BAUER v. AGA SERVICE COMPANY (2020)

ORDER

Before the Court is Defendants’ Motion to Dismiss and Strike. (Doc. 17). Defendants move to dismiss Plaintiff's Complaint for failure to state a claim and lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(6) and 12(d)(1)(D). Plaintiff has filed a response and the motion is ripe for review. For the reasons set forth herein, the Motion to Dismiss is granted.

BACKGROUND

Plaintiff has filed a Class Action Complaint against defendants AGA Service Company d/b/a Allianz Global Assistance (“AGA”) and Jefferson Insurance Company (“Jefferson”) alleging breach of contract (Count I) and vexatious/bad faith refusal (Count II).¹ Plaintiff also seeks a declaratory judgment (Count III). The claims arise out of Plaintiff's purchase of two insurance policies issued to him by Defendants regarding booked travel from Springfield, Missouri to Miami, Florida and the return trip from Miami, Florida to Springfield, Missouri. Plaintiff alleges AGA is the licensed producer and administrator of the policies and an agent of Jefferson. The policies provided for a maximum benefit of $300.00 and $318.20, respectively, in the event Plaintiff's trips were cancelled for any covered reason. Plaintiff alleges his trip was cancelled due to a covered reason – the traveler or a traveling companion was quarantined. Plaintiff states the policies define quarantine as “mandatory confinement, intended to stop the spread of a contagious disease to which you or a traveling companion may have been exposed.” Doc. 1 ¶ 10.

Plaintiff's Complaint alleges on March 24, 2020, the Mayor of the City of Springfield, Missouri issued a proclamation declaring a state of civil emergency, stating that the continued spread of COVID-19 presents an imminent threat of widespread illness and threat to public health, and issued a “Stay at Home Order” directing Springfield residents to cease all non-essential activities, including non-essential travel (the “City Quarantine Order”). The City Quarantine Order specifically provided: “Individuals may only leave their residences or place of rest only to perform Essential Activities as defined herein or to provide any services or perform any work necessary to the operations and maintenance of Essential Business, Minimum Basic Operations, or other enumerated exempted categories as prescribed by City Order or other prevailing law.” On or about March 24, 2020, Greene County, Missouri issued a similar “Stay at Home” order directing Greene County residents to cease all non-essential activities, including non-essential travel (the “County Quarantine Order”). Both the City Quarantine Order and County Quarantine Order were effective on and through April 10, 2020. On or about April 3, 2020, the Missouri Governor, Mike Parson, issued a statewide “Stay Home Missouri” Order effective beginning at 12:01 a.m. on Monday, April 6, 2020 until 11:59 p.m., on Friday, April 24, 2020 directing Missouri residents to “avoid leaving their homes or places of residence” (the “Statewide Quarantine Order”).

Plaintiff alleges that the City, County and State Quarantine Orders, and other Orders from around the country forced Plaintiff, and others similarly situated to him, to cancel their trips. Plaintiff alleges the cancelation entitles him to payment under the policies. Plaintiff sought coverage for his loss under the policies from Defendants but his claim was denied.

Plaintiff alleges Defendants claim the cancellation of the trip due to the Quarantine Orders are not covered under the policies. Plaintiff alleges Defendants believe the polices exclude coverage for the losses but that the asserted bases for denial of the claims are without merit, are unreasonable, without good cause and made in bad faith. Plaintiff alleges his claim represents a clearly-covered loss and no exclusions to the policies apply.

Defendants move to dismiss Plaintiff's claims. Defendants state Jefferson denied Plaintiff's claim because, among other reasons, the policies did not provide coverage for any loss resulting from an epidemic and because Plaintiff's alleged loss arises directly from COVID-19 there is no coverage. Defendants also argue the Court lacks personal jurisdiction over non-Missouri insureds’ claims that Plaintiff seeks to represent in the class action complaint.

STANDARD

“To survive a motion to dismiss [under 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A complaint is facially plausible where its factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The plaintiff must plead facts that show more than a mere speculation or possibility that the defendant acted unlawfully. Id.; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). While the Court accepts the complaint's factual allegations as true, it is not required to accept the plaintiff's legal conclusions. Ashcroft, 556 U.S. at 678, 129 S.Ct. 1937. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

The court's assessment of whether the complaint states a plausible claim for relief is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft, 556 U.S. at 679, 129 S.Ct. 1937. The reviewing court must read the complaint as a whole rather than analyzing each allegation in isolation. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009).

DISCUSSION

Here, Plaintiff's claims are based on two insurance policies covering each leg of his trip but containing the same relevant language. Plaintiff does not attach the Policies to his complaint. Defendants have attached the policies to their motion to dismiss and argue the language of the Policies exclude coverage for Plaintiff's claims. The underlying policies themselves are not disputed.

The Policies contain a provision providing for the payment of certain amounts as Trip Cancellation Coverage in the event an insured's trip is “canceled or rescheduled for a covered reason.” See Doc. 18-1, p. 13. The Policies include a list of covered reasons including if an insured or a traveling companion is “quarantined.” Id. Quarantine is defined as “mandatory confinement, intended to stop the spread of a contagious disease to which you or a traveling companion may have been exposed.” Doc. 18-1, p. 11.

The Policies’ coverages are also limited by general exclusions. The general exclusions state that the policy will not provide coverage for “any loss that results directly or indirectly from any of the following general exclusions if they affect you, a traveling companion, or a family member ․” Doc. 18-1, p. 18. Number fourteen in the list of general exclusions is “an epidemic.” Id. Epidemic is defined in the policy as a “contagious disease that spreads rapidly and widely among the population in an area and which is recognized as an epidemic by the World Health Organization (WHO) or Centers for Disease Control and Prevention (CDC).” Doc. 18-1, p. 10.

The interpretation of an insurance policy is a question of law and if the policy language is unambiguous is should be enforced as written. See Council Tower Ass'n v. Axis Specialty Ins. Co., 630 F.3d 725, 728 (8th Cir. 2011) and Todd v. Missouri United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. 2007). In disputes arising out of insurance policies, the party seeking to establish coverage has the initial burden of demonstrating that the claim is covered under the policy. Safeco Ins. Co. of Am. v. Schweitzer, 372 F. Supp. 3d 884, 889 (W.D. Mo. 2019). “On the other hand, an insurance company seeking to avoid coverage by reason of a policy exclusion has the burden of proving the applicability of the exclusion.” Id. If the definitions and exclusions contained in the policies are clear and unambiguous, within the context of the policy as a whole, then the terms are enforceable. See Park Reserve, LLC v. Peerless Ins. Co., No. 14-0763-CV-W-ODS, 2015 WL 6150420, at *2 (W.D. Mo. Oct. 19, 2015) (internal citation omitted). An ambiguity only exists where policy language is “reasonably open to different constructions.” Id. at *2. Missouri courts apply “the meaning which would be attached by an ordinary person of average understanding if purchasing insurance and resolves ambiguities in favor of the insured.” Williams v. Employers Mut. Cas. Co., 845 F.3d 891, 902 (8th Cir. 2017).

Defendants argue the general exclusion based on an epidemic is unambiguous and that the cancellation of Plaintiff's trip was a direct result of COVID-19. As result, Defendant states Plaintiff's claim was not covered under the policy which resulted in a proper denial of his claim. In response, Plaintiff argues his claim is covered under the quarantine provisions; that COVID-19 did not “affect” him; and that COVID-19 has not been defined as an epidemic. Plaintiff correctly argues that Defendants have the burden to prove an exclusion applies, and that any such exclusions should be construed strictly against the insurer. Williams v. Employers Mut. Cas. Co., 845 F.3d at 902-903 (internal citation omitted).

Plaintiff, relying on the policy language regarding exclusions based on an epidemic, argues COVID-19 did not affect him. The policy states, in part: “․ if they affect you, a traveling companion, or a family member ․” Plaintiff argues the term “affect” is not defined in the Policies, and ordinarily means “to produce an effect upon: such as (a) to produce a material influence upon or alteration in; (b) to act upon (a person, a person's mind or feeling, etc.) so as to effect a response.” Plaintiff argues that neither he nor his traveling companions were subject to the effects of a contagious disease, i.e. they were not infected with COVID-19, and therefore they were not “affected” by the epidemic exclusion. In addition, Plaintiff also argues that Defendants are relying on evidence outside the scope of the pleadings in contending that COVID-19 is an epidemic. Plaintiff argues Defendants cannot rely on evidence found on websites regarding definitions and evidence of the pandemic versus epidemic. Further, Plaintiff contends even if the Court did consider such evidence WHO has recognized COVID-19 as a pandemic as opposed to an epidemic.

Here, the parties do not dispute the underlying facts, the insurance policies at issue, rather they disagree on the interpretation and application of the policies. Therefore, the issue is a matter of law for the Court to decide and the Court finds the language of the policies is unambiguous. The policy specifically excludes coverage “for any loss that results directly or indirectly from any of the following exclusions if they affect you, a traveling companion, or a family member” and then identifies “an epidemic” as an exclusion.

The Court is not persuaded by Plaintiff's argument that because he himself was not infected with the COVID-19 disease that he was not affected by the epidemic. The policy excludes coverage for any loss that results directly or indirectly from an epidemic. Here, Plaintiff specifically alleges his trip was cancelled as a result of COVID-19, including his allegation that it was the stay at home orders resulting from COVID-19 that prevented his travel. The stay at home orders were a direct result of COVID-19. As a result, the cancellation of the trip resulted directly, or at a minimum indirectly, from COVID-19. Whether or not Plaintiff actually contracted the COVID-19 disease is not the requirement of the policy. Rather, Plaintiff's trip was canceled as a direct result of COVID-19 and therefore no coverage exists under the policy's general exclusion of an epidemic.

Further, the Court finds Plaintiff's argument regarding whether COVID-19 falls under the definition of “epidemic” unpersuasive. Plaintiff argues that the WHO and CDC have identified COVID-19 as a pandemic, rather than an epidemic. COVID-19, under the ordinary and plain meaning of what an average layperson would understand, falls under the policy's definition of “a contagious disease that spreads rapidly and widely among the population in an area and which is recognized as an epidemic by the World Health Organization (WHO) or Centers for Disease Control and Prevention (CDC).” Plaintiff does not dispute that WHO has recognized COVID-19 as a pandemic but argues that because it has been identified as a pandemic, the exclusion for “epidemic” does not apply. The plain meaning of these words, as defined by Merriam-Webster, state that “A disease can be declared an epidemic when it spreads over a wide area and many individuals are taken ill at the same time. If the spread escalates further, an epidemic can become a pandemic, which affects an even wider geographical area and a significant portion of the population becomes affected.” See https://www.merriam-webster.com/words-at-play/epidemic-vs-pandemic-difference. In essence, a pandemic is a type of epidemic that includes a greater range and coverage. Plaintiff argues that epidemic and pandemic are not interchangeable and that COVID-19 does not fit the definition of epidemic. This Court disagrees. While an epidemic may not rise to the level of a pandemic, here COVID-19 which has been recognized as a pandemic (the spread of the virus to a greater range and coverage), fits within the definition that would include the lesser spread of the disease defined as an epidemic. In other words, the definition of a pandemic would encompass an epidemic which is simply defined on a smaller level.² The Court finds the general exclusion therefore applies to this claim.

The Court finds Plaintiff has failed to state a claim for breach of the travel insurance polices at issue because the unambiguous terms of the policies contain an exclusion for any loss that results directly or indirectly from an epidemic. As a result, Plaintiff's claims based on the cancellation of this trip as a result of the COVID-19 disease, as contained in his Complaint, must be dismissed.

CONCLUSION

Wherefore, for the reasons set forth herein, the Court GRANTS the Motion to Dismiss.

IT IS SO ORDERED.

FOOTNOTES

1.   The background facts are taken from Plaintiff's Class Action Complaint. (Doc. 1).

2.   Plaintiff's proposed definitions further support this reasoning. Plaintiff submits the definition of epidemic as “the occurrence in a community or region of cases of an illness ․ clearly in excess of normal expectancy.” (Exhibit 1, Doc. 22-1). Plaintiff submits the definition of pandemic as “the worldwide spread of a new disease.” (Exhibit 2, Doc. 22-2).

DOUGLAS HARPOOL, UNITED STATES DISTRICT JUDGE