Atwells Realty Corp. v. Scottsdale Ins. Co.

Atwells Realty Corp. v. Scottsdale Ins. Co.

Opinion

DECISION

STERN, J. Before this Court is Defendant Scottsdale Insurance Company's Motion to Dismiss, pursuant to Rule 12(b)(6) of the Superior Court Rules of Civil Procedure, Plaintiff Atwells Realty Corp.'s Complaint, which was filed in response to Defendant's rejection of Plaintiff's insurance claim for business interruption coverage due to Covid-19. Plaintiff objects to the motion. Jurisdiction is pursuant to G.L. 1956 §§ 8-2-13, 8-2-14, and 9-30-1.

Facts and Travel

Since June 24, 2003, Plaintiff Atwells Realty Corp. (Atwells) has been a licensed operator of a nightclub known as "Desire" located at 1 Franklin Square, Providence (Premises). (Compl. ¶ 8 (June 17, 2020).) Atwells operates Desire on three floors with an outdoor patio and has a total occupancy capacity of approximately 522 patrons. Id. ¶ 11. In order to lawfully operate its nightclub, Atwells holds class BV/BX liquor, food sales, holiday sales, entertainment, and adult entertainment licenses issued by the Board of Licenses of the City of Providence. Id. ¶¶ 9-10. Defendant Scottsdale Insurance Company (Scottsdale) is a property and casualty insurer whose business operations consist of marketing, selling, and entering into insurance [*2]  contracts/policies with individuals and businesses domiciled in the State of Rhode Island. Id. ¶¶ 2-3.

On May 25, 2019, Atwells entered into an insurance policy contract with Scottsdale (Policy), which Atwells asserts was entered into in order to protect its business in the event of a sudden suspension of its operations for reasons outside Atwells' control and to prevent further damage to its property. Id. ¶¶ 13-14. Atwells alleges that its Policy was an "all risk" indemnification policy and provided that Scottsdale "will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Causes of Loss[,]" and that Scottsdale agreed to pay for "any covered loss not specifically excluded by an applicable exclusion under the Policy." Id. ¶¶ 17, 18, 36; Def.'s Mem. Supp. Mot. Dismiss (Def.'s Mem.) Ex. A (Certified Policy) (Aug. 12, 2020).¹

The Policy includes Commercial Property Coverage Part Supplemental Declarations providing coverage for "Improvements & Betterments[,]" "Business Personal Property[,]" and "Business Income[,]" and provides that the "Covered Causes of Loss" are "Special[.]" (Certified Policy [*3]  at 14-15.) The "Causes of Loss - Special Form" states that "[w]hen Special is shown in the Declarations, Covered Causes of Loss means direct physical loss unless the loss is excluded or limited in this policy." Id. at 50. In addition, Atwells' Business Income (and Extra Expense) Coverage Form provides for coverage of Business Income, Extra Expense, and an additional coverage for Civil Authority. Id. at 66-67.

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