Tapestry, Inc. v. Factory Mut. Ins. Co.

Tapestry, Inc. v. Factory Mut. Ins. Co.

Opinion

MEMORANDUM OPINION

THIS MATTER is before the Court on Plaintiff Tapestry, Inc.'s ("Tapestry") Motion to Certify a Question of Law to the Maryland Court of Appeals ("Motion to Certify") (ECF No. 29). The Motion is ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2021).¹ For the reasons set forth below, the Court will grant the Motion.²

I. BACKGROUND³

A. Factual Background

Tapestry is the owner of three luxury accessory and lifestyle brands: Coach, kate spade new york, and Stuart Weitzman. (First Am. Compl. ("FAC") ¶ 1, ECF No. 15). Before the spread of the SARS-CoV-2 virus (the "Coronavirus") and its resultant disease, Coronavirus Disease 2019 ("COVID-19"), Tapestry had 1,540 retail [*2]  and outlet stores under its three brands and operated in at least twenty countries, with 414 stores in the United States, fifteen of which were in Maryland. (Id. ¶¶ 21-23). Tapestry employed approximately 16,000 people across the United States, including 330 in Maryland. (Id. ¶ 23).

Tapestry purchased commercial property insurance policies from Defendant Factory Mutual Insurance Company ("Factory") covering not only common risks like fire, but also unanticipated and novel risks (the "Policies"). (Id. ¶ 25). The Policies cover "ALL RISKS OF PHYSICAL LOSS OR DAMAGE, except as hereinafter excluded" for the relevant periods. (Id. ¶¶ 1-2, 170; Factory Ins. Policy ["Policy"] at 1, ECF No. 4-1). The Policies also insure business interruption loss "directly resulting from physical loss or damage of the type insured," by allowing "recovery [] to the extent that [Tapestry is] wholly or partially prevented from producing goods or continuing business operations or services." (See Policy at 43-65). The Policies do not define what constitutes "physical loss or damage" to property. (FAC ¶ 297). The Policies define the "insured property" in relevant part as "Real Property, including new buildings and [*3]  additions under construction, in which the Insured has an insurable interest." (Policy at 14).

Tapestry suffered considerable losses due to the Coronavirus. (See id. ¶¶ 10, 158). As of the time Tapestry filed the First Amended Complaint, "at least 1,676 Tapestry employees (including 23 in Maryland) ha[d] confirmed that they contracted COVID-19, and virtually all . . . did so during periods when the Tapestry Stores where they worked were open for business and they were back at work." (Id. ¶¶ 79-80, 151). Thus, Tapestry alleges that the Coronavirus was present in its stores. (See id. ¶¶ 80, 99). Tapestry asserts further that the "high prevalence of infectious COVID-19 cases" in Maryland "makes it statistically certain or near-certain that Coronavirus droplets and aerosols were frequently dispersed into the air and on property in, on and around the Tapestry Stores." (Id. ¶ 88). Tapestry alleges that it suffered hundreds of millions of dollars in losses as a result of the physical loss or damage caused by the Coronavirus. (Id. ¶¶ 10, 152, 155, 227, 338). Factory denied coverage for Tapestry's losses. (Id. ¶ 311).

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