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Verveine Corp. v. Strathmore Insurance Company

Verveine Corp. v. Strathmore Insurance Company

Supreme Judicial Court of Massachusetts

January 7, 2022, Argued; April 21, 2022, Decided

SJC-13172.

Opinion

Kafker, J. This appeal requires us to determine whether various losses stemming from the COVID-19 pandemic constitute “direct physical loss of or damage to” properties owned by the plaintiffs and [**2]  insured by the defendants. The plaintiffs own three restaurants, which, like many brick-and-mortar businesses, suffered severe reductions in revenues during the pandemic and the resulting government restrictions on public gatherings. And like many other businesses, they looked to their property insurers to offset these losses, and had their claims denied. The plaintiffs sued their insurer for breach of contract and their insurance broker for negligently failing to procure policies that would have covered damages resulting from the COVID-19 virus. Holding that the insurance policies in question unambiguously did not cover the plaintiffs' losses, a Superior Court judge granted the motion to dismiss filed by the defendant Strathmore Insurance Company (Strathmore) and the motion for judgment on the pleadings filed by the defendant Commercial Insurance Agency, Inc. (Commercial).

We agree that the plaintiffs' losses were not “direct physical loss of or damage to” their property within the meaning of the insurance policies, and we therefore affirm.4

1. Background. The following facts are drawn from the plaintiffs' complaint and from sources of which this court can take  [*536]  judicial notice. See Jarosz v. Palmer, 436 Mass. 526, 530, 766 N.E.2d 482 (2002) [**3]  (motions under Mass. R. Civ. P. 12 [c], 365 Mass. 754 [1974]); Jackson v. Longcope, 394 Mass. 577, 580 n.2, 476 N.E.2d 617 (1985) (motions under Mass. R. Civ. P. 12 [b] , 365 Mass. 754 [1974]).5

The plaintiffs are three Massachusetts companies that operate restaurants in Boston and Cambridge (restaurants). They are Verveine Corporation, which operates Coppa in Boston (Coppa); 1704 Washington LLC, which operates Toro in Boston (Toro); and JKFOODGROUP LLC, which operates Little Donkey in Cambridge (Little Donkey). All three have common ownership and management.

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489 Mass. 534 *; 2022 Mass. LEXIS 158 **; 184 N.E.3d 1266

Verveine Corp.1 & others2 vs. Strathmore Insurance Company & another.3

Prior History:  [**1]  Suffolk. Civil action commenced in the Superior Court Department on June 30, 2020.

Motions to dismiss and for judgment on the pleadings were heard by Janet L. Sanders, J.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Vervaine Corp. v. Strathmore Ins. Co., 2020 Mass. Super. LEXIS 187, 2020 WL 8766370 (Mass. Super. Ct., Dec. 21, 2020)

CORE TERMS

coverage, physical loss, virus, restaurants, property damage, policies, losses, insured, plaintiffs', civil authority, cause of loss, insurance policy, alteration, suspension, described premises, motion to dismiss, contamination, remediation, quotation, covering, pandemic, dining

Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Judgments, Pretrial Judgments, Judgment on Pleadings, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Entire Contract, Ambiguous Terms, Construction Against Insurers, Reasonable Expectations, Reasonable Person, Ordinary & Usual Meanings, Coverage Favored, Unambiguous Terms, Evidence, Burdens of Proof, Allocation, Types of Insurance, Property Insurance, Obligations, Coverage, Property Damage, Business Insurance, Commercial General Liability Insurance, Property Claims, Claims Made Policies, Exclusions