MEMORANDUM OPINION & ORDER Plaintiff Office Solution Group, LLC (“Office Solution Group”) and Defendant National Fire Insurance Company of Hartford (“National Fire Insurance”) entered into an insurance agreement (the “Policy”) in June of 2019. Plaintiff specializes in office project management and furniture installation. It conducts the majority of its business at its office in Midtown Manhattan. Defendant agrees to indemnify Plaintiff against specified losses at its office under the “Business Property Coverage” and “Civil Authority Coverage” provisions of the Policy. The Business Property Coverage includes “direct physical loss of or damage to property” and coverage is further extended for losses caused by the action of civil authority. The Policy explicitly excludes coverage for certain specified losses, including those caused by microbes, which it defines to include viruses (the “Microbe Exclusion”). In March of 2020, due to the rapid spread of the COVID-19 virus and the subsequent executive orders issued by New York Governor Andrew Cuomo mandating that non-essential businesses suspend the presence of their in-person employees (the “Executive Orders”), Plaintiff shut the doors of its Midtown office space. As the pandemic persisted and both the threat of the virus and the Executive Orders remained in place, Plaintiff suffered substantial losses from the loss of use of its office space and ultimately laid off thirty-five employees. Plaintiff sought coverage for its losses, which Defendant denied. Defendant moves to dismiss the complaint, arguing that the terms of the Business Property Coverage only apply to losses caused by physical damage, and not to loss of use. Defendant also argues that the terms of the Civil Authority Coverage only apply when access to covered property is prohibited, and the Executive Orders were issued in response to direct physical loss or damage located away from the insured’s premises. Finally, Defendant argues that the Microbe Exclusion bars coverage for damage caused by the COVID-19 virus. In response to Defendant’s arguments, Plaintiff argues that the loss of use of its office space is considered a physical loss, that the Executive Orders unambiguously prohibit access to the office space and nearby properties, and that the Microbe Exclusion is ambiguous and does not apply. Because the Court concludes that the language of the Policy unambiguously does not cover Plaintiff’s losses, Defendant’s motion to dismiss is GRANTED. I. BACKGROUND A. Facts 1. The Insurance Policy On June 27, 2019, Plaintiff and Defendant entered into an insurance agreement, the terms of which are the subject of this dispute. Dkt. No. 36-1, Decl. of Yahonnes Cleary (“Cleary Decl.”) Ex. A (the “Policy”); Dkt. No. 28, Am. Compl. (“AC”), 11. Plaintiff purchased the Policy from Defendant for the period of June 27, 2019 through June 27, 2020. AC 10. In accordance with the Policy, Plaintiff agreed to pay Defendant policy premiums in exchange for indemnification for certain losses at its office at 28 West 36th Street, New York, New York 10018. Id. 11. Plaintiff alleges that the Policy is an all-risk policy, providing coverage for all perils unless explicitly excluded or limited in the Policy. See id. 16. Plaintiff asserts that the Policy includes “property, business personal property, business income and extra expense, contamination coverage, and additional coverages.” Id. 13. The Business Property Coverage provisions require “direct physical loss of or damage to” the covered property to trigger coverage: Personal Property Coverage The Insurer will pay for direct physical loss of or damage to personal property at a location directly caused by a covered peril. The most the Insurer will pay for any one occurrence for such loss or damage is the applicable Personal Property Coverage Limit of Insurance shown in the Business Property Schedule of Locations at that location…. Business Income Coverage The Insurer will pay for the actual loss of business income the Named Insured sustains during the period of restoration due to the necessary suspension or delay of operations caused by direct physical loss of or damage to property at a location directly caused by a covered peril…. Extra Expense Coverage The Insurer will pay extra expense caused by direct physical loss of or damage to property at a location directly caused by a covered peril. Policy at 75 (emphasis omitted).1 “Extra expense” is defined as actual reasonable and necessary operating expenses the Named Insured incurs during the period of restoration that would not have been necessary to incur if there had been no direct physical loss of or damage to property, provided such expenses are incurred: A. to avoid or minimize the suspension or delay of operations and to continue such operations which have been affected by the direct physical loss or damage to the property; or B. in an attempt to minimize the period of restoration. Id. at 37 (emphasis omitted). The Policy includes Civil Authority Coverage, which provides coverage for lost business income and extra expense for closures caused when civil authorities prohibit access to the covered property: For up to the number of days shown on the Business Property Schedule of Coverages and Limits, the Insurer will pay, as provided, for: i. The actual loss of business income the Named Insured sustains during the period of restoration due to the necessary suspension or delay of operations; ii. the actual loss of research and development business income the Named Insured sustains during the period of restoration due to the necessary suspension or delay of the research and development projects; and iii. extra expense, caused by action of civil authority that prohibits access to the location or reported unspecified location. Such action must result from a civil authority’s response to direct physical loss of or damage to property located away from a location or reported unspecified location. That lost or damaged property must be within five miles of that location or reported unspecified location which sustains a business income or research and development business income loss or where extra expense is incurred. The loss or damage must be directly caused by a covered peril. Id. at 82-83 (emphasis omitted). The Policy does not define the terms “direct,” “physical,” “loss,” or “damage.” The Policy also includes an exclusion for “Fungi, Wet Rot, Dry Rot and Microb[e]” (the “ Microbe Exclusion”) and defines “microbe” to include “any…virus,” though the term “virus” is not further defined; nor does the policy specifically mention coverage in the event of a pandemic: The Insurer will not pay for loss or damage caused directly or indirectly by or resulting from the presence, growth, proliferation, spread or any activity of fungi, wet or dry rot, or microbes. However, this exclusion does not apply when fungi, wet or dry rot, or microbes results from fire or lightning. Id. at 96 (emphasis omitted). Microbes means any: A. non-fungal microorganism; B. non-fungal, colony-form organism; C. virus; or D. bacteria. Microbe includes any spores, mycotoxins, odors, or any other substances, products, or byproducts produced by, released by, or arising out of the current or past presence of microbes. Id. at 40 (emphasis omitted). 2. Plaintiff Shuts its Doors in the Wake of COVID-19 In March of 2020, the COVID-19 virus spread rapidly across New York. The COVID-19 virus is particularly dangerous because it can spread rapidly among even asymptomatic carriers and persist in aerosols for hours and on surfaces for up to 28 days. AC
37, 40-41. By March 11, 2020, the World Health Organization (WHO) declared that the rapid spread of the COVID-19 virus was a pandemic. Id. 39. To mitigate the unfolding crisis, on March 7, 2020, New York Governor Andrew Cuomo declared a disaster emergency across New York State. Id. 46; Dkt. No. 36-2, Cleary Decl. Ex. B, at 2. On March 12, 2020, Governor Cuomo issued an executive order canceling “[a]ny large gathering or event for which attendance is anticipated to be in excess of five hundred people” and mandating that “[a]ny place of business or public accommodation, and any gathering or event for which attendance is anticipated to be fewer than five hundred people” operate at no more than fifty percent occupancy. Dkt. No. 36-3, Cleary Decl. Ex. C, at 5. On March 20, 2020, the State of New York issued a stay-at-home order, and Governor Cuomo ordered businesses to “reduce the in-person workforce at any work locations by 100 percent ” and “ utilize, to the maximum extent possible, any telecommuting or work from home procedures that they can safely utilize.” Dkt. No. 36-4, Cleary Decl. Ex. D, at 3; AC
