Supreme Court, Queens County, March 30, 2021

Farber Brocks & Zane LLP, Garden City, for defendant.

Sacco & Fillas, LLP, Astoria, for plaintiff.

It is ordered that the motion by defendant: (1) seeking dismissal of the complaint, pursuant to CPLR 3211 (a) (1) and (7); (2) seeking treatment of this motion as one for summary judgment, pursuant to CPLR 3211 (c); and (3) for declaratory relief, pursuant to CPLR 3001, is determined as follows:

Defendant issued an insurance policy to plaintiff, Oveila doing business as Mangia Restaurant Corp., effective December 16, 2019, through December 16, 2020, which covered plaintiff's restaurant and bar. Defendant's policy provides coverage for, inter alia, "Business Income," "Civil Authority" and "Extra Expense." As a result of the COVID-19 pandemic, in early May 2020, plaintiff notified defendant of its claim, under the policy, for loss of income. Days later, defendant disclaimed coverage. By summons and complaint, dated August 17, 2020, plaintiff asserts a breach of contract action for damages, and seeks a declaration that defendant was responsible for coverage for plaintiff's loss of income suffered as a result of the effects of the COVID-19 virus, and various executive orders, issued by the Governor of New York State, for the purpose of containing said virus. The complaint alleges that such executive orders restricted plaintiff "from operating its business in the usual manner causing a loss of income it would otherwise have received in absence of the Orders." Defendant moves this court: (1) for an order dismissing the complaint, pursuant to CPLR 3211 (a) (1) and (7); (2) to treat the motion as one for summary{**72 Misc 3d at 410} judgment pursuant to CPLR 3211 (c); and (3) for a judicial declaration that it has no duty to provide insurance coverage for such a claim, pursuant to CPLR 3001. Defendant contends that: (1) the subject insurance policy does not cover such loss; (2) there was not any physical loss or damage to real property involved in plaintiff's claim, as required by the insurance policy; (3) any civil authority loss was a result of COVID-19; and (4) such virus is specifically excluded from coverage in the policy.

Initially, CPLR 3211 (c) allows that, on a motion to dismiss, "the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment" (see Mihlovan v Grozavu, 72 NY2d 506 [1988]; Matter of Gorelick v Suffolk County Comptroller's Off., 186 AD3d 1518 [2020]). There exist three exceptions to the notice requitement, i.e., where subdivision (c) treatment is requested by all parties; where the motion raises a pure question of law addressed by both parties; and where the parties, by laying bare their respective proofs, deliberately chart a summary judgment course (see Hendrickson v Philbor Motors, Inc., 102 AD3d 251 [2012]). The second exception has been held to apply in cases such as the one at bar, where a motion to dismiss, pursuant to CPLR 3211 (a) (1) and (7), a cause of action seeking declaratory relief was properly converted into a motion for summary judgment because the subject cause of action, "inasmuch as it rested entirely upon the construction and interpretation of an unambiguous contractual provision . . . , 'exclusively involve[d] issues of law which were fully appreciated and argued by the parties' " (F&T Mgt. & Parking Corp. v Flushing Plumbing Supply Co., Inc., 68 AD3d 920, 923 [2009], quoting Moutafis v Osborne, 18 AD3d 723, 724 [2d Dept 2005]; see Brown v Decaudin, 129 AD3d 875 [2d Dept 2015]).

Further, again as in the instant case, the Court in the matter of Serrano v County of Suffolk (188 AD3d 938 [2d Dept 2020]) opined that a motion to dismiss should be treated as a summary judgment motion,

"since, in their motion papers, the defendants sought relief pursuant to both CPLR 3211 (a) and 3212, and specifically requested CPLR 3211 (c) treatment . . . , the plaintiff's responsive papers clearly stated that they were being submitted in opposition to the [*2]defendants' motion for summary judgment, and the parties demonstrated with their{**72 Misc 3d at 411} submissions that they were 'laying bare their proof and deliberately charting a summary judgment course' " (id. at 939, quoting Hendrickson v Philbor Motors, Inc., 102 AD3d at 258-259; see Ain v Allstate Ins. Co., 181 AD3d 875 [2020]).

As such, the court shall treat this motion as one for summary judgment pursuant to CPLR 3211 (c).

"[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Ayotte v Gervasio, 81 NY2d 1062, 1063 [1993], citing Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; see Wonderly v City of Poughkeepsie, 185 AD3d 632 [2020]; Oxford Health Plans [NY], Inc. v Biomed Pharms., Inc., 181 AD3d 808 [2020]). Once a prima facie demonstration has been made, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of a material issue of fact which requires a trial of the action (see Trustees of Columbia Univ. in the City of N.Y. v D'Agostino Supermarkets, Inc., 36 NY3d 69 [2020]; Zuckerman v City of New York, 49 NY2d 557 [1980]). On plaintiff's motion for summary judgment, the evidence should be liberally construed in a light most favorable to the non-moving defendants (see Hewitt v Palmer Veterinary Clinic, PC, 35 NY3d 541 [2020]; Matter of New York City Asbestos Litig., 33 NY3d 20 [2019]; Monroy v Lexington Operating Partners, LLC, 179 AD3d 1053 [2020]; Rivera v Town of Wappinger, 164 AD3d 932 [2018]). Credibility issues regarding the circumstances of the subject transactions require resolution by the trier of fact (see Bravo v Vargas, 113 AD3d 579 [2014]; Martin v Cartledge, 102 AD3d 841 [2013]), and the denial of summary judgment.

The court's function on a motion for summary judgment is "to determine whether material factual issues exist, not to resolve such issues" (Lopez v Beltre, 59 AD3d 683, 685 [2009]; Santiago v Joyce, 127 AD3d 954 [2015]). As summary judgment is to be considered the procedural equivalent of a trial, "it must clearly appear that no material and triable issue of fact is presented. This drastic remedy should not be granted where there is any doubt as to the existence of such issues, or where the issue is 'arguable' " (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957] [citations omitted]; see also Rotuba Extruders v Ceppos, 46 NY2d 223 [1978]; Andre v{**72 Misc 3d at 412} Pomeroy, 35 NY2d 361 [1974]; Stukas v Streiter, 83 AD3d 18 [2011]; Dykeman v Heht, 52 AD3d 767 [2008]). Summary judgment "should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility" (Collado v Jiacono, 126 AD3d 927, 928 [2015], citing Scott v Long Is. Power Auth., 294 AD2d 348, 348 [2002]; see Charlery v Allied Tr. Corp., 163 AD3d 914 [2018]; Chimbo v Bolivar, 142 AD3d 944 [2016]; Bravo v Vargas, 113 AD3d 579 [2014]). The burden is on the party moving for summary judgment to demonstrate the absence of a material issue of fact. Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966 [1988]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Cach, LLC v Khan, 188 AD3d 1135 [2020]).

The evidence submitted in support of defendant's motion, in the form of the applicable policy of insurance, was documentary, in that it was of undisputed authenticity, unambiguous and undeniable (see Twinkle Play Corp. v Alimar Props., Ltd., 186 AD3d 1447 [2020]; Qureshi [*3]v Vital Transp., Inc., 173 AD3d 1076 [2019]; Mehrhof v Monroe-Woodbury Cent. Sch. Dist., 168 AD3d 713 [2019]; Anderson v Armentano, 139 AD3d 769 [2016]). Such insurance policy was an out-of-court transaction, i.e., a contract, in admissible form, "the contents of which are essentially undeniable" (Phillips v Taco Bell Corp., 152 AD3d 806, 807 [2017]; see Porat v Rybina, 177 AD3d 632 [2019]; Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d 673 [2017]), which could conclusively establish a possible defense to plaintiff's claims as a matter of law (see Pacella v RSA Consultants, Inc., 164 AD3d 806 [2018]; Greenberg v Spitzer, 155 AD3d 27 [2017]; Phillips v Taco Bell Corp., 152 AD3d 806 [2017]; Scialdone v Stepping Stones Assoc., L.P., 148 AD3d 953, 954 [2017]). Such evidence would have to undeniably support movant's claims and/or utterly refute plaintiff's factual allegations (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Stewart v Berger, 192 AD3d 940 [2021]; Clarke v Laidlaw Tr., Inc., 125 AD3d 920 [2015]; Comprehensive Mental Assessment & Med. Care, P.C. v Gusrae Kaplan Nusbaum, PLLC, 130 AD3d 670 [2015]).

" 'The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent' . . . [and] [t]he best evidence of the parties' intent is their own writing{**72 Misc 3d at 413} . . . . A written agreement that is complete, clear, and unambiguous on its face is to be enforced according to the plain meaning of its terms" (Goetz v Trinidad, 168 AD3d 688, 689 [2019], quoting Greenfield v Philles Records, 98 NY2d 562, 569 [2002]; see MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 645 [2009]; Matter of Silberman v Farkas, 179 AD3d 1075 [2020]; Osborne v Williamson Law Book Co., 175 AD3d 1311 [2019]).

"[W]here the terms of a contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and reading the contract as a whole" (Tomhannock, LLC v Roustabout Resources, LLC, 33 NY3d 1080, 1082 [2019], quoting Ellington v EMI Music, Inc., 24 NY3d 239, 244 [2014]; see Long Is. Med. & Gastroenterology Assoc., P.C. v Mocha Realty Assoc., LLC, 191 AD3d 857 [2021]; World Ambulette Transp., Inc. v Lee, 161 AD3d 1028 [2018]).

"Extrinsic evidence of the parties' intent may be considered only if the agreement is ambiguous, which is an issue of law for the courts to decide . . . . A contract is unambiguous if the language it uses has 'a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion' " (Greenfield v Philles Records, 98 NY2d at 569, quoting Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]; see Gilbane Bldg. Co./TDX Constr. Corp. v St. Paul Fire & Mar. Ins. Co., 31 NY3d 131 [2018]; CDC Dev. Props., Inc. v American Ind. Paper Mills Supply Co., Inc., 184 AD3d 623 [2020]).

The relevant portions of this insurance policy are clear and unambiguous in their wording.

The terms of the instant insurance policy state, in pertinent part, that it covers a "loss of income" when "business is necessarily interrupted by loss or damage to real or personal property caused by a peril covered during the policy period." Said policy contains two exclusions in this regard: (1) "We do not cover loss caused by order of any civil authority," and (2) "We do not pay for loss, cost, or expense caused by, resulting from, or relating to any virus, bacterium, or other microorganism that causes disease, illness, or other physical distress or that is{**72 Misc 3d at 414} capable of causing disease, illness, or physical distress." Further, the policy provides that "[t]his exclusion applies to, but is not limited to, any loss, cost, or expense as a result of any denial of access to property [*4]because of any virus, bacterium, or other microorganism." Such unequivocal exclusions apply to any contamination by any virus, and any denial of access to property due to any virus. Plaintiff's "mere assertion . . . that [the] contract language means something different to [it] . . . is not . . . enough to raise a triable issue of fact" (Cohen & Slamowitz, LLP v Zurich Am. Ins. Co., 168 AD3d 905, 906 [2019]). This court will not apply to this insurance policy a "strain[ed] [reading] to find an ambiguity which otherwise might not be thought to exist" (Uribe v Merchants Bank of N.Y., 91 NY2d 336, 341 [1998], quoting Loblaw, Inc. v Employers' Liab. Assur. Corp., 57 NY2d 872, 877 [1982]).

Prior to the advent of the COVID-19 virus, New York case law held that there could be no recovery for lost business income/extra expense absent a showing of any "direct physical loss or damage," stating that "the language in the . . . policy clearly and unambiguously provides coverage only where the insured's property suffers direct physical damage" (Roundabout Theatre Co. v Continental Cas. Co., 302 AD2d 1, 6 [2002]; see Newman Myers Kreines Gross Harris, P.C. v Great N. Ins. Co., 17 F Supp 3d 323, 331 [2014] [plain meaning of phrase "direct physical loss or damage to" connotes a negative alteration in the tangible condition of property]). Such policy terms ordinarily connote actual, demonstrable, physical harm of some form to the premises themselves, rather than damages merely consequential to a forced closure or business interruption, as claimed herein. A mere loss of use was insufficient to trigger coverage under such policy terms (see United Airlines, Inc. v Insurance Co. of State of Pa., 385 F Supp 2d 343 [2005]; Philadelphia Parking Auth. v Federal Ins. Co., 385 F Supp 2d 280 [2005]).

The policyholder bears the initial burden of showing that the subject insurance contract covers the alleged loss (see Roundabout Theatre Co. v Continental Cas. Co., 302 AD2d 1 [2002]; Tappo of Buffalo, LLC v Erie Ins. Co., 2020 WL 7867553, 2020 US Dist LEXIS 245436 [WD NY, Dec. 29, 2020, 20-CV-754V(Sr)]). Plaintiff has failed to do so herein.

Since the appearance of the COVID-19 pandemic, courts have continued to posit that actual physical damage is required before business interruption insurance coverage is paid (see Sharde Harvey, DDS, PLLC v Sentinel Ins. Co., Ltd., 2021 WL{**72 Misc 3d at 415} 1034259, 2021 US Dist LEXIS 52552 [SD NY, Mar. 18, 2021, 20-CV-3350 (PGG) (RWL)]; Food for Thought Caterers Corp. v Sentinel Ins. Co., Ltd., 524 F Supp 3d 424 [SD NY 2021]; DeMoura v Continental Cas. Co., 523 F Supp 3d 314 [ED NY 2021]; 10012 Holdings, Inc. v Sentinel Ins. Co., Ltd., 507 F Supp 3d 482 [SD NY 2020]).

[1] Plaintiff would have had to show that the claimed "business interruption" was the result of "a loss or damage to real or personal property caused by a peril covered" (Satispie, LLC v Travelers Prop. Cas. Co. of Am., 448 F Supp 3d 287, 293 [2020]; Roundabout Theatre Co. v Continental Cas. Co., 302 AD2d 1 [2002]). Plaintiff failed to demonstrate that the alleged "damage" was a result of a covered peril, because it wasn't. The policy contained a specific "virus exclusion," and both sides agree that COVID-19 is a "virus." Additionally, plaintiff's claim that it suffered "actual damage" because the virus germs settled on the fixtures and food at the restaurant, and they were forced to "clean surfaces" of virus contaminants, is without merit. Contrary to plaintiff's contention, the "direct physical damage or loss" criteria of the subject policy was not triggered by such actions.

Additionally, plaintiff's claim that COVID-19, a harmful and unwanted substance, entered [*5]its premises and made them impossible to use was not borne out by any proof that COVID-19 was ever found on the premises, so there exists no reason to assert that the virus contaminated, or "damaged," anything at the property, let alone made it uninhabitable. Therefore, any claim for "loss" of the insured property is unavailable to plaintiff (see Michael Cetta, Inc. v Admiral Indem. Co., 506 F Supp 3d 168 [SD NY 2020]). Even had there been proof that the virus "physically attached to the property," as plaintiff alleged, that would not have constituted the direct, physical loss or damage required to trigger the policy coverage, because such presence can be eliminated by "routine cleaning and disinfecting" (Tappo of Buffalo, LLC v Erie Ins. Co., 2020 WL 7867553, *4, 2020 US Dist LEXIS 245436, *12 ["this Court agrees with the overwhelming majority of courts to have considered this issue that plaintiffs cannot plausibly allege that this impact is the result of direct physical loss of or damage to covered property as required to establish coverage under their insurance policies"]). In fact, even if the virus had been{**72 Misc 3d at 416} present on plaintiff's property, any business income losses were caused by the precautionary measures taken by the State to prevent the spread of COVID-19, rather than by direct physical loss of, or damage to, the property (see ibid; Sharde Harvey, DDS, PLLC v Sentinel Ins. Co., Ltd., 2021 WL 1034259, 2021 US Dist LEXIS 52552).

[2] Plaintiff's claim that the actions of a "civil authority . . . prohibited its access to the premises" is, also, meritless. A limitation of use is not the equivalent of a "prohibition of access." Plaintiff could have continued to operate its restaurant under a "limitation." Therefore, an essential element of the civil authorization coverage has not been demonstrated (see Michael Cetta, Inc. v Admiral Indem. Co., 506 F Supp 3d 168 [2020]). Also, plaintiff's contention that the risk of COVID-19 being physically present in neighboring properties "caused" the State authorities to prohibit access to plaintiff's property is without merit, as plaintiff's complaint does not allege that the potential presence of COVID-19 in neighboring properties directly resulted in the closure of plaintiff's property, but, instead, alleges that the "closure" was the direct result of the risk of COVID-19 at plaintiff's property (see 10012 Holdings, Inc. v Sentinel Ins. Co., Ltd., 507 F Supp 3d 482 [2020]).

"As a result of COVID-19 closure orders throughout the country, many businesses have brought lawsuits claiming entitlement to coverage under provisions materially similar to those at issue in Roundabout Theater, Newman Myers, and here. And nearly every court to address this issue has concluded that loss of use of a premises due to a governmental closure order does not trigger business income coverage premised on physical loss to property" (Michael Cetta, Inc. v Admiral Indem. Co., 506 F Supp 3d at 179).

Defendant has conclusively established defenses to plaintiff's claims as a matter of law (see Greenberg v Spitzer, 155 AD3d 27 [2017]; Shofel v DaGrossa, 133 AD3d 649 [2015]). Such evidence undeniably supports movant's claims and utterly refutes plaintiff's factual allegations (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314 [2002]; Arnell Constr. Corp. v New York City Sch. Constr. Auth., 177 AD3d 595 [2d Dept 2019]; US Bank N.A. v Hunte, 176 AD3d 894 [2019]). Plaintiff's opposition, devoid of any case law decided after the appearance of COVID-19 on the world stage, fails to raise an issue of fact in rebuttal.{**72 Misc 3d at 417}

"The general purpose of the declaratory judgment is to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation either as to present or prospective obligations" (James v Alderton Dock Yards, 256 NY 298, 305 [1931]; see 159 MP Corp. v [*6]Redbridge Bedford, LLC, 160 AD3d 176 [2018]). An action for declaratory judgment may be utilized only for a justiciable controversy, i.e., where the court has jurisdiction over the subject matter of the action, and the dispute is genuine, rather than academic, between parties with a stake in the outcome (see Matter of Hargraves v City of Rye Zoning Bd. of Appeals, 162 AD3d 1022 [2018]; DiGiorgio v 1109-1113 Manhattan Ave. Partners, LLC, 102 AD3d 725 [2013]; Chanos v MADAC, LLC, 74 AD3d 1007 [2010]). A declaratory judgment action, brought by the disclaiming insurer, would be the appropriate vehicle to test the insurer's right to disclaim coverage or deny liability (see McDonald v Shore, 100 AD3d 602, 603 [2012]; see Iacobellis v A-1 Tool Rental, Inc., 65 AD3d 1015 [2d Dept 2009]; Monaghan v Meade, 91 AD2d 1014 [1983]). In the case at bar, the movant has demonstrated "the absence of all factual issues so that a determination as to the rights of the parties could be determined as a matter of law" (Guthart v Nassau County, 178 AD3d 777, 778 [2019]).

Plaintiff's remaining contentions and arguments are either without merit or need not be addressed in light of the foregoing determinations.

Accordingly, it is ordered and adjudged that defendant's motion, seeking declaratory relief, pursuant to CPLR 3001, is granted and it is further ordered and adjudged that the defendant, Utica First Insurance Company, has no duty to provide insurance coverage to plaintiff, for its COVID-19 virus related loss as set forth in the summons and complaint herein.