Rockhurst University Et Al. V. Factory Mutual Insurance Company
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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION ROCKHURST UNIVERSITY, and MARYVILLE UNIVERSITY, individually and on behalf of Case No. other similarly situated institutions of higher education, COMPLAINT Plaintiffs, Class Action v. DEMAND FOR JURY TRIAL FACTORY MUTUAL INSURANCE COMPANY, Defendant. CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Plaintiffs Rockhurst University and Maryville University (“Plaintiffs”), individually and on behalf of other similarly situated institutions of higher education, for its Class Action Complaint against Defendant Factory Mutual Insurance Company (“Defendant”), state and allege as follows: NATURE OF ACTION 1. Institutions of higher education have been hit particularly hard by the ongoing COVID-19 pandemic. Since the disease began to spread rapidly across the country in late February and early March 2020, almost every college and university has taken drastic and unprecedented action to protect its students, faculty, staff, and the general public from COVID-19. This was no easy task. Most institutions of higher education are more like small- or medium-sized cities than mere schools. In addition to educating the future of America, they provide housing for hundreds or thousands of students; serve and sell food; operate stores; employ large numbers of teachers, administrators, and other employees; sponsor sports teams; host public events; and perform many other services. 1 Case 4:20-cv-00581-BCW Document 1 Filed 07/23/20 Page 1 of 22 2. On March 6, 2020, the University of Washington became the first major university to cancel in-person classes and exams.1 By the middle of March, others across the country had followed suit and more than 1,100 colleges and universities in all 50 state have canceled in-person classes and shifted to online-only instruction. Due directly to the pandemic, these institutions also: closed dorms and sent students home; shuttered all dining halls; closed administrative buildings; canceled spring sports seasons; canceled graduation ceremonies; closed campus entirely to all but a few essential personnel; and took many other precautions. 3. Although the spring semester has now concluded for virtually all institutions, the effects of the pandemic continue to deprive Plaintiffs of the use of their campuses and property. Large gatherings are still prohibited. Residence halls are still closed. Summer classes are being held online. Events that would normally take place on campus during the summer – like summer camps – have been canceled in their entirety. And it is still unclear whether students will be permitted to return to campus for the fall semester, which looms just around the corner. 4. Apart from the nightmarish logistical challenge, and the serious disruption to their core mission of education, the measures colleges and universities have taken as a result of COVID- 19 have had a devastating financial impact. After closing dorms and dining halls, colleges and universities provided room-and-board reimbursements, often totaling in the millions of dollars. Other substantial costs include lost revenue from on-campus events; lost revenue from summer classes and programs; increased costs to clean and disinfect the campus as a result of COVID-19; and many others. And these losses may continue or worsen if these precautions continue into the fall semester. 1 https://www.ncsl.org/research/education/higher-education-responses-to-coronavirus-covid-19.aspx 2 Case 4:20-cv-00581-BCW Document 1 Filed 07/23/20 Page 2 of 22 5. Plaintiffs Rockhurst University and Maryville University are two such institutions that have suffered substantial financial losses due to COVID-19. 6. Fortunately – or so they thought – Plaintiffs had purchased all-risk commercial property insurance policies from Defendant to protect them in the event of an event such as COVID-19. The Policies provide hundreds of millions of dollars in coverage for a wide variety of losses, including loss of use of property, business interruption, and property damage. The Policies contain specific provisions covering communicable diseases. 7. Plaintiffs promptly made a claim for coverage under the Policy. But Defendant has refused to honor its promise to provide the protection that Plaintiffs purchased. Defendants have not paid any funds to date. Rather, it has indicated that any coverage – if provided – will be limited to the communicable disease provisions in Plaintiffs’ Policies which have a sublimit far lower than Plaintiffs’ expected losses and the overall limits of liability in each Policy. Defendant has further stated that even if the communicable disease coverages apply, they will cover damages far narrower than what the Policies’ language provides. 8. Plaintiffs are not unique. The insurance industry – and this Defendant in particular – appears to be taking a uniform approach to the current pandemic: deny coverage even when the policy they drafted and offered to insureds, and the policy paid for by the insureds, does not contain an exclusion for pandemic- or virus-related losses. Based on other lawsuits and other publicly available information, it appears that Defendant is taking a consistent position with other insureds – including other higher education institutions – across the country. Indeed, in March 2020, Defendant began meeting with representatives of colleges and universities and actively discouraged those representatives from submitting claims for coverage. 3 Case 4:20-cv-00581-BCW Document 1 Filed 07/23/20 Page 3 of 22 9. Defendant’s conduct is particularly galling in light of the huge amount of premiums insurers like Defendant receive annually. According to information published by the Insurance Information Institute, the U.S. insurance industry collected net premiums of $1.22 trillion in 2018. Premiums recorded by property/casualty insurers accounted for 51% of that amount. Between 2014 and 2018, these insurers wrote net premiums each year of between $497 billion to $612.6 billion but only incurred losses of between $277.7 billion and $360.9 billion. 10. This is a class action for declaratory judgment and breach of contract arising from Defendant’s refusal to pay claims related to COVID-19 as required by its property insurance agreements it sold to Plaintiffs and other institutions of higher education. PARTIES 11. Plaintiff Rockhurst University is a Missouri nonprofit corporation, with its principal place of business in Kansas City, Missouri. 12. Plaintiff Rockhurst University is a private Jesuit university in Kansas City, Missouri. Founded in 1901, it now serves over 3,000 students. Its 55-acre campus is located just blocks from Kansas City’s busy Country Club Plaza district and minutes from downtown. 13. As a result of, and in connection with the COVID-19 pandemic and related governmental restrictions on non-essential business, Rockhurst ceased normal operations and effectively closed its campus the week of March 16, 2020. Students did not return to campus from the Rockhurst’s scheduled Spring Break recess. Rockhurst has refunded to students approximately $2.2 million in room, board, and fees, and has suffered, and will continue to suffer other substantial losses and damages. Campus facilities remain closed. 14. Plaintiff Maryville University is a Missouri nonprofit corporation, with its principal place of business in St. Louis, Missouri. 4 Case 4:20-cv-00581-BCW Document 1 Filed 07/23/20 Page 4 of 22 15. Plaintiff Maryville University is a private university located in St. Louis, Missouri. It was founded in 1872 and serves over 10,000 students. 16. Friday, March 6, 2020 was Maryville’s last day of normal campus operations in advance of Spring Break. On March 10, 2020, Maryville announced that beginning on March 16, 2020, the first day classes were to resume after Spring Break, Maryville would be delivering all on-campus class virtually. On March 17-19, 2020, it conducted a move out for residential students and shuttered all dorms. In early April 2020, Maryville issued refunds in excess of $2 million to students for room and board. Campus facilities remain closed. 17. Both Rockhurst and Maryville have had the confirmed presence of COVID-19 on property covered by the Policies. 18. It is more likely than not that by at least early March 2020 other persons infected with COVID-19 were present on Plaintiffs’ campuses and thereby caused the virus to be present throughout Plaintiffs’ insured property and surrounding areas. 19. As a result, Plaintiffs’ insured property was rendered unsuitable for its intended use and was subject to a variety of limitations, restrictions, and prohibits, including by orders of applicable government entities (“Stay at Home Orders”), which are matters of public record. 20. Defendant Factory Mutual Insurance Company, is a Rhode Island corporation, with its principal place of business in Johnston, Rhode Island. JURISDICTION AND VENUE 21. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332(d)(2) because this is a class action in which at least one member of the class is a citizen of a state different from Defendant, the amount in controversy exceeds $5 million exclusive of interest and costs, and the proposed class contains more than 100 members. 5 Case 4:20-cv-00581-BCW Document 1 Filed 07/23/20 Page 5 of 22 22. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because a substantial portion of the events giving rise to Plaintiffs’ causes of action occurred in this judicial district and division. The Policies at issue covers Plaintiffs’ facilities located in the State of Missouri, and Plaintiffs purchased the Policies from an insurance broker located in the State of Missouri. FACTUAL BACKGROUND 23. The novel coronavirus – named “severe acute respiratory syndrome coronavirus 2” or “SARS-CoV2” – has spread widely and rapidly across the United States. The illness related to SARS-CoV-2 is “novel coronavirus disease 2019,” commonly abbreviated to “COVID-19.” Although the virus and related illness are distinct, for purposes of this Complaint, Plaintiffs refer to both interchangeably as “COVID-19.” 24.