Overview

HOLDINGS: [1]-An insured did not allege facts plausibly supporting an inference that it was entitled to coverage because absent either direct physical loss of or damage to the property, it could not show that coverage applied; [2]-Even if the insured was able to show that it suffered such loss or damage, coverage would be precluded under the virus exemption provision because all alleged loss or damage was both caused by and resulted from the novel coronavirus; [3]-The insured’s cause of action seeking declaratory relief failed because it did not provide a cognizable legal theory or set of facts about the policy that would allow the district court to provide declaratory relief; [4]-The breach of contract action failed because the insurer did not withhold benefits due. No conditions triggered coverage, and even if they had, coverage would have been excluded under the virus provision. The California litigation attorney made a motion to protect the party’s interest.

Table of Contents

Outcome

Motion to dismiss granted.

Procedural Posture

Plaintiff debtor filed a motion for leave to file a second amended adversary complaint against defendant creditor asserting fraud-oriented claims arising from the mortgage encumbering her real property. The creditor moved to dismiss the first amended complaint pursuant to Fed. R. Civ. P. 12(b)(6), based on the doctrine of res judicata.

The complaint sought relief for fraud and misrepresentation, fraudulent transfer, and quiet title. The claim for fraud and misrepresentation alleged that the creditor engaged in actions intended to induce the debtor to convey title to the property to the creditor. The creditor’s motion to dismiss asserted that the claims were barred by res judicata, because the same claims were, or could have been, litigated in a prior district court action that had been dismissed with prejudice. The court agreed that each of these elements of claim preclusion was satisfied. It was of no consequence that the debtor might be asserting new theories of recovery in the proceeding herein, as all were based on the same transactional nucleus of facts. Therefore, the doctrine of claim preclusion barred their being reasserted in the instant court.