Court Opinion

ID: 6498273
Source: CourtListenerOpinion
Date Created: 2022-07-06 20:00:40.54466+00
Date Added: 2024-06-11T08:50:55.519797
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                                File Name: 22a0266n.06

                                       Case No. 21-4150
                                                                                     FILED
                           UNITED STATES COURT OF APPEALS                       Jul 06, 2022
                                FOR THE SIXTH CIRCUIT                      DEBORAH S. HUNT, Clerk

                                               )
 DANA INCORPORATED,
                                               )
        Plaintiff - Appellant,                 )
                                                       ON APPEAL FROM THE UNITED
                                               )
        v.                                             STATES DISTRICT COURT FOR THE
                                               )
                                                       NORTHERN DISTRICT OF OHIO
                                               )
 ZURICH AMERICAN INSURANCE                     )
 COMPANY,                                      )
                                                                                      OPINION
        Defendant - Appellee.                  )
                                               )

Before: GIBBONS, WHITE, and NALBANDIAN, Circuit Judges.

       JULIA SMITH GIBBONS, Circuit Judge. Zurich American Insurance Company issued

an insurance policy to Dana Incorporated. After suffering financial effects from the COVID-19

pandemic, Dana sought coverage under the policy. Zurich denied coverage and Dana sued. The

district court dismissed Dana’s complaint, finding a policy exclusion applied. We affirm.

                                                   I

       Dana provides power-conveyance and energy-management solutions for vehicles and

machinery. Like many businesses, Dana felt the effects of the COVID-19 pandemic, including

extra expenses and suspended operations. Dana turned to its insurance policy for relief.

       Zurich issued an insurance policy to Dana for the period of January 1, 2020 to January 1,

2021. Dana sought coverage for its losses and expenses related to COVID-19, but Zurich denied
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

coverage. Dana sued Zurich, and Zurich moved to dismiss.1 Per the district court’s direction,

Zurich focused its arguments on two policy exclusions: the contamination exclusion and the

microorganism exclusion.2

        The policy covers Dana’s property against all risks of direct physical loss, except as

excluded under the policy. In a section titled “PROPERTY DAMAGE” the policy identifies what

property is insured. DE 28-1, Policy, Page ID 774–75. In this same section, the policy lists

“EXCLUSIONS,” and it notes: “In addition to the exclusions elsewhere in this Policy, the

following exclusions apply unless otherwise stated.” Id. at 775 (“Exclusions”). Underneath

Exclusions, the policy provides a contamination exclusion:

        This Policy excludes the following unless directly resulting from other physical
        damage not excluded by this Policy:
        1) contamination, and any cost due to contamination including the inability to
           use or occupy property or any cost of making property safe or suitable for use
           or occupancy. If contamination due only to the actual not suspected presence
           of contaminant(s) directly results from other physical damage not excluded by
           this Policy, then only physical damage caused by such contamination may be
           insured. This exclusion . . . does not apply to radioactive contamination which
           is excluded elsewhere in this Policy.

Id. at 779. “Contamination” is defined as:

        any condition of property due to the actual or suspected presence of any foreign
        substance, impurity, pollutant, hazardous material, poison, toxin, pathogen or
        pathogenic organism, bacteria, virus, disease causing or illness causing agent,
        fungus, mold, or mildew.

Id. at 828.

1
  Dana sued in state court and Zurich removed the case to federal court based on diversity
jurisdiction.
2
 We need not discuss the microorganism exclusion because, like the district court, we base our
decision on the contamination exclusion.

                                                -2-
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

       The policy also provides coverage for business interruption expenses under its “TIME

ELEMENT” provision.          Id. at 800–08.       Included in this section is a portion titled

“TIME ELEMENT EXCLUSIONS,” which states, “[i]n addition to the exclusions elsewhere in

this Policy, the following exclusions apply to TIME ELEMENT loss.” Id. at 808–09. It then lists

various exclusions.

       Dana sought coverage for business interruption expenses related to COVID-19 under the

policy’s time element provision. The district court found that the contamination exclusion applied

and dismissed Dana’s complaint. Dana appeals, arguing the district court misinterpreted the policy

and improperly dismissed.

                                                  II

       We review the district court’s interpretation of the insurance policy “de novo and in

accordance with the substantive law of Ohio, since this is a diversity case.” Dakota Girls, LLC

v. Philadelphia Indem. Ins. Co., 17 F.4th 645, 648 (6th Cir. 2021). We also review de novo

whether the district court properly granted Zurich’s motion to dismiss. Id. To survive a motion to

dismiss, the complaint must contain “enough facts to state a claim to relief that is plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

       We review the policy using “normal rules of contract construction,” giving “the terms of

the contract their plain and natural meaning.” St. Marys Foundry, Inc. v. Emps. Ins. of Wausau,

332 F.3d 989, 992 (6th Cir. 2003). We “presume that the intent of the parties is reflected in the

language used in the policy.” Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261 (Ohio 2003).

If “the language of a written contract is clear, a court may look no further than the writing itself to

find the intent of the parties.” Id. “[A] contract is unambiguous if it can be given a definite legal

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No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

meaning.” Id. If a contract is ambiguous, however, “a court may consider extrinsic evidence to

ascertain the parties’ intent.” Id.

        The district court found that the policy was unambiguous and that the contamination

exclusion barred coverage. Dana argues this was error because the contamination exclusion: (1)

does not apply to the time element section; (2) does not apply to the type of loss Dana seeks to

recover; (3) is limited to traditional environmental contamination; and (4) creates a factual dispute.

We take each argument in turn.

                                                  A

        First, Dana contends that the contamination exclusion does not apply to the time element

section of the policy. We disagree.

        Although the contamination exclusion is placed under the property damage section, it is

included in the list of Exclusions that “apply unless otherwise stated.” DE 28-1, Policy, Page ID

775, 779. Based on this plain language, the contamination exclusion applies throughout the policy,

including to the time element section, unless the policy states otherwise. Bolstering this point, the

time element section has specific exclusions that apply “[i]n addition to the exclusions elsewhere

in this Policy.” Id. at 808 (emphases added). Further, there is at least one provision in the time

element section that states certain Exclusions do not apply. See id. at 812–13 (“[With respect to

the SERVICE INTERRUPTION TIME ELEMENT,] [t]he exclusions in the EXCLUSIONS

clause in the PROPERTY DAMAGE section do not apply except for [certain sections].”). This

carve out would be unnecessary if the Exclusions did not automatically apply to the time element

section. Rather, the Exclusions apply “unless otherwise stated.”3 Id. at 775.

3
 Dana’s argument about the significance of placement is not unreasonable given the contamination
exclusion’s location under the property damage section and the policy’s lack of a general
exclusions section. However, the Exclusions listed under the property damage section appear to

                                                -4-
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

       Despite this clear language, Dana contends the contamination exclusion does not apply to

the time element section. In support, it points to other exclusions that discuss time element loss.

Dana contends this shows that “exclusions outside the Time Element section would not

automatically apply to the Time Element coverage” because otherwise, such reference to time

element loss would be unnecessary. CA6 R. 23, Appellant Br., at 11. The sections Dana quotes,

however, are not part of the Exclusions and, therefore, may require explicit reference to time

element loss. The fact that these quoted provisions reference time element loss does not conflict

with the policy’s plain language that the Exclusions are generally applicable.

       Dana notes one of the listed Exclusions, “indirect or remote loss or damage,” is duplicative

of the time element exclusion for remote loss. CA6 R. 23, Appellant Br., at 15–16. But the

exclusions in each section are not identical. Dana also contends the “loss of use” exclusion

conflicts with time element coverage, which insures against the “policyholder’s loss of use of its

property.” CA6 R. 23, Appellant Br., at 16–17. Dana ignores, however, the language of the

Exclusions, which states it applies “unless otherwise stated.” DE 28-1, Policy, Page ID 775. The

inapplicability of some of the Exclusions to the time element section, based on explicit language

in the policy, does not change that the Exclusions apply when there is no language to the contrary.

The plain language of the policy shows that the Exclusions apply to the time element section. See

OTG Mgmt. PHL LLC v. Emps. Ins. Co. Wausau, 557 F. Supp. 3d 556, 564–65 (D.N.J. 2021).

function as a “general exclusions” section, stating “[t]his policy excludes” rather than “this
coverage excludes” or “coverage under this section excludes.” DE 28-1, Policy, Page ID 775, 779.
While the exclusions in the time element section are labeled “TIME ELEMENT EXCLUSIONS”
and state that they apply “to TIME ELEMENT loss” “[i]n addition to the exclusions elsewhere in
this Policy,” id. at 808, the Exclusions in the property damage section are not explicitly limited to
property damage but are simply labeled “EXCLUSIONS” that “apply unless otherwise stated.”
Id. at 775.

                                                -5-
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

                                                  B

       Dana argues that even if the contamination exclusion applies to the time element section,

it does not bar coverage for the types of losses Dana seeks to recover—time element losses—

because the contamination exclusion does not use the word “loss,” but instead refers to costs and

damages.

       The policy insures time element loss “directly resulting from physical loss or damage of

the type insured . . . to property described elsewhere in this Policy and not otherwise excluded by

this Policy.” DE 28-1, Policy, Page ID 800. But contamination is not a “type insured.” See id.

The policy excludes “contamination, and any cost due to contamination” unless the

contamination directly results “from other physical damage not excluded by this Policy.” Id. at

779. Under the policy, contamination is “any condition of property due to the actual or suspected

presence of any . . . pathogen or pathogenic organism, bacteria, virus, [or] disease causing or illness

causing agent.” Id. at 828.

       Looking to the plain language of the policy, the actual or suspected presence of a virus like

COVID-19 on Dana’s property is contamination. The policy excludes coverage of contamination

and any cost from contamination, unless directly resulting from other covered physical damage.

Dana’s claims are exclusively based on damage and loss related to COVID-19, not other physical

damage. Therefore, the contamination of COVID-19 on Dana’s property is excluded. Regardless

whether the contamination exclusion uses the words “loss,” “cost,” or “damage,” Dana cannot

recover for time element loss from this contamination because the policy only covers time element

loss resulting from covered damage. As contamination from COVID-19 is excluded, there is no

coverage for time element loss from this contamination. Numerous courts have found likewise in

interpreting similar provisions. See, e.g., NTT Data Int’l LLC v. Zurich Am. Ins. Co., 2022 WL

                                                 -6-
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

196533, at *7 (N.D. Tex. Jan. 21, 2022) (citing cases); OTG Mgmt. PHL LLC, 557 F. Supp. 3d at

565–66; Cordish Cos., Inc. v. Affiliated FM Ins. Co., --- F. Supp. 3d ----, 2021 WL 5448740, at

*19–20 (D. Md. Nov. 22, 2021); Monarch Casino & Resort, Inc. v. Affiliated FM Ins. Co., 2021

WL 4260785, at *6 (D. Colo. Sept. 17, 2021).4

                                                C

       Dana contends the contamination exclusion does not apply here because the exclusion only

covers traditional environmental contamination, which does not include COVID-19.

Contamination is defined in the policy as:

       any condition of property due to the actual or suspected presence of any foreign
       substance, impurity, pollutant, hazardous material, poison, toxin, pathogen, or
       pathogenic organism, bacteria, virus, disease cause or illness causing agent, fungus,
       mold or mildew.

DE 28-1, Policy, Page ID 828. COVID-19 is a disease caused by a virus.5 Therefore, the actual

or suspected presence of COVID-19 on Dana’s property is contamination as defined by the policy.

       Dana contends contamination is limited to “traditional environmental contamination”

under Andersen v. Highland House Co., 757 N.E.2d 329 (Ohio 2001). CA6 R. 23, Appellant Br.,

at 28–29. In Andersen, the Ohio Supreme Court considered an insurance policy exclusion for

4
  In opposition, Dana cites Thor Equities, LLC v. Factory Mutual Insurance Co., 531 F. Supp. 3d
802 (S.D.N.Y. 2021). The court in Thor held a similar contamination provision was ambiguous
as to whether losses were excluded or only costs. 531 F. Supp. 3d at 808. But Thor did not
consider the interaction between the contamination provision and the language establishing time
element loss coverage. See id. Therefore, the court did not consider the critical question here:
whether there was a covered incident of damage to trigger time element loss coverage. See id.
Further, courts have disagreed with Thor’s interpretation. See OTG Mgmt. PHL LLC, 557 F. Supp.
3d at 565–66; Ralph Lauren Corp. v. Factory Mut. Ins. Co., 2021 WL 1904739, at *4 n.8 (D.N.J.
May 12, 2021).
5
   Ctrs. for Disease Control and Prevention, Basics of COVID-19 (Nov. 4, 2021),
https://www.cdc.gov/coronavirus/2019-ncov/your-health/about-covid-19/basics-covid-19.html.

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No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

bodily injury or property damage from pollutants. 757 N.E.2d at 331. The policy defined

pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor,

soot, fumes, acids, alkalis, chemicals and waste.” Id. at 332. The parties disputed whether carbon

monoxide qualified as a pollutant under the policy. Id. The court explained that under Ohio

caselaw, “if a policy does not plainly exclude a claim from coverage, then an insured may infer

that the claim will be covered.” Id. The court concluded, “the policy in question never clearly

excludes claims for deaths or injuries caused by residential carbon monoxide poisoning.” Id.

Further, the court reasoned that the pollution exclusion was meant to cover traditional

environmental contamination, not “carbon monoxide emitted from a malfunctioning residential

heater.” Id. at 334.

       Expanding Andersen beyond its holding, Dana argues only traditional environmental

contamination is excluded under its contamination exclusion. The contamination exclusion here,

however, is completely different from the pollution exclusion in Andersen. Unlike in Andersen,

the definition of contamination here clearly encompasses the presence of COVID-19 and there is

no indication the exclusion is limited to traditional environmental contaminants.

                                                 D

       Last, Dana argues there is a factual issue on whether the contamination exclusion applies

to viruses. According to Dana, Zurich was required to include in the policy “the state amendatory

endorsements for Louisiana and the other states in which Dana is located.” CA6 R. 23, Appellant

Br., at 31. Dana contends the Louisiana state amendatory endorsement that Zurich was required

to use would have removed “virus” from contamination’s definition. Id. at 31–32. Dana argues

this fact, combined with its allegation in the complaint that the contamination exclusion does not

                                                -8-
No. 21-4150, Dana Inc. v. Zurich Am. Ins. Co.

apply, creates a factual dispute over whether the contamination exclusion includes viruses. Id. at

32–34. We are not persuaded.

       The policy does not contain the Louisiana amendment and Dana’s complaint does not

allege that the policy is incomplete. Therefore, we do not look beyond the language of the policy,

and the policy clearly states contamination from a virus is excluded from coverage. See Galatis,

797 N.E.2d at 1261.

                                                III

       The district court did not err in dismissing Dana’s complaint because the contamination

exclusion bars coverage. We affirm.

                                                -9-