Prime Hospitality, Inc. v. Acadia Insurance Company

STATE OF MAINE BUSINESS AND CONSUMER COURT
CUMBERLAND, ss. CIVIL ACTION
DOCKET NO. BCD-CIV-2022-00023

PRIME HOSPITALITY, INC., d/b/a )
PRIME 25, )
)
Plaintiff, )
)
)
v. ) ORDER ON MOTION TO
) DISMISS BY DEFENDANT
) ACADIA INSURANCE
ACADIA INSURANCE COMPANY, ) COMPANY
)
Defendant. )

INTRODUCTION

This case is about the scope of coverage provided by a commercial property policy of

insurance. Plaintiff Prime Hospitality, Inc., d/b/a Prime 25 (“Prime”) seeks declarations by this

Court that it is entitled to coverage under the policy of insurance issued by Defendant Acadia

Insurance Company (“Acadia”) for alleged business interruption losses sustained as a result of

direct physical loss of or damage to Prime’s commercial property caused by the COVID-19

pandemic and associated executive orders. Pursuant to Rule 12(b)(6) of the Maine Rules of Civil

Procedure, Acadia moves to dismiss Prime’s Complaint. For the reasons discussed below,

Acadia’s motion is granted in part and denied in part.

FACTUAL ALLEGATIONS

Prime is a Colorado limited liability company with its place of business in Colorado

Springs, Colorado. (Pl.’s Compl. ¶ 1.) Prime’s business includes operation of a restaurant located

at 1605 South Tejon Street in Colorado Springs. (Pl.’s Compl. Introduction; Ex. A 39.) Acadia is

an Iowa corporation with its principal place of business in Westbrook, Maine, that provides

1
insurance products and services throughout the United States, including in Colorado. (Pl.’s Compl.

¶ 2.) On or about December 27, 2019, Prime purchased business interruption insurance, the

Commercial Lines Policy of insurance No. 3156450-23 (the “Policy”), from Acadia. (Pl.’s Compl.

¶ A3; Ex. A 10.) The Policy insured the premises of Prime’s restaurant-business, identified as the

“Covered Property,” for covered risks during the period beginning December 27, 2019 through

December 27, 2020. (Ex. A 10, 39.)

I. The Policy.

The Policy’s Commercial Property Coverage Part provided all-risk building coverage,

which was limited to $1,868,100. (Ex. A 39.) This coverage insured Prime for “direct physical

loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of

Loss.” (Ex. A 94.) According to the Policy, “Covered Cause of Loss” means “direct physical loss

unless the loss is excluded or limited in the policy.” (Ex. A 124.)

The Policy also includes a “Business Income (And Extra Expense) Coverage Form” (the

“Business Income Form”). (Pl.’s Compl. ¶ A10; Ex. A 110.) The Business Income Form provided

coverage for lost business income:

We will pay for the actual loss of Business Income you sustain due to the necessary
“suspension” of your “operations” during the “period of restoration”. The
“suspension” must be caused by direct physical loss of or damage to property . . .
The loss or damage must be caused by or result from a Covered Cause of Loss.

(Ex. A 110.) It also provided “Extra Expense” coverage for “necessary expenses” incurred by

Prime “during the ‘period of restoration’” that Prime “would not have incurred if there had been

no direct physical loss or damage to property caused by or resulting from a Covered Cause of

Loss.” (Pl.’s Compl. ¶ A10; Ex. A 110.)

The Policy defines “operations” to mean “business activities occurring at the” Covered

Property. (Ex. A 118.) “Suspension” is defined as “[t]he slowdown or cessation of [the insured’s]

2
business activities.” (Ex. A 118.) The “period of restoration” means the period of time that begins

“72 hours after the time of direct physical loss or damage for Business Income Coverage,” or

“immediately after the time of direct physical loss or damage for Extra Expense Coverage,” that

was caused by or resulted from any Covered Cause of Loss at the Covered Property. (Ex. A 118.)

This period ends on the earlier of “the date when the property . . . should be repaired, rebuilt or

replaced with reasonable speed and similar quality” or “the date when business is resumed at a

new permanent location.” (Ex. A 118.) The “period of restoration” does not include “any

increased period required due to the enforcement of or compliance with any ordinance or law that

. . . regulates the construction, use or repair . . . of any property” or “[r]equires any insured or

others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way

respond to, or assess the effects of “pollutants.” (Ex. A 118.) A “pollutant” is defined as “any

solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes,

acids, alkalis, chemicals and waste.” (Ex. A 118.)

The Policy also provided “Additional Coverages,” including coverage for business

interruption caused by the exercise of “Civil Authority.” (Pl.’s Compl. ¶ A10; Ex. A 111.) This

coverage applied when “a Covered Cause of Loss causes damage to property other than [the

Covered Property]” and insured against “actual loss of Business Income sustain[ed] and necessary

Extra Expenses caused by action of civil authority that prohibits access to” the Covered Property.

(Ex. A 111.) The coverage is triggered only when “[a]ccess to the area immediately surrounding

the damaged property is prohibited by civil authority as a result of the damage, and the [Covered

Property is] within that area but [is] not more than one mile from the damaged property,” and the

action of the civil authority “is taken in response to a dangerous physical condition resulting from

the damage or continuation of the Covered Cause of Loss that caused the damage.” (Ex. A 111.)

3
The Additional Coverages within the Commercial Property Coverage Part are modified by

a “Premier Choice Property Enhancement” (“Enhancement”). (Ex. A 49.) The Enhancement adds

coverage for “Expediting Expenses” incurred by Prime “as a result of direct physical loss or

damage to Covered Property.” (Ex. A 51.) “Expediting Expenses” are “reasonable extra costs for

temporary repairs of and for expediting the repairs or replacement of Covered Property damaged

by a Covered Cause of Loss.” (Ex. A 51.)

In addition to its coverages, the Policy also lists numerous exclusions to coverage under

the Commercial Property Coverage Part. (Ex. A 124-29.) According to the Policy, Acadia is not

liable to pay “for loss or damage caused directly or indirectly” by an excluded cause of loss, and

such loss or damage “is excluded [from coverage] regardless of any other cause or event that

contributes concurrently or in any sequence to the loss.” (Ex. A 124.)

The “Ordinance or Law” exclusion excludes from coverage loss or damage resulting from

“the enforcement of or compliance with any ordinance or law” that regulates “the . . . use or repair

of any property.” (Ex. A 124.) This exclusion applies to a loss that results from either an ordinance

or law “that is enforced even if the [Covered Property] has not been damaged” or when increased

costs of compliance are incurred by the insured in the course of “construction, repair, renovation,

remodelling or demolition of [the Covered Property] . . . following a physical loss” to it.” (Ex. A

124.)

The Enhancement adds “Ordinance or Law” coverage that is not subject to the “Ordinance

or Law” exclusion. (Ex. A 53, 63.) Nevertheless, that additional coverage is triggered only when

the ordinance or law in question “requires compliance as a condition precedent to obtaining a

building permit or certificate of occupancy.” (Ex. A 53.) Further, the Enhancement clarifies that

Acadia will not pay for “[t]he enforcement of or compliance with any ordinance or law which

4
requires . . . remediation of property due to contamination by ‘pollutants,’” or for “[a]ny costs

associated with the enforcement of or compliance with any ordinance or law which requires any

insured . . . to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any

way respond to, or assess the effects of ‘pollutants.’” (Ex. A 53-54.)

Similar to the “Ordinance or Law” exclusion, the Policy also excludes from coverage “loss

or damage caused by or resulting from . . . Acts or decisions . . . of any person, group, organization

or government body.” (Ex. A 127.) However, notwithstanding this exclusion, coverage extends

to loss or damage caused by a Covered Cause of Loss (again, “direct physical loss” within the

meaning of the Policy) that results from the excluded risk for “Acts or Decisions.” (Ex. A 127.)

Another exclusion contained within the Policy excludes from coverage “loss or damage caused by

or resulting from . . . Delay, loss of use or loss of market.” (Ex. A 126.)

Finally, the Policy provides “Special Exclusions” applicable only to the Business Income

Form. (Ex. A 128.) Among these Special Exclusions, the Policy excludes from coverage any

“consequential loss” not enumerated within the Policy. (Ex. A 128.)

II. The COVID-19 Pandemic and Regulation by the State of Colorado.

The novel coronavirus, SARS-CoV-2, that causes COVID-19, was first identified by

investigators during December 2019. (Ex. B 1.) COVID-19 is a “severe infectious disease” that

can lead to illness and death. (Pl.’s Compl. ¶ B16.) It is highly contagious and uniquely resilient,

capable of remaining infectious beyond periods generally considered possible; it can survive on a

variety of common surfaces for up to twenty-eight days at room temperature. (Pl.’s Compl. ¶¶

B20-B21.) According to the World Health Organization (“WHO”):

The disease spreads primarily from person to person through small droplets from
the nose or mouth, which are expelled when a person with COVID-19 coughs,
sneezes, or speaks. People can catch COVID-19 if they breathe in these droplets
from a person infected with the virus. These droplets can land on objects and

5
surfaces around the person such as tables, doorknobs and handrails. People can
become infected by touching these objects or surfaces, then touching their eyes,
nose or mouth.

(Pl.’s Compl. ¶ B24.) This means that the coronavirus is spread among people through respiratory,

airborne and surface transmission. (Pl.’s Compl. ¶¶ C33-C34, C38; Ex. B 1.)

A physical object or material that carries and is capable of transmitting infectious agents

like the coronavirus, and that is thusly altered to become a vector of disease, is known as a

“fomite.” (Pl.’s Compl. ¶ C38.) The presence of the coronavirus can transform everyday surfaces

and objects into fomites. (Pl.’s Compl. ¶ C42.) Because contraction of COVID-19 is dangerous

and potentially fatal, the coronavirus’s presence in and on property, including in indoor air, on

surfaces and objects, renders the property lost, unsafe and unfit for its normal use. (Pl.’s Compl.

¶¶ C45-C46.) To abate the spread of the coronavirus and COVID-19, consumer-facing businesses

like restaurants observe social-distancing, encourage or require masking for employees and

customers, and routinely clean surfaces to disinfect them. (Pl.’s Compl. ¶¶ F81-F83.)

To slow the spread of COVID-19, beginning in March 2020 executive officials throughout

the United States issued civil orders and advisements recognizing the emergent “disaster

emergency” threatening public health. (Pl.’s Compl. ¶ E64.) Among them, Governor Jared Polis

of the State of Colorado issued an executive order recognizing a disaster emergency in Colorado

caused by the spread of COVID-19. (Pl.’s Compl. ¶¶ E71, E73; Ex. B 1.) That order was followed

by a “Stay At Home Order” issued by Governor Polis on March 25, 2020. (Pl.’s Compl. ¶ E74;

Ex. C 1.) The “Stay At Home Order” directed any non-“Critical Business” to close temporarily,

except as necessary to engage in minimum basic operations needed to protect assets or maintain

personnel functions. (Ex. C 2.)

During this time, the Colorado Department of Public Health and Environment (the

“CDPHE”) issued Public Health Order 20-22. (Ex. I.) This Order instructed all restaurants in the

6
State of Colorado to close temporarily to slow the spread of COVID-19. (Ex. I ¶ 6.) The Order

categorically grouped restaurants with other public accommodations that offer food or beverage

for on-premises consumption. (Ex. I § II(A).) Such places were “encouraged to offer food and

beverage using delivery service, window service, walk-up service, drive-through service, or drive-

up service.” (Ex. I § II(A).) They were prohibited from offering or permitting consumption of

food and beverage onsite. (Ex. I § II(A).) Places of public accommodation like restaurants are

not “Critical Businesses” according to CDPHE. (Ex. H § III(C).)

The Governor’s initial Stay At Home Order, applicable to all Coloradans, was extended

during the beginning of April 2020. (Ex. D.) On April 26, 2020, Governor Polis issued the “Safer

At Home Order,” ordering CDPHE to issue a new public health order lifting the Stay At Home

Order. (Ex. E 3.) Governor Polis indicated that, beginning May 1, 2020, customers would be

permitted to return to public accommodations’ business premises in a manner allowing for

compliance with social distancing requirements. (Ex. E 4.) By May 4, 2020, “Non-Critical

Commercial Businesses” were permitted to allow up to fifty percent of their employees to return

to the business’s premises to conduct in-person work. (Ex. E 4.)

Governor Polis extended Colorado’s state of disaster emergency by executive order on

May 22, 2020. (Pl.’s Compl. ¶ E76; Ex. F 2.) The Safer At Home Order was extended on June 1,

2020, and it persisted through Summer 2020. (Pl.’s Compl. ¶ E77; Ex. G 1-2.)

III. Presence of COVID-19 at the Covered Property.

Employees, customers, and other business visitors who were infected with, carrying, or

exposed to persons infected with COVID-19 were physically present at the Covered Property on

various dates during 2020 and 2021. (Pl.’s Compl. ¶¶ F86-F91.) Those individuals caused

COVID-19 to proliferate through aerosols and droplets they spread throughout the Covered

7
Property. (Pl.’s Compl. ¶¶ F86, F92.) Those aerosols and droplets lingered in the air and came

into contact with and adhered to the surfaces of Prime’s real property and personal property. (Pl.’s

Compl. ¶¶ F89, F92.) This imbued real and personal property located at the Covered Property

with a capacity to transmit COVID-19 to others, and it rendered the Covered Property dangerous

and unusable. (Pl.’s Compl. ¶¶ F86-F93.)

The presence of COVID-19 in the air and on surfaces caused the Covered Property to

become “altered, damaged, and [] unsafe.” (Pl.’s Compl. ¶ F95.) This necessitated repairs and

remediation. (Pl.’s Compl. ¶¶ F95-F97.) To cleanse the air at the Covered Property and prevent

further contamination of real and personal property kept there, Prime took remedial measures

including, but not limited to, installation of new air filters. (Pl.’s Compl. ¶ F96.) Prime undertook

these measures so that it could continue its business and avoid further property damage. (Pl.’s

Compl. ¶ F97.)

Due to the coronavirus’s physical presence within Prime’s community, the Covered

Property is subject to constant recontamination notwithstanding Prime’s efforts to practice social

distancing and face-covering, and to perform routine disinfectant cleaning. (Pl.’s Compl. ¶¶ F83,

F97.) The physical presence of COVID-19 forced Prime to substantially reduce or shut down its

business, causing it to operate below its ordinary level of operation and incur reduced income.

(Pl.’s Compl. ¶ F84.) This constituted a “loss of functionality” of the Covered Property. (Pl.’s

Compl. ¶ F89.) Furthermore, Prime’s restaurant located at the Covered Property was forced to

suspend its operations temporarily as a result of the closure orders issued by Governor Polis for

the State of Colorado. (Pl.’s Compl. ¶ F99.)

Due to the presence of COVID-19 at the Covered Property and the aforementioned closure

orders, Prime lost business income and incurred extra expenses. (Pl.’s Compl. ¶ F100.)

8
Accordingly, it submitted a claim for loss to Acadia under the Policy. (Pl.’s Compl. ¶ F101.)

Acadia denied Prime’s claim, (Pl.’s Compl. ¶ F101), and Prime responded by filing its complaint.

LEGAL STANDARD

The parties agree that the substantive law of the State of Colorado should govern Prime’s

claims. (Mot. Dismiss 6; Pl.’s Opp’n to Def.’s Mot. Dismiss n.1.) Otherwise, this Court applies

the rules of procedure provided by the Maine Supreme Judicial Court, as interpreted by the Law

Court.

I. Standard of Review.

A motion to dismiss under Rule 12(b)(6) “tests the legal sufficiency of the complaint and

does not probe the merits of the underlying case.” Carey v. Bd. of Overseers of the Bar, 2018 ME

119, ¶ 19, 192 A.3d 589 (internal quotation marks omitted). To survive a motion to dismiss for

failure to state a claim, the complaint “must allege facts with sufficient particularity so that, if true,

they give rise to a cause of action; merely reciting the elements of a claim is not enough.” Meridian

Med. Sys., LLC v. Epix Therapeutics, Inc., 2021 ME 24, ¶ 2, 250 A.3d 122 (citation omitted). This

standard requires only that the complainant “give fair notice of the cause of action by providing a

short and plain statement of the claim” showing their entitlement to relief. Id. ¶ 3 (citation omitted).

In reviewing a motion to dismiss, courts must “consider the facts in the complaint as if they

were admitted.” Bonney v. Stephens Mem. Hosp., 2011 ME 46, ¶ 16, 17 A.3d 123. The complaint

is viewed “in the light most favorable to the plaintiff to determine whether it sets forth elements

of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal

theory.” Id. (quoting Saunders v. Tisher, 2006 ME 94, ¶ 8, 902 A.2d 830). Thus, “a complaint is

sufficient unless it appears to a certainty the plaintiff is entitled to no relief under any set of facts

[it] might prove in support of [its] claim.” Richards v. Soucy, 610 A.2d 268, 270 (Me. 1992).

9
Generally, a court may consider only the pleadings on a motion to dismiss. Est. of Robbins

v. Chebeague & Cumberland Land Tr., 2017 ME 17, ¶ 2 n.2, 154 A.3d 1185 (citing Moody v. State

Liquor & Lottery Comm’n, 2004 ME 20, ¶¶ 8-9, 843 A.2d 43). However, official public

documents, documents central to the plaintiff’s complaint, and documents referred to therein may

also be considered in a ruling on a motion to dismiss “without converting [the] motion . . . into a

motion for summary judgment when the authenticity of such documents is not challenged.” Id.

(citing Moody, 2004 ME 20, ¶ 10, 843 A.2d 43).

II. Construction and Interpretation of Policies of Insurance.

The interpretation of an insurance policy is a matter of law. Allstate Ins. Co. v. Huizar, 52

P.3d 816, 819 (Colo. 2002). As contracts, insurance policies should be interpreted consistently

with well-settled principles of contractual interpretation. Id. (citing Chacon v. Am. Family Mut.

Ins. Co., 788 P.2d 748, 750 (Colo. 1990)). This means that courts must construe terms of a policy

to promote the intent of the parties. Cary v. United of Omaha Life Ins. Co., 108 P.3d 288, 290

(Colo. 2005). This also means that words of the contract should be given their plain meaning

according to common usage, and that strained constructions should be avoided. Huizar, 52 P.3d

at 819 (citation omitted).

“A mere disagreement between the parties concerning interpretation of the policy does not

create an ambiguity.” Cary, 108 P.3d at 290. Thus, to determine whether a policy contains an

ambiguity, courts must evaluate the policy as a whole. Id. An insurance policy, or a provision

contained therein, is ambiguous when it is reasonably susceptible to more than one meaning. State

Farm Mut. Aut. Ins. Co. v. Stein, 924 P.2d 1154, 1158 (Colo. App. 1996). Courts will not force

an ambiguity in order to resolve a claim against the insurer. Martinez v. Hawkeye-Security Ins.

Co., 576 P.2d 1017, 1019 (Colo. 1978) (citation omitted). If the policy’s provisions are clear and

10
unambiguous, courts should not rewrite them and instead must give effect to their plain and

ordinary meaning. Emenyonu v. State Farm Fire and Cas. Co., 885 P.2d 320, 323 (Colo. App.

1994). However, ambiguous or inconsistent language in an insurance policy must be construed

against the insurer in favor of coverage. Dupre v. Allstate Ins. Co., 62 P.3d 1024, 1027-28 (Colo.

App. 2002).

DISCUSSION

As a result of the presence and prevalence of COVID-19 and the corresponding closure

and stay at home orders issued by the State of Colorado, Prime claims it suffered direct physical

loss and damage to the Covered Property and that it experienced lost or limited functionality

thereof. (Pl.’s Compl. ¶ F80.) In its Complaint, Prime seeks 1) declaratory relief (Count I), along

with damages for breach of contract related to Acadia’s denial of coverage for alleged 2) property

loss and damage (Count II), 3) business interruption (Count III), as well as 4) Acadia’s denial of

additional coverages from the Policy’s “Extensions” and “Extensions of Time Element Coverage”

(Count IV), and for 5) Acadia’s purported violation of the Maine Insurance Code at 24-A M.R.S.A.

§ 2436-A, 1 which provides a cause of action for unfair claims settlement practices by insurance

companies (Count V).

In response, Acadia seeks dismissal of Prime’s complaint. Acadia asserts that 1) the

Policy’s Building, Business Income, and Extra Expenses coverages apply only where there is a

“direct physical loss of or damage to” the insured property, but not where there is only purely

economic loss; 2) Prime cannot establish the elements required to trigger Civil Authority coverage,

namely “damage to nearby property, and an action of civil authority that ‘prohibits access’ to the

1
Prime’s Complaint refers to “24-A M.R.S. § 2136,” (Pl.’s Compl. Count IV ¶¶ 144-155), but there is no such
statute. The Court assumes Prime intends to make its claim, in part, under 24-A M.R.S.A. § 2436-A “Unfair claims
settlement practices.” 24-A M.R.S.A. § 2436-A (2015).

11
insured property”; and 3) the Policy’s exclusions bar coverage for Prime’s loss of use claims.

(Mot. Dismiss 2.)

I. Prime adequately alleges “direct physical loss or damage” within the meaning of
the Policy.

Under the Policy, the Building, Business Income and Extra Expenses, and Civil Authority

coverages apply only when there is “direct physical loss or damage” to the Covered Property. (Ex.

A. 110, 124.) The Policy does not define the phrase “direct physical loss,” and the parties dispute

its meaning and consequently the validity of Prime’s claims. Nevertheless, Acadia argues

strenuously that a majority of courts nationwide have rejected similar claims, and this Court should

follow the majority approach. The problem with Acadia’s argument based on the weight of

authority, however, is that Colorado’s leading case, Western Fire Ins. Co. v. First Presbyterian

Church, 437 P.2d 52 (Colo. 1968), appears to leave the door ajar for this claim to slip in past the

Motion to Dismiss. Recognizing the challenge presented by Western Fire, Acadia argues this

Court should narrowly interpret Western Fire and Colorado law as does the U.S. District Court in

Tom’s Urban Master LLC v. Fed. Ins. Co., 2022 U.S. Dist. LEXIS 60293 (D. Colo. Mar. 31, 2022).

However, the Court finds the broader reading of Western Fire and Colorado law presented by the

court in Spectrum Ret. Comtys., LLC, et al. v. Cont’l Cas. Co., No. 2021-CV-30695, slip op. at 7-

10 (Colo. Dist. Ct. July 13, 2022) to be more faithful to Colorado’s motion to dismiss standard

and, overall, substantially persuasive in its approach.

As explained at length by the Spectrum court, under Colorado law “direct physical loss or

damage” to property occurs when the loss of use is the consequence of an occurrence affecting the

property that renders it “uninhabitable” and makes further use of it “unduly dangerous.” Spectrum,

slip op. at 7, 9 (Colo. Dist. Ct. July 18, 2022) (collecting cases); see Western Fire Ins. Co., 437

P.2d at 55. Finding “direct physical loss or damage” as that term is used in an all-risk commercial

12
property insurance policy “does not require evidence of ‘tangible injury’ or ‘physical alteration’

of property.” Spectrum, slip op. at 9 (Colo. Dist. Ct. July 18, 2022) (citing Western Fire Ins. Co.,

437 P.2d at 56). Accordingly, at this stage of the litigation it is enough that Prime alleges 1) the

coronavirus was actually present on or attached to surfaces on the Covered Property, and 2) its

presence caused the Covered Property to become uninhabitable, unusable, inaccessible, or unduly

dangerous to use. See id. Likewise, Prime adequately pleads a direct connection between the

alleged “direct physical loss or damage” it endured, local government COVID-19 shutdown

orders, and the resulting limited use of the Covered Property. See id. at 13. Accordingly, Acadia’s

motion is DENIED with respect to Counts I-IV of Prime’s Complaint.

II. Prime does not adequately plead a violation of Maine Insurance Code 24-A
M.R.S.A. § 2436 or any claim for bad-faith settlement by Acadia.

After citing the Maine Insurance Code, 24-A M.R.S.A. § 2436-A as one basis for its cause

of action, Prime subsequently agreed with Acadia that this case should be governed by the

substantive law of the State of Colorado. Thus, the Maine statute governing unfair claim

settlement practices does not apply. Moreover, Prime makes no claim under the State of

Colorado’s analogue to Maine’s § 2436-A, located at Colo. Rev. Stat. § 10-3-1115 (2017).

Dismissal is warranted as to Count V for this reason.

Even if § 2436-A were applicable, a civil cause of action accrues under § 2436-A(E) when

the insurer “[w]ithout just cause, fail[s] to effectuate prompt, fair and equitable settlement of claims

submitted in which liability has become reasonably clear.” 24-A M.R.S.A. § 2436-A(1)(E) (2015).

The insurer acts “without just cause” when “it refuses to settle claims without a reasonable basis.”

Id. § 2436-A(2). In its response in opposition to Acadia’s Motion to Dismiss, Prime argues that a

“plain reading” of the Policy’s definitions of “damage” and “property damage” “at the very least

[] creates an ambiguity.” (Pl.’s Opp’n to Def.’s Mot. Dismiss 2.) By qualifying the Policy’s

13
language as ambiguous, Prime implicitly concedes Acadia's interpretations of "damage" and

"property damage" were within the universe of interpretations to which those terms are reasonably

susceptible, and that its denial of coverage therefore rested on a reasonable basis within the

meaning of the statute. See Sch. Union No. 37 v. United Nat'l Ins. Co., 617 F.3d 554, 564 (1st Cir.

2010) (holding insurer had a reasonable basis to deny coverage when Maine law regarding the

interpretation of the term "damages" was uncertain, thereby providing the insurer with legitimate

and reasonable doubts as to the scope of its liability). Thus, Acadia's motion is GRANTED as

regards Count V of Prime's Complaint.

CONCLUSION

Prime adequately pleads entitlement to the Policy's business interruption and civil

authority coverages. However, Prime failed to sufficiently allege its bad faith claim. Accordingly,

Acadia's Motion to Dismiss is DENIED as to Counts I-IV of the Complaint, but the Motion to

Dismiss is GRANTED as to Count V.

The Clerk is instructed to enter this Order on the docket for this case by incorporating it by

reference. M.R. Civ. P. 79(a).

So Ordered.

11/02/2022
Dated:
Michael A. Duddy, Judge
Business and Consumer Court

Entered on the docket: 11/02/2022

14
BCD-CIV-2022-00023

PRIME HOSPITALITY, LLC.

Plaintiff(s)

v.

ACADIA INSURANCE COMPANY

Defendant(s)

Party Name: Attorney Name:

Plaintiff:

Prime Hospitality Michael Earner, Esq.
Earner & Weaver, PLLC
10 Woodbridge Road, unit 731
York, ME 03909

Defendant:

Acadia Insurance Co. James Bowie, Esq
Thompson Bowie & Hatch, LLC
Po Box 4630
415 Congress St 5th Floor
Portland, Me 04112