5.11 ABR, Corp., d/b/a 5.11 Tactical v. Affiliated FM Insurance Company; Washington Football, Inc.; Pro-Football, Inc.; and WFI Stadium, Inc. v. Affiliated Factory Mutual Insurance Company

STATE OF RHODE ISLAND

PROVIDENCE, SC. SUPERIOR COURT

(FILED: June 4, 2025)

5.11 ABR, CORP., d/b/a 5.11 :

TACTICAL, :

:

Plaintiff, :

:

v. : C.A. No. PC-2022-00966

:

AFFILIATED FM INSURANCE :

COMPANY, :

:

Defendant. :

WASHINGTON FOOTBALL, INC.; :

PRO-FOOTBALL, INC.; and WFI :

STADIUM, INC., :

:

Plaintiffs, :

:

v. : C.A. No. PC-2022-05230

:

AFFILIATED FACTORY MUTUAL :

INSURANCE COMPANY, :

:

Defendant. :

DECISION

STERN, J. Before the Court is Defendant, Affiliated FM Insurance Company's (Affiliated FM), Application for Order to Show Cause filed against Plaintiff, 5.11 ABR, Corp., d/b/a 5.11 Tactical (5.11 ABR) in C.A. No. PC-2022-00966. (Def.'s Appl. for Order to Show Cause, (Def.'s Appl. for Order to Show Cause re 5.11 ABR) 1.) Also before the Court is Affiliated FM's Application for Order to Show Cause filed against Plaintiffs, Washington Football, Inc.; Pro-Football, Inc.; and WFI Stadium, Inc. (collectively, the Washington Insureds) in C.A. No. PC-2022-05230.

1

2

(Def.'s Appl. for Order to Show Cause, (Def.'s Appl. for Order to Show Cause re the Washington Insureds) 1.)

I

Factual and Procedural Background

On February 18, 2022, 5.11 ABR filed a Complaint in this Court against Affiliated FM. See 5.11 ABR's Compl. The Complaint filed by 5.11 ABR alleges a sole count for Breach of Contract related to Affiliated FM's alleged "unjustifiabl[e] refus[al] to pay for 5.11 [ABR]'s loss in breach" of the parties' all-risks commercial property insurance policies "for losses [5.11 ABR] suffered due to physical loss and damage to property in 2020 and 2021 resulting from the COVID-19 pandemic and related risks[.]" Id. ¶¶ 1, 111.

On August 31, 2022, the Washington Insureds filed a similar Complaint in this Court against Affiliated FM. See the Washington Insureds' Compl. The Washington Insureds' Complaint alleges a cause of action for Breach of Contract and a cause of action for Declaratory Relief. Id. ¶¶ 230-245. The count for Breach of Contract stems from the Washington Insureds' allegation that "COVID-19 . . . has caused and continues to cause physical loss and/or damage to the Washington Insureds' properties and to properties within any required vicinity of the Washington Insureds' insured locations." Id. ¶ 234. The Complaint alleges that the Washington Insureds have suffered "actual losses and incurred extra expense due to physical loss and damage caused by the COVID-19 virus, a risk not excluded by the All Risks Policies [the Washington Insureds purchased from Affiliated FM]." Id. ¶ 235. Further, the Complaint alleges that Affiliated FM is contractually obligated under the All Risks Policies "to indemnify the Washington Insureds for the full amount of their losses." Id. ¶ 237. According to the Washington

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Insureds, "Affiliated FM refused to indemnify the Washington Insureds for their losses and expenses in breach of their All Risks Policies." Id. ¶ 238.

The Policies purchased by 5.11 ABR and the Washington Insureds from Affiliated FM include a Contamination Exclusion provision that excludes

"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."

(The Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause 3-4; 5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 3.)

The Policies define "contamination" 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." (The Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause 4; 5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 3.) On March 29, 2022, this Court filed its Decision in Josephson, LLC d/b/a The Moinian Group v. Affiliated FM Insurance Co., No. PC-2021-03708, 2022 WL 999134 (R.I. Super. Mar. 29, 2022). The plaintiff in Josephson (Moinian)—similar to 5.11 ABR, the Washington Insureds, and the other twenty-nine similarly-situated plaintiffs who had brought suit against Affiliated FM in Rhode Island—brought suit against Affiliated FM seeking coverage for business-interruption losses related to COVID-19. See the Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause 5. In Josephson, the Court was faced with cross-motions for partial summary judgment filed by both Moinian and Affiliated FM. Josephson, 2022 WL 999134, at *3. To this Court, Moinian argued that partial summary judgment was warranted in its favor because:

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"(1) the presence of SARS-CoV-2 on, at, or in Moinian's covered property causes 'physical loss or damage' within the meaning of the Policy; (2) the Contamination Exclusion applies, if at all, only to any 'costs' incurred by Moinian to remediate damaged property and not to any business interruption 'losses' incurred by Moinian; and (3) the Loss of Market or Loss of Use exclusion does not bar Moinian's claim to coverage." Id.

Affiliated FM's motion for partial summary judgment in Josephson argued to this Court that summary judgment was warranted in its favor because:

"(1) Moinian's affidavits which claim that employees, tenants, or guests were present at insured properties while positive for COVID-19 or had COVID-19 symptoms does not establish 'physical loss or damage' as required by the Policy; and (2) even if Moinian could show 'physical loss or damage,' the Policy's Contamination, Loss of Use, and Ordinance and Law exclusions all apply, save the Policy's Communicable Disease coverages." Id. In its Decision, this Court wrote that:

"Moinian is not seeking a judicial ruling from this Court that COVID-19 was present at each of its insured locations or that Moinian has established monetary damages resulting from that circumstance or from the issuance of orders of civil authority prohibiting access to Moinian's properties. . . . Rather, the primary issue presently before this Court is whether the Policy's terms provide coverage for losses allegedly arising from the presence of COVID-19 on Moinian's insured properties. . . . To resolve this issue, however, the Court must address an important threshold question: does the presence of COVID-19 at insured locations constitute 'physical loss or damage' under the Policy and as a matter of law?" Id. at *4.

Ultimately, this Court denied Moinian's motion for partial summary judgment and granted Affiliated FM's motion for partial summary judgment. Id. at *16. The Court held that Moinian "has not alleged any facts demonstrating that its insured locations have been physically or structurally altered." Id. at *15 (emphasis in original). "Consequently, even if COVID-19 at, on, or in Moinian's insured locations could constitute 'physical loss or damage' under the Policy, Moinian has presented claims that numerous courts have rejected, as demonstrated above." Id.

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This Court concluded by joining "the overwhelming majority of jurisdictions who have concluded that COVID-19 does not cause physical loss or damage to property." Id. In Josephson, the Court granted Affiliated FM's Motion for Entry of Partial Final Judgment on December 13, 2022 and entered partial final judgment on December 16, 2022. See Docket, C.A. No. PC-2021-03708. This Court found that entering partial final judgment was appropriate "'so that [Josephson] may serve as a bellwether appeal' and because '[o]ur Supreme Court's review will assist this Court greatly in resolving [or limiting] not only [Josephson], but all other business interruption cases in an efficient manner.'" (C.A. No. PC-2022-00966 Order, dated May 25, 2023; C.A. No. PC-2022-05230 Order, dated June 13, 2023.) Moinian filed a Notice of Appeal on December 27, 2022—Josephson was certified to our Supreme Court on January 18, 2023. See Docket, C.A. No. PC-2021-03708. Thereafter, 5.11 ABR and the Washington Insureds' proceedings were stayed "until our Supreme Court completes its review of Josephson." (C.A. No. PC-2022-00966 Order, dated May 25, 2023; C.A. No. PC-2022-05230 Order, dated June 13, 2023.)

On May 31, 2024, our Supreme Court issued its decision in Josephson, deciding against coverage for Moinian on the basis that the Contamination Exclusion in the Policy precluded coverage. Josephson, LLC d/b/a The Moinian Group v. Affiliated FM Insurance Co., 314 A.3d 954, 955-56 (R.I. 2024). Thereafter, fourteen of the thirty-one lawsuits filed against Affiliated FM in Rhode Island in connection with denials of business interruption coverage were voluntarily dismissed. (Def.'s Appl. for Order to Show Cause ¶ 8, n.2, C.A. No. PC-2022- 05230.) A fifteenth case, Newell Brands Inc. v. Factory Mutual Insurance Co., C.A. No. PC- 2022-04082, was voluntarily dismissed pursuant to Rule 41(a)(1)(A) of the Superior Court Rules of Civil Procedure on June 25, 2024. See Docket, C.A. No. PC-2022-04082.

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On November 14, 2024, Affiliated FM filed identical Applications for Orders to Show Cause in the sixteen remaining lawsuits filed against Affiliated FM in Rhode Island in connection with the denial of business interruption coverage. Included were Applications for Orders to Show Cause filed against 5.11 ABR and the Washington Insureds. (Def.'s Appl. for Order to Show Cause 1, C.A. No. PC-2022-00966; Def.'s Appl. for Order to Show Cause 1, C.A. No. PC-2022-05230.) Since November 14, 2024, fourteen of the sixteen remaining cases have been dismissed or were resolved. (Def.'s Resp. to Pls.' Obj. to Appl. for Order to Show Cause 4 n.2.) What remains are the Applications for Orders to Show Cause against 5.11 ABR and the Washington Insureds.

Affiliated FM's Applications ask the Court to issue Orders to Show Cause why the claims of 5.11 ABR and the Washington Insureds should not be dismissed or, alternatively, be subject to entry of judgment in Affiliated FM's favor based on our Supreme Court's ruling in Josephson, 314 A.2d 954. (Def.'s Appl. for Order to Show Cause re 5.11 ABR 1; Def.'s Appl. for Order to Show Cause re the Washington Insureds 1.) In its respective Applications for Order to Show Cause, Affiliated FM argues that our Supreme Court's ruling in Josephson is

"controlling precedent" as to 5.11 ABR and the Washington Insureds' property damage and time element/business interruption claims. Id.

On January 8, 2025, 5.11 ABR and the Washington Insureds each filed their Objection to Affiliated FM's Applications for Orders to Show Cause. See 5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause; the Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause. In its Objection, 5.11 ABR noted that it "generally joins the Washington [Insureds]' arguments from their response to [Affiliated FM]'s application for order to show cause[.]" (5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 1 n.1.) On January 22, 2025, Affiliated FM filed

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its Response to 5.11 ABR and the Washington Insureds' Objections to Application for Order to Show Cause in one memorandum. See Def.'s Resp. to Pls.' Obj. to Appl. for Order to Show Cause. The parties were fully heard on January 29, 2025.

On March 27, 2025, the Court entered an Order stating that it will consider both of Affiliated FM's Applications for Order to Show Cause under the parameters of Rule 12(b)(6) of the Superior Court Rules of Civil Procedure because Affiliated FM has functionally filed motions to dismiss 5.11 ABR and the Washington Insureds' respective Complaints. (Order, dated March 27, 2025.) The Court's March 27, 2025 Order granted the parties twenty days from the entry of the Order to submit any additional briefing or papers. Id. On April 16, 2025, 5.11 ABR filed its Brief as to Why Defendant Affiliated FM Insurance Company is Not Entitled to Dismissal Based on Josephson, LLC v. Affiliated FM Insurance Company. See Docket, C.A. No. PC-2022-00966. Also on April 16, 2025, the Washington Insureds filed its Supplemental Brief in Opposition to Defendant's Motion Seeking Dismissal of the Complaint. See Docket, C.A. No. PC-2022-05230. Finally, on April 16, 2025 Affiliated FM filed its Supplemental Brief in Support of its Motion to Dismiss. See Docket, C.A. No. PC-2022-00966; Docket, C.A. No. PC-2022-

05230.

II

Standard of Review

There is nothing in the Rhode Island Superior Court Rules of Civil Procedure that endows a defendant with the ability to file an "Application for Order to Show Cause." In its two Applications for Order to Show Cause, Affiliated FM asks the Court to enter "an Order to Show Cause why the claims of the Plaintiff in the above captioned matter should not be dismissed or, in the alternative, be subject to the entry of judgment in favor of FM[.]" (Def.'s Appl. for Order

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to Show Cause 1, C.A. No. PC-2022-00966; Def.'s Appl. for Order to Show Cause 1, C.A. No. PC-2022-05230.) Affiliated FM has functionally filed motions to dismiss the Complaints of 5.11 ABR and the Washington Insureds.

A motion to dismiss under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure

"has a narrow and specific purpose: 'to test the sufficiency of the complaint.'" Mokwenyei v. Rhode Island Hospital, 198 A.3d 17, 21 (R.I. 2018) (quoting Multi-State Restoration, Inc. v. DWS Properties, LLC, 61 A.3d 414, 416 (R.I. 2013)). A trial justice "'must look no further than the complaint, assume that all allegations in the complaint are true, and resolve any doubts in a plaintiff's favor.'" Multi-State Restoration, Inc., 61 A.3d at 416 (quoting Laurence v. Sollitto,

788 A.2d 455, 456 (R.I. 2002)) (internal citations omitted). The Court will grant a motion to dismiss "if it 'appears beyond a reasonable doubt that a plaintiff would not be entitled to relief under any conceivable set of facts.'" Laurence, 788 A.2d at 456 (quoting Rhode Island Affiliate, ACLU, Inc. v. Bernasconi, 557 A.2d 1232, 1232 (R.I. 1989)). Importantly, "'the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.'" Chhun v. Mortgage Electronic Registration Systems, Inc., 84 A.3d 419, 422 (R.I. 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

III

Analysis

A

Applicability of Josephson

Affiliated FM argues that our Supreme Court's holding in Josephson is controlling precedent. (Def.'s Appl. for Order to Show Cause re 5.11 ABR 1; Def.'s Appl. for Order to Show Cause re the Washington Insureds 1.) Affiliated FM argues that both 5.11 ABR and the

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Washington Insureds' cases "involve the same or nearly the same Contamination Exclusion considered in Josephson." Id. at 5; id. at 5. Thus, "because [5.11 ABR and the Washington Insureds]' claims are undeniably barred by the Contamination Exclusion in each of the policies at issue in the respective cases," Affiliated FM argues there are "no additional grounds or bases upon which [5.11 ABR and the Washington Insureds] may recover for claimed property damage and time element/business interruption losses." Id. at 5; id. at 5. Affiliated FM argues that Josephson stands for the proposition that "'there is no dispute that the Contamination Exclusion applies' to a case in which a party alleges:" the COVID-19 virus was in, on, and around the insured's property; such a presence caused physical loss or damage to that property; and as a result of said alleged physical loss or damage, the insured property was rendered unable and/or unfit for its intended purpose which prevented the insured's business guests and customers from using the property. (Def.'s Resp. to Pls.' Obj. to Appl. for Order to Show Cause 6.) It is argued by 5.11 ABR that Josephson is inapplicable because the complaint in Josephson contained different allegations than 5.11 ABR's complaint. (5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 2.) It is further argued by 5.11 ABR that the summary judgment briefing in Josephson reflects the absence of "two critical categories of evidence" that

5.11 ABR argues it "intends to seek discovery on and submit into the record at the non-pleadings stage[:]" scientific evidence showing how COVID-19 causes physical loss or damage and underwriting or regulatory history regarding the Contamination Exclusion. Id. Finally, 5.11 ABR argues that Josephson is inapplicable here because the insured in Josephson "only focused on certain language in the Contamination Exclusion." Id.

The Washington Insureds argue that Josephson does not bar its claims because the facts alleged under their Complaint differ in critical ways from the factual scenario presented in the

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Josephson litigation. (The Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause 11.) Specifically, the Washington Insureds argue that they "allege that COVID-19 physically and chemically altered the structure of the air, property, and surfaces of their football stadium and other insured locations." Id. at 12. They argue that unlike the plaintiff in Josephson, the Washington Insureds' Complaint "specifically alleges that COVID-19 physically and structurally altered surfaces and the surrounding air throughout the stadium . . . such that the chemical composition of those objects and of the surrounding air actually changed, thereby facilitating the spread of COVID-19." Id.

Our Supreme Court in Josephson held that "[t]he Contamination Exclusion precludes coverage for '[c]ontamination, and any cost due to contamination[.]' 'Contamination' is defined as '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[.]'" Josephson,

314 A.3d at 960 n.4. "Moinian's pleadings and representations make clear that the requirements of the Contamination Exclusion have been satisfied. For example, in its complaint, Moinian alleges: 'The presence of the coronavirus/COVID-19 in, on, and around Moinian's insured property in multiple physical, tangible forms caused physical loss or damage to that property and as a result rendered it unusable and/or unfit for its intended purpose; that in turn prevented Moinian's tenants, prospective tenants, guests, and retail customers from using the property.'"

Id. "Moinian's written arguments to this Court likewise represent that it has 'suffered significant losses when COVID-19, a deadly physical substance, permeated and attached to its properties and rendered them functionally useless for their intended and insured purpose.' These averments constitute a small sampling of the statements made by Moinian concerning its theory of coverage. We have no difficulty concluding that Moinian's allegations fall squarely within the

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Contamination Exclusion." Id. (citations omitted). Thus, despite "Moinian's recognition that the Contamination Exclusion applie[d] and serve[d] to preclude coverage for costs significantly narrow[ed] the issue before [our Supreme Court,]" our Supreme Court addressed why the Contamination Exclusion applied—and barred—the plaintiff's theory of recovery. Id. at 960. The allegations central to 5.11 ABR and the Washington Insureds' Complaints correlate with those of the plaintiff in Josephson, cementing the notion that our Supreme Court's holding in Josephson ought to apply.

As recounted, the plaintiff in Josephson alleged that:

"'The presence of the coronavirus/COVID-19 in, on, and around Moinian's insured property in multiple physical, tangible forms caused physical loss or damage to that property and as a result rendered it unusable and/or unfit for its intended purpose; that in turn prevented Moinian's tenants, prospective tenants, guests, and retail customers from using the property.' Moinian's written arguments to this Court likewise represent that it has 'suffered significant losses when COVID-19, a deadly physical substance, permeated and attached to its properties and rendered them functionally useless for their intended and insured purpose.'" Id. at 960 n.4.

Similarly, 5.11 ABR alleges in its Complaint that "[t]he risk of and actual spread of COVID-19 causes physical loss and damage to property" and that "'[i]ndividuals with COVID- 19 . . . alter[] the physical characteristics of surfaces and the air of occupied spaces at the location and at facilities in the vicinity with respiratory secretions and aerosols. As a result, the surfaces and air of occupied spaces . . . bec[o]me vehicles for COVID-19 transmission.'" (5.11 ABR's Compl. ¶¶ 93, 91) (internal quotation omitted). It is further alleged by 5.11 ABR that it has "incurred 'loss' 'from losing,' from a 'decrease,' or from 'having less' of its covered property due to COVID-19 and/or the Pandemic." Id. ¶ 40. Additionally, it is alleged by 5.11 ABR that courts have "long held that the presence of a dangerous invisible substance at or on a

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property, including within its airspace, constitutes 'physical loss or damage' to property." Id. ¶ 41. "Many courts also held that the restriction of use of property due to an imminent risk of danger to its inhabitants constitutes 'physical loss' to property[,]" is further alleged by 5.11 ABR. Id.

The Washington Insureds as well allege that COVID-19 directly causes physical loss and damage to property in part by "physically altering both air and property surfaces, making them unfit for their intended use, and . . . altering the molecular structure of the physical surfaces of otherwise inert property." (The Washington Insureds' Compl. ¶ 70.) They additionally allege that COVID-19 was

"present at FedExField and other insured locations, and caused all of these types of physical loss and damage to those insured locations. As a result, the Washington Insureds were unable to use FedExField for its intended purpose—to host fans or more than a small number of fans (which occurred for only one game)—for the 2020-2021 NFL season. In fact, the presence of COVID-19 and the COVID-19 virus, and the physically deleterious effects they have on spaces and property, caused civil authorities to impose unprecedented restrictions, prohibiting, among other things, fans from attending football games and other live events." Id. A comparison of the allegations in 5.11 ABR and the Washington Insureds' Complaints with the allegations our Supreme Court attributed the plaintiff in Josephson with making leads the Court to the conclusion that Josephson controls said Complaints.

A survey of cases involving analogous circumstances indicate that 5.11 ABR and the Washington Insureds' claims fail as a matter of law—in fact, our Supreme Court in Josephson cited to several cases supporting this notion. See Josephson, 314 A.3d at 960 n.4. (citing AC Ocean Walk, LLC v. American Guarantee and Liability Insurance Company, 307 A.3d 1174, 1190 (N.J. 2024) ("As Ocean Walk alleges in its complaint, its claim arises from a 'highly contagious and easily transmitted human pathogen.' The presence of SARS-CoV-2 in Ocean

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Walk's facilities falls squarely within the description of 'contamination' in the policies."); Monarch Casino & Resort, Inc. v. Affiliated FM Insurance Company, 85 F.4th 1034, 1040 (10th Cir. 2023) ("[T]he Contamination Exclusion's plain language precludes all-risk and business-interruption coverage on exactly what Monarch asks for: physical loss or damage associated with the presence of the virus, COVID-19."); San Jose Sharks, LLC v. Superior Court of Santa Clara County, 316 Cal. Rptr. 3d 393, 403 (Cal. Ct. App. 2023) ("Because plaintiffs alleged that it was a virus that caused the disputed physical damage to their property, their allegations implicate the policies' contamination exclusion."), disapproved of on other grounds by Another Planet Entertainment, LLC v. Vigilant Insurance Company, 548 P.3d 303 (Cal.

2024).).

Other courts outside of those cited by our Supreme Court in Josephson have similarly found that Affiliated FM's Contamination Exclusion precludes coverage in such circumstances. See Out West Restaurant Group, Inc. v. Affiliated FM Insurance Co., No. 21-15585, 2022 WL 4007998, at *2 (9th Cir. Sept. 2, 2022) ("[T]o the extent that Out West argues that infected persons contaminated the property or that virus was otherwise present, the contamination exclusion would bar coverage under the direct physical loss or damage policy provisions. . . . It follows that the policy excludes under those provisions losses caused by the presence of COVID- 19 virus on Out West's property."); Creative Artists Agency, LLC v. Affiliated FM Insurance Co., No. 2:21-CV-08314AB(GSx), 2022 WL 3097371, at *7 (C.D. Cal. July 27, 2022) ("Several courts within this district have held that similar Contamination Exclusion provisions bar coverage even if plaintiffs are able to show that they suffered 'physical loss of or damage to' their premises."); Mashantucket Pequot Tribal Nation v. Factory Mutual Insurance Co., 313 A.3d 1219, 1244 (Conn. 2024) ("[W]e already have rejected the plaintiff's claim that a

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communicable disease such as COVID-19, under the language of this policy, constitutes a physical loss or damage to covered property."); Rockhurst University v. Factory Mutual Insurance Co., 582 F. Supp. 3d 633, 638 (W.D. Mo. 2022) ("Under its plain terms, this contamination exclusion excludes coverage for any condition of covered property attributable to the actual or suspected presence of a virus or illness-causing agent, and any cost attributable to the actual or suspected presence of a virus or illness-causing agent, including the inability [to] use the covered property and/or make the covered property safe for use. . . . Under the circumstances presented here, to the extent Plaintiffs assert a right to coverage under the policy for physical damage attributable to the presence or suspected presence of coronavirus or COVID-19, a virus, or more broadly, an illness causing agent, such alleged physical damage is subject to the contamination exclusion (except as otherwise specifically described and inapplicable here) and is not covered by the policy."); Ralph Lauren Corp. v. Factory Mutual Insurance Co., No. 20-10167(SDW)(LDW), 2021 WL 1904739, at *3, *4 (D.N.J. May 12, 2021) ("Nor does the alleged 'presence' of the Virus in or around Plaintiff's stores equate to actual or imminent physical loss or damage of any sort. . . . Consistent with other courts' contractual interpretations in similar COVID-19-related insurance disputes, Plaintiff's allegations are not enough. . . . In any event, even if Plaintiff did plead the existence of actual or imminent 'physical loss or damage,' its claim fails under the Contamination Exclusion."); Baylor Scott & White Holdings v. Factory Mutual Insurance Co., 667 F. Supp. 3d 368, 377 (E.D. Tex. 2023), aff'd,

105 F.4th 816 (5th Cir. 2024) ("In this regard, Baylor fails to reconcile its claim with the Fifth Circuit's explanation of Texas law's plain reading of 'physical loss or damage' to mean a 'tangible alteration or deprivation of property.' . . . In applying that definition, the Fifth Circuit has consistently rejected arguments like Baylor's by holding that COVID-19's temporary,

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though persistent, attachment to surfaces or air particles fails to establish a 'physical loss or damage' because 'COVID-19 is a virus that injures people, not property.' . . . Because Fifth Circuit precedent applying Texas law precludes Baylor's allegations of 'physical loss or damage,' the Court holds that Baylor has failed to sufficiently plead that it suffered a 'physical loss or damage' due to COVID-19 under the Policy. . . . Accordingly, on that ground alone, Baylor's breach-of-contract claims fail."); The Shakopee Mdewakanton Sioux Community v. Factory Mutual Insurance Co., No. 70-CV-21-6480, 2021 WL 6328369, at *3, *8 (Minn. Dist. Ct. Dec. 29, 2021) ("Relying on the foregoing Minnesota precedent, a number of Minnesota recent courts have dismissed claims by policyholders seeking to recover for business interruption COVID-19 losses. . . . The decisions of Minnesota courts align with the overwhelming majority of courts throughout the country. Over the past several months, courts applying the same or similar standards have held that COVID-19 is not capable of causing a physical loss or damage to property. Defendant provided a list of four hundred and twenty-four cases, both published and unpublished, that have rejected business interruption coverage for COVID-19 related claims. This is compared to only seven cases finding in favor of coverage. . . . Moreover, because COVID-19 contamination is excluded, it cannot constitute 'physical loss or damage of the type insured' as required by the coverage provisions on which Plaintiff relies, including the Policy's Time Element Earnings and Ingress/Egress provisions.").

Finally, this Court in Josephson held that "even if COVID-19 at, on, or in [the plaintiff's] insured locations could constitute 'physical loss or damage' under the Policy, [the plaintiff] has presented claims that numerous courts have rejected[.]" Josephson, 2022 WL 999134, at *15. This Court further held that:

"COVID-19 does not constitute 'physical loss or damage' both under the Policy and as a matter of law . . . [e]ven assuming,

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arguendo, that COVID-19 could constitute 'physical loss or damage' under the Policy and as a matter of law, the Policy's Contamination Exclusion unambiguously bars coverage because contamination is expressly excluded under the terms of the Policy, and consequently, even if COVID-19 caused physical loss or damage, it is not 'physical [loss or] damage of the type insured[.]'"

Id. at *15 n.7 (citation omitted).

The Washington Insureds and 5.11 ABR allege that their Complaints are different from the plaintiff's in Josephson because 5.11 ABR's Complaint includes "scientific evidence showing how COVID-19 causes physical loss or damage[,]" and the Washington Insureds' Complaint includes the allegation that "COVID-19 physically and structurally altered surfaces and the surrounding air throughout the stadium . . . , such that the chemical composition of those objects and of the surrounding air actually changed, thereby facilitating the spread of COVID- 19." (5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 2; The Washington Insureds' Obj. to Def.'s Appl. for Order to Show Cause 12.) Yet this Court has already held that "as a matter of law, the Policy's Contamination Exclusion unambiguously bars coverage because contamination is expressly excluded under the terms of the Policy, and consequently, even if COVID-19 caused physical loss or damage, it is not 'physical [loss or] damage of the type insured[.]'" Josephson, 2022 WL 999134, at *15 n.7. Our Supreme Court's holding in Josephson, taken in tandem with the previously recounted survey of cases from throughout the nation and this Court's previous Josephson holding, weigh in favor of dismissal of the Complaints filed by 5.11 ABR and the Washington Insureds.

B

Discovery Regarding Affiliated FM's Contamination Exclusion

Affiliated FM argues that "[b]ecause the terms of the AFM Policies are clear and unambiguous, and have been held to be clear and unambiguous both by this Court and the

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Supreme Court," there is no utility for parol evidence to interpret or apply those terms, and accordingly there is no need for discovery to try to develop such information. (Def.'s Resp. to Pls.' Obj. to Appl. for Order to Show Cause 14.) Affiliated FM then argues that "this Court held the AFM policy was, 'without question, clear and unambiguous and is not susceptible to more than one reasonable interpretation.'" Id. at 15 (quoting Josephson, 2022 WL 999134, at *9). It is also argued by 5.11 ABR that it intends to "seek discovery into and submit such corporate underwriting and drafting history documents[,]" and as such Affiliated FM "should not be permitted to escape liability and its obligations under this exclusion, and in this case, through its application." (5.11 ABR's Obj. to Appl. for Order to Show Cause 11.) The Washington Insureds similarly argue that they "require discovery on the scope of the Contamination Exclusion, an issue that is not precluded by the Rhode Island Supreme Court's Josephson decision." (The Washington Insureds' Obj. to Appl. for Order to Show Cause 18.) The Washington Insureds argue that Josephson "clearly left open as valid the possibility that a party insured under an all-risk policy might object to the entry of summary judgment on the proper interpretation of a contamination exclusion until it has had the opportunity to take discovery on that issue." Id.

Further, the Washington Insureds contend that by way of footnote five in the Josephson decision, our Supreme Court "stressed that [the plaintiff in Josephson] did not argue to that court 'that the trial justice improperly short-circuited discovery and erroneously made factual findings at the summary judgment stage . . . concerning the statutory interpretation of the Contamination Exclusion.'" Id. (quoting Josephson, 314 A.3d at 962 n.5). "By contrast, here, the Washington Insureds do argue that dismissing the above-captioned complaint would short-circuit discovery on the interpretation of the Contamination Exclusion." Id. "The Washington Insureds believe

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their allegations demonstrate that discovery is needed to clarify the proper interpretation of AFM's Contamination Exclusion, including AFM's own admissions as to its scope. The Washington Insureds should not be denied the opportunity to explore these issues simply because another insured, Moinian, did not argue that it needed discovery." Id. (emphasis added). Our Supreme Court has made it clear that "when the provisions of a written agreement are clear and unambiguous, such provisions 'can be interpreted and applied to the undisputed facts as a matter of law[.]'" Kinder v. Westcott, 107 A.3d 321, 325 (R.I. 2015) (quoting Carpenter v. Hanslin, 900 A.2d 1136, 1147 (R.I. 2006)). When such is the case, "'neither oral testimony nor extrinsic evidence will be received to explain the nature of extent of the rights acquired.'" Id. (quoting Carpenter, 900 A.2d at 1147). Recall that this Court previously held that when "viewing the Policy in its entirety and giving the terms their plain, ordinary, and usual meanings, the Policy is, without question, clear and unambiguous and is not susceptible to more than one reasonable interpretation." Josephson, 2022 WL 999134, at *9. This Court additionally held that "under a plain reading of the Policy and applying the ordinary and usual meanings of the terms contained therein, the Contamination Exclusion undoubtably applies to [the plaintiff]'s claims." Id. at *10. Further, this Court held that "the Contamination Exclusion unambiguously applies to bar [the plaintiff]'s claims." Id.

Given that this Court has already rendered the Contamination Exclusion clear and unambiguous, the Court does not hesitate to preclude discovery that would attempt "to clarify the proper interpretation of AFM's Contamination Exclusion[.]" (The Washington Insureds' Obj. to Appl. for Order to Show Cause 18.) Our Supreme Court has urged against finding ambiguity by

"'viewing a word in isolation or by taking a phrase out of context.'" Koziol v. Peerless Insurance Co., 41 A.3d 647, 650-51 (R.I. 2012) (quoting Bliss Mine Road Condominium Association v.

19

Nationwide Property and Casualty Insurance Co., 11 A.3d 1078, 1083 (R.I. 2010)). "Indeed, as this Court often has said, we shall 'refrain from engaging in mental gymnastics or from stretching the imagination to read ambiguity into a policy where none is present.'" Id. at 651 (quoting Bliss Mine Road Condominium Association, 11 A.3d at 1083). To permit either 5.11 ABR or the Washington Insureds to conduct discovery with the goal of "clarify[ing] the proper interpretation of AFM's Contamination Exclusion," when the Contamination Exclusion is not subject to more than one reasonable interpretation, would be an exercise in futility. (The Washington Insureds' Obj. to Appl. for Order to Show Cause 18.)

To bolster the preclusion of discovery on the alleged "proper interpretation of AFM's Contamination Exclusion," the Court recounts Merrimack Mutual Fire Insurance Co. v. Dufault,

958 A.2d 620 (R.I. 2008). (The Washington Insureds' Obj. to Appl. for Order to Show Cause 18.) In Dufault, our Supreme Court was tasked with analyzing an umbrella liability policy in an insurance contract within the context of a motor vehicle accident involving the son of the insureds. Dufault, 958 A.2d at 622. On review, our Supreme Court held in pertinent part that:

"After a careful examination of the insurance contract, we are satisfied that the umbrella policy is clear and unambiguous. . . . Because we are unable to discern any ambiguity in the policy, its terms will be accorded their plain and ordinary meaning without reference to any extrinsic material." Id. at 625. Indeed, a plaintiff's breach-of-contract claims ought not be dismissed at the pleading stage if further factual development is needed to clarify the meaning of an ambiguous contractual provision. See Chariho Regional School District, by and through Chariho Regional School Committee v. State of Rhode Island, 207 A.3d 1007, 1015-16 (R.I. 2019); Premier Home Restoration, LLC v. Federal National Mortgage Association, 245 A.3d 745, 748-49 (R.I. 2021). Yet the Contamination Exclusion is unambiguous, so there is no other "proper interpretation" to

20

conduct fact discovery on. (The Washington Insureds' Obj. to Appl. for Order to Show Cause 18.) Neither 5.11 ABR nor the Washington Insureds are entitled to further discovery "to clarify the [']proper['] interpretation of AFM's Contamination Exclusion[.]" Id.

C

Communicable Disease Coverage

In the sole Count within its Complaint, 5.11 ABR alleged in pertinent part that it "is entitled to recover from AFM the entirety of its Business Interruption Coverage losses and Extra Expense, including without limitation under the various extensions of those coverages under the headings . . . 'Communicable Disease - Business Interruption.' . . . AFM unjustifiably refused to pay for 5.11's loss in breach of the Policies. . . . 5.11 is entitled to damages as a result and consequence of AFM's breach[.]" (5.11 ABR's Compl. ¶¶ 110-112.) The Washington Insureds' Complaint, which claims that the "All Risks Policies provide explicit coverage for Communicable Disease[,]" alleges, in pertinent part, in its first count for Breach of Contract that:

"Affiliated FM refused to indemnify the Washington Insureds for their losses and expenses in breach of their All Risks Policies [including the Communicable Disease Coverage provision]. . . . As a direct and proximate result of its breaches of contract, Affiliated FM has deprived the Washington Insureds of the benefits of the insurance contracts for which substantial premiums were paid, which entitles the Washington Insureds to money damages, including interest according to law." (The Washington Insureds' Compl. ¶¶ 203, 238-239.)

In its second and final count for Declaratory Relief, the Washington Insureds ask the Court to declare in pertinent part that:

"Affiliated FM is contractually obligated under the All Risks Policies to indemnify the Washington Insureds for their real property losses, time element losses, extra expense, and other losses sustained as a result of direct loss or damage to property due to the COVID-19 virus and/or COVID-19; . . . Affiliated FM is contractually obligated under the All Risks Policies to indemnify

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the Washington Insureds for their time element losses and extra expense as a result of qualifying orders of civil authority that have prohibited access to insured properties as a result of the COVID-19 virus and/or COVID-19 at insured properties or other locations within any required vicinity of insured properties; and . . . Affiliated FM is contractually obligated under the All Risks Policies to indemnify the Washington Insureds for all other losses, costs, and expenses covered under the policies." Id. ¶ 245. Affiliated FM argues that 5.11 ABR and the Washington Insureds' claims—alleging that Affiliated FM committed a breach of contract in connection with the policies' Communicable Disease Coverage provisions—ought to be dismissed. (Def.'s Resp. to Pls.' Obj. to Appl. for Order to Show Cause 18.) Specifically, Affiliated FM argues that 5.11 ABR and the Washington Insureds' claims under the Communicable Disease provisions of the respective policies are merely pending—Affiliated FM has neither approved nor denied the claims. Id. Affiliated FM argues that an evaluation of whether it breached any contract or whether a declaratory judgment is warranted in connection with the Communicable Disease provision is therefore not ripe for adjudication. See id.

Affiliated FM's argument is addressed by 5.11 ABR—that the Communicable Disease claims are not ripe for adjudication—solely by stating that such is "a misguided assertion with respect to 5.11." (5.11 ABR's Obj. to Def.'s Appl. for Order to Show Cause 11.) The Washington Insureds do not address the ripeness issue raised by Affiliated FM in their Objection to Affiliated FM's Application for Order to Show Cause.

Our Supreme Court has "'long . . . recognized the need, apart from certain exceptional circumstances, to confine judicial review only to those cases that present a ripe case or controversy.'" Riley v. Narragansett Pension Board, 275 A.3d 545, 556 (R.I. 2022) (quoting City of Cranston v. Rhode Island Laborers' District Council, Local 1033, 960 A.2d 529, 533 (R.I. 2008)). Further, our Supreme Court has explained that "'[a]s a general rule, a claim is not ripe

22

for adjudication if it rests upon 'contingent future events that may not occur as anticipated, or indeed may not occur at all.'" Id. (quoting State v. Gaylor, 971 A.2d 611, 614 (R.I. 2009)). Neither 5.11 ABR nor the Washington Insureds allege that Affiliated FM has denied coverage pursuant to their Communicable Disease Coverage claims.

There is nothing to indicate that Affiliated FM has taken more action regarding 5.11 ABR and the Washington Insureds' Communicable Disease Coverage claims. As such, an adjudication as to whether Affiliated FM has committed a breach vis-à-vis the Communicable Disease provisions in 5.11 ABR or the Washington Insureds' policies is contingent on a future event:

Affiliated FM denying Communicable Disease coverage to either 5.11 ABR or the Washington Insureds. As such, the Court finds it appropriate to dismiss such claims without prejudice.

IV

Conclusion

Based on the foregoing, Affiliated FM's Application for Order to Show Cause in 5.11 ABR, Corp., d/b/a 5.11 Tactical v. Affiliated FM Insurance Company, C.A. No. PC-2022-00966 is GRANTED. Additionally, Affiliated FM's Application for Order to Show Cause in Washington Football, Inc.; Pro-Football, Inc.; and WFI Stadium, Inc. v. Affiliated FM Insurance Company, C.A. No. PC-2022-05230 is GRANTED.

Given the Court's treatment of Affiliated FM's Applications for Order to Show Cause as Motions to Dismiss under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure, the Complaint filed by 5.11 ABR in C.A. No. PC-2022-00966 and the Complaint filed by the Washington Insureds in C.A. No. PC-2022-05230 are hereby DISMISSED. The Court clarifies that, as held supra, 5.11 ABR and the Washington Insureds' counts for Breach of Contract vis-à-

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vis the Communicable Disease coverage provision in their respective policies with Affiliated FM are dismissed without prejudice.

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RHODE ISLAND SUPERIOR COURT

Decision Addendum Sheet TITLE OF CASE: 5.11 ABR, Corp., d/b/a 5.11 Tactical v. Affiliated FM Insurance Company

and

Washington Football, Inc., et al. v. Affiliated Factor Mutual Insurance Co.

CASE NO: PC-2022-00966 and PC-2022-05230

COURT: Providence County Superior Court

DATE DECISION FILED: June 4, 2025 JUSTICE/MAGISTRATE: Stern, J.

ATTORNEYS:

For Plaintiff: Timothy M. Bliss, Esq. Joseph V. Cavanagh, III, Esq. For Defendant: Dana M. Horton, Esq. Daniel F. Sullivan, Esq.