Founder Institute Incorporated v. Hartford Fire Insurance Company

Background

Founder Institute Incorporated sought coverage for loss of business income under an insurance policy issued by Hartford Fire Insurance Company. Hartford moved to dismiss. In an earlier order, the court concluded that Founder’s claimed loss fell within the policy’s virus exclusion.

Arguments and analysis

Founder raised several new arguments. The court rejected the argument that the virus exclusion was unenforceable because it was unclear or insufficiently visible, holding that the exclusion was “conspicuous, plain and clear.” The court also rejected the argument that the exclusion was illusory. It explained that the exclusion still allowed coverage in various circumstances different from the circumstances Founder alleged.

Founder further argued that the efficient proximate cause doctrine supported coverage. The court concluded that the doctrine did not help Founder because the efficient proximate cause of the claimed loss was the virus, rather than human droplets.

Ruling

The court granted Hartford’s motion to dismiss. It dismissed the case with prejudice because amendment would be futile, ordered that judgment be entered in favor of the defendants, and directed the Clerk’s Office to close the case. Judge Vince Chhabria signed the order.

Classification note

This is a procedural order because the court ruled on a motion to dismiss. Although the court addressed the policy exclusion, the order disposed of the case through Rule 12 motion practice rather than deciding the matter through a merits judgment such as summary judgment.