The court granted portions of the business interruption claim, while denying other portions. Phoenix Ins. Co. v. Infogroup, Inc., 2015 U.S. Dist. LEXIS 162810 (S. D. Iowa Nov. 30, 2015). Phoenix insured Infogroup's business buildings and personal business property, including data and data processing equipment. In late May 2011, warnings were issued of possible flooding from the Missouri River. On June 1, 2011, Infogroup moved and relocated its business operations and data centers away from the river and did not intend to return to the facilities. On July 19, 2011, Phoenix advanced $500,000 to Infogroup for anticipated claims under the policy. On August 22, 2011, heavy rain left surface water in the parking lot at Infogroup's facilities. Infogroup claimed that it suffered minor property damage during July and August, 2011, including damage to an uninterruptable power source and damage to a server. In May 2012, Infogroup submitted a claim for over $12 million. Phoenix responded that it would not reimburse for business income loss or costs to re-establish business because there was no direct physical loss or damage under the policy. Phoenix filed suit seeking a declaratory judgment that Infogroup was not entitled to coverage. The policy's Extra Expense Clause provided that the insurer, will pay for the actual loss of Business Income the insured sustains due to the necessary suspension of the insured's "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. The policy was unambiguous in requiring that an insured must suffer "direct physical loss or damage" to trigger the Extra Expense Clause. Here, Infogroup did not lose the facility in June 2011 because employees, equipment, and servers remained there until August 22, 2011, over two months after the threat of flooding caused Infogroup to initiate the moving process. Inforgoup's claimed loss of use due to the threat of flood. The threat, however, did not prevent Infogroup from using the facility for its intended purpose - storing data - until Infogroup could facilitate its methodical evacuation. The mere loss of use did not constitute physical loss or damage under the Extra Expense Clause. Further, Infogroup did not show that physical loss allegedly suffered after it had already decided to and began to relocate was the cause of its moving expenses. Any physical damage did not occur until mid-June, and therefore could not have caused Infogroup's decision to move its business prior to its occurrence. Therefore, Infogroup was not entitled to any recovery under the Extra Expense Clause. Infogroup also sought recovery under the Preservation of Property Clause: If it is necessary to move Covered Property from the described premises to preserve it from loss or damage by a Covered Cause of Loss, we will pay for: . . . Any direct physical loss or damage to this property . . . and the cost to remove the property. The parties agreed that Infogroup was entitled to reimbursement for some of the costs of removing its covered property from its facility on the river. But the parties disputed the extent of the reimbursement. Infogroup sought reimbursement for the cost to re-establish its business operations at a new location. It also sought coverage for the cost of new servers and other equipment as a "necessary cost to remove." Unlike the Extra Expense clause, which explicitly covered business income and operations, the Preservation of Property clause did not mention business operations, suspension of business, or relocation of the business. Therefore, Infogroup was not entitled to reimbursement for costs necessary to remove its property under the Preservation of Property clause. Infogroup also argued that the Protection of Property Clause covered mitigation expenses, including the cost to evacuate, build a berm, and build new facilities. The court found that genuine issues of material fact existed as to whether Infogroup suffered the physical harm it had alleged. If the trier of fact determined this claimed damage occurred, it would constitute "loss or damage" within the meaning of the policy and would trigger Infogroup's duty to "take all reasonable steps to protect the Covered Property from further damage."
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