Lerner v. Bela LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
MOLLIE R. LERNER,
Plaintiff,
v.
BELA LLC d/b/a THE PERCH HOTEL,
et als.,
Defendants.
Civil No. 25-1546 (FAB)
OPINION 	AND 	ORDER
BESOSA, Senior District Judge.
Before 	the 	Court 	is 	defendant 	Universal 	Insurance 	Company
(“Universal”)’s motion to dismiss the complaint. 	(Docket No. 8.)
For the following reasons, Universal’s motion to dismiss is DENIED.
I. 	Background
According to the allegations in the complaint, on October 12,
2024, 	plaintiff 	Mollie 	Lerner 	(“Lerner”), 	a 	resident 	of 	North
Carolina 	visiting 	Puerto 	Rico, 	went 	to 	the 	Perch 	Hotel 	(the
“Hotel”)1 to 	rent 	a 	bicycle. 	(Docket 	No. 	1 	at 	p. 	3.) 	The 	Hotel
rents 	bicycles 	to 	both 	guests 	and 	non-guests; 	Lerner 	was 	not
staying 	at 	the 	hotel 	but 	at 	a 	nearby 	Airbnb. 	Id. 	at 	pp. 	1; 	3-4.
Lerner was riding the rented bicycle back to her Airbnb to pick up
water 	and 	sunscreen 	when 	she 	encountered 	a 	steep 	hill. 	Id. 	at
1 The Hotel is owned and operated by a company called Bela LLC, which is the
defendant in this case. 	See Docket No. 1 at p. 2.
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 1 of 10

Civil No. 25-1546 (FAB) 	2
p. 4. 	As 	she 	rode 	down 	the 	hill, 	she 	picked 	up 	speed, 	but 	when
she 	tried 	to 	apply 	the 	brakes, 	the 	bike 	did 	not 	slow 	down. 	Id.
She swerved into the road, fell over the bicycle’s handlebars, and
was 	run 	over 	by 	a 	truck 	that 	was 	driving 	up 	the 	hill. 	Id. 	She
sustained serious injuries. 	Id. at pp. 4-5.
Lerner sued the Hotel, alleging that her accident was caused
by 	its 	negligence 	in 	maintaining 	the 	rental 	bicycle. 	Id. 	at
pp. 6-8. 	She also sued Universal, the Hotel’s insurance provider.
Id. 	at 	pp. 	2, 	8. 	The 	Hotel’s 	insurance 	policy 	with 	Universal
provides 	commercial 	property 	and 	commercial 	general 	liability
(“CGL”) 	insurance. 	See 	Docket 	No. 	8-1. 	Lerner 	claims 	that 	the
policy obliges Universal to indemnify the Hotel for any liability
related to her claims. 	See Docket No. 1 at p. 2.
Universal 	asks 	the 	Court 	to 	be 	dismissed 	as 	a 	defendant,
claiming 	that 	Lerner’s 	accident 	does 	not 	trigger 	its 	duties
pursuant 	to 	the 	Hotel’s 	insurance 	policy. 	(Docket 	No. 	8.)
Universal’s 	main 	argument 	is 	that 	the 	policy 	does 	not 	provide
coverage 	for 	liability 	related 	to 	the 	Hotel’s 	bicycle 	rentals
because 	it 	only 	covers 	risks 	arising 	out 	of 	hotel 	and 	restaurant
operations. 	Id. 	at 	pp. 	6-8. 	Lerner 	disagrees, 	arguing 	that 	the
Hotel’s bicycle rental fits within its hotel operations. 	(Docket
No. 	12 	at 	pp. 	4-6.) 	In 	the 	alternative, 	Lerner 	argues 	that 	the
policy’s duty to defend is broader than its duty to indemnify, and
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 2 of 10

Civil No. 25-1546 (FAB) 	3
that 	at 	this 	stage 	in 	the 	proceedings, 	Universa1l’s 	motion 	to
dismiss should be denied. 	Id. at pp. 6-7.
II. 	Legal Standard
Pursuant 	to 	Federal 	Rule 	of 	Civil 	Procedure 	12(b)(6)
(“Rule 12(b)(6)”), 	a 	defendant 	may 	move 	to 	dismiss 	an 	action 	for
failure 	to 	state 	a 	claim 	upon 	which 	relief 	can 	be 	granted. 	See
Fed. 	R. 	Civ. 	P. 	12(b)(6). 	To 	survive 	a 	Rule 	12(b)(6) 	motion, 	a
complaint must contain sufficient factual matter “to state a claim
to 	relief 	that 	is 	plausible 	on 	its 	face.” 	Bell 	Atl. 	Corp. 	v.
Twombly, 	550 	U.S. 	544, 	570 	(2007). 	A 	court 	must 	decide 	whether
the 	complaint 	alleges 	facts 	which 	“raise 	a 	right 	to 	relief 	above
the 	speculative 	level.” 	Id. 	at 	555. 	In 	doing 	so, 	a 	court 	is
“obligated 	to 	view 	the 	facts 	of 	the 	complaint 	in 	the 	light 	most
favorable 	to 	the 	plaintiffs, 	and 	to 	resolve 	any 	ambiguities 	in
their favor.” 	Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 17
(1st Cir. 2011).
“When a complaint’s factual allegations are expressly linked
to — and admittedly dependent upon — a document (the authenticity
of which is not challenged), that document effectively merges into
the 	pleadings 	and 	the 	trial 	court 	can 	review 	it 	in 	deciding 	a
motion to dismiss under Rule 12(b)(6).” 	Sterngold Dental, LLC v.
HDI Global Ins. Co., 929 F.3d 1, 6 (1st Cir. 2019) (citing Beddall
v. 	State 	St. 	Bank 	& 	Tr. 	Co., 	137 	F.3d 	12, 	17 	(1st 	Cir. 	1998))
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 3 of 10

Civil No. 25-1546 (FAB) 	4
(alterations 	omitted). 	With 	respect 	to 	Lerner’s 	claims 	against
Universal, the insurance contract is such a document. 	See Docket
No. 8-1.
III. Discussion
This 	case 	arises 	in 	diversity 	jurisdiction 	and 	the 	parties
agree 	that 	Puerto 	Rico 	law 	supplies 	the 	substantive 	rules 	of
decision. 	See 	Docket 	No. 	1 	at 	p. 	8; 	Docket 	No. 	8 	at 	p. 	2; 	Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). 	“This includes rules
relating 	to 	interpretation 	of 	an 	insurance 	policy.” 	Sterngold
Dental, 929 F.3d at 6 (alterations omitted).
“Pursuant 	to 	Puerto 	Rico 	law, 	the 	Insurance 	Code 	of 	Puerto
Rico controls the interpretation of insurance contracts.” 	Lorenzo
v. 	Perfect 	Cleaning 	Servs., 	Civil 	No. 	15-1301 	(JAG), 	2016 	U.S.
Dist. 	LEXIS 	200313, 	at 	*6 	(D.P.R. 	Dec. 	2, 	2016) 	(García-Gregory,
J.); 	see 	P.R. 	Laws 	Ann. 	tit. 	26, 	§§ 	1101-1137. 	The 	Puerto 	Rico
Insurance Code mandates that “[e]very insurance contract shall be
construed according to the entirety of its terms and conditions as
set 	forth 	in 	the 	policy, 	and 	as 	amplified, 	extended, 	or 	modified
by 	any 	lawful 	rider, 	endorsement, 	or 	application 	attached 	to 	and
made 	a 	part 	of 	the 	policy.” 	P.R. 	Laws 	Ann. 	tit. 	26, 	§ 	1125.
“[T]he 	Puerto 	Rico 	Supreme 	Court 	has 	[] 	established 	that 	since
most 	of 	the 	insurance 	contracts 	sold 	in 	Puerto 	Rico 	are 	modeled
after 	contracts 	drafted 	in 	the 	United 	States, 	both 	federal 	and
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 4 of 10

Civil No. 25-1546 (FAB) 	5
state law principles are useful and persuasive.” 	Fajardo Shopping
Ctr. 	of 	P.R., 	Inc. 	v. 	Sun 	Alliance 	Ins. 	Co., 	167 	F.3d 	1, 	7 	(1st
Cir. 	1999) 	(citing 	Quiñones 	López 	v. 	Esposa 	Jane 	Doe, 	141
D.P.R. 139, 157-58 (1996)).
“[L]anguage used in [insurance contracts] must ordinarily be
construed 	within 	its 	common 	and 	usual 	meaning, 	not 	paying 	much
attention to grammatical rigour, but to the general use and popular
meaning 	of 	the 	idioms.” 	W 	Holding 	Co. 	v. 	AIG 	Ins. 	Co., 	Civil
No. 11-2271 	(GAG), 	2014 	U.S. 	Dist. 	LEXIS 	94005, 	at 	*19 	(D.P.R.
Jul. 9, 2014) (Gelpí, J.) (quoting Guerrido García v. Univ. Cent.
de Bayamón, 143 D.P.R. 337, 348 (1997)). 	“[E]xclusionary clauses
must 	be 	restrictively 	construed 	so 	that 	the 	policy’s 	purpose 	of
protecting 	the 	insured 	is 	met.” 	Id. 	“Any 	ambiguity 	must 	be
resolved in favor of the insured.” 	Id. 	“This rule, however, does
not 	bind 	the 	court 	to 	construe 	in 	favor 	of 	the 	insured 	a 	clause
that 	clearly 	and 	unambiguously 	favors 	the 	insurer 	in 	the
controversy in question.” 	Id. at 19-20.
In a CGL policy like Universal’s, “not all covered risks are
specifically 	enumerated, 	and 	insurance 	is 	provided 	for 	all
enumerated risks and for any other risk that has not been excluded,
recognized 	or 	specified.” 	Demario 	v. 	Lamadrid-Maldonado, 	Civil
No. 	16-2897, 	2023 	U.S. 	Dist. 	LEXIS 	74392, 	at 	*27-28 	(D.P.R.
Apr. 26, 	2023) 	(Arias, 	C.J.) 	(citing 	Albany 	Ins. 	Co. 	v. 	Compañía
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 5 of 10

Civil No. 25-1546 (FAB) 	6
de Desarrollo Comercial de P.R., 125 D.P.R. 421, 425 (1990)). 	The
provision in question here, labelled Coverage A, provides coverage
for “those sums that the insured becomes legally obligated to pay
as damages because of ‘bodily injury’ or ‘property damage’ to which
this 	insurance 	applies.” 	See 	Docket 	No. 	8-1 	at 	p. 	95. 	Bodily
injury 	and 	property 	damage, 	both 	defined 	in 	the 	policy, 	must 	be
caused by an “occurrence” in the “coverage territory.” 	Id. 	Each
of 	these 	terms 	is 	defined 	very 	broadly 	- 	for 	example, 	“bodily
injury” is defined as “bodily injury, sickness or disease sustained
by 	a 	person, 	including 	death 	resulting 	from 	any 	of 	these 	at 	any
time,” 	and 	the 	“coverage 	territory” 	is 	the 	United 	States, 	Puerto
Rico, 	and 	Canada, 	along 	with 	other 	parts 	of 	the 	world 	in 	various
situations. 	See 	id. 	at 	p. 	107. 	The 	policy 	then 	lists 	several
categories 	of 	risks 	excluded 	from 	coverage, 	such 	as 	expected 	or
intended 	injuries 	and 	assumption 	of 	liability 	through 	contract.
See id. at pp. 96-100.
Pointing to the qualifier “to which this insurance applies,”
Universal argues that their obligations are limited by the business
description and classifications in the policy’s declarations. 	See
Docket 	No. 	8 	at 	p. 	6 	n. 	2; 	Docket 	No. 	8-1 	at 	pp. 	8-9 	(describing
the 	Hotel 	as 	a 	hotel 	and 	restaurant). 	Universal 	argues 	that
because renting bicycles is not a typical activity for a hotel or
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 6 of 10

Civil No. 25-1546 (FAB) 	7
restaurant, liability for Lerner’s accident is not covered by the
policy. 	The Court disagrees.
First, 	Universal’s 	interpretation 	of 	the 	policy 	is 	not
supported 	by 	the 	text 	of 	the 	contract. 	Universal 	would 	have 	the
Court 	read 	the 	business 	description 	and 	classifications 	as
limiting 	coverage 	to 	risks 	typical 	to 	hotels 	and 	restaurants.
“[T]he general rule[, however,] is that ‘business descriptions’ do
not limit coverage to the precise type of business described . . .
[and] if the insurer wants to strictly limit coverage to activities
within 	that 	description, 	it 	should 	explicitly 	say 	so.” 	Old
Republic 	Ins. 	Co. 	v. 	Stratford 	Ins. 	Co., 	777 	F.3d 	74, 	88-89 	(1st
Cir. 	2015) 	(Barron, 	J., 	concurring); 	see 	also 	Mount 	Vernon 	Fire
Ins. 	Co. 	v. 	Belize 	N.Y., 	Inc., 	277 	F.3d 	232, 	239 	(2d 	Cir. 	2002)
(rejecting insurance company’s argument limiting coverage based on
a 	business 	classification, 	noting 	that 	this 	“would 	enable 	an
insurer 	to 	limit 	its 	policy 	coverage 	through 	classification
listings without alerting the insured to the limitation.”) 	Here,
the insurance contract never indicates that coverage is limited to
activities 	falling 	within 	the 	scope 	of 	the 	business
classifications. 	The 	classifications 	are 	simply 	listed 	in 	the
declarations without any reference to coverage. 	Accordingly, the
Court cannot infer that the parties intended coverage to be limited
by these classifications.
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 7 of 10

Civil No. 25-1546 (FAB) 	8
Nor does the mere presence of the business classifications in
the 	policy 	declarations 	create 	ambiguity 	about 	the 	scope 	of
coverage.2 	Had 	Universal 	wished 	to 	limit 	coverage 	based 	on 	the
business 	classifications, 	this 	limitation 	would 	have 	been
straightforward 	to 	draft 	by 	adding 	what 	is 	known 	as 	a
“classification limitation endorsement.” 	See, e.g., Colony Nat’l
Ins. 	Co. 	v. 	Hing 	Wah 	Chinese 	Rest., 	546 	F. 	Supp. 	2d 	202, 	206-12
(E.D. 	Pa. 	2008) 	(finding 	that 	the 	insurance 	contract’s
classification 	limitation 	endorsement, 	specifying 	that 	“coverage
under 	this 	policy 	is 	specifically 	limited 	to 	those 	operations
described 	in 	the 	declarations 	under 	‘Classification[,]’” 	limited
coverage 	to 	restaurant 	activities 	only, 	excluding 	delivery
service). 	The absence of a classification limitation endorsement
in Universal’s policy indicates that the parties did not intend to
limit 	coverage 	based 	on 	the 	classifications 	listed 	in 	the
declaration.
There 	is 	a 	second 	explanation 	for 	what 	the 	business
classifications 	are 	in 	the 	policy, 	which 	undercuts 	the 	inference
that 	they 	are 	meant 	to 	limit 	coverage. 	Business 	classifications
are 	used 	to 	estimate 	the 	policyholder’s 	risk 	profile 	when
calculating 	its 	insurance 	premium. 	See 	Cincinnati 	Ins. 	Co. 	v.
2 Even if they did, ambiguities must be construed in favor of coverage. 	See W
Holding Co., U.S. Dist. LEXIS 94005 at *19 (quoting Guerrido García, 143 D.P.R.
at 348) (“Any ambiguity must be resolved in favor of the insured.”).
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 8 of 10

Civil No. 25-1546 (FAB) 	9
Wilkerson, 	616 	Fed. 	Appx. 	813, 	817 	n. 	3 	(6th 	Cir. 	2015).
Subsequent 	changes 	in 	the 	policyholder’s 	risk 	profile 	may 	be
addressed 	through 	premium 	audits 	performed 	by 	the 	insurer. 	See
Docket 	No. 	8-1 	at 	p. 	106; 	Zurich 	Am. 	Ins. 	Co. 	v. 	UGS 	Priv. 	Sec.,
Inc., 	No. 	CV 	22-1163-GW-Ex, 	2023 	WL 	3565063, 	at 	*2 	(C.D. 	Cal.
Jan. 20, 	2023) 	(outlining 	premium 	audit 	process). 	Following 	an
audit, the insurer can modify the policyholder’s premium to reflect
any 	newly 	discovered 	risk 	exposure. 	Id. 	In 	other 	words, 	the
contract contains a specified mechanism for addressing changes to
the 	policyholder’s 	risk 	profile 	that 	does 	not 	involve 	denying
coverage 	for 	activities 	outside 	the 	scope 	of 	the 	business
classifications.
Universal’s proposed interpretation of the policy also would
introduce 	substantial 	coverage 	uncertainty 	without 	notice 	to 	the
policyholder. 	The 	business 	classifications 	do 	not 	purport 	to
provide 	a 	detailed 	description 	of 	all 	the 	Hotel’s 	operations.
There is no list of “hotel activities” to which the Hotel can refer
when 	considering 	the 	extent 	of 	its 	coverage. 	As 	this 	case
demonstrates, assessing whether an activity falls within the scope
of 	a 	business 	classification 	is 	not 	an 	exact 	science 	– 	whether
renting 	bicycles 	should 	qualify 	as 	a 	“hotel 	activity” 	is 	not
immediately 	obvious. 	Because 	the 	purpose 	of 	an 	insurance 	policy
is “to provide protection to the insured,” CH Props. v. First Am.
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 9 of 10

Civil No. 25-1546 (FAB) 	10
Title 	Ins. 	Co., 	43 	F. 	Supp. 	3d 	83, 	97 	(D.P.R. 	2014) 	(Besosa, 	J.)
(citing 	Quiñones 	López, 	141 	D.P.R. 	at 	155), 	the 	Court 	will 	not
construe 	the 	contract 	in 	a 	manner 	that 	transfers 	substantial
coverage 	uncertainty 	to 	the 	insured 	Hotel 	without 	explicit
language placing the Hotel on notice.
Accordingly, 	the 	Court 	rejects 	Universal’s 	argument 	that 	it
has no coverage obligation for Lerner’s accident under the Hotel’s
CGL 	policy. 	Dismissing 	Universal 	as 	a 	defendant 	is 	therefore
unwarranted.
IV. 	Conclusion
For 	the 	above 	reasons, 	Universal’s 	motion 	to 	dismiss 	is
DENIED. 	(Docket No. 8.)
IT IS SO ORDERED.
San Juan, Puerto Rico, January 21, 2026.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
SENIOR UNITED STATES DISTRICT JUDGE
Case 3:25-cv-01546-FAB Document 15 Filed 01/21/26 Page 10 of 10