New CA Insurance Case

 

 

 

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To get my free summaries of the 22 new civil cases published by the California Supreme Court in 2021, click here.

Below is a discussion of a new CA civil case published last month.

Insurance

The COVID-19 pandemic has led to the filing of many coverage actions by businesses against their commercial property carriers. We're now starting to see published cases from California Courts of Appeal regarding coverage. Last month, the Second District Court of Appeal addressed whether the plaintiffs had adequately alleged potential coverage for business losses due to COVID-19. As you'll see in the summary, plaintiffs were creative making in their allegations. A video discussing the case is above and my summary of the case is below.

New Insurance Decision  

Marina Pacific Hotel and Suites, LLC v. Fireman's Fund Ins. Co. (2022) _ Cal.App.5th _ , 2022 WL 2711886: The Court of Appeal reversed the trial court's order sustaining defendant's demurrer, without leave to amend, to plaintiffs' complaint alleging causes of action for breach of contract, tortious breach of contract, elder abuse and unfair competition based upon defendant's denial of coverage and refusal to pay (or to advance) commercial property insurance policy benefits for losses claimed by the insureds as a result of the COVID pandemic. Plaintiffs alleged the COVID-19 virus was present on, and had physically transformed, portions of the insured properties—"direct physical loss or damage" within the meaning of defendant's first party commercial property insurance policy. The trial court sustained the demurrer concluding that the COVID-19 virus could not cause direct physical loss or damage to property for purposes of insurance coverage. The trial court also found there was a virus exclusion in the policy. The Court of Appeal disagreed, concluding that by alleging that COVID-19 not only lives on surfaces but also bonds to surfaces through physicochemical reactions involving cells and surface proteins, which transformed the physical condition of the property and forced plaintiffs to close their business on the property, plaintiffs adequately alleged direct physical loss or damage caused by the COVID-19 virus and a cause of action for breach of contract. (C.A. 2nd, July 13, 2022.)