Justia California Court of Appeals Opinion Summaries

John’s Grill in San Francisco was closed or operating at limited capacity during the pandemic. The restaurant was covered by Sentinel’s “Spectrum Business Owner’s Policy,” providing first-party property coverage, third-party liability coverage, and umbrella liability coverage. Sentinel denied the Grill’s claim for business interruption coverage. The trial court upheld the denial.The court of appeal reversed. A nearly uniform line of cases has held that temporary loss of use of property due to the COVID-19 pandemic does not constitute “direct physical loss of or damage to” property for purposes of first-party insurance coverage; nearly all of these cases involved standard form language that was not customized in any material way. Sentinel’s policy, however, has customized language. Other cases have analyzed the undefined term “direct physical loss of or damage to” property. Sentinel’s policy, by endorsement, affirmatively grants coverage for “loss or damage” caused by a virus; a special definition of “loss or damage” is broad enough to encompass pervasive infiltration of virus particulates onto the surfaces of covered property. The coverage is expressly limited to situations in which the virus is the “result of” a listed cause, none of which John’s Grill has alleged. The court rejected Sentinel’s proposed broad reading, citing the illusory coverage doctrine. Insuring agreements should be read broadly in favor of coverage, View "John's Grill, Inc. v. Hartford Financial Services Group, Inc." on Justia Law

This appeal concerned a particular rate known as a “base rate,” which State Compensation Insurance Fund (State Fund) used to calculate premiums for its insureds. California Insurance Code section 11664(e)(6)(A) stated: “[i]f the premium rate in the governing classification for the insured is to be increased 25 percent or greater and the insurer intends to renew the policy, the insurer shall provide a written notice of a renewal offer not less than 30 days prior to the policy renewal date.” In a matter of first impression, the Court of Appeal found State Fund was not obligated to provide notice to cross-complainant Cover Right Roofing (Cover Right) under this statute. The increase at issue was not due to any change in the premium rate of Cover Right’s governing classification. Rather, a third party changed the applicable governing classification criteria, which caused Cover Right to be assigned a new governing classification with a higher premium rate. The statute did not require notice in such circumstances. Thus, the Court found the trial court correctly granted State Fund’s motion for summary judgment and affirm the judgment. View "Cover Right Roofing, Inc. v. State Compensation Ins. Fund" on Justia Law

Plaintiff sued Farmers New World Life Insurance Company (Defendant or Farmers) for breach of contract, breach of the covenant of good faith and fair dealing, and punitive damages in connection with a policy insuring the life of her ex-husband. The trial court granted summary judgment for Defendant on those claims, concluding it was undisputed that the ex-husband remained the owner of the policy until he died, and that he had changed the beneficiaries on the policy, reducing his ex-wife’s interest from 100 percent to 25 percent.   The Second Appellate District reversed, finding that the trial court failed to consider the terms of a divorce decree affecting ownership of the policy, and because Defendant’s agent repeatedly assured Plaintiff, up to and after the ex-husband’s death, that Plaintiff remained the sole beneficiary. Therefore, the court concluded disputed issues of material fact prevent summary judgment. View "Randle v. Farmers New World Life Insurance Co." on Justia Law

The Travelers Indemnity Company appeals the judgment entered after the superior court denied Travelers’ petition for a writ of administrative mandate challenging the Insurance Commissioner’s decision that certain agreements relating to workers’ compensation insurance policies issued to Adir International, LLC were unenforceable. Travelers contended that Adir’s lawsuit in the trial court, which included a request for a declaratory judgment the agreements were void, barred the Commissioner, under the doctrine of exclusive concurrent jurisdiction, from exercising jurisdiction while that lawsuit was pending. Travelers also appealed the post-judgment order granting Adir’s motion for attorney fees, contending attorney fees were not authorized.   The Second Appellate Division affirmed the order and judgment denying Travelers’s petition. The court explained that the exclusive concurrent jurisdiction doctrine does not apply in this context to proceedings pending before the trial court and an administrative agency; and, in any event, it was reasonable and consistent with the primary jurisdiction doctrine for the trial court to defer to the Commissioner’s determination of the validity of the agreement at issue. In addition, because Adir’s administrative claim fell within the agreement’s attorney fee provision, the court affirmed the post-judgment order awarding Adir attorney fees. View "The Travelers Indemnity Co. v. Lara" on Justia Law

Appellant is a self-described “watchdog association” that brings actions for injunctive relief against immigration consultants under section 22446.5, which provides a right of action against an immigration consultant to anyone who suffers damages by reason of the immigration consultant’s fraud, misrepresentation, or failure to provide services.In October 2017, Appellant brought over 90 actions against immigration consultants, two of whom had bonds issued by Appellee insurance company. After Appellant prevailed at trial against the consultants, it filed suit against Appellee to recover its attorney fees and costs against the Immigration Consultant Act bond. The trial court granted summary judgment in the insurance company's favor.On appeal, the Second Appellate District affirmed, explaining a surety issuing a statutory bond is liable only to the extent indicated in the code section under which the surety executes the bond and under the plain language of the relevant bond statutes, a non-aggrieved person who suffers no damages is not entitled to recovery from an Immigration Consultant Act bond. View "Immigrant Rights Defense etc. v. Hudson Insurance Co." on Justia Law

Amy’s employs 2,500 people to manufacture vegetarian meals. It purchased comprehensive property insurance from Fireman’s for a period ending in July 2020. The policy included coverage extensions for communicable diseases and for loss avoidance and mitigation: Fireman’s “will pay for direct physical loss or damage to Property" caused by or resulting from a "communicable disease event at a location.” The policy defines “communicable disease event” as one in which “a public health authority has ordered that a location be evacuated, decontaminated, or disinfected due to the outbreak of a communicable disease.” Amy’s incurred costs “to mitigate, contain, clean, disinfect, monitor, and test for the effects of” the coronavirus at insured locations, and to avoid or mitigate potential coronavirus-related losses, including temperature-screening equipment to test for COVID, protective shields to prevent transmission on assembly lines, masks and goggles, cleaning supplies, and “hero pay.” People with confirmed COVID-19 cases were on Amy’s premises. The complaint cited “various require[d safety measures] for all essential businesses.”Fireman’s denied Amy’s claim. The court of appeal affirmed the dismissal of the complaint. Under communicable disease extension, the need to clean or disinfect infected or potentially infected covered property constitutes “direct physical loss or damage” of the property; Amy’s has not pled a “communicable disease event” but should be given leave to amend to do so. View "Amy's Kitchen, Inc. v. Fireman's Fund Insurance Co." on Justia Law

Tarrar operated “a utility consultant business” in Contra Costa County. Associated issued Tarrar a comprehensive commercial liability and property insurance policy to “pay for direct physical loss of or damage to Covered Property,” and in particular to “pay for the actual loss of Business Income you sustain due to the necessary suspension of your operations during the period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.Based on the 2020 “shelter-in-place orders,” Tarrar made an unsuccessful claim for “business income loss.” The trial court dismissed Tarrar’s subsequent suit without leave to amend. While several California courts of appeal have resolved this issue against the insureds, one court held for the insured on the basis it had pled the element missing from earlier cases: it “adequately alleged direct physical loss or damage.” While Tarrar’s complaint did not allege the necessary “direct physical loss of or damage to property,” Tarrar should be permitted to amend. A plaintiff need not even request leave to amend an original complaint. Unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion. View "Tarrar Enterprises, Inc. v. Associated Indemnity Corp." on Justia Law

Appellant Federal Insurance Company (Federal) was the prevailing party in a lawsuit Cell-Crete Corporation (Cell-Crete) brought seeking to recover against Federal on a payment bond. After dismissal, the trial judge denied Federal’s request for attorney fees and taxed its costs on the ground that Federal did not incur any fees or costs because a third party, Granite Construction Company (Granite), paid the fees and costs of Federal’s defense under an indemnity agreement between Federal and Granite. On appeal, Federal argued it was entitled, as the prevailing party, to recover their reasonable attorney fees and costs anyway: a party represented by counsel in an attorney-client relationship was entitled to an award of fees and costs even if they had been or would be borne by a third party. To this the Court of Appeal agreed and reversed the order denying Federal’s motion for attorney fees and granting Cell-Crete’s motion to tax costs, and remanded for further proceedings. View "Cell-Crete Corp. v. Federal Ins. Co." on Justia Law

Apple Annie operated restaurants in Marin, San Francisco, and Santa Barbara counties and had comprehensive commercial liability and property insurance through Oregon Mutual for “for direct physical loss of or damage to Covered Property at the [insured] premises,” and to “pay for the actual loss of Business Income you sustain due to the necessary suspension of your ‘operations’ during the ‘period of restoration. The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.” The policy did not define “direct physical loss of or damage.”Apple Annie filed claims for losses resulting from the COVID pandemic and ensuing lockdown. The court of appeal affirmed summary judgment in favor of Oregon Mutual. The policy language,“direct physical loss or damage to,” despite its disjunctive phrasing, is unambiguous. A loss of use simply is not the same as a physical loss. Although the COVID virus has a physical presence, and thus Apple Annie may have suffered economic loss from the physical presence of the COVID virus, it has not suffered “direct physical loss of or damage to [its] property.” View "Apple Annie, LLC v. Oregon Mutual Insurance Co." on Justia Law

Northfield issued a policy to insure an apartment complex. The coverage excludes liability for violations of the insured’s duty to maintain habitable premises; this exclusion also encompasses coverage for “any claim or ‘suit’ ” that also alleges habitability claims. Tenants sued the insured, alleging multiple habitability claims and other causes of action that were arguably not based on habitability. Northfield declined to defend the tenants’ lawsuit. After settling the underlying action, the insured sued Northfield for breach of its duty to defend. The trial court concluded the case presented a “mixed” action containing both potentially covered and uncovered claims, and that Northfield was obliged to provide a defense.The court of appeal reversed. The policy exclusion is plain and clear. The court rejected arguments that claims for retaliation, conversion, and trespass to chattels did not arise from the duty to provide habitable premises. The retaliation concerned complaints about habitable conditions and the claims are alleged in a suit that also alleges habitability claims. View "24th & Hoffman Investors, LLC v. Northfield Insurance Co." on Justia Law