Justia Insurance Law Opinion Summaries

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

The Thompsons own property in Sonoma County that is subject to a conservation easement (Civ. Code 815) in favor of SLT, which prohibits any impairment of the land’s conservation values. SLT sued, alleging that the Thompsons had done work on the parcel that caused damage in violation of the conservation easement. The Thompsons tendered defense of the action to Burlington Insurance, which declined the tender on the ground that the action did not arise from an “occurrence,” defined as an “accident.” The Ninth Circuit upheld the denial of coverage.While that appeal was pending, the Thompsons tendered defense of the action to Crestbrook and Nationwide, under policies identical in relevant part to the Burlington policy. The insurers declined the tender. The trial court ultimately upheld the denial of coverage. The California court of appeal affirmed. The federal court judgment precludes relitigation of whether the SLT action arose from an “accident” within the meaning of the two insurers’ policies. The issue here is identical to the issue in the Burlington litigation. No material change in the law since the Burlington judgment diminishes its preclusive effect and there is no unfairness in affording the Burlington judgment preclusive effect. View "Thompson v. Crestbrook Insurance Co." on Justia Law

The owners of Hotel Erwin and Larry’s (a restaurant adjacent to the hotel) in Venice Beach—Marina Pacific Hotel & Suites, LLC; Venice Windward, LLC; Larry’s Venice, L.P.; and Erwin H. Sokol, as trustee of the Frances Sokol Trust (collectively insureds)—sued Fireman’s Fund Insurance Company alleging 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 Fireman’s Fund’s first party commercial property insurance policy—but Fireman’s Fund refused to pay policy benefits for covered losses incurred as a result. The trial court sustained Fireman’s Fund’s demurrer to the insureds’ first amended complaint without leave to amend and dismissed the lawsuit, ruling the COVID-19 virus cannot cause direct physical loss or damage to property for purposes of insurance coverage.   The Second Appellate District reversed the trial court’s judgment sustaining Defendant’s demurrer to the insureds’ first amended complaint without leave to amend and dismissed the lawsuit, ruling the COVID-19 virus cannot cause direct physical loss or damage to property for purposes of insurance coverage. The court held it was an error at the nascent phase of the case. The court explained that because the insureds adequately alleged losses covered by Fireman’s Fund’s policy, they are entitled to an opportunity to present their case, at trial or in opposition to a motion for summary judgment. The judgment of dismissal based on the trial court’s disbelief of those allegations, whether ultimately reasonable or not, must be reversed. View "Marina Pacific Hotel and Suites, LLC v. Fireman's Fund Ins. Co." on Justia Law

St. Paul Fire and Marine Insurance Company (St. Paul Fire & Marine) and multiple other appellants (collectively, the St. Paul Insurers or sometimes St. Paul) appealed a California trial court’s order staying their declaratory judgment insurance coverage action. The trial court issued the stay in recognition of a "bellwether case of national importance" that was ongoing in West Virginia (WV coverage action), which, like this, arose from the opioid prescription abuse and addiction crisis. The WV coverage action commenced in March 2017, nearly four years before plaintiffs filed their complaint here. At the time the trial court issued its stay, proceedings had progressed significantly in West Virginia. The trial court found that in this action and in the WV coverage action “some of the same insurance policies are at issue in both cases, and the West Virginia court will be interpreting at least one of St. Paul’s policies to determine whether they cover opioid litigation, an answer that presumably will be the same whether the underlying litigation is in West Virginia or some other state.” St. Paul challenged the trial court’s stay order, arguing it constituted an abuse of discretion. The California Court of Appeal concluded St. Paul failed to meet its burden to demonstrate an abuse of discretion, and affirmed the order. View "St. Paul Fire & Marine Ins. Co. v. AmerisourceBergen Corp." on Justia Law

Appellants alleged that Respondents, Berkshire Hathaway Homestate Insurance Company (Berkshire), Cypress Insurance Company (Cypress), Zenith Insurance Company (Zenith), and others conspired to “hack” a third-party computer system. At the direction of the insurance-company Respondents, allegedly copied thousands of electronic litigation files, which had been uploaded to the system by workers’ compensation and personal injury attorneys and their clients (including Appellants), and transmitted the copies to insurers and insurance defense law firms. Appellants first sued respondents in federal district court on various causes of action, including invasion of privacy.   The Second Appellate District, affirmed and agreed with the trial court that Appellants failed to state a claim. The court concluded that Appellants failed to allege any actionable injury because: (1) they did not allege damage or disruption to the computer system, as required by Intel; and (2) they did not allege injury to the copied files or their asserted property interests therein. The trial court properly sustained Respondents’ demurrers to Appellants’ trespass-to-chattels claim, because Appellants failed to allege any actionable injury to a property interest, whether in the HQSU system or in the files copied from it. In response to Appellants’ unfounded warnings that affirmance will leave future victims of hacking without any effective remedy. Having abandoned a privacy claim during their federal litigation, Appellants effectively attempted, both in the trial court and on appeal, to repackage an alleged invasion of privacy as a trespass to chattels. Because Appellants failed to plead facts satisfying the latter tort’s element of injury to a property interest, the trial court properly sustained respondents’ demurrers. View "Casillas v. Berkshire Hathaway Homestate Insurance Co." on Justia Law

A Surety on a $50,000 bail bond appeals from an order denying its motion to set aside a summary judgment entered on the bond. Surety contends the summary judgment entered on the bail bond is voidable and must be vacated because it was not filed within 90 days after the appearance period expired as required by Penal 2 Code section 1306, subdivision (c).   The trial court concluded the Surety was estopped from arguing the reinstatement order was void. As Surety’s challenge to the summary judgment was based on the invalidity of the reinstatement order, the court concluded that the challenge must fail.   The Fifth Appellate District agreed with Surety’s contention that the trial court lacked the authority to reinstate the bond after the appearance period expired. However, the trial court correctly decided that Surety’s conduct estopped it from raising the invalidity of the reinstatement order as a basis for vacating the summary judgment. Here, Surety (1) had prior notice that a reinstatement order would be entered, (2) gave its written consent to the reinstatement, (3) paid a $50 reinstatement fee a few days after the reinstatement order, and (4) benefited when the forfeited $50,000 bail bond was reinstated. Furthermore, the trial court relied on Surety’s consent when it vacated the forfeiture and reinstated the bail bond. The court concluded such circumstances estop Surety from arguing the reinstatement order was invalid. Because the invalidity of the reinstatement order is a necessary condition to Surety’s argument that the summary judgment is voidable. View "P. v. Accredited Surety and Casualty Co." on Justia Law

Plaintiff sued her employer, Life Insurance Company of North America, and several related individuals (collectively, Employer) for discrimination, harassment and wrongful termination. In response, Employer moved to compel arbitration based on a 2014 arbitration agreement. However, Employer did not present a copy of the agreement. Instead, Employer presented an auto-generated acknowledgment indicating Plaintiff read and consented to the terms of the agreement.The trial court denied Employer's motion to compel arbitration, finding that Employer did not establish an agreement to arbitrate and, even if an agreement existed, it was both procedurally and substantively unconscionable.The Second Appellate District affirmed. The trial court had the authority to review the "gateway" issue of arbitrability because Plaintiff claimed to have never seen or agreed to the arbitration agreement. Further, the fact that Employer's system created an auto-generated acknowledgment that Plaintiff consented to the agreement did not overcome Plaintiff's claim that she was not presented with the agreement and never would have agreed to it. View "Trinity v. Life Ins. Co. of North America" on Justia Law