A federal appeals court affirmed a ruling in favor of a Travelers Cos. Inc. unit that denied a property owner’s claim involving a pool’s roof, stating the damage was known before the policy period. 

Newport Beach, California-based Monterey Property Associates Anaheim LLC sought defense and indemnity from Travelers Property Casualty Co. of America after it was sued by a tenant, Fitness International LLC, according to Wednesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Monterey Property Associates Anaheim, LLC v. Travelers Property Casualty Co. of America and Does, 1 through 10. 

Fitness International, which conducts business as LA Fitness, contended that MPAA’s refusal to repair a failing roof over its swimming pool in accordance with its lease contract damaged it by forcing LA Fitness to permanently close its pool because of the health and safety hazards the roof posed, the ruling said. 

Travelers denied coverage based on a policy exclusion to property that the insured owns or rents and a lack of coverage for property damage that was known prior to the policy period. 

MPAA filed suit for breach of contract and breach of the implied covenant of good faith and fair dealing in U.S. District Court in Pasadena, which ruled in the insurer’s favor. 

A unanimous three-judge appeals court panel affirmed the ruling. “Under the Travelers insurance policy, property damage is not covered if the insured knew that all or part of the damage had already occurred prior to the policy period,” the panel’s ruling said. 

“The district court implicitly held – and there is ample evidence in the record to support – that MPAA knew about damage to the roof over LA Fitness’s pool before the policy period began.” 

The ruling disagreed with MPPA’s argument that the pool closure was not a continuation of the roof damage because it was “a different type of loss, to a different property, at a different time.” 

“Because known roof damage is the only proffered reason for the pool closure found anywhere on the record, we conclude that the pool closure was excluded for coverage under the policy as a known loss, and the district court properly granted summary judgment in Traveler’s favor,” the ruling said. 

Attorneys in the case did not respond to requests for comment.