Calif. court refuses summary judgment to insurer in COVID case

A Los Angeles state court on Thursday refused to grant an Allianz SE unit’s motion for summary judgment in a COVID-19-related business interruption case that was returned to a lower court after a pro-policyholder state appeals court ruling.

In July, in a rare policyholder victory, the California Court of Appeal in Los Angeles reversed a lower court and reinstated the coverage lawsuit filed by a Los Angeles hotel and restaurant, Marina Pacific Hotel and Suites LLC, stating it was premature to dismiss the litigation, according to the ruling in Marina Pacific Hotel and Sites LLC et al. v. Fireman’s Fund Insurance Co.

Plaintiffs in the case, who are owners of the Hotel Erwin and Larry’s, an adjacent restaurant in the Los Angeles neighborhood of Venice, sued Allianz SE unit Fireman’s Fund in July 2020 under their commercial property insurance policy, which provided $22 million in business interruption coverage.

The ruling issued Thursday by a different judge in Superior Court in Santa Monica cites the appellate court ruling and states, “Defendant fails to engage Plaintiff’s allegations that it suffered ‘direct physical loss or damage’ due to COVID under the Business Income, Business Access and Civil Authority coverage.”

It states the insurer “does not present any evidence or argument challenging Plaintiff’s allegation that the COVID virus is an external force that causes physical change or alteration onto Hotel Erwin’s property,” and “fails to negate Plaintiff’s allegation that the surface at Hotel Erwin were exposed to COVID and the virus was present on them.”

“At best, defendant’s evidence suggests there may have been additional, contributing causes for Plaintiff’s business suspension and reduction in addition to the physical loss or damage caused by the virus,” the order states.

In December, the court issued a motion to compel Fireman’s Fund president and CEO William Scaldaferri to participate in a deposition, which took place on Jan. 10.

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