A federal appeals court on Wednesday affirmed a lower court ruling in favor of an insurer over the issue of whether an insurance policy’s rights had been properly transferred to the new owner of a hotel that was damaged.

Thousand Oaks, California-based MS & Sons Hospitality LLC purchased a motel in Thousand Palms, California, from Santa Clara, California-based Seoul Plaza LLC in 2017, according to the complaint in the case, MS & Sons Hospitality LLC; Mukesh K. Patel vs. DB Insurance Co. Ltd.; and Does 1 through 10 Inclusive.

In April 2017, during the escrow period for the motel’s purchase, the motel suffered extensive water damage, which required a complete remodel and renovation and led to more than $2 million in damages, the complaint said.

Seoul filed a claim with its insurer, South Korea-based DB Insurance Co. Ltd., whose U.S. headquarters are in Anaheim, California, through its operating entity, Pinnacle Hospitality Inc., the complaint said.

In February 2018 Pinnacle retroactively assigned all its rights under the policy to MS to coincide with the property’s transfer in June 2017, the complaint said.

DB refused to recognize the assignment as valid and MS filed suit against the insurer in U.S. District Court in Riverside, California, charging negligence and breach of contract.

The district court ruled in the insurer’s favor and was affirmed by the 9th U.S. Circuit Court of Appeals in San Francisco. “MS argued that it has a legally protected interest in the proceeds of DB and Pinnacle Hospitality insurance contract,” the ruling said. “But MS was not party to the insurance contract. Whether MS has standing therefore hinges on whether it was validly assigned rights under the contract.”

“The only evidence in the record related to assignment is a February 2018 letter to DB from Mr. Chris Choi, who was the secretary of the company that owned the property subject to the insurance contract,” the ruling said.

Mr. Choi is not named as a beneficiary on the insurance policy, and he is not “the owner of the right,’” the ruling said. “No evidence suggests that Mr. Choi had actual authority,” it said.

“In sum, Pinnacle did not validly assign its contractual rights to MS under California law, the ruling said, in affirming the lower court.

MS attorney Frank A. Weiser, of the Law Offices of Frank A. Weiser in Los Angeles, said he disagrees with the ruling and plans to seek an en banc hearing of the case. The insurer’s attorneys did not respond to a request for comment.