A California appeals court said Thursday that while a June 2020 burglary at a marijuana dispensary constituted one occurrence under its insurance policy, a trial judge erred when finding the insurer was not required to make an additional payment for business losses.  

The First Appellate District said in its published ruling in Apex Solutions Inc. v. Falls Lake Insurance Management Company Inc., that a narrow triable issue exists concerning the proper calculation of Apex’s lost business income.

The three-judge appeals court panel said the trial judge erred by not squarely addressing the parties’ “diametrically opposed” arguments on how to calculate Apex’s business losses stemming from the burglary. The panel pointed out that the judge did not rule on Falls Lake’s objection to the declaration of Apex accountant William Funderburke for hearsay and lack of foundation.

Apex’s Oakland store was burglarized in June 2020 during the civil unrest following the death of George Floyd. The company’s policies from Falls Lake provided $600,000 in coverage per occurrence for property damage and up to $2 million in coverage for business losses, court records show.

Apex told Falls Lake that it lost $2.5 million in inventory from the burglary. The insurer paid $600,000 to Apex after taking the position that the burglary only constituted one occurrence. Apex received a second payment of $673,477 for business losses.

Apex sued Falls Lake for breach of contract and bad faith after they were unable to resolve their dispute on the business loss calculations. Apex also argued that the burglary constituted two occurrences since inventory was stolen from two of its vaults. The parties filed competing summary judgment motions, and the trial judge sided with Falls Lake.

Apex appealed, arguing that the trial judge erred when finding that the burglary was only one occurrence and that the insurer had correctly calculated its business losses.  

Representatives for the parties did not respond to requests for comment.