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October 27th, 2020
California Business Interruption Coverage Plaintiff Seeks Expedited Supreme Court Review
The Inns by the Sea, which operates hotels in California, is hoping to fast track its appeal of a state judge's August ruling dismissing its suit against California Mutual Insurance Co., by bypassing a midlevel appellate court and seeking immediate review by the Supreme Court of California. The case involves an issue of "great public importance" that is coming up in thousands of similar coverage disputes.
The Inns filed suit against California Mutual on April 20, after the insurer denied coverage for losses suffered when its hotels closed due to state and local officials’ shelter-in-place orders.
The Inns sought coverage under its all-risk policy with California Mutual – citing the "civil authority" trigger. “Civil authority” coverage applies where a state or local government prohibits the policyholder from accessing its property due to direct physical loss of or damage to a property other than the policyholder's. The parties dispute the interpretation and application of the “civil authority” provision.
The Inns argued that COVID-19 can cause direct physical loss of or damage to property because the virus renders property "unsafe and unfit for its intended purpose." California Mutual, on the other hand, asserted that the provision requires "direct, tangible, and perceptible alteration" to the property to trigger coverage.
California Mutual moved to dismiss The Inns' complaint on June 18. The Court granted the insurer’s motion on Aug. 4. The Inns not only appealed, but also sought immediate transfer to the Supreme Court of California – an extraordinary remedy. The Supreme Court will not order transfer under this rule unless the cause presents an issue of great public importance that the Supreme Court must promptly resolve. Here, the Inns argue that resolution of its dispute will affect tens of thousands of existing lawsuits concerning the availability of coverage for businesses' losses due to government-mandated COVID-19 shutdowns. We will watch this case closely and report developments.
If you have questions about the Inns by the Sea case, or about other commercial disputes arising from the COVID-19 pandemic, the Frankfurt Kurnit Litigation Group can help. Contact Tiffany Caterina at (310)-579-9620 or tcaterina@fkks.com, or any other member of the Group.
Other Commercial Litigation Alerts
ADA Website Accessibility Lawsuits: What Companies Need to Know
Plaintiffs have filed thousands of lawsuits (including class actions) alleging that commercial websites are not accessible to the blind or visually impaired in violation of the Americans with Disabilities Act of 1990 (the “ADA”) and corresponding state laws. Read more.
December 6 2018
NY Court Expands Protections for Employers to Safeguard Proprietary Information
Yesterday a New York State appeals court reinstated the conviction of a former Goldman Sachs computer programmer under New York's unlawful use of secret scientific material statute. In doing so, the court gave a twenty-first century voice to a statute that was written in the age of blueprints and photocopiers. Read more.
January 27 2017
New Trade Secrets Law Calls for Changes to Handbooks and Certain Employment Agreements
As we noted in an alert last week, the Defend Trade Secrets Act of 2016 ("DTSA") creates a private right of action to sue in federal court for trade secret misappropriation, and provides for remedies including actual damages and attorneys' fees. Read more.
May 25 2016
