Tarrar Enterprises v. Associated Indemnity Corp.

Filed 9/22/22 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

TARRAR ENTERPRISES, INC., Plaintiff and Appellant, A162795

v. (Contra Costa County ASSOCIATED INDEMNITY Super. Ct. No. MSC20- CORP., 01776) Defendant and Respondent.

At all relevant times, plaintiff Tarrar Enterprises, Inc. (Tarrar) operated what it describes as “a utility consultant business” in Contra Costa County. Defendant Associated Indemnity Corporation (Associated) issued Tarrar a comprehensive commercial liability and property insurance policy that, as relevant here, promised in general to “pay for direct physical loss of or damage to Covered Property at the described [insured] premises,” and in particular to “pay for the actual loss of Business Income you sustain due to the necessary suspension of your ‘operations’ during the ‘period of restoration.’ . . . The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.” According to Tarrar’s complaint, in March 2020, first the Contra Costa Board of Supervisors, and then the Governor, issued “shelter in place orders,”

1

which, Tarrar alleged, required it “to close its business premises for the duration of the orders” and “caused [it] to suffer a serious and sustained loss of business income.” Associated denied Tarrar’s claim for “business income loss.” Tarrar sued, and its action ended when the trial court sustained Associated’s general demurrer without leave to amend. And Tarrar’s timely appeal is from the judgment of dismissal entered on the demurrer order. Tarrar’s opening brief was filed on November 30, 2021, and begins with this: “This appeal presents an important coverage issue arising from the COVID-19 pandemic, and one that appears to be, in this factual context, of first impression before the California Courts of Appeal: can losses caused by the COVID-19 pandemic be covered by business interruption insurance policies which are triggered by physical loss or damage?” This statement may have been true when the brief was filed, but it has been overtaken by subsequent events. Since then several California Courts of Appeal have resolved the issue against the insureds—like here, on demurrer—holding that the issue comes down to whether the insured can allege it suffered “direct physical loss of or damage to property” within the plain meaning of the policy language: Inns-by-the-Sea v. California Mutual Ins. Co. (2021) 71 Cal.App.5th 688; Musso & Frank Grill Co. Inc. v. Mitsui Sumitomo Ins. USA Inc. (2022) 77 Cal.App.5th 753; and United Talent Agency v. Vigilant Insurance Co. (2022) 77 Cal.App.5th 821. Most recently, some three weeks ago, this court filed its opinion in Apple Annie, LLC v. Oregon Mutual Insurance Co. (Sep. 2, 2022, A163300) __ Cal.App.5th __ [2022 Cal.App. Lexis 753] (Apple Annie)), which, discussing the cases, affirmed a judgment on the pleadings for the insurer. Meanwhile, in July, one Court of Appeal decision ruled for the insured, in Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund Ins. Co. (2022)