Apple Annie, LLC v. Oregon Mutual Ins. Co.

Apple Annie, LLC v. Oregon Mutual Ins. Co.

Opinion

RICHMAN, Acting P. J.—The COVID pandemic and ensuing lockdown have generated a host of legal issues. One of the most momentous, in terms of the potential monetary liability, is whether businesses ordered by government decree to close or suspend operations could get compensation under the business income coverage of the standard comprehensive commercial liability policy. The issue has generated opinions from different Courts of Appeal, all of which have held that the issue comes down to whether the insured can allege it suffered “direct physical loss of or damage to [the insured] property.” Having lost in the trial court, the insured here tells us “this appeal can be viewed as [**2]  a referendum on whether [those] decisions were correctly decided.” We conclude that they were, add our agreement with the other cases, and thus affirm the judgment on the pleadings for the insurer.

 [*924] 

BACKGROUND

At all relevant times, plaintiff Apple Annie, LLC, operated restaurants in Marin, San Francisco, and Santa Barbara counties. Defendant Oregon Mutual Insurance Company issued Apple Annie 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 [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.’³ 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.” The policy did not define “direct physical loss of or damage.”

The policy included two provisions that will have only glancing relevance to our analysis and conclusion.⁴

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