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Patel v. Am. Econ. Ins. Co.

United States District Court for the Northern District of California

May 8, 2014, Decided; May 8, 2014, Filed

Case No. 12-cv-04719-WHO

Opinion

ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT

On October 14, 2009, a fire in the basement of a commercial building caused smoke damage to the dental office of plaintiff Namrata Patel. She had an insurance policy with defendant American Economy Insurance that covered, among other things, direct physical damage, loss of business income for twelve months after the date of the loss, and necessary extra expenses. Patel seeks current loss of business income because she was forced to relocate her business when the building closed for repairs in 2014. She also claims coverage of $50,275 for a feng shui consultant she hired before reopening the office after the fire. Because any lost business income suffered more than twelve months after the fire is not covered by the policy, and because feng shui services are not covered since they are not a direct physical loss or damage nor a necessary "extra expense," I will GRANT American Economy's motion for partial summary judgment.1

FACTUAL BACKGROUND

After discovering the smoke damage caused  [*2] by the fire, Patel submitted claims to American Economy in 2009 and 2010 for various items, including damage to dental and electronic equipment, cleaning and repair costs, inventory replacement, and lost business income. Atwood Decl. Exs. D, I, L. One of the items claimed was "Five Elements Feng Shui Invoice" in the amount of $50,275 for a feng shui consultant who "had to come in and change crystals and perform additional cures to help to restore the location to its original condition." Id., Ex. L. American Economy investigated Patel's claims and determined that some claims were covered by the policy, but that other claims were not covered or were not valid. See Id. Exs. M, S (detailing approved and rejected claims). American Economy determined that the feng shui consultant costs were not covered by the policy because "it is not a necessary expense to restore the premises to its pre-loss condition" and "does not meet the definition of direct physical loss of or damage to covered property." Id., Ex. M. American Economy paid Patel a total of $114,703.29 under the policy, consisting of $74,950.50 for business personal property and $39,752.79 for business income loss. Id. ¶ 26.

On December  [*3] 30, 2011, Patel filed this action alleging causes of action for breach of contract for American Economy's failure to pay amounts allegedly due under the policy, and breach of the implied covenant of good faith and fair dealing for American Economy's alleged mishandling of Patel's claims. See Notice of Removal, Dkt. No. 1.

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2014 U.S. Dist. LEXIS 63935 *; 2014 WL 1862211

NAMRATA C. PATEL, DDS, Plaintiff, v. AMERICAN ECONOMY INSURANCE COMPANY, et al., Defendants.

Prior History:  [*1] Re: Dkt. No. 47.

Patel v. Am. Econ. Ins. Co., 2012 U.S. Dist. LEXIS 194135 (N.D. Cal., Nov. 26, 2012)

CORE TERMS

coverage, physical loss, business income, feng, shui, summary judgment, restoration, extra expense, consultant, losses, replacement, insurance policy, insured, described premises, genuine dispute, consecutive months, bad faith claim, fair dealing, good faith, benefits, breach of the implied covenant, bad faith, repaired, fails, cause of action, suspension, premises, damages, partial, argues