Seeking an answer to a question that the California Supreme Court has so far repeatedly avoided, a Ninth Circuit panel today asked the state high court to address: “Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute ‘direct physical loss or damage to property’ for purposes of coverage under a commercial property insurance policy?” The case is Another Planet Entertainment, LLC v. Vigilant Insurance Company.
The Ninth Circuit summarized the case as one involving “an insured who sued for breach of contract, bad faith, and fraud when its insurer denied coverage for business income losses that the insured incurred following government closure orders issued during the COVID-19 pandemic.” Video of the Ninth Circuit oral argument in the case, held earlier this month, is here.
The Supreme Court has denied review in three cases raising similar coverage issues and denied a depublication request in a fourth. (See here.) The Court of Appeal opinion in the most recent review-denied case said that, of the Covid pandemic legal issues (related: the Supreme Court’s pandemic docket), the coverage issue is “[o]ne of the most momentous, in terms of the potential monetary liability.”
After the last Supreme Court refusal to take up a Covid insurance case, we said, “It looks like the only way the court will address the issue is if the Ninth Circuit asks it to.” The odds are good that the court will agree to answer the Ninth Circuit’s question. Not counting one pending request, the Supreme Court has granted 17 of the last 18 Ninth Circuit requests for help in resolving questions of California law, dating back to July 2018. The lone denial during that time was in October 2019.
If the Supreme Court agrees to resolve the pandemic insurance coverage issue, the issue would follow a path similar to that taken by another pandemic issue — whether an employer can be liable to its employees’ households for failing to prevent the spread of COVID-19. After it had denied review of a Court of Appeal opinion in a take-home Covid case (see here), the Supreme Court agreed to answer take-home Covid questions for the Ninth Circuit in Kuciemba v. Victory Woodworks.
The Supreme Court should let the Ninth Circuit know by late February — give or take — whether it will answer the coverage question.