Trial and Appellate Solutions

Hayes Scott Bonino Ellingson Guslani Simonson & Clause LLP Wins First California Decision on Pandemic Business Interruption Claim

Businesses across the United States have sought insurance coverage for the loss of income they have sustained due to government shelter-in-place orders during the pandemic.

The first California federal or state court to hear this issue was in Monterey County.

In the first California decision of its kind, Judge Lydia M. Villarreal granted California Mutual Insurance Company’s demurrer without leave to amend regarding plaintiff The Inns by The Sea’s Complaint for business income loss to their hotels during the pandemic.

California Mutual’s Commercial Property insurance policy did not have a virus exclusion.  However, Ryan Keller of Hayes Scott argued on California Mutual’s behalf that there was no coverage because the business income loss was not caused by “direct physical loss”.  Judge Lydia M. Villarreal of Monterey County Superior Court agreed.

The Court sustained the demurrer to the entire Complaint without leave to amend on the grounds that the allegations fail to state facts sufficient to constitute a cause of action.  The matter is currently on appeal.

Plaintiff The Inns by the Sea are represented by Michael J. Reiser of Reiser Law p.c. and Samuel Ferguson of The Meade Firm p.c.

Defendant California Mutual Insurance Company is represented by Stephen M. Hayes, Mark G. Bonino and Ryan Z. Keller of Hayes Scott Bonino Ellingson Guslani Simonson & Clause, LLP.

The case is The Inns by the Sea v. California Mutual Insurance Company, Case No. 20CV001274, in Monterey County Superior Court.  A Court of Appeal case number has yet to be created.