Published July 18, 2022 10 Views

This is Not a Ruling on Evidence & Is Not a Win for Insureds

In Marina Pacific Hotel And Suites, LLC, et al. v. Fireman’s Fund Insurance Company, B316501, California Court of Appeals, (July 13, 2022) the Court of Appeals was faced with a ruling on a demurrer without leave to amend when the complaint alleged all elements required to allege a cause of action.

For more than two years the courts understanding of COVID-19, the infectious disease caused by the SARS-CoV-2 virus and its many variants, has evolved. Courts now think they know how it spreads, how to protect against it and how best to treat those who have it. When a pleading alleges facts sufficient to constitute a cause of action, what we think we know-beliefs not yet appropriately subject to judicial notice- has never been a proper basis for concluding, as a matter of law, those alleged facts cannot be true and, on that ground, sustaining a demurrer without leave to amend.

Governing Law: Interpretation of Insurance Policies

In general, interpretation of an insurance policy is a question of law that is decided under settled rules of contract interpretation

The insureds’ appeal requires analysis of the allegations in their first amended complaint primarily in terms of one insuring provision -coverage for business interruption due to “direct physical loss or damage to” covered property-and one exclusion-for “mortality and disease.”

The Insureds Adequately Alleged Direct Physical Loss or Damage Caused by the COVID-19 Virus and a Cause of Action for Breach of Contract by Fireman’s Fund

The elements of a cause of action for breach of contract are

the existence of the contract,
plaintiff’s performance or excuse for nonperformance,
defendant’s breach, and
the resulting damages to the plaintiff.

Fireman’s Fund’s demurrer did not challenge elements (1), (2) or (4), contending only it did not breach its obligation to pay benefits under the policy because the insureds, having failed to allege any direct physical loss or damage to property, failed to allege a covered loss.

Because the insureds adequately alleged losses covered by Fireman’s Fund’s policy, they are entitled to an opportunity to present their case, at trial or in opposition to a motion for summary judgment.

The judgment is reversed, and the cause remanded with directions to the trial court to vacate its order sustaining the demurrer without leave to amend and to enter a new order overruling the demurrer. The insureds are to recover their costs on appeal.


Although press reports consider this decision to be a win for the plaintiffs, it is not. It is a statement that the Plaintiffs adequately pleaded a cause of action that, if proved with admissible evidence, can result in coverage and that the Plaintiffs are entitled to try to prove their case. At best it is a decision that the mere allegation of direct physical loss is sufficient to avoid a demurrer but that evidence is required to avoid a motion for summary judgment or a trial.

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