notice of demurrer and demurrer to first amended complaintCal. Super. - 1st Dist.October 7, 2021 1 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Michelle Press (SBN 163637) Sue H. Kim (SBN 310334) WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP 555 South Flower Street, Suite 2900 Los Angeles, California 90071 Telephone:(213) 443-5100 Facsimile: (213) 443-5101 Attorneys for Plaintiffs Certain Underwriters at Lloyd's, London Subscribing to Policy Nos. RTB-0000172-02 and RTB-0000172-03 SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO ROYAL CUCKOO INC., a California Corporation, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYDS LONDON POLICY Nos. RTB-0000172-02 AND RTB-0000172-03; and DOES 1-50, inclusive, Defendants. Case No. CGC-20-587390 Hon. Samuel K. Feng NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT BY DEFENDANT CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY NOS. RTB-0000172-02 AND RTB-0000172-03; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: July 21, 2021 Time: 9:30 a.m. Dept: 302 Complaint filed: October 16, 2020 Trial Date: None Set [Filed concurrently with Declaration of Chad Butterfield] TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on July 21, 2021 at 9:30 a.m., or as soon thereafter as the matter may be heard in Department 302 of the above-entitled Court, located at 400 McAllister Street, San Francisco, California 94102, Defendant Certain Underwriters at Lloyd's, London Subscribing to Policy Nos. RTB-0000172-02 and RTB-0000172-03 ("Underwriters") will and ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 06/23/2021 Clerk of the Court BY: EDNALEEN ALEGRE Deputy Clerk 2 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hereby do demur to the first amended complaint ("the complaint") of Plaintiff Royal Cuckoo, Inc. ("plaintiff"). This demurrer is made pursuant to Code of Civil Procedure sections 430.10(d) and (e), and is based upon this Notice, the attached Memorandum of Points and Authorities, all other papers submitted and filed with this notice, the pleadings and papers on file in this action, and on such further documentary evidence and oral argument as the Court may allow at the hearing of this matter. DATED: June 23, 2021 WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP By Michelle Press Michelle R. Press Sue Kim Attorneys for Defendant Certain Underwriters at Lloyd's, London Subscribing to Policy Nos. RTB-0000172-02 and RTB-0000172-03 DEMURRER Underwriters generally demur to the first amended complaint on the following grounds: The complaint fails to state a cause of action against Underwriters. Underwriters specially demur to the following Causes of Action set forth within the first amended complaint on the following grounds: I. The first cause of action for breach of insurance contract fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). II. The second cause of action for breach of the covenant of good faith and fair dealing fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). 3 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. The third cause of action for bad faith denial of insurance claim fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). IV. The fourth cause of action for unfair business practices fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). V. The fifth cause of action for declaratory relief fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). VI. The sixth cause of action for injunctive relief fails to state a claim because the complaint does not state facts sufficient to constitute such a cause of action. Code Civ. Proc. § 430.10(e). WHEREFORE, Underwriters respectfully request that this Court issue an order sustaining its general and special demurrers without leave to amend, or with leave in the alternative, with and/or for such other relief as the Court deems just and proper. DATED: June 23, 2021 WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP By Michelle Press Michelle R. Press Attorneys for Defendants Certain Underwriters at Lloyd's, London Subscribing to Policy Nos. RTB-0000172-02 and RTB-0000172-03 i DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page I. INTRODUCTION ............................................................................................................. 1 II. FACTUAL BACKGROUND ............................................................................................ 1 III. LEGAL ARGUMENT ....................................................................................................... 6 A. Plaintiff Fails to Allege any Direct Physical Loss or Damage to Property ........... 6 B. Plaintiff Has Not Plead A Valid "Civil Authority" Claim Under the Policies ................................................................................................................. 10 C. The Exclusions in the Covered Cause of Loss Form Preclude Coverage............ 12 D. The Virus, Contamination and Microorganism Exclusions Apply ...................... 13 IV. NO REDEEMING AMENDMENT IS POSSIBLE ........................................................ 14 V. CONCLUSION ................................................................................................................ 15 ii DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases 10E, LLC v. Travelers Indem. Co., 2020 U.S. Dist. LEXIS 156827 (C.D. Cal. Aug. 28, 2020) .................................. 7, 8, 9, 10, 14 Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541 ............................................................................................................. 15 Dickie Brennan & Co. v. Lexington Ins. Co. (5th Cir. 2011) 636 F.3d 683 ................................................................................................... 10 Diesel Barbershop, LLC v. State Farm Lloyds, 2020 U.S. Dist. LEXIS 147276 (W.D. Tex. Aug. 13, 2020) .................................................. 10 Franklin EWC, Inc. v. Hartford Fin. Servs. Grp., 2020 U.S. Dist. LEXIS 174010 (N.D. Cal. Sep. 22, 2020) .................................................... 12 George v. Auto. Club of S. Cal. (2011) 201 Cal.App.4th 1112 ................................................................................................. 15 La Jolla Village Homeowners’ Ass’n, Inc. v. Superior Court (1989) 212 Cal.App.3d 1131 .................................................................................................. 15 Long Affair Carpet & Rug, Inc. v. Liberty Mut. Ins. Co., 2020 U.S. Dist. LEXIS 220757 (C.D. Cal. Nov. 12, 2020) ...................................................... 9 Los Angeles Cty. Museum 2021 U.S. Dist. LEXIS 83317 ................................................................................................ 13 Mark's Engine Co. No. 28 Rest., LLC v. The Travelers Indem. Co. of Conn., 2020 U.S. Dist. LEXIS 188463 (C.D. Cal. Oct. 2, 2020) ....................................................... 14 Mosley v. Pac. Specialty Ins. Co. (2020) 49 Cal.App.5th 417 ..................................................................................................... 13 MRI Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co. (2010) 187 Cal.App.4th 766 ..................................................................................................... 7 Mudpie, Inc. v. Travelers Cas. Ins. Co., 2020 U.S. Dist. LEXIS 168385 (N.D. Cal. Sep. 14, 2020) ................................................ 9, 12 Pappy's Barber Shops, Inc. v. Farmers Grp., Inc. (S.D. Cal. Sept. 11, 2020) 2020 U.S. Dist. LEXIS 166808 .................................................... 10 Plan Check Downtown III, LLC v. AmGuard Ins. Co., 2020 U.S. Dist. LEXIS 178059 (C.D. Cal. Sep. 10, 2020) ....................................................... 9 Robert W. Fountain, Inc. v. Citizens Ins. Co. of Am., 2020 U.S. Dist. LEXIS 231629 (N.D. Cal. Dec. 9, 2020) ........................................................ 9 iii DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Syufy Enter. v. Home Ins. Co. of Ind., 1995 U.S. Dist. LEXIS 3771 (N.D. Cal. Mar. 21, 1995) ........................................................ 11 Total Intermodal Servs. v. Travelers Prop. Cas. Co. of Am., 2018 US Dist. LEXIS 216917 (C.D. Cal. July 11, 2018) ..................................................... 8, 9 Travelers Cas. & Sur. Co. v. Superior Court (1998) 63 Cal.App.4th 1440 ..................................................................................................... 6 Travelers Cas. Ins. Co. of Am. v. Geragos & Geragos, 2020 U.S. Dist. LEXIS 196932 (C.D. Cal. Oct. 19, 2020) .................................. 10, 13, 14 Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680 ..................................................................................................... 15 1 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION The challenging and unfortunate circumstances of the COVID-19 pandemic do not create insurance coverage for losses that fall outside the terms of a policyholder's insurance contract. Here, plaintiff claims that the pandemic resulted in its inability to use its property for its "full" intended purpose (i.e., open at 100% for in-person dining and drinks), which constitutes "direct physical loss of . . . property." That position is incorrect as a matter of law, as a majority of courts nationwide and in California have held in Coronavirus-related cases. Moreover, plaintiff ignores the fact that all of the insuring clauses under which it could possibly claim coverage require as an express prerequisite to coverage direct physical loss or damage. Plaintiff does not allege its business personal property was physically lost or damaged; it does not allege there was any physical loss or damage to the building in which it operates its business; and, it does not allege that a civil authority prohibited access to the insured property because of direct physical loss or damage to nearby property. As a result, it cannot plead facts that bring this matter within an insuring clause of the policy. Even if plaintiff had properly met its burden of alleging facts to bring this matter into the basic scope of coverage, which is not the case, numerous exclusions in the policy would nonetheless apply to preclude coverage, including those for loss caused directly or indirectly by: (a) compliance with an "Ordinance or Law" regulating the use of the property; (b) "Acts or Decisions" of a governmental body; (c) viruses; (d) microorganisms; and (e) the threat of contamination of anything. Accordingly, Underwriters respectfully request that this Court sustain its demurrer without leave to amend. 1 II. FACTUAL BACKGROUND Underwriters subscribed to a certificate of insurance for a policy issued to plaintiff, No. RTB-0000172-02, from April 2, 2019 to April 2, 2020, renewed as No. RTB No. RTB-000172- 1 Plaintiff's original complaint selectively quoted the policies. The two parties met and conferred and worked together to identify the relevant provisions of the policies for plaintiff to attach As Ex. A to the amended complaint. Underwriters will lodge complete copies of the policies if the Court would like. 2 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 03, effective from April 2, 2020 to April 2, 2021 ("the policies"). The policies identify the Designated Premises as 3202 Mission St. in San Francisco - the bar and tavern plaintiff owns called the Royal Cuckoo Organ Lounge ("the Lounge"). (FAC ¶¶ 19, 29-30.) The policies include Building and Personal Property Coverage, which provides in pertinent part as follows: A. Coverage We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss. * * * 3. Covered Causes Of Loss See applicable Causes Of Loss form as shown in the Declarations. (FAC Ex. A, Form No. CP 00 10 06 07, emphasis added.) Causes of Loss - Special Form, CP 10 30 06 07, provides as follows: A. Covered Causes Of Loss When Special is shown in the Declarations, Covered Causes of Loss means Risks Of Direct Physical Loss unless the loss is: 1. Excluded in Section B., Exclusions; or 2. Limited in Section C., Limitations; that follow. B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. a. Ordinance Or Law The enforcement of or compliance with any ordinance or law: (1) Regulating the construction, use or repair of any property; * * * This exclusion, Ordinance Or Law, applies whether the loss results from: (a) An ordinance or law that is enforced even if the property has not been damaged…. * * * 3. We will not pay for loss or damage caused by or resulting from any of the following, 3.a. through 3.c. But if an excluded cause of loss that is listed in 3.a. through 3.c. results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss. 3 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 * * * b. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body. (FAC ¶ 41; Ex. A, emphasis added.) The policies include Business Income (And Extra Expense) Coverage Form CP 00 30 06 07: A. Coverage 1. Business Income * * * We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss…. * * * 3. Covered Causes Of Loss See applicable Causes Of Loss form shown in the Declarations. * * * 5. Additional Coverages * * * a. Civil Authority When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises, provided that both of the following apply: (1) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than one mile from the damaged property; and (2) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property. (FAC ¶¶ 45-46; Ex. A, emphasis added.) 4 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Coverage Form defines "period of restoration" as the period of time that: a. Begins: (1) 72 hours after the time of direct physical loss or damage for Business Income Coverage; or (2) Immediately after the time of the direct physical loss or damage for Extra Expense Coverage; caused by or resulting from any Covered Cause of Loss at the described premises; and b. Ends on the earlier of: (1) The date when the property at the described premises should be repaired, rebuilt or replaced…; or (2) The date when business is resumed at a new permanent location. "Period of restoration" does not include any increased period due to the enforcement of or compliance with any ordinance or law that: (1) Regulates the construction, use or repair, or requires the tearing down of any property; or (2) Requires any insured or others to test for … the effects of "pollutants"…. (Ex. A, Form No. CP 00 30 06 07.) The policies include the following Seepage And/Or Pollution And/Or Contamination Exclusion, Form NMA2340 24/11/88: SEEPAGE AND/OR POLLUTION AND/OR CONTAMINATION EXCLUSION Notwithstanding any provision to the contrary within the Policy of which this Endorsement forms part (or within any other Endorsement which forms part of this Policy), this Policy does not insure: a) any loss, damage, cost or expense, or b) any increase in insured loss, damage, cost or expense, or c) any loss, damage, cost, expense, fine or penalty, which is incurred, sustained or imposed by order, direction, instruction or request of, or by any agreement with, any court, government agency or any public, civil or military authority, or threat thereof, (and whether or not as a result of public or private litigation), which arises from any kind of seepage or any kind of pollution and/or contamination, or threat thereof, whether or not caused by or resulting from a peril insured, or from steps or measures taken in connection with the avoidance, prevention, abatement, mitigation, remediation, clean-up 5 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or removal of such seepage or pollution and/or contamination or threat thereof. The term "any kind of seepage or any kind of pollution and/or contamination" as used in this Endorsement includes (but is not limited to): (a) seepage of, or pollution and/or contamination by, anything, including but not limited to…. Any substance designated or defined as toxic, dangerous, hazardous or deleterious to persons… under any … law, ordinance or regulation; and (b) the presence, existence, or release of anything which endangers or threatens to endanger the health, safety or welfare of persons or the environment. (FAC Ex. A, Form NMA2340 24/11/88, emphasis added.) The policies also include Microorganism Exclusion (Absolute), Form LMA5018 14/09/2005: This policy does not insure any loss, damage, claim, cost, expense or other sum directly or indirectly arising out of or relating to: mold, mildew, fungus, spores or other microorganism of any type, nature, or description, including but not limited to any substance whose presence poses an actual or potential threat to human health. This Exclusion applies regardless whether there is (i) any physical loss or damage to insured property; (ii) any insured peril or cause, whether or not contributing concurrently or in any sequence (iii) any loss of use, occupancy, or functionality; or (iv) any action required, including but not limited to repair, replacement, removal, cleanup, abatement, disposal, relocation, or steps taken to address medical or legal concerns. This Exclusion replaces and supersedes any previous in the Policy that provides insurance, in whole or in part, for these matters. (FAC Ex. A, Form LMA5018 14/09/2005, emphasis added.) The policies contain Exclusion of Loss Due to Virus or Bacteria, Form CP 01 40 07 06: COMMERCIAL PROPERTY COVERAGE PART STANDARD PROPERTY POLICY A. The exclusion set forth in Paragraph B. applies to all coverage under all forms and endorsements that comprise this Coverage Part or Policy, including but not limited to forms or endorsements that cover property damage to buildings or personal property and forms or endorsements that cover business income, extra expense or action of civil authority. 6 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease. * * * On March 15, 2020, Governor Gavin Newsom "ordered the closure of all bars and nightclubs in the state." (Compl. ¶ 52.) On March 16, 2020, San Francisco City and County officials issued "Order of the Health Officer No. C19-07" that ordered businesses to cease nonessential operations at physical locations in the county, and prohibited all non-essential gatherings of any number of individuals. (Compl. ¶¶ 49-51.) The Lounge was not deemed essential under the State, County and City orders (collectively "Closure Orders"). As a result, it closed along with "all bars and nightclubs in the state." (Compl. ¶ 52). The Lounge remained completely closed until San Francisco permitted a partial reopening in late September 2020 when the owners were allowed "to allow some customers to sit outside, and to conduct limited business on the property." (Compl.¶¶ 5-6.) On December 17, 2020, the Mayor issued a second order that all non-essential businesses close, requiring plaintiff to close the Lounge. (Compl. ¶ 7.) None of the State, County or City officials issued these orders as a result of any direct physical loss or damage to any specific property, as required to trigger coverage under the policy. III. LEGAL ARGUMENT A. Plaintiff Fails to Allege any Direct Physical Loss or Damage to Property "With regard to claims for insurance coverage, it is axiomatic that the insured has the burden of establishing that the occurrence which forms the basis of the coverage claim is within the basic scope of the insurance coverage." Travelers Cas. & Sur. Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1453. Plaintiff is seeking coverage under the Business Income (And Extra Expense) Coverage Form. Coverage A of that form provides insurance for the actual loss of Business Income sustained due to the necessary "suspension" of "operations" during the "period of restoration" provided that the "suspension" is "caused by direct physical loss of or damage to property at premises described in the Declarations," and the loss or damage is caused by or resulting from a Covered Cause of Loss. Therefore, the insuring clause requires, as a condition precedent to coverage, a "Covered Cause of Loss," which is defined in the policies as "Risks of 7 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Direct Physical Loss unless the loss is…excluded…or…limited." Accordingly, to fall within the basic scope of coverage for Business Income, a claim must involve "direct physical loss." California law requires that courts give the term "physical" its plain and ordinary meaning, i.e., something that is "material" and "tangible." Using the ordinary meaning of the term, "physical" precludes "any claim against the property insurer when the insured merely suffers a detrimental economic impact unaccompanied by a distinct, demonstrable, physical alteration of the property.'" MRI Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co. (2010) 187 Cal.App.4th 766, 779, emphasis added. A direct physical loss "contemplates an actual change in insured property then in a satisfactory state," occasioned by accident or other fortuitous event directly upon the property requiring repairs to make it satisfactory for future use. Id. Absent a "physical change in the condition of the property, i.e., it must have been 'damaged' within the common understanding of that term," no direct physical loss has occurred within the scope of the insuring agreement's "Covered Cause of Loss." Id. at 780. Applying these requirements, California courts have consistently found during the past year that shut-down orders because of the pandemic are not covered under property/business income policies because, losses from inability to use property do not amount to "direct physical loss" or damage to property within the ordinary and popular meaning of that phrase. See, e.g., 10E, LLC v. Travelers Indem. Co., 2020 U.S. Dist. LEXIS 156827, at *11 (C.D. Cal. Aug. 28, 2020). Physical loss or damage occurs only when property undergoes a "distinct, demonstrable, physical alteration." MRI Healthcare, supra, 187 Cal.App.4th at 779. "An insured cannot recover by attempting to artfully plead temporary impairment to economically valuable use of property as physical loss or damage." 10E, supra at *11. Yet, that is precisely what plaintiff attempts to do in a futile effort to avoid the direct physical loss requirement in the policies. Id. Specifically, plaintiff alleges that the policies provide coverage for "either the 'direct physical damage of or damage to the property,'" making "the words OF and OR … each pivotal." (FAC ¶ 67). Plaintiff argues there is "no requirement that the loss of use 'of' the property be accompanied by physical damage to the property for the coverage to be operative. It need only be one or the other - physical loss 'of' OR damage 'to.'" (FAC ¶ 68). Plaintiff alleges that as a 8 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 result of the Closure Orders in March 2020, the Lounge "had to totally…suspend its operations and as a result, suffered a direct physical loss of its property…" (FAC ¶ 65). Notably, the complaint does not allege the Lounge sustained any physical damage to its property, nor does it allege the presence of the SARS-CoV-2 virus therein; rather, it acknowledges that the "Closure Orders mandated the loss of use of the Lounge's property, which was the sole cause of the interruption of its business income." (FAC ¶ 53). As support for this contention, plaintiff cites to Total Intermodal Servs. v. Travelers Prop. Cas. Co. of Am., 2018 US Dist. LEXIS 216917 (C.D. Cal. July 11, 2018), arguing that the court in that case held that the phrase "'direct physical loss of' should be construed differently from 'direct physical loss to' or 'direct physical loss' […and that] the phrase 'loss of' includes the permanent dispossession of something." Id. at *9. Plaintiff's reliance on Total Intermodal is misplaced. Unlike the case at bar, Total Intermodal involved cargo that was accidentally shipped to the wrong port, where custom authorities refused to return it, thereby permanently depriving the insured of the cargo. Id. at **2-3. The insurer argued that the loss was not covered because there was no physical damage to the cargo. Id. at ** 6, 9. The court rejected that argument, finding that "physical loss of" property contemplates that the property is misplaced and unrecoverable, without regard to whether it was damaged. Id. at *9. Notably, while the court drew a distinction between "loss of" and "loss to," it was careful to "recognize that the same phrase in a different kind of insurance contract could mean something else." Id. at *11 n.4. Here, unlike the insured in Total Intermodal, plaintiff does not allege it was permanently dispossessed of any insured property. Rather, plaintiff remained in possession of its property at all times, even though public health restrictions kept the Lounge's patrons at home instead of in the Lounge. 10E, LLC, supra, at **14-15. California courts analyzing COVID-19 business interruption claims also have overwhelmingly rejected plaintiff's contention that Total Intermodal supports Royal Cuckoo's position that temporary loss of use, without any tangible alteration to property, is sufficient to trigger coverage under the policies. As a result, the cases that plaintiff cites at paragraphs 70 and 72-73 of the complaint do not apply. In fact, several California courts have expressly rejected 9 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Total Intermodal approach, in deciding that "loss of use" is clearly insufficient to trigger coverage for COVID-19 business interruption claims. See, e.g., Plan Check Downtown III, LLC v. AmGuard Ins. Co., 2020 U.S. Dist. LEXIS 178059, at *16 (C.D. Cal. Sep. 10, 2020) (granting insurer's motion to dismiss and rejecting insured's loss of use argument, by distinguishing Total Intermodal); 10E, LLC, supra at **13-14 (granting motion to dismiss, rejecting the insured's reliance upon Total Intermodal, noting in the alternative that insured did not allege it was permanently displaced of property). Other courts have expressed a limited agreement with Total Intermodal's holding that physical alteration to property is not necessary for a "direct loss of" that property, but have nevertheless rejected COVID-19 claims on the basis that government shut-down orders did not permanently dispossess the insured of the use of its property. See, e.g., Robert W. Fountain, Inc. v. Citizens Ins. Co. of Am., 2020 U.S. Dist. LEXIS 231629, at *7 (N.D. Cal. Dec. 9, 2020) (business losses resulting from temporary inability to access an unharmed property are not "direct physical loss of or damage to" property; they are not "damage to property" given the plain meaning of those words. Nor are they "direct physical loss of" property); Long Affair Carpet & Rug, Inc. v. Liberty Mut. Ins. Co., 2020 U.S. Dist. LEXIS 220757, at *6 (C.D. Cal. Nov. 12, 2020) (complaint dismissed where plaintiff temporarily dispossessed of storefronts, but it was not a "permanent dispossession"); Mudpie, Inc. v. Travelers Cas. Ins. Co., 2020 U.S. Dist. LEXIS 168385, at *11 (N.D. Cal. Sep. 14, 2020) (complaint dismissed, court acknowledged that while a "direct physical loss of" property does not require damage or physical alteration to the property, the surrounding provisions in policy suggest the insured's inability to occupy its storefront does not fall within the Business Income and Extra Expense coverage of this policy). Plaintiff has conceded the absence of physical damage to the property through its allegation that the "Closure Orders mandated the loss of use of the Royal Cuckoo's property, which was the sole cause of the interruption of its business income." (FAC ¶ 53). At the same time, plaintiff acknowledges that when the Closure Orders were eased, the Lounge was able to immediately resume limited operations. (FAC ¶ 5). Plaintiff's admissions are fatal to its claims as they show that plaintiff has not been permanently dispossessed of the property. 10 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. Plaintiff Has Not Plead A Valid "Civil Authority" Claim Under the Policies Plaintiffs' complaint alleges simply that the Closure Orders required "the closure of all bars and nightclubs in the state," but plaintiff does not explain how access to the property was prohibited or how nearby property suffered physical damage. Accordingly, plaintiff fails to plead a valid Civil Authority claim. "Civil authority coverage is intended to apply to situations where access to an insured's property is prevented or prohibited by an order of civil authority issued as a direct result of physical damage to other premises in the proximity of the insured's property." Dickie Brennan & Co. v. Lexington Ins. Co. (5th Cir. 2011) 636 F.3d 683, 686-87. SARS-CoV-2 does not cause physical damage or loss to property. "While the Orders technically forced the Propert[y] to close to protect public health, the Orders only came about sequentially as a result of the COVID-19 virus…. Thus, it was the presence of COVID-19… that was the primary root cause of Plaintiff's business[] temporarily closing." Diesel Barbershop, LLC v. State Farm Lloyds, 2020 U.S. Dist. LEXIS 147276 (W.D. Tex. Aug. 13, 2020). California courts have concluded in the context of similar policies that insureds like plaintiff cannot satisfy the conditions of the Civil Authority coverage extension. Travelers Cas. Ins. Co. of Am. v. Geragos & Geragos, 2020 U.S. Dist. LEXIS 196932, at **8-10 (C.D. Cal. Oct. 19, 2020) (no civil authority coverage because insured failed to plead a covered cause of loss); 10E, LLC, 2020 U.S. Dist. LEXIS 165252, at *6. Even looking beyond that shortcoming, there are two more reasons why plaintiff cannot fulfill the conditions of the Civil Authority coverage extension. First, access to the property has not been "prohibited." Plaintiff has not - and cannot - allege that its access to the property was barred by the Closure Orders. Rather, plaintiff alleges only that the orders prevented the Lounge "from operating." (FAC ¶¶ 45-46, 50). That is not enough. As another California court has explained, "the civil authority coverage provision only provides coverage to the extent that access to plaintiff's physical premises is prohibited, and not if plaintiff[] [is] simply prohibited from operating [its] business. The government orders alleged in the complaint prohibit the operation of plaintiff's business; they do not prohibit access to plaintiffs' place of business." Pappy's Barber Shops, Inc. v. Farmers Grp., Inc. (S.D. Cal. Sept. 11, 2020) 2020 U.S. Dist. 11 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEXIS 166808, at **14-15 (Emphasis added.) Since the Civil Authority extension requires plaintiff to show that access to its property was "prohibited" by civil authority and plaintiff cannot credibly make any such allegations, the Civil Authority coverage does not apply. Second, the Closure Orders were not issued "in response" to direct physical loss or damage to nearby property. Although plaintiff conspicuously fails to mention anywhere in its complaint the reason they were issued, one of the Closure Orders plaintiff cites at paragraph 49 makes the purpose of the Closure Orders abundantly clear: On February 25, 2020 the Mayor of the City and County of San Francisco (the "County") declared a state of emergency to prepare for coronavirus disease 2019 ("COVID-19"). On March 5, 2020 the County recorded its first reported case of COVID19. On March 16, 2020 the County and five other Bay Area counties and the City of Berkeley, working together, were the first in the State to implement shelter-in-place orders in a collective effort to reduce the impact of the virus that causes COVID-19…. City and County of San Francisco, Dep't of Pub. Health, Order of the Health Officer No. C19- 07s, available at https://www.sfdph.org/dph/alerts/files/C19-07-Shelter-in-Place-Health- Order.pdf ("Order No. C19-07s"). These facts do not trigger Civil Authority coverage. See Syufy Enter. v. Home Ins. Co. of Ind., 1995 U.S. Dist. LEXIS 3771 (N.D. Cal. Mar. 21, 1995). In Syufy, after the Rodney King verdict and subsequent riots, three cities imposed dawn- to-dusk curfews. Id. at *2. An insured movie theater operating in those cities submitted a business interruption claim after it closed the theaters during the curfew. Id. at *3. The court concluded there was no civil authority coverage because not only did the civil orders not specifically prohibit individuals from entering the theaters, but the "requisite causal link between damage to adjacent property and denial of access to a Syufy theater [was] absent." Id. at **5-6. In other words, Syufy closed its theaters as a "direct result of the city-wide curfews," not as a result of adjacent property damage. Id. at *6. Moreover, the court noted that even though the curfews were imposed to "prevent" property damage, they were not the result of the damage itself. Id. Likewise, here the Closure Orders were imposed to prevent the spread of sickness and disease, not as the result of property damage. 12 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Other California courts have reached similar conclusions during the COVID-19 pandemic. See, Mudpie, Inc., 2020 U.S. Dist. LEXIS 168385, at *20 ("Because the orders were preventative... the complaint does not establish the requisite causal link between prior property damage and the government's closure order."); Franklin EWC, Inc. v. Hartford Fin. Servs. Grp., 2020 U.S. Dist. LEXIS 174010, at *7 (N.D. Cal. Sep. 22, 2020) ("Closure Orders cannot have been issued as a result of the Closure Orders; instead, as the complaint repeatedly alleges, they were issued as a direct result of COVID-19," which is not a covered cause of loss.). Plaintiff cannot establish that physical damage occurred due to COVID-19, nor can plaintiff establish that the government Closure Orders prohibited access to the insured property. Furthermore, these Closure Orders were not taken "in response" to physical loss or damage, but were instead preventative measures issued for public health purposes. Consequently, plaintiff's complaint does not trigger the Civil Authority coverage. C. The Exclusions in the Covered Cause of Loss Form Preclude Coverage As noted, to fall within the scope of any insuring agreement of the policy, a claim must involve a "Covered Causes Of Loss," which is defined as the Risk Of Direct Physical Loss unless excluded by Section B., Exclusions, which provides as follows: B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following…. a. Ordinance Or Law [¶] The enforcement of or compliance with any ordinance or law: [¶] (1) Regulating the … use … of any property; * * * 3. We will not pay for loss or damage caused by or resulting from any of the following…. * * * b. Acts or decisions, including the failure to act or decide, of any … governmental body. (FAC ¶ 41; Ex. A, emphasis added.) The losses caused by the Closure Orders fall squarely within these exclusions, as the Orders regulated the "use" of the property; that is, pursuant to the Closure Orders, plaintiff could not operate its business as before. Similarly, it goes without saying that the loss resulted from an act or decision of a governmental body. 13 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 D. The Virus, Contamination and Microorganism Exclusions Apply Here, even if plaintiff could plead a claim within the policies' coverage grant (which is not the case), the policies exclude coverage for "loss due to virus or bacteria," which provides that: "We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease." (Ex. A, Form CP 01 40 07 06). This language is unambiguous. Los Angeles Cty. Museum 2021 U.S. Dist. LEXIS 83317, at *13 (acknowledging "there is no ambiguity in policy language excluding losses 'resulting from' a virus."). "The term 'resulting from' broadly links a factual situation with the event creating liability and connotes only a minimal causal connection or incidental relationship . . . [and] is general equated . . . with origination, growth or flow from the event." Id. at *11 (quoting Mosley v. Pac. Specialty Ins. Co. (2020) 49 Cal.App.5th 417 (citations and quotation marks omitted). SARS-CoV-2, which causes COVID-19, is a microorganism and a virus. Despite its best efforts to separate the Closure Orders from COVID-19, "Plaintiff does not and cannot plausibly allege that a pandemic is anything other than a virus spreading on a global scale. In other words, the pandemic results from a virus, and the virus exclusion therefore applies." Los Angeles Cty. Museum 2021 U.S. Dist. LEXIS 83317, at *13. Thus, the virus exclusion bars coverage. Similarly, the policies exclude coverage for losses arising out of microorganisms, which includes the SARS-CoV-2 virus The Microorganism Exclusion does "not insure any loss, damage, claim, cost, expense or other sum directly or indirectly arising out of or relating to … [a] microorganism of any type, nature or description, including but not limited to any substance whose presence poses an actual or potential threat to human health." (Policy, Ex. A, Form LMA5018) (emphasis added). California courts have concluded that similar microorganism exclusions bar coverage for loss of business income and/or civil authority claims. In Geragos, the court concluded that claims based upon losses from COVID-19 stay-at- home orders were barred by a virus exclusion. 2020 U.S. Dist. LEXIS 196932, at **8-10. There, as here, losses due to a virus were not a "Covered Cause of Loss" under the policy. Id. at *8. The court rejected the plaintiff's argument that it was "unclear" whether a closure order "stemmed 14 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 from the virus" and discovery was "needed to resolve the issue." Id. The court found that the government orders, like the Closure Orders cited by Plaintiff, resulted from efforts to protect public health from the growing COVID-19 pandemic. Id. at **8-9. Consequently, the Virus Exclusion Provision, like the Microorganism Exclusion (Absolute) and the Virus Exclusion in the case at bar, explicitly excludes loss or damage resulting from a virus. Id. at *9. Thus, coverage was barred. Id. at *10. Other California courts addressing microorganism or virus exclusions in the context of claims resulting from COVID-19 shutdowns have reached the same conclusion. For example, in 10E, LLC, the court noted "its skepticism that Plaintiff can evade application of the Policy's virus exclusion." 2020 U.S. Dist. LEXIS 165252, at **16-17. The court observed: "Plaintiff's theory of liability appears to inevitably rest on a potentially implausible allegation that in-person dining restrictions are not attributable to 'any virus,' a cause which the Policy expressly excludes." Id. at *17; see also, Mark's Engine Co. No. 28 Rest., LLC v. The Travelers Indem. Co. of Conn., 2020 U.S. Dist. LEXIS 188463 (C.D. Cal. Oct. 2, 2020) (dismissing claim based on business losses resulting from COVID-19 stay-at-home order because of virus exclusion). Here, it is likewise true that no such argument could plausibly be made. One of the Closure Orders cited by plaintiff as causing its loss expressly stated it was "implement[ing] shelter-in-place orders in a collective effort to reduce the impact of the virus that causes COVID-19…." Order No. C19-07s, supra (emphasis added). As for the Contamination Exclusion, it provides that the policy does not insure any loss, damage, cost or expense that arises from any kind of contamination, or threat thereof, or from steps or measures taken in connection with the avoidance, prevention, abatement, mitigation, remediation, clean-up or removal of such contamination or threat thereof. This language could not be more on point to the Closure Orders, which were designed to prevent contamination or threat thereof. Although Underwriters discuss these exclusions together to save space, each one on its own excludes coverage for plaintiff's complaint as a matter of law. IV. NO REDEEMING AMENDMENT IS POSSIBLE 15 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 There is nothing plaintiff can do to obtain or alter facts to amend the complaint to state a cause of action. In such a case, sustaining a demurrer without leave to amend is proper. See, La Jolla Village Homeowners’ Ass’n, Inc. v. Superior Court (1989) 212 Cal.App.3d 1131, 1141, overruled on other grounds in Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 550 (leave to amend should be denied where no liability exists under substantive law); Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685 (leave to amend should not be granted where, in all probability, amendment would be futile). In the context of an insurance coverage dispute, California courts have recognized that "insurance policy language 'may unambiguously negate[ ] beyond reasonable controversy the construction alleged in the body of the complaint.'" George v. Auto. Club of S. Cal. (2011) 201 Cal.App.4th 1112, 1128. Where, as here, "where the insurance contract is not reasonably susceptible to the meaning alleged in the complaint, it is proper to sustain a demurrer without leave to amend." Id. V. CONCLUSION Over 60 California courts have found that Covid-19 losses do not qualify for insurance under similar policies because these losses do not involve direct physical loss or damage to the insured's property, or other property nearby, or the losses are excluded by exclusions almost identical to those in Underwriters' policies. The government closure orders were issued to protect public health from COVID-19, not in response to any physical loss or damage to other property. Underwriters attach hereto an Appendix listing 60 such California cases decided during the last nine months. Underwriters respectfully request that this Court sustain their Demurrer without leave to amend. DATED: June 23, 2021 WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP By Michelle Press Michelle R. Press Attorneys for Defendants Certain Underwriters at Lloyd's, London APPENDIX APPENDIX California Covid-19 Cases 1 Case Name Court Case No. Date Result Caribe Restaurant and Nightclub v. Topa Ins. Co. CDCA 2:20-cv-03570-ODW-MRW 04/09/21 Full Dismissal With Prejudice Islands Restaurants, LP et al v. Affiliated FM Ins. Co. et al SDCA 3:20-cv-02013 04/02/21 Full Dismissal With Prejudice Motiv Group, Inc v Continental Casualty Company CDCA 2:20-cv-09368 04/01/21 Full Dismissal With Prejudice Barbizon School of SF, Inc. et al. v. Sentinel Ins. Co. Ltd NDCA 3:20-cv-08578 03/31/21 Full Dismissal Without Prejudice Mayssami Diamond, Inc. v. Travelers Casualty Ins. Co. SDCA 37-2020-00016241-CU-FR-CTL 03/30/21 Full Dismissal Without Prejudice Sky Flowers Inc. v. Hiscox Ins. Co. Inc. CDCA 2:20-cv-05411 03/26/21 Full Dismissal With Prejudice Baker et al v. Oregon Mutual Ins. Co. NDCA 3:20-cv-05467 03/25/21 Full Dismissal With Prejudice Out West Restaurant Grp Inc. v. Affiliated FM Ins. Co. NDCA 3:20-cv-06786 03/19/21 Full Dismissal With Prejudice Westside Head & Neck v. Hartford Financial Service CDCA 2:20-cv-06132-JFW-JC 03/19/21 Full Dismissal With Prejudice Monarch Ballroom, LLC v. Farmers Ins. Co., Inc. et a CDCA 2:20-cv-05493-ODW-KK 03/18/21 Full Dismissal With Prejudice Daneli Shoe Company v. Valley Forge Ins. Co. SDCA 3:20-cv-01195-TWR-WVG 03/17/21 Full Dismissal With Prejudice Kingray Inc v. Truck Insurance Exchange CDCA 5:20-cv-00963-JGB-SP 03/04/21 Partial Dismissal With Prejudice Wellness Eatery La Jolla LLC v. Hanover Insurance Gro SDCA 3:20-cv-01277-AJB-RBB 02/18/21 Full Dismissal With Prejudice Founder Institute Inc. v. Hartford Fire Ins. Co. NDCA c:20-cv-04466-NC 02/12/21 Full Dismissal With Prejudice Fink v. Hanover Insurance Group, Inc. et al NDCA 4:20-cv-03907-JSC 02/11/21 Full Dismissal With Prejudice Selane Products, Inc. v. Continental Casualty Company CDCA 2:20-cv-07834 02/08/21 Full Dismissal With Prejudice Protege Restaurant Partners LLC v. Sentinel Ins. Co. Ltd NDCA 5:20-cv-03674 02/08/21 Full Dismissal Without Prejudice Wellness Eatery La Jolla LLC v. Hanover Ins. Group SDCA 3:20-cv-01277-AJB-RBB 02/03/21 Full Dismissal Without Prejudice Thomas Phan v. Nationwide General Ins. Co. CDCA 2:20-cv-07616 02/01/21 Full Dismissal With Prejudice Gym Management Services Inc. v Vantapro Specialty Ins. Co. CDCA 2:20-cv-09541 02/01/21 Full Dismissal With Prejudice Water Sports Kauai, Inc. v. Fireman's Fund Ins. Co. et al NDCA 3:20-cv-03750 02/01/21 Full Dismissal With Prejudice Colgan v Sentinel Ins. Co. LTD NDCA 4:20-cv-04780-HSG 01/26/21 Full Dismissal Without Prejudice APPENDIX California Covid-19 Cases 2 Case Name Court Case No. Date Result Fink v. Hanover Insurance Group, Inc. et al NDCA 4:20-cv-03907-JSC 01/25/21 Full Dismissal Without Prejudice Unmasked Management, Inc. et al v. Century-National Ins. Co. SDCA 3:20-cv-01129-H-MDD 01/22/21 Full Dismissal With Prejudice Pez Seafood DTLA, LLC v. Travelers Indemnity Company CDCA 2:20-cv-04699-DMG-GJS 01/20/21 Full Dismissal With Prejudice Roundinrd Sports Bar LLC v. Hartford Insurance Co. CDCA 2:20-cv-05159-SVW-PLA 01/14/21 Full Dismissal With Prejudice Kevin Barry Fine Art Associates v. Sentinel Ins. Co., Limited NDCA 3:20-cv-04783 01/13/21 Full Dismissal With Prejudice O'Brien Sales and Marketing, Inc. v. Transportation Ins. Co. NDCA 3:20-cv-02951 01/12/21 Full Dismissal With Prejudice BA LAX, LLC et al v. Hartford Fire Ins. Co. et al CDCA 2:20-cv-06344 01/12/21 Insurer MSJ granted Rialto Pockets, Inc. et al v. Certain Underwriters at Lloyds London, Including Beazley Furlonge LTD CDCA 2:20-cv-07709 01/07/21 Full Dismissal With Prejudice Palmdale Estates, Inc. v. Blackboard Ins. Co. NDCA 3:20-cv-06158 01/04/21 Full Dismissal Without Prejudice Baker et al v. Oregon Mutual Ins. Co. NDCA 3:20-cv-05467 01/04/21 Full Dismissal Without Prejudice Jonathan Oheb MD, Inc. v. Travelers Casualty Ins. Co. of Am. CDCA 2:20-cv-08478 12/30/20 Full Dismissal With Prejudice Tralom, Inc. v. Beazley USA Services, Inc. CDCA 2:20-cv-08344 12/29/20 Full Dismissal With Prejudice Karen Trinh DDS v. State Farm General Ins. Co. NDCA 5:20-cv-04265-BLF 12/28/20 Full Dismissal Without Prejudice VStyles, Inc. v. Continental Casualty Company Riverside RIC2003415 12/23/20 Full Dismissal Without Prejudice Posh Cafe Inc. v. Amguard Ins. Co. CDCA 2:20-cv-08037 12/21/20 Full Dismissal Without Prejudice Mortar and Pestle Corp. v. Atain Specialty Ins. Co. NDCA 3:20-cv-03461 12/21/20 Full Dismissal With Prejudice Franklin EWC, Inc. et al v. Hartford Financial Services Group NDCA 3:20-cv-04434-JSC 12/14/20 Full Dismissal With Prejudice HealthNOW Medical Center, Inc v. State Farm General Ins Co. NDCA 5:20-cv-04340-NC 12/10/20 Full Dismissal Without Prejudice Robert W. Fountain v. Citizens Ins. Co. of America NDCA 3:20-cv-05441 12/09/20 Full Dismissal With Prejudice Geragos & Geragos Engine Co No. 28, LLC v. Hartford Fire Ins. CDCA 2:20-cv-04647-GW-MAA 12/03/20 Full Dismissal With Prejudice Selane Products, Inc. v. Continental Casualty Company CDCA 2:20-cv-07834 11/24/20 Full Dismissal Without Prejudice APPENDIX California Covid-19 Cases 3 Case Name Court Case No. Date Result 10E, LLC v. Travelers Indemnity Company of Connecticut CDCA 2:20-cv-04418-SVW-AS 11/13/20 Full Dismissal With Prejudice Long Affair Carpet and Rug, Inc. v. Liberty Mutual Ins. Co., et al CDCA 8:20-cv-01713 11/12/20 Full Dismissal With Prejudice Water Sports Kauai, Inc. v. Fireman's Fund Ins. Co. et al NDCA 3:20-cv-03750 11/09/20 Full Dismissal Without Prejudice West Coast Hotel Mngmt v Berkshire Hathaway Guard Ins Co CDCA 2:20-cv-05663-VAP-DFM 10/27/20 Full Dismissal With Prejudice Boxed Foods Company, LLC et al v. California Capital Ins. Co. NDCA 3:20-cv-04571-CRB 10/27/20 Full Dismissal With Prejudice Founder Institute Inc. v. Hartford Fire Ins. Co. NDCA c:20-cv-04466-NC 10/22/20 Full Dismissal Without Prejudice Travelers Casualty Ins. Co. of America v. Geragos and Geragos CDCA 2:20-cv-03619 10/19/20 Full Dismissal With Prejudice O'Brien Sales and Marketing, Inc. v. Transportation Ins. Co. NDCA 3:20-cv-02951 10/09/20 Full Dismissal Without Prejudice Mark's Engine Co No. 28 Restaurant, LLC v. Travelers Ind C CDCA 2:20-cv-04423-AB-SK 10/02/20 Full Dismissal With Prejudice Pappy's Barber Shops, Inc. v. Farmers Group, Inc. SDCA 3:20-cv-00907-CAB-BLM 10/01/20 Full Dismissal With Prejudice Franklin EWC, Inc. et al v. Hartford Financial Services Group NDCA 3:20-cv-04434-JSC 09/22/20 Full Dismissal Without Prejudice Plan Check Downtown III, LLC v. Amguard Ins. Co. CDCA 2:20-cv-06954 09/16/20 Full Dismissal With Prejudice Mudpie, Inc. v. Travelers Casualty Ins. Co. of America NDCA 4:20-cv-03213-JST 09/14/20 Full Dismissal With Prejudice Mortar and Pestle Corp. v. Atain Specialty Ins. Co. NDCA 3:20-cv-03461 09/11/20 Full Dismissal Without Prejudice Pappy's Barber Shops, Inc. v. Farmers Group, Inc. SDCA 3:20-cv-00907-CAB-BLM 09/11/20 Full Dismissal Without Prejudice 10E, LLC v. Travelers Indemnity Company of Connecticut CDCA 2:20-cv-04418-SVW-AS 08/29/20 Full Dismissal Without Prejudice Inns by the Sea v. California Mutual Ins. Co. Monterey 20CV001274 08/06/20 Full Dismissal With Prejudice 16 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE Royal Cuckoo, Inc. v. Certain Underwriters at Lloyd London, et . San Francisco Superior Court Case No.: CGC-20-587390 Attorneys for Defendant Certain Underwriters at Lloyd’s London Policy Nos. RTB-0000172-02 and RTB0000172-03 File No.: 18827.00069 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to this action. My business address is 555 South Flower Street, Suite 2900, Los Angeles, California 90071. My electronic service address is veronica.ochoa- alvarez@wilsonelser.com On June 23, 2021, I caused the foregoing document, entitled NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT BY DEFENDANT CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY NOS. RTB-0000172-02 AND RTB-0000172-03; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF to be served on the person(s) identified in the attached Service List, at their respective [residential / business / electronic service] address(es), by the below-indicated means: [X] (BY ELECTRONIC SERVICE) I electronically served the foregoing document in PDF format on behalf of Certain Underwriters at Lloyd's, London Subscribing to Certificate Nos. RTB-0000172-02 and RTB-0000172-03. I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed on June 23, 2021, at Los Angeles, California /s/ Veronica Ochoa-Alvarez Veronica Ochoa-Alvarez 17 DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT 255549476v.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SERVICE LIST Royal Cuckoo, Inc. v. Certain Underwriters at Lloyd London, et . San Francisco County Superior Court Case No.: CGC-20-587390 Attorneys for Defendant Certain Underwriters at Lloyd’s London Policy Nos. RTB-0000172-02 and RTB0000172-03 File No.: 18827.00069 Julien Swanson, Esq. AUSTIN LAW GROUP 584 Castro Street, Suite 2126 San Francisco, CA 94103 Tel: (415) 282-4511 / Fax: (415) 282-4536 E-Mail: swanson@austinlawgroup.com Attorney for Plaintiff, ROYAL CUCKOO INC.