Riker Danzig prevailed before the Supreme Court of the State of California for its client Mitsui Sumitomo Insurance USA, Inc., in a suit brought by the iconic Hollywood restaurant Musso & Frank Grill. Musso & Frank had sought insurance coverage from Mitsui Sumitomo for financial losses it sustained due to public safety measures adopted to prevent the spread of COVID-19, and claimed breach of contract and bad faith against Mitsui Sumitomo. In Musso & Frank Grill Co. Inc. v. Mitsui Sumitomo Insurance USA Inc., the Los Angeles Superior Court Judge dismissed Musso & Frank’s complaint without leave to amend in November 2020, finding that the restaurant failed to allege that it suffered “direct physical loss of or damage to” its property.
On appeal before the Second Appellate District, Riker Danzig partner Maura C. Smith argued on April 19, 2022, that the language in the policy about physical loss or damage was not ambiguous. Referring to the first COVID-19 coverage ruling by a California appellate court, The Inns by the Sea v. California Mutual Insurance Co., Maura pointed out that the Inns court recognized that the word "loss" can have different meanings, and that court noted that "you need to accord meaning to the word 'physical,' which immediately precedes 'loss.' And when you do that it becomes clear that you cannot have a physical loss without a physical impact to the property."
The appellate panel affirmed the Superior Court ruling, stating that “Musso & Frank did not suffer any physical alteration of its property, and its closure was not based on any physical loss or damage.” The Court further concluded that “Because Musso & Frank cannot establish a breach of contract, it follows necessarily that it cannot prove a breach of the covenant of good faith and fair dealing.”
On May 27, 2022, Musso & Frank filed a petition for review with the Supreme Court of California. Shortly thereafter, a third party, Ross Stores, Inc., filed a request with the Supreme Court of California to depublish the Appellate Court’s opinion. MSI opposed both submissions and, on August 10, 2022, the California Supreme Court issued an order denying the petition for review and request to depublish.
Riker Danzig’s trial and appellate teams were led by Riker Danzig Co-Chairman Brian E. O’Donnell, with partners Maura C. Smith, Jeffrey M. Beyer and counsel Cara C. Vecchione.