Riker Danzig Prevails Before CA Court of Appeal for Mitsui Sumitomo

Title:
Riker Danzig Prevails Before CA Court of Appeal for Mitsui Sumitomo
Date:
Apr 21, 2022
Attorneys:
Practices:

Riker Danzig prevailed before the Court of Appeal of the State of California for its client Mitsui Sumitomo Insurance USA, Inc. (“MSI”) in a suit brought by the iconic Hollywood restaurant Musso & Frank Grill.  Musso & Frank sought insurance coverage under a property insurance policy issued by MSI for certain financial losses it sustained because of governmental orders restricting its ability to serve dine-in customers as a result of the COVID-19 pandemic.  In November 2020, the Los Angeles Superior Court dismissed with prejudice Musso & Frank’s complaint against MSI for breach of contract and bad faith, finding that the restaurant failed to allege that it suffered “direct physical loss of or damage to” its property and that, in any event, the policy’s virus exclusion barred coverage for its losses.

On appeal before the Second Appellate District, Riker Danzig partner Maura C. Smith argued on April 19, 2022, that the policy language was unambiguous and required affirmance of the trial court’s ruling.  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 the “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 in a decision certified for publication, 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, even if Musso & Frank could bring itself within the policy’s insuring clause, the policy’s virus exclusion expressly bars coverage for its losses.  Finally, the Court concluded that “[b]ecause 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 Riker Danzig’s trial and appellate team with Maura were Firm Co-Chairman Brian E. O'Donnell, partner Jeffrey M. Beyer and counsel Cara Vecchione.

The appellate argument was covered by Law360 on April 19, 2022. 

ALM's Litigation Daily gave our team an ALM Litigator of the Week "shout-out" on April 29th for this impressive win in its weekly column.