Apple Annie, LLC V. Oregon Mutual Insurance Company

• Published date: 23 December 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Mr Michael Velladao and Aaron Knapp

(December 2022) - In Apple Annie, LLC v. Oregon Mut. Ins. Co., 82 Cal. App.5th 919 (September 2, 2022), the California First District Court of Appeal affirmed the trial court's order granting Oregon Mutual Insurance Company's ("Oregon Mutual") motion for judgment on the pleadings with respect to a declaratory relief action filed by Apple Annie, LLC ("Apple Annie") seeking coverage under a property policy for business income loss due to government shut-down orders related to COVID-19. The Court of Appeal affirmed the trial court's reasoning that Apple Annie's loss was not caused by "direct physical damage to or direct physical loss of" the insured's property. The Court of Appeal held as follows:

In our case, Apple Annie contends that "because the phrase 'physical loss of or damage to' is phrased disjunctively, 'loss of' and 'damage to' must each be given a separate meaning." Apple Annie reasons: "Because of this disjunctive framing, each concept must be accorded a separate, distinct meaning. An interpretation of 'loss of' that assigns it the same meaning as 'damage to' would do violence to the language of the policy by rendering the former term surplusage." Apple Annie also insists that such an interpretation would also contradict what is known as the "plain meaning rule," namely, an insurance policy and its terms are to be given their "plain meaning or the meaning a layperson would ordinarily attach to it." (Waller, supra, 11 Cal.4th 1, 18.)

. . .

The plain meaning of this language is convincingly established in Inns-by-the-Sea. To urge a differentiation is, in one sense, pointless, because the terms are often used in overlapping and redundant ways. (See Inns-by-The-Sea, supra, 71 Cal.App.5th 688, 700 ["'Damage' is defined as 'loss or harm resulting from injury to ... property . . . . '"]; cf. MRI Healthcare Center of Glendale, Inc. v. State Farm General Ins. Co. (2010) 187 Cal.App.4th 766, 780 [115 Cal. Rptr. 3d 277 (MRI Healthcare) ["For there to be a 'loss' within the meaning of the policy, some external force must have acted upon the insured property to cause a physical change in the condition of the property, i.e., it must have been 'damaged' within the common understanding of that term" (italics omitted)]; Windham at Carmel Mountain Ranch Assn. v. Superior Court (2003) 109 Cal.App.4th 1162, 1175 {135 Cal. Rptr. 2d 8347 ["In its common usage, 'damage' includes harm, loss, injury, detriment, or diminution in value"]; Jarrett v. Allstate Ins. Co. (1962...