Sherlene Wong v. Stillwater Insurance Company

• Published date: 02 October 2023
• 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

(Insurer Entitled to Summary Judgment Because Insureds Failed to Meet Their Burden of Establishing Direct Physical Loss Sustained by Embryos Caused by a Specific Peril Covered by Homeowners Insurance Policy)

(September 2023) - In Sherlene Wong et al. v. Stillwater Ins. Co., 92 Cal.App.5th 1297 (June 30, 2023), the California First District Court of Appeal affirmed the trial court's entry of summary judgment in favor of Stillwater Insurance Company ("Stillwater") in connection with a claim for property damage made by insureds, Sherlene and Lawrence Wong (the "Wongs"), under a homeowners insurance policy. The Wongs contended their personal property coverage was triggered under their homeowners insurance policy in connection with the loss of three embryos stored in a cryogenic tank that used liquid nitrogen to store human embryos at very low temperatures. The seal in the tank failed causing the some or all the embryos to thaw. After consulting with their doctor, the Wongs determined that the embryos had been compromised and could not be used. Subsequently, the Wongs submitted a claim for personal property loss to Stillwater in the amount of $1,550,370 ($516,790 per embryo).

The insuring agreement for the Stillwater policy stated as follows:

"ENDORSEMENT A6140 07 15

"Under SECTION I'PERILS INSURED AGAINST, B. Coverage C'Personal Property, the first paragraph is deleted in its entirety and replaced by the following:
"We insure for sudden and accidental direct physical loss to property described in Coverage C caused by any of the following perils unless the loss is excluded in SECTION I'EXCLUSIONS.
"POLICY HO 00 03 05 11
"SECTION I'PERILS INSURED AGAINST
"1. Fire Or Lightning

"2. Windstorm Or Hail

"3. Explosion

"4. Riot Or Civil Commotion

"5. Aircraft

"6. Vehicles

"7. Smoke

"8. Vandalism Or Malicious Mischief

"9. Theft

"10. Falling Objects

"11. Weight Of Ice, Snow Or Sleet

"12. Accidental Discharge Or Overflow Of Water Or Steam

"13. Sudden And Accidental Tearing Apart, Cracking, Burning Or Bulging
"14. Freezing

"15. Sudden And Accidental Damage From Artificially Generated Electrical Current
"16. Volcanic Eruption

"There may be other reasons why coverage does not apply. We do not waive our rights to deny coverage for any other valid reason, which may arise."

Because the Wongs did not provide any evidence of direct physical loss sustained by the embryos caused by one of the 16 perils listed in the insuring agreement, Stillwater denied coverage of their claim. Subsequently, the Wongs filed a lawsuit alleging various causes of...