Facts

Caribe Restaurant and Nightclub, Inc. owns and operates La Luz Ultralounge, a restaurant and nightclub in Bonita, CA. Caribe purchased an insurance policy from Topa Insurance. The Policy included "business income" coverage for loss due to the necessary suspension of operations following loss to property. The policy also covered loses from an action by a civil authority and would cover expenses incurred to minimize the suspension of business and continue operations. As a result of orders issued by the government due to the COVID-19 pandemic, Caribe was forced to suspend or reduce business at La Luz. Caribe brought action against Topa alleging Topa refused to cover its loses due to COVID-19 under the Policy.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended Topa breached the contract when Topa refused to cover or pay for business losses. Plaintiffs also contended it had sustained "direct physical loss" of La Luz under the Policy because it was forced to suspend or reduce business at its location as a result of the COVID-19 pandemic.

DEFENDANT'S CONTENTIONS: Defendants denied all of the contentions. Defendants further contended the court should grant its motion to dismiss because an economic business impairment does not qualify as physical loss or damages of La Luz under the Policy.

Result

The court granted defendant's motion to dismiss.