Facts

The Typewritorium Co dba A2Z Business System's business consists of retail sales, servicing, and repair of office machines, including copiers, fax machines, and printers. For several years, Typewritorium was insured by Travelers under contracts of insurance. Their policy included coverage designated as Businessowners Property Coverage Special Form that covered their principal place of business located at 200 Valley Drive, Brisbane, California. Under the policy, Business Income and Extra Expense Coverage were provided for due to any suspension of the insured's operations caused by direct physical loss of or damage to property. On March 16, 2020, Shelter-in-Place orders were issued in response to the COVID-19 pandemic by civil authorities in San Francisco Bay Area counties, including San Mateo County in which Typewritorium has its principal place of business. On March 19, 2020, California Governor Gavin Newsom issued Executive Order N-33-20 that ordered, pursuant to the authority of the Constitution and laws of California, all individuals living in California to stay home or at their place of residence except as needed to maintain continuity. All such orders remained in place at the time of the complaint. On April 27, 2020, Typewritorium filed a claim for loss of income with Travelers based entirely on the action of civil authorities that caused partial cessation of their business operations. On May 4, 2020, Travelers' COVID-19 unit informed Typewritorium that the coverage would be denied based on the "Virus Exclusion" of the Policy. On May 5, 2020, Travelers transmitted a 11-page letter denying Typewritorium's claim since there was no direct physical loss of or damage to the property. On June 17, 2020, Travelers reaffirmed it denial of insurance coverage. The Typewritorium Co filed a class action for damages and declaratory relief against the Travelers Companies, Inc. and Travelers Property Casualty Company of America on behalf of itself and others who suffered loss of business income and incurred extra expenses as a result of the civil orders and who, despite being insured by Travelers, were unfairly and unjustifiably denied coverage and compensation in violation of California Insurance Code and Unfair Competition Law.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that when they and other class members claimed compensation for loss of business income under their insurance policies, defendants routinely and expeditiously denied payment through letters that distorted and deliberately misquoted policy language pertaining to limitations and exclusions of insurance coverage. Further, defendant's denial of insurance coverage was both factually and legally wrong because there was direct physical loss of or damage to plaintiff's business premises and the so-called "Virus Exclusion" provision in the policy was inapplicable. As a result of defendant hiding behind a variety of spurious reasons for denying coverage, defendants racked up premiums and caused plaintiff and other class members to suffer significant loss of income. Moreover, Traveler's willful disregard of the terms of the Business Income and Extra Expense Coverage of the Policy violated its duty to investigate and otherwise deal fairly with plaintiff and the other class members, as required by the Insurance Code.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

Traveler's motion to dismiss was granted because Typewritorium Co.'s insurance policy did not cover the effects of the COVID-19 stay-at-home order.