Shusha, Inc. v. Century-National Ins. Co.
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Shusha, Inc., dba La Cava (La Cava) appeals from the judgment of dismissal entered after the trial court sustained without leave to amend the demurrer filed by Century-National Insurance Company (Century-National) to La Cava’s first amended complaint. La Cava sued Century-National for breach of an insurance contract and related claims after Century-National denied coverage for La Cava’s lost business income as a result of its suspension of restaurant operations in March 2020 due to the COVID-191 pandemic and associated government shutdowns.
On appeal, La Cava contended the trial court erred in concluding the alleged presence of the COVID-19 virus in its restaurant did not constitute “direct physical loss of or damage to” the restaurant necessary for coverage under the terms of the policy at issue. La Cava also argued Century-National acted in bad faith by summarily denying coverage without investigating La Cava’s claim.
The Second Appellate District reversed the trial court’s order and remanded for the trial court to vacate its order sustaining the demurrer without leave to amend and to enter a new order overruling the demurrer. The court held that La Cava’s allegations that contamination by the COVID-19 virus physically altered its restaurant premises were sufficient to withstand demurrer. The court explained that Century-National’s denial of coverage just three weeks after La Cava tendered its claim and in the earliest days of our understanding of the novel COVID-19 virus, cannot be deemed as a matter of law to have been made in good faith with reasonable grounds.
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