Opinion

Another Planet Entertainment, LLC v. Vigilant Insurance Co.

Court: California Supreme Court
Filed: May 23, 2024
Status: Published
Cited by: 0 cases
Authority: More cited than 16.2%

The opinion

IN THE SUPREME COURT OF

CALIFORNIA

ANOTHER PLANET ENTERTAINMENT, LLC,

Plaintiff and Appellant,

VIGILANT INSURANCE COMPANY,

Defendant and Respondent.

S277893

Ninth Circuit

21-16093

Northern District of California

3:20-cv-07476-VC

May 23, 2024

Chief Justice Guerrero authored the opinion of the Court, in

which Justices Corrigan, Liu, Kruger, Groban, Jenkins, and

Evans concurred.

ANOTHER PLANET ENTERTAINMENT, LLC v.

VIGILANT INS. CO.

S277893

Opinion of the Court by Guerrero, C. J.

At the outset of the COVID-19 pandemic, and for some

time thereafter, many businesses were forced to curtail their

operations or close entirely. Some of these businesses sought

coverage for their financial losses from their commercial

property insurers under conventional first-party “all risk” or

“open peril” insurance policies. These policies generally

predicate coverage on “direct physical loss or damage” to the

insured property or nearby property. State and federal courts

across the country have considered whether conventional

property insurance policies provide coverage for pandemic-

related losses, including whether the COVID-19 virus satisfies

the threshold requirement of direct physical loss or damage to

property. California courts have reached different conclusions

on this issue, and in this case we accepted a request by the

United States Court of Appeals for the Ninth Circuit to clarify

California law in this area. (Cal. Rules of Court, rule 8.548.)

The Ninth Circuit posed the following question: “Can the

actual or potential presence of the COVID-19 virus on an

insured’s premises constitute ‘direct physical loss or damage to

property’ for purposes of coverage under a commercial property

insurance policy?” (Another Planet Entertainment, LLC v.

Vigilant Insurance Co. (2022) 56 F.4th 730, 734 (Another

Planet).)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The question arises in the context of a civil lawsuit filed

by Another Planet Entertainment, LLC (Another Planet)

against its property insurer, Vigilant Insurance Company

(Vigilant). Another Planet operates venues for live

entertainment. It suffered pandemic-related business losses

when its venues closed, and Vigilant denied Another Planet’s

subsequent claim for insurance coverage. Another Planet filed

suit in federal district court, alleging that the actual or potential

presence of the COVID-19 virus at its venues or nearby

properties caused direct physical loss or damage to property and

triggered coverage under its insurance policy. The district court

granted Vigilant’s motion to dismiss for failure to state a claim,

and Another Planet appealed. According to the Ninth Circuit,

the issue on appeal “is whether [Another Planet’s] allegations,

if taken as true, were sufficient to show ‘direct physical loss or

damage to property’ as defined by California law.” (Another

Planet, supra, 56 F.4th at p. 731.) Because the Ninth Circuit

concluded that resolution of this question of California law could

determine the outcome of the case pending before it, the Ninth

Circuit certified the question to this court.

We conclude, consistent with the vast majority of courts

nationwide, that allegations of the actual or potential presence

of COVID-19 on an insured’s premises do not, without more,

establish direct physical loss or damage to property within the

meaning of a commercial property insurance policy. Under

California law, direct physical loss or damage to property

requires a distinct, demonstrable, physical alteration to

property. The physical alteration need not be visible to the

naked eye, nor must it be structural, but it must result in some

injury to or impairment of the property as property.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The factual allegations of Another Planet’s complaint,

which we accept as true for purposes of this proceeding, do not

satisfy this standard. While Another Planet alleges that the

COVID-19 virus alters property by bonding or interacting with

it on a microscopic level, Another Planet does not allege that any

such alteration results in injury to or impairment of the property

itself. Its relevant physical characteristics are unaffected by the

presence of the COVID-19 virus.

Another Planet focuses on the virus’s risk to humans, and

it alleges that the actual or potential presence of the virus

rendered its properties unfit for their intended use. But the

mere fact that a property cannot be used as intended is

insufficient on its own to establish direct physical loss to

property. Similarly, the fact that a business was forced to

curtail its operations, in whole or in part, based on pandemic-

related government public health orders is likewise insufficient.

The restrictions of a government public health order are legal,

i.e., intangible, in nature. They do not constitute direct physical

loss or damage to property.

In rare situations, a property may suffer direct physical

loss where it is not damaged in a conventional sense, including

where a chemical contaminant or noxious odor infiltrates the

property and renders it effectively unusable or uninhabitable.

In such a case, the contaminant or odor may cause direct

physical loss, but only where the source of the property’s

unusability or uninhabitability is sufficiently connected to the

property itself. This situation may arise when the effect of the

contaminant or odor is so lasting and persistent that the risk of

harm is inextricably linked or connected to the property.

Another Planet’s allegations regarding the effect of the COVID-

19 virus on property fail to meet this standard as well.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

While we conclude Another Planet’s allegations are

insufficient, and it appears that such allegations represent the

most common allegations in support of pandemic-related

property insurance coverage, we cannot and do not in this

proceeding determine that the COVID-19 virus can never cause

direct physical loss or damage to property. Our contemplation

of the virus and the affected property is necessarily limited by

Another Planet’s factual allegations. Nonetheless, given the

prevalence of similar circumstances, we answer the Ninth

Circuit’s question as follows: No, the actual or potential

presence of COVID-19 on an insured’s premises generally does

not constitute direct physical loss or damage to property within

the meaning of a commercial property insurance policy under

California law.

I. FACTUAL AND PROCEDURAL BACKGROUND

“Because this matter is presently on appeal from a

dismissal under Federal Rules of Civil Procedure, rule 12(b)(6)

(28 U.S.C.), we recite the facts as alleged in the operative

complaint. [Citation.] The question at this stage of the

litigation is the legal sufficiency of the pleadings. We treat the

factual allegations as true for purposes of addressing the

certified question[].” (Kuciemba v. Victory Woodworks, Inc.

(2023) 14 Cal.5th 993, 1004.)

Another Planet is an independent operator and promoter

of live entertainment (including concerts, festivals, and events)

at several venues in California and Nevada. It purchased a

commercial property insurance policy from Vigilant. The policy

provided for two main categories of coverage: (1) building and

personal property coverage and (2) business income and extra

expense coverage.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

Under the first category, Vigilant promised, “We will pay

for direct physical loss or damage to [a building or personal

property] caused by or resulting from a peril not otherwise

excluded . . . .” It also promised, “We will pay the reasonable

and necessary costs you incur to protect [the building and

personal property] at the premises shown in the Declarations

from imminent direct physical loss or damage caused by or

resulting from a peril not otherwise excluded . . . .” The policy

defined “[b]uilding” as “a structure,” “building components,”

“completed additions,” and “alterations and repairs to the

structure.” It excluded “land, water or air, either inside or

outside of a structure.”

Under the second category of coverage, Vigilant promised,

“We will pay for the actual: [¶] business income loss you incur

due to the actual impairment of your operations; and [¶] extra

expense you incur due to the actual or potential impairment of

your operations, [¶] during the period of restoration . . . . [¶]

This actual or potential impairment of operations must be

caused by or result from direct physical loss or damage by a

covered peril to property, unless otherwise stated.”

The policy defined the “[p]eriod of restoration” as “the

period of time that, for business income, begins: [¶] A.

immediately after the time of direct physical loss or damage by

a covered peril to property; or [¶] B. on the date operations

would have begun if the direct physical loss or damage had not

occurred, when loss or damage [to new buildings, alterations, or

personal property] delays the start of operations . . . .”

Similarly, for extra expense, the period of restoration begins

“immediately after the time of direct physical loss or damage by

a covered peril to property.” The policy provided that the period

of restoration “will continue until your operations are restored,

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

with reasonable speed, to the level which would generate the

business income amount that would have existed if no direct

physical loss or damage occurred, including the time required

to: [¶] . . . repair or replace the property.” The outside limit on

the length of the period of restoration was “the applicable

number of days shown as Extended Period in the Declaration,

beginning on the date that,” as relevant here, “the lost or

damaged property is actually repaired or replaced and your

operations are restored.”

Within this second category, the policy also covered lost

income and extra expenses incurred as a result of certain

governmental actions. Vigilant promised, “We will pay for the

actual: [business income loss or extra expense] you incur due to

the actual impairment of your operations, directly caused by the

prohibition of access to [your premises or a dependent business

premises] by a civil authority. [¶] This prohibition of access by

a civil authority must be the direct result of direct physical loss

or damage to property away from such premises or such

dependent business premises by a covered peril, provided such

property is within [either one mile or the miles specified in the

policy’s declaration] from such premises or dependent business

premises, whichever is greater.”

In early 2020, the COVID-19 virus became a widespread

concern in the United States. The virus — technically SARS-

CoV-2, which causes the COVID-19 respiratory illness — is

highly contagious and potentially fatal. The virus is a physical

substance. It primarily spreads from person to person via

airborne respiratory droplets or aerosols containing the virus.

According to Another Planet, indoor and outdoor air is

normally composed of various gaseous elements and particles.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The introduction of respiratory droplets or aerosols containing

the COVID-19 virus changes the composition of the affected air

through the addition of such droplets or aerosols. Respiratory

droplets with the COVID-19 virus can also settle on the surfaces

of real and personal property. The droplets attach to these

surfaces and, in Another Planet’s view, physically alter them.

The virus can remain in the air or on surfaces for hours or days.

Although it is not a primary mode of transmission, a person can

contract COVID-19 by touching a surface on which the COVID-

19 virus has been deposited. Another Planet alleges that the

presence of the droplets containing the COVID-19 virus

“requires steps to be taken to minimize their spread, such as

physical distancing, regular disinfection, air filtration, and

further physical alterations, such as installation of physical

barriers restricting the movement of the aerosolized droplets.”

Another Planet asserts there is evidence that remedial

measures “cannot be assured to eliminate or exclude” the

COVID-19 virus from its premises.

Another Planet further alleges that the COVID-19 virus

was present at its properties, “or would have been present but

for its efforts to reduce, prevent, or otherwise mitigate its

presence on its properties.” It maintains that the presence or

potential presence of the COVID-19 virus caused a “distinct,

demonstrable, physical alteration to property,” and its presence

or potential presence prevented or impaired the use of Another

Planet’s property. Another Planet’s properties were “unsafe and

unusable.” Given the danger of the COVID-19 virus, “no

‘rational persons would be content’ to be in a venue likely to

cause them to contract COVID-19.” Another Planet alleged the

only way to prevent the presence of the COVID-19 virus was to

close its venues completely.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

State and local authorities recognized the public health

risk of the COVID-19 virus and imposed restrictions on

individuals and businesses, including Another Planet. Public

health orders “prohibited or limited the use and operations of

Another Planet’s insured locations.” Another Planet was forced

to cancel all events scheduled for its venues and could not use

its insured locations for their intended purpose. It alleges it

suffered losses in excess of $20 million.

In May 2020, Another Planet submitted an insurance

claim to Vigilant for direct physical loss or damage to its

properties and consequent economic losses. Vigilant denied

coverage. It maintained that Another Planet had not shown

“physical loss or damage that would implicate coverage in this

matter.”

Another Planet filed a complaint and, later, a first

amended complaint against Vigilant in federal district court. It

alleged causes of action for breach of contract, tortious breach of

the implied covenant of good faith and fair dealing, and various

forms of fraud. It also sought declaratory relief. Vigilant moved

to dismiss the first amended complaint for failure to allege facts

sufficient to state a claim upon which relief can be granted.

(Fed. Rules Civ.Proc., rule 12(b)(6), 28 U.S.C.) Vigilant

primarily argued that Another Planet had not alleged direct

physical loss or damage to property, which was required to

trigger coverage under any theory advanced by Another Planet.

The district court granted Vigilant’s motion to dismiss. It

found that “Another Planet does not have a claim for loss of

business income because the closure orders [by state and local

public health authorities] — and not [the] virus’s alleged

presence at Another Planet’s facilities — caused it to shut

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

down.” The district court also rejected Another Planet’s attempt

to tie the closure orders to direct physical loss or damage to

property. It explained, “[T]hose closure orders were not passed

as a direct result of property damage at nearby properties.”

There was no suggestion that the “closure orders were passed

‘as a direct result’ of the virus having caused actual property

damage at buildings close to Another Planet’s facilities (or

anyone else’s facilities for that matter).” (Fn. omitted.)

Another Planet appealed. After briefing and oral

argument, the Ninth Circuit issued a written order certifying a

question of law to this court. (Another Planet, supra, 56 F.4th

730.) The order identified “conflicting decisions” of the lower

California courts “regarding whether allegations like Another

Planet’s suffice to state a viable claim for ‘direct physical loss or

damage to property.’ ” (Id. at p. 733.) The order stated that the

resolution of this conflict was potentially dispositive of Another

Planet’s appeal “because if the allegation of the presence or

potential presence of the COVID-19 virus is sufficient to show

‘direct physical loss or damage to property,’ the district court

erred in dismissing Another Planet’s complaint for failure to

state a claim, and we would remand to the district court for

further proceedings. Alternatively, if the allegation is not

sufficient, we would affirm the district court.” (Id. at p. 734.) As

noted, we agreed to answer the Ninth Circuit’s question, and

these proceedings followed.

II. DISCUSSION

A. General Principles of Property Insurance

As a leading treatise explains, “The fundamental principle

of a property insurance contract is to indemnify the owner

against loss; that is to place the owner in the same position in

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

which he or she would have been had no accident occurred.”

(10A Couch on Insurance (3d ed. 2005) § 148:1.) “ ‘Property

insurance . . . is an agreement, a contract, in which the insurer

agrees to indemnify the insured in the event that the insured

property suffers a covered loss. Coverage, in turn, is commonly

provided by reference to causation, e.g., “loss caused by . . . ”

certain enumerated perils.’ ” (Garvey v. State Farm Fire &

Casualty Co. (1989) 48 Cal.3d 395, 406 (Garvey).) Alternatively,

the coverage grant may cover all perils “ ‘not specifically

excepted or excluded (as in an “all risks” policy).’ ” (Ibid.) “ ‘The

term “perils” in traditional property insurance parlance refers

to fortuitous, active, physical forces such as lightning, wind, and

explosion, which bring about the loss.’ ” (Ibid.)

“Historically, property insurance grew out of the

insurance against the risk of fire which became available for

ships, buildings, and some commercial property at a time when

most of the structures in use were made wholly or primarily of

wood.” (10A Couch on Insurance, supra, § 148:1.) “On this side

of the Atlantic, fire insurance first developed in the middle of

the eighteenth century. . . . [T]his was insurance against only

one cause of loss, or peril — fire. Over time other insured perils,

such as wind and hail, were added. These insured perils were

each specified in the insurance policy. For this reason, such

insurance came to be known as ‘specified-risk’ coverage. It

insured property against the risk of damage or destruction

resulting from specified causes of loss.” (Abraham, Peril &

Fortuity in Property & Liability Insurance (2001) 36 Tort Trial

& Ins. Prac. L.J. 777, 782–783, fn. omitted.) By contrast, marine

insurance developed “standardized forms that insured an ocean-

going vessel and its cargo against ‘perils of the high seas.’

Whereas the development of fire insurance for property on land

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focused on the danger presented by a specified cause of loss,

marine insurance typically provided coverage for all risks

associated with a particular shipment or voyage.” (5 New

Appleman on Insurance Law Library Edition (2023) § 41.01[1],

fn. omitted.) “[B]y the middle of the twentieth century, insurers

adopted the marine insurance approach by offering all-risk

commercial and homeowners’ property insurance. The

operative phrase in such policies is contained in the section

labeled ‘Perils Insured Against,’ and provides coverage against

the risk of ‘direct physical loss’ to covered property.” (Abraham,

at p. 783, fn. omitted.)

“As with any insurance, property insurance coverage is

‘triggered’ by some threshold concept of injury to the insured

property. Under narrow coverages like theft, the theft is itself

the trigger. Under most coverages, however, the policy

specifically ties the insurer’s liability to the covered peril having

some specific effect on the property. In modern policies,

especially of the all-risk type, this trigger is frequently ‘physical

loss or damage’ . . . .” (10A Couch on Insurance, supra,

§ 148:46.)

This court has not previously interpreted the phrase

“physical loss or damage” (or “direct physical loss or damage”)

as the phrase is commonly used in property insurance policies.

Even prior to the COVID-19 pandemic, however, the Courts of

Appeal decided several cases that turned on the meaning of this

phrase. Without at this point endorsing their reasoning, we

summarize the most pertinent of these opinions to provide

context for the parties’ contentions and our discussion below.

In one early case, the Court of Appeal considered a

property insurance policy that “insured plaintiffs against all

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risks of physical loss of and damage to their dwelling.” (Hughes

v. Potomac Ins. Co. (1962) 199 Cal.App.2d 239, 242 (Hughes).)

The plaintiffs owned a home adjacent to a creek, and one night

“the earth to the rear of and partially underlying plaintiffs’

house slid into the creek, leaving their home standing on the

edge of and partially overhanging a newly formed 30-foot cliff.

This landslide resulted in the loss to plaintiffs of a block of earth

30 feet wide and 100 feet long, and it deprived them of subjacent

and lateral support essential to the stability of their house.” (Id.

at p. 243.) The insurance company argued it was not

responsible for the cost of shoring up the hillside because “its

policy insured the building structure and foundations of

respondents’ house, but did not insure the soil or land

underneath the building.” (Id. at p. 245.)

The Hughes court disagreed: “To accept [the insurer’s]

interpretation of its policy would be to conclude that a building

which has been overturned or which has been placed in such a

position as to overhang a steep cliff has not been ‘damaged’ so

long as its paint remains intact and its walls still adhere to one

another. Despite the fact that a ‘dwelling building’ might be

rendered completely useless to its owners, [the insurer] would

deny that any loss or damage had occurred unless some tangible

injury to the physical structure itself could be detected.

Common sense requires that a policy should not be so

interpreted in the absence of a provision specifically limiting

coverage in this manner. [Plaintiffs] correctly point out that a

‘dwelling’ or ‘dwelling building’ connotes a place fit for

occupancy, a safe place in which to dwell or live. It goes without

question that [plaintiffs’] ‘dwelling building’ suffered real and

severe damage when the soil beneath it slid away and left it

overhanging a 30-foot cliff. Until such damage was repaired and

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

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the land beneath the building stabilized, the structure could

scarcely be considered a ‘dwelling building’ in the sense that

rational persons would be content to reside there.” (Hughes,

supra, 199 Cal.App.2d at pp. 248–249.)

Several decades later, a different Court of Appeal

confronted direct physical loss or damage more directly. (Ward

General Ins. Services, Inc. v. Employers Fire Ins. Co. (2003)

114 Cal.App.4th 548 (Ward).) Due to human error — “an

operator inadvertently pressed the ‘delete’ key on the

keyboard” — the plaintiff suffered a computer “ ‘crash’ ” that

resulted in the loss of electronically stored data. (Id. at p. 550

& fn. 3.) “Plaintiff incurred extra expenses restoring its data,

and also suffered the loss of business income because of the

disruption.” (Id. at p. 550.) The plaintiff sought insurance

coverage on the theory that its lost data constituted a “ ‘direct

physical loss.’ ” (Ibid.) The parties did not submit “any evidence

suggesting that the phrase ‘direct physical loss’ has some

technical meaning or special meaning given by usage.” (Id. at

p. 556.) The court therefore construed the terms in accordance

with their ordinary meanings: “The word ‘physical’ is defined,

inter alia, as ‘having material existence’ and ‘perceptible esp.

through the senses and subject to the laws of nature.’ (Merriam-

Webster’s Collegiate Dict. (10th ed. 1993) p. 875.) ‘MATERIAL

implies formation out of tangible matter.’ (Id. at p. 715.)

‘Tangible’ means, inter alia, ‘capable of being perceived esp. by

the sense of touch.’ (Id. at p. 1200.) Thus, relying on the

ordinary and popular sense of the words, we say with confidence

that the loss of plaintiff’s database does not qualify as a ‘direct

physical loss,’ unless the database has a material existence,

formed out of tangible matter, and is perceptible to the sense of

touch.” (Ward, at p. 556.)

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Because a database consists of organized information, and

therefore “the loss of a database is the loss of organized

information,” the Ward court held that the loss of the database

was not a direct physical loss. (Ward, supra, 114 Cal.App.4th at

p. 556.) “Plaintiff did not lose the tangible material of the

storage medium. Rather, plaintiff lost the stored information.

The sequence of ones and zeros can be altered, rearranged, or

erased, without losing or damaging the tangible material of the

storage medium.” (Ibid.)

This requirement of tangible or physical harm took on

similar importance in Doyle v. Fireman’s Fund Ins. Co. (2018)

21 Cal.App.5th 33 (Doyle). In that case, a wine collector

purchased “close to $18 million of purportedly rare, vintage

wine,” but it turned out to be counterfeit. (Id. at p. 36.) The

collector’s insurance policy covered “ ‘direct and accidental loss

or damage to covered property.’ ” (Id. at p. 38.) The court

proceeded from the premise that “ ‘property insurance is

insurance of property. While in the modern setting “just about

any type of property” may be insured, the insured item must

nonetheless be property.’ ” (Ibid.) “ ‘Given this premise, the

threshold requirement for recovery under a contract of property

insurance is that the insured property has sustained physical

loss or damage. [Citation.] “The requirement that the loss be

‘physical,’ given the ordinary definition of that term is widely

held to exclude alleged losses that are intangible or incorporeal,

and, thereby, to preclude any claim against the property insurer

where the insured merely suffers a detrimental economic impact

unaccompanied by a distinct, demonstrable, physical alteration

of the property.” ’ ” (Ibid.) The same principle applied even

though the collector’s insurance policy did not use the word

“physical” in its grant of coverage: “[G]iven the fundamental

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nature of property insurance, the policy [the collector]

purchased only insured him against potential harms to the wine

itself, such as fire, theft, or abnormal spoilage; [the collector] did

not insure himself against any potential financial losses.” (Id.

at p. 39.) Thus, “because nothing happened to the covered

property (i.e., the wine that [the collector] purchased and

insured),” the property did not suffer any loss and the insurer

properly denied coverage. (Id. at p. 38.)

In MRI Healthcare Center of Glendale, Inc. v. State Farm

General Ins. Co. (2010) 187 Cal.App.4th 766 (MRI Healthcare),

the Court of Appeal discussed some of these same concepts. A

plaintiff purchased an insurance policy providing coverage for

“ ‘accidental direct physical loss to business personal property,’ ”

as well as lost business income as a result of “accidental direct

physical loss to property . . . caused by an insured loss.” (Id. at

p. 771, italics omitted.) The plaintiff, a healthcare provider, was

required to “demagnetize[]” or “ ‘ramp[] down’ ” its magnetic

resonance imaging (MRI) machine in order to facilitate repairs

to the roof of the building in which it was housed. (Id. at p. 770.)

“Once the machine was ramped down, it failed to ramp back up.

This failure purportedly constituted ‘damage’ to the MRI

machine and resulted in loss of business income to [the

plaintiff].” (Ibid.)

To determine coverage, the MRI Healthcare court looked

to general principles described in the Couch treatise: “In

modern policies, ‘ “physical loss or damage” ’ is typically the

trigger for coverage. [Citation.] Clearly, this threshold is met

when an item of tangible property has been ‘physically altered’

by perils such as fire or water. [Citation.] However, serious

questions crop up in instances when the structure of the

property itself is unchanged to the naked eye and the insured

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claims its usefulness for its normal purposes has been destroyed

or reduced. [Citation.] That the loss needs to be ‘physical,’ given

the ordinary meaning of the term, is ‘widely held to exclude

alleged losses that are intangible or incorporeal, and, thereby,

to preclude any claim against the property insurer when the

insured merely suffers a detrimental economic impact

unaccompanied by a distinct, demonstrable, physical alteration

of the property.’ ” (MRI Healthcare, supra, 187 Cal.App.4th at

pp. 778–779, quoting 10A Couch on Insurance, supra, § 148:46.)

The court continued, “A direct physical loss ‘contemplates an

actual change in insured property then in a satisfactory state,

occasioned by accident or other fortuitous event directly upon

the property causing it to become unsatisfactory for future use

or requiring that repairs be made to make it so.’ ” (MRI

Healthcare, at p. 779, quoting AFLAC Inc. v. Chubb & Sons, Inc.

(Ga.Ct.App. 2003) 581 S.E.2d 317, 319.)

In the court’s view, “there was no ‘distinct, demonstrable

[or] physical alteration’ of the MRI machine.” (MRI Healthcare,

supra, 187 Cal.App.4th at p. 779.) “The failure of the MRI

machine to satisfactorily ‘ramp up’ emanated from the inherent

nature of the machine itself rather than actual physical

‘damage.’ As [the insurer] suggests, the MRI machine was not

‘damaged’ in the ordinary meaning of the word. In effect, the

machine was turned off and could not be turned back on. This

does not constitute a compensable ‘direct physical loss’ under

the policy.” (Id. at p. 780.) “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.” (Ibid.) The plaintiff

“failed to show any ‘physical loss’ occurred to the MRI machine”

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and therefore could not recover under its insurance policy.

(Ibid.)

B. The Conflict Underlying the Certified Question

Against this backdrop, California courts confronted

insurance claims arising from the COVID-19 pandemic. In its

certification order, the Ninth Circuit identified a split in the

California Courts of Appeal regarding the prospect for insurance

coverage for pandemic-related losses. (Another Planet, supra,

56 F.4th at pp. 733–734.) United Talent Agency v. Vigilant

Ins. Co. (2022) 77 Cal.App.5th 821 (United Talent) held, as a

matter of law, that “the presence or potential presence of the

[COVID-19] virus does not constitute direct physical damage or

loss.” (Id. at p. 838.) By contrast, Marina Pacific Hotel &

Suites, LLC v. Fireman’s Fund Ins. Co. (2022) 81 Cal.App.5th 96

(Marina Pacific) held that a plaintiff had sufficiently alleged

direct physical loss or damage based on the presence of the

COVID-19 virus. (Id. at pp. 108–109.) We examine each opinion

in greater detail below.

In United Talent, the plaintiff was a large talent agency

representing various professionals in the entertainment

industry. (United Talent, supra, 77 Cal.App.5th at p. 824.) It

purchased property insurance from Vigilant, in a form

substantially similar to Another Planet’s policy. (Id. at pp. 824–

825.) At the outset of the COVID-19 pandemic, government

closure orders impaired the talent agency’s ability to use its

insured locations. (Id. at p. 826.) The orders also caused the

cancellation of live events and motion picture and television

productions. (Ibid.) The talent agency suffered lost profits, lost

commissions, and lost business opportunities in excess of

$150 million. (Id. at p. 825.) Vigilant denied the talent agency’s

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

insurance claim, and the trial court sustained Vigilant’s

demurrer to the talent agency’s subsequent complaint. (Id. at

pp. 826, 828.)

On appeal, the talent agency offered “two theories for why

its losses were covered under the business expense provisions.

First, [the talent agency] contend[ed] that the ‘danger posed by’

the virus, which gave rise to the closure orders and other

restrictions, caused ‘physical loss’ because it ‘limited [the

agency’s] use of and operations at its insured locations,’

including dependent business premises, such as concert venues,

thus ‘rendering them unusable for their intended purposes.’

Second, [the talent agency] assert[ed] that the virus itself in or

around [the agency’s] insured locations caused ‘physical

damage.’ ” (United Talent, supra, 77 Cal.App.5th at pp. 829–

830.)

The United Talent court relied on MRI Healthcare, supra,

187 Cal.App.4th 766, and an earlier COVID-19 insurance

opinion in Inns-by-the-Sea v. California Mutual Ins. Co. (2021)

71 Cal.App.5th 688 (Inns-by-the-Sea), to discern the scope of the

talent agency’s insurance coverage, particularly the

requirement of direct physical loss or damage. (United Talent,

supra, 77 Cal.App.5th at p. 830.) Initially, the court noted, “In

the wake of the COVID-19 pandemic, many insureds have

asserted arguments similar to [the agency’s], and the majority

of courts have rejected them. It is now widely established that

temporary loss of use of a property due to pandemic-related

closure orders, without more, does not constitute direct physical

loss or damage.” (Id. at pp. 830–831.) In that situation, an

insured “ ‘cannot reasonably allege that the presence of the

COVID-19 virus on its premises is what caused the premises to

be uninhabitable or unsuitable for their intended purpose.’ ”

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Opinion of the Court by Guerrero, C. J.

(Id. at p. 831.) “[E]ven if [the insured] had eradicated the virus

by thoroughly sterilizing its properties, ‘[the insured] would still

have continued to incur a suspension of operations because the

Orders would still have been in effect and the normal

functioning of society still would have been curtailed.’ ” (Id. at

p. 832.) The loss alleged by the talent agency “ ‘was not a

physical deprivation of property, but rather an interruption in

business operations.’ ” (Id. at p. 833.) The “ ‘mere loss of use of

physical property to generate business income, without any

other physical impact on the property, does not give rise to

coverage for direct physical loss.’ ” (Id. at p. 834.)1

The United Talent court next confronted the talent

agency’s alternative argument, that “the physical presence of

the virus on [its] insured premises constituted ‘physical

damage.’ ” (United Talent, supra, 77 Cal.App.5th at p. 834.)

The agency contended its allegations were “akin to cases that

‘have recognized that “direct physical loss or damage to

property” occurs’ in the presence of contaminants such as

bacteria, smoke, asbestos, fumes, or mold.” (Ibid.) The court

disagreed, identifying numerous cases from other jurisdictions

that had rejected similar arguments. (Id. at pp. 835–836 &

fn. 10.) It quoted a federal appellate court’s observation that,

“ ‘[w]hile the impact of the virus on the world . . . can hardly be

overstated, its impact on physical property is inconsequential:

deadly or not, it may be wiped off surfaces using ordinary

Shortly before United Talent, the court in Musso & Frank

Grill Co., Inc. v. Mitsui Sumitomo Ins. USA, Inc. (2022)

77 Cal.App.5th 753, 756, 759 also followed Inns-by-the-Sea and

held that government closure orders did not trigger coverage for

pandemic-related losses. (See United Talent, supra,

77 Cal.App.5th at p. 831, fn. 7.)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

cleaning materials, and it disintegrates on its own in a matter

of days.’ ” (Id. at p. 835.) The United Talent court also repeated

the following hypothetical, originally offered by a federal district

court: “ ‘If, for example, a sick person walked into one of

Plaintiffs’ restaurants and left behind COVID-19 particulates

on a countertop, it would strain credulity to say that the

countertop was damaged or physically altered as a result.’ ”

(Ibid.) The United Talent court reasoned that “the virus exists

worldwide wherever infected people are present, it can be

cleaned from surfaces through general disinfection measures,

and transmission may be reduced or rendered less harmful

through practices unrelated to the property, such as social

distancing, vaccination, and the use of masks. Thus, the

presence of the virus does not render a property useless or

uninhabitable, even though it may affect how people interact

with and within a particular space.” (Id. at p. 838.) Thus, the

court concluded that the talent agency “has not established that

the presence of the virus constitutes physical damage to insured

property.” (Id. at p. 840.)

Several months later, the Marina Pacific court disagreed.

(Marina Pacific, supra, 81 Cal.App.5th at pp. 111–112.) The

plaintiffs in Marina Pacific were the owners of a hotel and

adjacent restaurant who alleged that “the COVID-19 virus was

present on, and had physically transformed, portions of [their]

insured properties,” thus causing direct physical loss or damage

and triggering coverage for their pandemic-related economic

losses. (Id. at p. 99.) In large part, the owners’ insurance policy

was the same as the insurance policy obtained by Another

Planet. (Id. at pp. 99–100.) But the policy also provided

coverage for losses caused by a “ ‘communicable disease event,’ ”

which was defined as “ ‘an event in which a public health

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

authority has ordered that a location be evacuated,

decontaminated, or disinfected due to the outbreak of a

communicable disease at such location.’ ” (Id. at p. 100, boldface

omitted.) The insurer promised to pay “ ‘for direct physical loss

or damage’ to insured property ‘caused by or resulting from a

covered communicable disease event,’ including costs necessary

to repair or rebuild insured property damaged or destroyed by

the communicable disease and to ‘[m]itigate, contain, remediate,

treat, clean, detoxify, disinfect, neutralize, cleanup, remove,

dispose of, test for, monitor and assess the effects [of] the

communicable disease.’ In addition, business interruption

coverage was provided for suspension of operations during a

period of restoration, provided the suspension was ‘due to direct

physical loss or damage to property at a location caused by or

resulting from a covered communicable disease event.’ ” (Ibid.)

The Marina Pacific plaintiffs alleged that “the COVID-19

virus does not simply live on the surface of objects. Rather, ‘it

also actually bonds and/or adheres to such objects through

physico-chemical reactions involving, inter alia, cells and

surface proteins’ and ‘caus[es], among other things, a distinct,

demonstrable or physical alteration to property.’ ” (Marina

Pacific, supra, 81 Cal.App.5th at p. 101.) They further alleged

that the virus was present on various objects at the insured

properties and in the air. (Ibid.) Moreover, they alleged, “in

response to multiple employees of [the hotel] testing positive,

‘various public health authorities have ordered that [the hotel]

be evacuated, decontaminated, or disinfected,’ and specifically

alleged one employee had been ordered by the Los Angeles

County Department of Health–Environmental Health Division

to ‘evacuate the hotel and quarantine.’ ” (Id. at pp. 101–102.)

“The physical loss or damage to property, the insureds alleged,

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

required the closure or suspension of operations at [the hotel

and restaurant] or portions of those properties at various times

and caused them to incur extra expense, adopt remedial and

precautionary measures ‘to attempt to restore and remediate

the air and surfaces at the Insured Properties, dispose of

property damaged by COVID-19 and limit operations at the

Insured Properties.’ ” (Id. at p. 102.) The insurer successfully

demurred on the ground that these allegations did not state a

claim for coverage, and the plaintiffs appealed. (Id. at pp. 103–

104.)

On appeal, the Marina Pacific court acknowledged MRI

Healthcare’s interpretation of direct physical loss or damage as

requiring “ ‘a “distinct, demonstrable, physical alteration” of the

property.’ ” (Marina Pacific, supra, 81 Cal.App.5th at p. 107.)

The court also acknowledged the plaintiffs’ criticism of MRI

Healthcare’s interpretation, but it found it unnecessary to

resolve the dispute. (Id. at pp. 107–108.) The court held that

the plaintiffs had alleged direct physical loss or damage to

property even under MRI Healthcare’s interpretation of the

phrase. (Id. at p. 108.) It emphasized that the plaintiffs had

alleged the COVID-19 virus was present on surfaces throughout

their properties, the virus “bonds to surfaces through

physicochemical reactions involving cells and surface proteins,

which transform the physical condition of the property,” and the

presence of the COVID-19 virus caused the plaintiffs to “close or

suspend operations in whole or in part at various times and

incur[] extra expense as they adopted measures to restore and

remediate the air and surfaces at the insured properties. The

[plaintiffs] specifically alleged they were required to ‘dispose of

property damaged by COVID-19 and limit operations at the

Insured Properties.’ ” (Id. at pp. 108–109.) The presence of the

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

virus was therefore a “distinct, demonstrable, physical

alteration of the property,” which “caused a slowdown in, or

cessation of, the operation of the insureds’ business while the

covered property was restored or remediated, thereby triggering

their business interruption (‘business income and extra

expense’) coverage.” (Id. at p. 109.)

The Marina Pacific court “recognize[d] this conclusion is

at odds with almost all (but not all) decisions considering

whether business losses from the pandemic are covered by the

business owners’ first person commercial property insurance.”

(Marina Pacific, supra, 81 Cal.App.5th at p. 109.) It had three

primary responses. First, the court noted that “the pleading

rules in federal court are significantly different from those we

apply when evaluating a trial court order sustaining a

demurrer.” (Ibid.) California courts do not evaluate the

plausibility of a plaintiff’s allegations when determining

whether to accept them as true. (Ibid.) Thus, the court

accepted — “ ‘however improbable’ ” — the owners’ allegation

that “the COVID-19 virus alters ordinary physical surfaces

transforming them into fomites[2] through physicochemical

processes, making them dangerous and unusable for their

intended purposes unless decontaminated.” (Id. at p. 110.)

Second, the court observed that the allegations considered by

many courts were materially different because they relied on

government closure orders, rather than the presence of the virus

itself, as the cause of the insureds’ losses. (Id. at pp. 110–111.)

A fomite is “ ‘an object . . . that may be contaminated with

infectious agents (such as bacteria or viruses) and serve in their

transmission.’ ” (United Talent, supra, 77 Cal.App.5th at p. 826,

fn. 5.)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

Third, the court emphasized that the insurance policy at issue

specifically included coverage for communicable diseases, in its

communicable disease event coverage extension. (Id. at p. 112.)

The language of this extension “explicitly contemplates that a

communicable disease, such as a virus, can cause damage or

destruction to property and that such damage constitutes direct

physical loss or damage as defined in the policy.” (Ibid.) The

court explained, “Construing the policy provisions together, as

we must, this language precludes the interpretation that direct

physical loss or damage categorically cannot be caused by a

virus.” (Ibid.)3

The court in Amy’s Kitchen, Inc. v. Fireman’s Fund Ins.

Co. (2022) 83 Cal.App.5th 1062, 1068 (Amy’s Kitchen) examined

a communicable disease event coverage extension in some

detail. The court noted that the extension provided coverage for

“ ‘direct physical loss or damage’ ” to property, including costs

incurred to “ ‘[m]itigate, contain, remediate, treat, clean,

detoxify, disinfect, neutralize, cleanup, remove, dispose of, test

for, monitor, and assess the effects [of] the communicable

disease.’ ” (Ibid., boldface omitted.) It rejected the insurer’s

argument that such costs were not recoverable “unless the

communicable disease event physically altered the property.”

(Id. at p. 1069.) The court reasoned that the communicable

disease event extension was unlike the policy provisions where

courts had found a physical alteration requirement. (Ibid.)

Instead, “[o]n reading the phrase ‘direct physical loss or damage’

as it appears in the extension, a reasonable layperson would

assume that the phrase includes costs incurred for each of the

three purposes specified in” the extension itself. (Id. at p. 1070.)

Thus, the court held, “[T]he need to clean or disinfect infected or

potentially infected covered property constitutes ‘direct physical

loss or damage’ of that property within the meaning of the

policy.” (Id. at p. 1071.) However, the plaintiff had not alleged

a “ ‘communicable disease event’ ” sufficient to trigger coverage,

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The Marina Pacific court disagreed with United Talent

that the ability to remove the COVID-19 virus from surfaces

precluded coverage. (Marina Pacific, supra, 81 Cal.App.5th at

p. 111.) It stated, “Even if there had been evidence subject to

proper judicial notice to establish that disinfecting repaired any

alleged property damage, it would not resolve whether

contaminated property had been damaged in the interim, nor

would it alleviate any loss of business income or extra expenses.

As the insureds argue on appeal, the duration of exposure may

be relevant to the measure of policy benefits; it does not negate

coverage.” (Id. at p. 112.)

Subsequent California decisions have offered variations

on the themes of United Talent and Marina Pacific. Several

courts followed United Talent (and the earlier Inns-by-the-Sea)

to hold that government closure orders alone are insufficient to

trigger coverage because they do not cause direct physical loss

or damage to property. (See Starlight Cinemas, Inc. v.

Massachusetts Bay Ins. Co. (2023) 91 Cal.App.5th 24, 38–39

(Starlight Cinemas); Tarrar Enterprises, Inc. v. Associated

Indemnity Corp. (2022) 83 Cal.App.5th 685, 687–688; Apple

Annie, LLC v. Oregon Mutual Ins. Co. (2022) 82 Cal.App.5th

919, 923, 934 (Apple Annie).) Another court extended this

principle. (See Best Rest Motel, Inc. v. Sequoia Ins. Co. (2023)

88 Cal.App.5th 696 (Best Rest).) It held that even if the COVID-

19 virus was present at an insured property, the plaintiff must

i.e., “ ‘an event in which a public health authority has ordered

that a location be evacuated, decontaminated, or disinfected due

to the outbreak of a communicable disease at such location.’ ”

(Ibid.) The Amy’s Kitchen court therefore held that the trial

court properly sustained the insurer’s demurrer, but the

plaintiff should have been given leave to amend. (Id. at p. 1072.)

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Opinion of the Court by Guerrero, C. J.

show the presence of the virus — rather than public health

orders or negative economic conditions overall — caused its

losses. (Id. at p. 706.) The court explained, “The dispositive

issue in this case is not whether there was COVID-19 in the

hotel, or whether fomites are a form of physical damage, but

instead is whether the presence of COVID-19 in or on the

insured property caused the hotel’s loss of income.” (Ibid.) It

held that the plaintiff had not created a triable issue of fact that

the virus itself caused its losses: “[E]ven if [the plaintiff] had

eradicated all traces of COVID-19 from its premises, it still

would have suffered the same lost income.” (Id. at p. 708.)

By contrast, Coast Restaurant Group, Inc. v. Amguard

Ins. Co. (2023) 90 Cal.App.5th 332, 340 (Coast Restaurant) held

that public health orders could trigger coverage in and of

themselves. The orders “physically affected the property

because they affected how the physical space of the property and

the physical objects (chairs, tables, etc.) in that space could or

could not be used,” and they constituted a loss because “the

governmental restrictions . . . deprived the appellant of

important property rights in the covered property.” (Ibid.)

Nonetheless, despite the possibility of coverage, the court held

that the plaintiff could not prevail based on specific policy

exclusions for loss or damage caused by “ ‘enforcement of any

ordinance or law’ ” or by “ ‘[a]ny virus, bacterium or other

microorganism that induces or is capable of inducing physical

distress, illness or disease.’ ” (Id. at pp. 343–344.)

In two later cases, the Marina Pacific court reaffirmed its

holding that the presence of the COVID-19 virus on an insured’s

property may constitute direct physical loss or damage to

property. (Shusha, Inc. v. Century-National Ins. Co. (2022)

87 Cal.App.5th 250, 264, review granted Apr. 19, 2023, S278614

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

(Shusha); see JRK Property Holdings, Inc. v. Colony Ins. Co.

(2023) 96 Cal.App.5th 1, 4, review granted Dec. 20, 2023,

S282657.) The court confirmed its view that a plaintiff “is not

required to provide authority at the pleading stage to support

its position that contamination with the COVID-19 virus caused

damage to the surfaces in its premises.” (Shusha, at p. 265.)

Importantly, the court extended Marina Pacific’s interpretation

of direct physical loss or damage even to policies that, unlike

Marina Pacific, did not extend special coverage to communicable

disease events. (Id. at pp. 265–266.) There was “a sufficient,

independent basis for lost business income coverage under the

policy provision for losses due ‘to the necessary suspension of

[the insured’s] operation during the period of restoration arising

from direct physical loss or damage to [covered] property.’ ”

(Ibid.)

A different court likewise followed Marina Pacific and

held that allegations of molecular interaction between the

COVID-19 virus and the surfaces of insured property were

sufficient to allege direct physical loss or damage. (San Jose

Sharks, LLC v. Superior Court (2023) 98 Cal.App.5th 158, 168

(San Jose Sharks).) But it determined that the policy’s

contamination exclusion, which “unambiguously exclude[d]

physical loss or damage in the form of viral contamination from

the scope of coverage,” largely precluded recovery. (Id. at

p. 171.)

Reviewing a number of these decisions, the court in

Endeavor Operating Co., LLC v. HDI Global Ins. Co. (2023)

96 Cal.App.5th 420, review granted December 13, 2023,

S282533 (Endeavor), disagreed with Marina Pacific and Shusha

that the presence of COVID-19 on an insured’s property, and

allegations that COVID-19 adsorbed or interacted with surfaces

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Opinion of the Court by Guerrero, C. J.

of the property, were sufficient to trigger coverage. (Id. at

pp. 441–442.) The Endeavor court explained, “[T]he type of viral

interaction with surfaces alleged by Endeavor (and accepted as

true) does not, as a matter of law, satisfy the default definition

of ‘direct physical harm or loss to property.’ ” (Id. at p. 442, fn.

omitted.) The court further disagreed with Coast Restaurant

that public health orders, in and of themselves, could constitute

a physical loss to property. It observed, “Every other California

decision has rejected that view and instead held that ‘ “direct

physical loss or damage” ’ requires ‘physical alteration’ of the

property, such that mere loss of the property’s use will generally

not suffice — except when the policy explicitly includes loss of

use due to a virus as qualifying for coverage.” (Id. at p. 434.)

Still another court agreed in principle that a plaintiff “may

fall within the insurance property damage coverage provisions

by showing the COVID-19 virus altered its property and caused

physical damage.” (Santa Ynez Band of Chumash Mission

Indians v. Lexington Ins. Co. (2023) 90 Cal.App.5th 1064, 1070,

review granted July 12, 2023, S280353.) But, in the context of

a motion for summary judgment, the court held that a plaintiff

must show “that the virus actually caused physical damage to

its property.” (Id. at p. 1072.) “If there is alteration of property

without physical damage, then there is no proof of an economic

loss that can be compensated under the policy. The ordinary

meaning of the term ‘physical damage to property’ does not

include a virus on the property.” (Ibid.) The plaintiff, which

owned and operated a casino and resort, failed to make a

sufficient showing of damage. (Id. at p. 1073.) It did not provide

evidence, “for example, that its carpeting, gaming tables,

gambling devices, and playing cards had to be replaced or could

not be used again.” (Ibid.) The casino and resort’s “physical

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

building structure remained intact and was not changed.

[Plaintiff’s] employees worked there before, during, and after

the shutdown. . . . There was no showing of the type of damage

that policyholders could reasonably expect to be compensated

for, such as alteration causing damage by fire, flood, or by

physical impact to the property.” (Ibid.)

Lastly, the court in John’s Grill, Inc. v. The Hartford

Financial Services Group, Inc. (2022) 86 Cal.App.5th 1195,

1211, review granted March 29, 2023, S278481, sidestepped

these disputes and found coverage under a policy’s “Limited

Fungi or Virus Coverage Endorsement.” The court interpreted

the triggering language for coverage under this endorsement as

“includ[ing] but . . . not restricted to ‘direct’ and ‘physical’ forms

of loss or damage.” (Id. at p. 1215.) While the policy placed

certain conditions on coverage, the court found the operative

paragraph “indecipherable when applied to viruses.” (Id. at

p. 1221.) These conditions rendered any coverage under the

endorsement illusory, and therefore they could not be enforced.

(Id. at p. 1224.)

C. The Parties’ Positions

As noted, the Ninth Circuit posed the following question:

“Can the actual or potential presence of the COVID-19 virus on

an insured’s premises constitute ‘direct physical loss or damage

to property’ for purposes of coverage under a commercial

property insurance policy?” (Another Planet, supra, 56 F.4th at

p. 734.) The parties, naturally, disagree about the correct

answer.

Another Planet urges an answer in the affirmative. It

contends the COVID-19 virus causes both direct physical

damage and direct physical loss to property. It notes that the

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

COVID-19 virus is a physical substance, and “[l]ike any physical

substance, it interacts with its environment, including the cells

it infects, and the air and other matter it contaminates.” (Fn.

omitted.) The COVID-19 virus bonds or attaches to particles in

the air and the surfaces of objects. In Another Planet’s view,

when the COVID-19 virus “attaches or binds to surfaces and

objects, it converts those surfaces and objects to active

fomites. . . . People can become infected by touching surfaces

where [the COVID-19 virus] is present, then touching their eyes,

nose, or mouth. The physical alteration from an object to a

fomite makes physical contact with those previously safe, inert

surfaces (e.g., handrails, doorknobs, bathroom fixtures) unsafe.”

(Fns. omitted.) Thus, according to Another Planet, the COVID-

19 virus contaminates physical property and physically

damages it. In addition, Another Planet argues the presence of

the COVID-19 virus causes direct physical loss to property

because it renders property unusable for its intended use. It

relies on Hughes, supra, 199 Cal.App.2d at page 249 for the

proposition that a property suffers direct physical loss when

“rational persons” would not “be content” to use the property for

its intended purpose, given the risk of contracting the COVID-

19 illness. Another Planet criticizes MRI Healthcare for

allegedly equating physical loss with physical damage and

requiring a “ ‘distinct, demonstrable, physical alteration’ of the

property” for both. (MRI Healthcare, supra, 187 Cal.App.4th at

p. 779, quoting 10A Couch on Insurance, supra, § 148:46.) For

both physical loss and physical damage, Another Planet relies

heavily on the opinion of the Supreme Court of Vermont in

Huntington Ingalls Industries, Inc. v. Ace American Ins. Co. (Vt.

2022) 287 A.3d 515 (Huntington Ingalls), which held that a

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Opinion of the Court by Guerrero, C. J.

plaintiff had stated a claim for insurance coverage based on the

presence of the COVID-19 virus at its insured properties.

Vigilant disagrees, citing what it describes as the

overwhelming majority of state and federal courts to consider

the issue. It argues that “because viral particles resting on inert

physical property do not cause any structural alteration to the

property, the temporary presence of such particles does not

qualify as ‘direct physical damage or loss’ to the property as a

matter of law.” Vigilant acknowledges that “when viral particles

contaminate an inert surface . . . the surface may become a

vector of transmission known as a ‘fomite.’ [Citation.] But when

an object becomes a ‘fomite,’ the object itself has not physically

changed in any way. The word ‘fomite’ is merely a label used to

describe an object where viral particles rest and can be

transferred to other humans who touch the object.” Vigilant

contends that such property is not damaged; it need not be

replaced or repaired. At most, it should be cleaned, but for

Vigilant such a cleaning “does not constitute a ‘repair’ of broken

property any more than does mopping up spilled water or

brushing off a dusty tabletop.” Vigilant defends MRI Healthcare

and asserts that “limitations on the use of undamaged property

that remains in the insured’s possession do not qualify as a

‘direct physical loss.’ ” (Italics omitted.) In Vigilant’s view, the

fact that the virus’s physical presence caused a loss of use is

insufficient without a physical loss: “[T]he word ‘physical’

modifies ‘loss to property,’ not the cause of the loss.” Vigilant

allows that a physical force might render property “entirely

‘unusable or uninhabitable’ for any purpose,” thus causing a

physical loss, but it contends such a situation is entirely

distinguishable from the “temporary presence of” the COVID-19

virus.

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D. Principles of Interpretation

The Ninth Circuit’s question and the parties’ arguments

require us to interpret the phrase “direct physical loss or

damage to property” in the insurance policy Vigilant issued to

Another Planet. “As a question of law, the interpretation of an

insurance policy is reviewed de novo under well-settled rules of

contract interpretation.” (E.M.M.I. Inc. v. Zurich American

Ins. Co. (2004) 32 Cal.4th 465, 470.) “ ‘ “While insurance

contracts have special features, they are still contracts to which

the ordinary rules of contractual interpretation apply.”

[Citation.] Thus, “the mutual intention of the parties at the time

the contract is formed governs interpretation.” [Citation.] If

possible, we infer this intent solely from the written provisions

of the insurance policy. [Citation.] If the policy language ‘is

clear and explicit, it governs.” ’ ” (Yahoo Inc. v. National Union

Fire Ins. Co. (2022) 14 Cal.5th 58, 67 (Yahoo).)

“ ‘The “clear and explicit” meaning of these provisions,

interpreted in their “ordinary and popular sense,” unless “used

by the parties in a technical sense or a special meaning is given

to them by usage” [citation], controls judicial interpretation.

[Citation.]’ [Citations.] A policy provision will be considered

ambiguous when it is capable of two or more constructions, both

of which are reasonable. [Citation.] But language in a contract

must be interpreted as a whole, and in the circumstances of the

case, and cannot be found to be ambiguous in the abstract.

[Citation.] Courts will not strain to create an ambiguity where

none exists.” (Waller v. Truck Ins. Exchange, Inc. (1995)

11 Cal.4th 1, 18–19.) “Thus, if the meaning a layperson would

ascribe to contract language is not ambiguous, we apply that

meaning.” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807,

822 (AIU Insurance).)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

E. Plain Meaning

Another Planet’s insurance policy uses the phrase “direct

physical loss or damage” several times, but it is not defined in

the policy itself. It appears undisputed that the adjectives

“ ‘direct’ ” and “ ‘physical’ ” apply to “ ‘damage,’ ” as well as

“ ‘loss.’ ” (Ward, supra, 114 Cal.App.4th at p. 554.) It also

appears undisputed that direct physical loss and direct physical

damage must differ in their meaning somehow, even if they

overlap. (See Starr Surplus Lines Ins. Co. v. Eighth Judicial

Dist. (Nev. 2023) 535 P.3d 254, 262 (Starr Surplus) [“though the

disjunctive ‘or’ directs that each word retains its own meaning,

[citation], they are not wholly ‘distinct concept[s]’ ”].) We

therefore examine each phrase in turn.

1. Direct Physical Damage to Property

Notwithstanding the split identified by the Ninth Circuit,

and the parties’ disagreement regarding the ultimate question

of insurance coverage here, the available authorities in

California and elsewhere reflect a substantial degree of

consensus regarding the meaning of direct physical damage to

property. As the Inns-by-the-Sea court noted, “The words in the

phrase ‘direct physical damage’ all have commonly understood

meanings. ‘Physical’ is defined as ‘having material existence:

perceptible especially through the senses and subject to the laws

of nature.’ [Citation.] ‘Direct’ is defined as ‘proceeding from one

point to another in time or space without deviation or

interruption,’ ‘stemming immediately from a source,’ and

‘characterized by close logical, causal, or consequential

relationship.’ [Citation.] ‘Damage’ is defined as ‘loss or harm

resulting from injury to . . . property . . . .’ ” (Inns-by-the-Sea,

supra, 71 Cal.App.5th at pp. 699–700.) Another Planet’s

preferred authority adopted these same definitions, even as it

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

found for the insured. (See Huntington Ingalls, supra, 287 A.3d

at pp. 525–526.)

It is self-evident, of course, that “property insurance is

insurance of property. While in the modern setting ‘just about

any type of property’ may be insured, the insured item must

nonetheless be property. [¶] Given this premise, the threshold

requirement for recovery under a contract of property insurance

is that the insured property has sustained physical loss or

damage.” (Simon Marketing, Inc. v. Gulf Ins. Co. (2007)

149 Cal.App.4th 616, 622–623 (Simon Marketing).) Thus, for

direct physical damage to property to occur, the property itself

must have been physically harmed or impaired. (See Starr

Surplus, supra, 535 P.3d at p. 262 [“the plain language of ‘direct

physical . . . damage to covered property’ requires a material or

tangible harm or injury directed toward the property itself,” fn.

omitted].)

It is also evident, based on the plain meaning of direct

physical damage, that the general requirement of a distinct,

demonstrable, physical change or alteration to property applies

here. As the Supreme Court of Vermont explained, “We

conclude that direct physical damage requires a distinct,

demonstrable, physical change to property. When we combine

the definitions of ‘direct,’ ‘physical,’ and ‘damage’ provided

above, the plain meaning is evident. The three components —

immediate or proximate causation, [citation], material force or

effect, [citation], and injury to property, [citation] — when

logically construed together require that there be a physical

alteration to the property itself for damage to occur under the

policy. [Citation.] The addition of ‘distinct’ and ‘demonstrable’

to this definition is important because it ‘necessarily implicates

the insured’s burden of showing that a covered loss has

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

occurred,’ i.e. an articulable change to the property.”

(Huntington Ingalls, supra, 287 A.3d at p. 527.)

Such a change or alteration need not be visible to the

naked eye to constitute direct physical damage to property;

“alterations at the microscopic level may meet this threshold.”

(Huntington Ingalls, supra, 287 A.3d at pp. 527–528; see Starr

Surplus, supra, 535 P.3d at p. 263 [“Both physical loss and

physical damage can arise from invisible or microscopic

forces”].) Instead, it is the effect of the change or alteration of

the property that is determinative. If the change or alteration

causes harm or injury to the property itself, such a change or

alteration may constitute direct physical damage to property.

Conversely, if a change or alteration does not cause any damage

or harm to the property, it does not constitute direct physical

damage to property. Many physical forces, such as heat and

cold, cause physical changes or alterations to property, but these

changes or alterations do not necessarily cause physical

damage.

2. Direct Physical Loss to Property

Although the precise meaning of direct physical loss to

property is more contested, its general scope is readily

ascertainable. Loss can simply be a more extreme form of

damage, but its meaning is also broader. Referencing a common

dictionary definition, the Inns-by-the-Sea court explained,

“ ‘Loss’ is often used to refer to ‘destruction’ and ‘ruin’ [citation],

but its definition also includes ‘the partial or complete

deterioration or absence of a physical capability or function,’ ‘an

instance of losing someone or something,’ and ‘the harm or

privation resulting from losing or being separated from someone

or something.’ ” (Inns-by-the-Sea, supra, 71 Cal.App.5th at

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

p. 705, fn. 18.) Again, the authority cited by Another Planet is

generally in accord. (Huntington Ingalls, supra, 287 A.3d at

p. 525.)

The pairing of the word “physical” with “loss”

demonstrates “ ‘there must be some physicality to the loss . . . of

property — e.g., a physical alteration, physical contamination,

or physical destruction.’ ” (Inns-by-the-Sea, supra,

71 Cal.App.5th at p. 707.) It also encompasses complete

physical deprivation or dispossession, such as when property is

stolen. (See Apple Annie, supra, 82 Cal.App.5th at p. 929,

fn. 10.)

This physicality requirement is reinforced by the

insurance policy’s reference in its business income and extra

expense provisions to a “period of restoration” following direct

physical loss or damage, which includes “the time required to

[¶] . . . [¶] repair or replace the property.” This language

“implies that the ‘loss’ or ‘damage’ that gives rise to Business

Income coverage has a physical nature that can be physically

fixed.” (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 707.) “The

definition of ‘period of restoration’ provides an indication that

the phrase ‘direct physical loss of’ property was not intended to

include the mere loss of use of physical property to generate

income, without any other physical impact to property that

could be repaired, rebuilt or replaced.” (Id. at p. 708.) “The

definition of ‘period of restoration,’ by recognizing there will be

a period of physical repair to the property, is, at a minimum,

consistent with requirement of a physical alteration to trigger a

covered loss.” (Starlight Cinemas, supra, 91 Cal.App.5th at

p. 40.)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

In describing this physicality requirement, the Couch

treatise does not note any difference between direct physical

damage and direct physical loss. It applies the same “distinct,

demonstrable, physical alteration” requirement to each: “The

requirement that the loss be ‘physical,’ given the ordinary

definition of that term, is widely held to exclude alleged losses

that are intangible or incorporeal and, thereby, to preclude any

claim against the property insurer when the insured merely

suffers a detrimental economic impact unaccompanied by a

distinct, demonstrable, physical alteration of the property.”

(10A Couch on Insurance, supra, § 148:46, fns. omitted.)

Another treatise echoes this description: “The requirement that

the loss or damage be ‘physical’ therefore has been found to

preclude coverage for losses that are solely intangible or

incorporeal; for example, an economic loss unaccompanied by a

distinct physical alteration to property.” (5 New Appleman on

Insurance Law Library Edition, supra, § 46.03[2].)

Prior to the COVID-19 pandemic, several California courts

likewise adopted this description of direct physical loss to

property. (See, e.g., Doyle, supra, 21 Cal.App.5th at p. 38; MRI

Healthcare, supra, 187 Cal.App.4th at p. 779; Simon Marketing,

supra, 149 Cal.App.4th at pp. 622–623.) It has also been widely

adopted in cases rejecting coverage for pandemic-related losses.

(See, e.g., Endeavor, supra, 96 Cal.App.5th at p. 440, review

granted; Starlight Cinemas, supra, 91 Cal.App.5th at p. 38;

Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 706.) Even cases

finding the possibility of coverage have assumed this description

applies. (See, e.g., San Jose Sharks, supra, 98 Cal.App.5th at

p. 168; Shusha, supra, 87 Cal.App.5th at p. 264, review granted;

Marina Pacific, supra, 81 Cal.App.5th at p. 108.)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The longstanding California view that direct physical loss

to property requires a distinct, demonstrable, physical

alteration of property is correct. But this requirement is not as

restrictive as the Couch treatise has interpreted it. The Couch

treatise places its description in opposition to cases “allowing

coverage based on physical damage despite the lack of physical

alteration of the property” including one where “the

uninhabitability of the property was due to the fact that gasoline

vapors from adjacent property had infiltrated and saturated the

insured building.” (10A Couch on Insurance, supra, § 148:46,

citing Western Fire Ins. Co. v. First Presbyterian Church (Colo.

1968) 437 P.2d 52.) But, as the Inns-by-the-Sea court observed,

it is not self-evident that the physical alteration requirement

necessarily excludes such a loss: “[I]t is possible that in the

context of real property, the ‘distinct, demonstrable, physical

alteration’ referenced in the Couch treatise [citation] could

include damage that is not structural, but instead is caused by

a noxious substance or odor.” (Inns-by-the-Sea, supra,

71 Cal.App.5th at p. 706, fn. 19.)

Inns-by-the-Sea cited case law from other jurisdictions

where “the presence of noxious substances and odors” was found

sufficient to constitute direct physical loss or damage to

property. (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 701.) It

explained, “[C]ase law supports the view that in certain

circumstances an invisible substance or biological agent might

give rise to coverage because it causes a policyholder to suspend

operations due to direct physical loss of or damage to property.”

(Id. at p. 710, fn. 21.)

We agree that an invisible substance or biological agent

may, in some cases, be sufficiently harmful and persistent to

cause a distinct, demonstrable, physical alteration to property.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

As one court explained, a physical contaminant may cause direct

physical loss or damage where it is “so connected to the property

that the property effectively becomes the source of its own loss

or damage.” (Starr Surplus, supra, 535 P.3d at p. 265;

see United Talent, supra, 77 Cal.App.5th at p. 833 [risk of harm

“inextricably linked to the insured property”].) Notably, such a

connection will not be found where the substance or biological

agent can be easily cleaned or removed from the property. (Inns-

by-the-Sea, supra, 71 Cal.App.5th at p. 703, fn. 17.) “While

saturation, ingraining, or infiltration of a substance into the

materials of a building or persistent pollution of a premises

requiring active remediation efforts is sufficient to constitute

‘direct physical loss of or damage to property,’ evanescent

presence is not.” (Verveine Corp. v. Strathmore Ins. Co. (Mass.

2022) 184 N.E.3d 1266, 1276 (Verveine).)

Given this physicality requirement, Another Planet is

incorrect that direct physical loss to property may be found

anytime a property may not be used as intended. A property

insurance policy does not cover a particular intended use; it

covers the property itself. (See Simon Marketing, supra,

149 Cal.App.4th at pp. 622–623.) “In simple terms, under this

rule, ‘ “Plaintiff[s’] operations are not what is insured — the

building and the personal property in or on the building are.” ’ ”

(Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 706.) The property

itself must suffer a direct physical loss, i.e., it must be so

negatively affected that it is rendered effectively unusable or

uninhabitable.

Another Planet relies on Hughes, supra, 199 Cal.App.2d

239, but Hughes does not support Another Planet’s broad

interpretation of direct physical loss. The primary issue in

Hughes was whether the terms “ ‘dwelling’ ” or “ ‘dwelling

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

building’ ” included the soil underneath the insured’s home. (Id.

at p. 248.) The Hughes court concluded the soil was included,

because “to exclude the underlying land would be to render the

policy illusory.” (Ibid.) Among other things, the court reasoned

that coverage must exist where the home was “rendered

completely useless to its owners,” even if no “tangible injury to

the physical structure itself could be detected.” (Ibid.) The

home “suffered real and severe damage when the soil beneath it

slid away and left it overhanging a 30-foot cliff. Until such

damage was repaired and the land beneath the building

stabilized, the structure could scarcely be considered a ‘dwelling

building’ in the sense that rational persons would be content to

reside there.” (Id. at p. 249.) While we need not address the

specific question before the Hughes court, it does not support

Another Planet’s view that direct physical loss encompasses any

loss of intended use. The loss in Hughes was plainly more severe

than simply a change in use; the insureds were effectively

deprived or dispossessed of their property. (See Endeavor,

supra, 96 Cal.App.5th at p. 435, review granted [“Hughes did

not purport . . . to erect a ubiquitous ‘loss of use equals property

loss or damage’ rule”].)

Finally, the requirement of a direct physical loss to

property generally excludes impairments that are purely legal

in nature. (See Garvey, supra, 48 Cal.3d at p. 406 [referring to

“ ‘fortuitous, active, physical forces such as lightning, wind, and

explosion, which bring about the loss’ ”].) It does not cover

situations where there is “a loss of use of property but there is

no direct physical loss because a government order as opposed

to a physical condition related to the property caused the

deprivation.” (Huntington Ingalls, supra, 287 A.3d at p. 531.)

This position enjoys near-universal support among the Courts

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

of Appeal: “[M]ost California appellate courts have held the

allegation of temporary loss of use of property resulting from

pandemic-related government closure orders — without any

physical loss of the property — is not sufficient to support a

claim against an insurer for business income coverage under a

policy that requires the suspension be caused by ‘direct physical

loss of or damage to’ insured property.” (Starlight Cinemas,

supra, 91 Cal.App.5th at p. 38; accord, Endeavor, supra,

96 Cal.App.5th at p. 434, review granted [collecting cases].)

Coast Restaurant departed from this consensus. It held,

“[W]hile physical alteration to covered property could trigger

coverage under a ‘physical loss or damage’ insuring provision,

that is not the only possible trigger for coverage.” (Coast

Restaurant, supra, 90 Cal.App.5th at p. 343.) Specifically, the

Coast Restaurant court believed pandemic-related public health

orders could cause direct physical loss to property because they

“affected how the physical space of the property and the physical

objects (chairs, tables, etc.) in that space could or could not be

used” and “deprived the [insured] of important property rights

in the covered property.” (Id. at p. 340.)

Neither scenario identified by Coast Restaurant falls

within the definition of direct physical loss to property. Both

reflect changes in the insured’s use of or rights to the property,

not changes to the physical condition of the property itself.

(See Endeavor, supra, 96 Cal.App.5th at pp. 434–435, review

granted; Starlight Cinemas, supra, 91 Cal.App.5th at p. 38 [“We

disagree with our colleagues in Coast . . . that a temporary

deprivation of an insured’s right to use covered property

constitutes a covered loss under policy language covering a

‘direct physical loss of or damage to property’ ”].) Although an

insured may choose to make physical changes to the condition

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

of the property in response to a government order, the

government order itself has only intangible or incorporeal

effects — uses and rights — not physical ones. “[D]eprivation of

property must be causally linked to a physical event. The plain

meaning of ‘direct physical loss’ requires an ‘explicit nexus

between the purported loss and the physical condition of the

insured property.’ ” (Huntington Ingalls, supra, 287 A.3d at

p. 531.) Where the deprivation of property is caused by a

government order, rather than a physical event, no direct

physical loss to property has occurred.4

3. “Property Damage” in Commercial General

Liability Policies

Another Planet urges a more expansive interpretation of

direct physical loss or damage to property, based in part on the

definition of “property damage” contained in its commercial

general liability (CGL) insurance policy. Another Planet

obtained its CGL policy from Vigilant as well, and it appears as

a separate section in a single insurance policy packet. Under

the CGL policy, Vigilant agreed to pay “damages that the

insured becomes legally obligated to pay by reason of liability:

[¶] imposed by law; or [¶] assumed in an insured contract; [¶]

for bodily injury or property damage caused by an occurrence to

which this coverage applies.” (Boldface omitted.) The CGL

We disapprove Coast Restaurant Group, Inc. v. Amguard

Ins. Co., supra, 90 Cal.App.5th 332, to the extent it holds that

pandemic-related government health orders regulating the use

of property may cause direct physical loss to property. We need

not express any view regarding the separate question of whether

or under what circumstances a governmental seizure of real or

personal property would constitute a direct physical loss to

property. (Cf. American Alternative Ins. Corp. v. Superior Court

(2006) 135 Cal.App.4th 1239, 1246.)

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

policy defined property damage as (1) “physical injury to

tangible property, including resulting loss of use of that

property” and (2) “loss of use of tangible property that is not

physically injured.”

Another Planet is correct that this definition in its CGL

policy may be relevant to the interpretation of direct physical

loss or damage in its property insurance policy, whether the two

policies are considered a single contract (see Civ. Code, § 1641

[“The whole of a contract is to be taken together, so as to give

effect to every part, if reasonably practicable, each clause

helping to interpret the other”]) or not (see id., § 1642 [“Several

contracts relating to the same matters, between the same

parties, and made as parts of substantially one transaction, are

to be taken together”]). But, for two primary reasons, we

conclude that this CGL definition does not expand the definition

of direct physical loss or damage to property described above.

First, the nature of third party CGL insurance is

materially different from first party property insurance. “[A]

first party insurance policy provides coverage for loss or damage

sustained directly by the insured (e.g., life, disability, health,

fire, theft and casualty insurance). A third party liability policy,

in contrast, provides coverage for liability of the insured to a

‘third party’ (e.g., a CGL policy, a directors and officers liability

policy, or an errors and omissions policy). In the usual first

party policy, the insurer promises to pay money to the insured

upon the happening of an event, the risk of which has been

insured against. In the typical third party liability policy, the

carrier assumes a contractual duty to pay judgments the

insured becomes legally obligated to pay as damages because of

bodily injury or property damage caused by the insured.”

(Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

645, 663 (Montrose).) Third party coverage therefore turns on

the insured’s legal liability, rather than the fact of injury to

property itself.

Second, and relatedly, the scope of coverage in a standard

third party CGL policy is materially different from the scope of

standard first party property coverage at issue here. Although

the two types of coverage are often combined in a single

insurance package, “[t]he scope of coverage and the operation of

the exclusion clauses . . . are different in the separate policy

portions and should be treated as such.” (Garvey, supra,

48 Cal.3d at p. 406.) “ ‘Liability and corresponding coverage

under a third party insurance policy must be carefully

distinguished from the coverage analysis applied in a first party

property contract. Property insurance, unlike liability

insurance, is unconcerned with establishing negligence or

otherwise assessing tort liability.’ ” (Ibid.)

Moreover, a reasonable person would readily understand

that property damage in Another Planet’s CGL policy is more

expansive in scope than direct physical loss or damage to

property in its property insurance policy. The first prong of the

CGL property damage definition covers “physical injury to

tangible property,” which is analogous to the ordinary

understanding of direct physical damage to property. The

second prong of the CGL property damage definition covers “loss

of use of tangible property that is not physically injured,” but it

does not contain the limiting adjectives “direct” or “physical” in

direct physical loss to property. Because the definition of

property damage in Another Planet’s CGL policy is materially

different, on its face, from the terms used in its property

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

insurance policy, the former carries little weight in interpreting

the latter.5

F. Ambiguity and Extrinsic Evidence

Another Planet also urges an expansive definition of direct

physical loss or damage based on what it characterizes as

extrinsic evidence of a latent ambiguity in the meaning of the

policy language, as applied to its specific allegations of

insurance coverage for COVID-19-related losses. We conclude

that the evidence proffered by Another Planet is not inconsistent

with the plain meaning of direct physical loss or damage

described above, and it does not reveal any ambiguity in the

policy language.

“As California courts previously have observed, the

‘meaning of language is to be found in its applications. An

For similar reasons, the specific virus exclusion in Another

Planet’s CGL policy sheds little light on the meaning of direct

physical damage or loss to property in Another Planet’s property

insurance policy. The exclusion states, in part, “[T]his

insurance does not apply to any damages, loss, cost or expense

arising out of the actual, alleged or threatened contaminative,

pathogenic, toxic or other hazardous properties of biological

agents.” (Boldface omitted.) The phrase “biological agents”

includes “viruses or other pathogens.” Because the grant of

coverage in Another Planet’s CGL policy is different from the

grant of coverage in its property insurance policy, the fact that

certain losses are excluded from the former does not mean they

are covered by the latter. Moreover, to the extent Another

Planet’s point is that the virus exclusion shows that “ ‘all risks’

insurance include[s] coverage for losses caused by a virus” like

COVID-19, that point is not inconsistent with our interpretation

of direct physical loss or damage to property. As discussed

further in the next section, nothing in that interpretation

categorically excludes a virus as a potential cause of direct

physical loss or damage to property.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

indeterminacy in the application of language signals its

vagueness or ambiguity. An ambiguity arises when language is

reasonably susceptible of more than one application to material

facts. There cannot be an ambiguity per se, i.e., an ambiguity

unrelated to an application.’ [Citations.] [¶] Accordingly,

‘[e]ven if a contract appears unambiguous on its face, a latent

ambiguity may be exposed by extrinsic evidence which reveals

more than one possible meaning to which the language of the

contract is yet reasonably susceptible.’ [Citation.] ‘The test of

admissibility of extrinsic evidence to explain the meaning of a

written instrument is not whether it appears to the court to be

plain and unambiguous on its face, but whether the offered

evidence is relevant to prove a meaning to which the language

of the instrument is reasonably susceptible.’ ” (Dore v. Arnold

Worldwide, Inc. (2006) 39 Cal.4th 384, 391.) A court may

provisionally receive such evidence until it is “in a position to

determine whether in the light of all of the offered evidence, the

item objected to will turn out to be admissible as tending to

prove a meaning of which the language of the instrument is

reasonably susceptible or inadmissible as tending to prove a

meaning of which the language is not reasonably susceptible.”

(Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968)

69 Cal.2d 33, 40, fn. 7 (Pacific Gas).) In this case, Another

Planet has cited or requested judicial notice of certain extrinsic

evidence it contends is relevant to the interpretation of its

insurance policy.

First, Another Planet relies on a 2006 circular issued by

the Insurance Services Office, Inc. (ISO) announcing a new

standard exclusion for “loss or damage caused by or resulting

from any virus, bacterium or other microorganism that induces

or is capable of inducing physical distress, illness or disease.”

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

The ISO is “an organization that develops standard policy forms

for the insurance industry and collects statistical data and

estimates risks relevant to the forms.” (Bank of the West v.

Superior Court (1992) 2 Cal.4th 1254, 1262.) It also “publishes

circulars designed to explain the intent, purpose and effect of its

standard form provisions.” (Maryland Casualty Co. v. Reeder

(1990) 221 Cal.App.3d 961, 971.)

This ISO circular stated, “Disease-causing agents may

render a product impure (change its quality or substance), or

enable the spread of disease by their presence on interior

building surfaces or the surfaces of personal property. When

disease-causing viral or bacterial contamination occurs,

potential claims involve the cost of replacement of property (for

example, the milk), cost of decontamination (for example,

interior building surfaces), and business interruption (time

element) losses.” The circular offered examples such as “the

growth of listeria bacteria in milk” and “viral and bacterial

contaminants [including] rotavirus, SARS, influenza (such as

avian flu), legionella and anthrax.”

Under the heading, “Current Concerns,” the circular

provided the following explanation for the new virus exclusion:

“Although building and personal property could arguably

become contaminated (often temporarily) by such viruses and

bacteria, the nature of the property itself would have a bearing

on whether there is actual property damage. An allegation of

property damage may be a point of disagreement in a particular

case. In addition, pollution exclusions are at times narrowly

applied by certain courts. In recent years, ISO has filed

exclusions to address specific exposures relating to

contaminating or harmful substances. Examples are the mold

exclusion in property and liability policies and the liability

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Opinion of the Court by Guerrero, C. J.

exclusion addressing silica dust. Such exclusions enable

elaboration of the specific exposure and thereby can reduce the

likelihood of claim disputes and litigation.”

The circular continued, “While property policies have not

been a source of recovery for losses involving contamination by

disease-causing agents, the specter of pandemic or hitherto

unorthodox transmission of infectious material raises the

concern that insurers employing such policies may face claims

in which there are efforts to expand coverage and to create

sources of recovery for such losses, contrary to policy intent. [¶]

In light of these concerns, we are presenting an exclusion

relating to contamination by disease-causing viruses or bacteria

or other disease-causing microorganisms.”

We have recognized that standardized insurance industry

provisions and their accompanying interpretative materials

may be useful in analyzing coverage issues. (Montrose, supra,

10 Cal.4th at p. 670.) This general rule extends to standard

form exclusions. But, as with any extrinsic evidence, such

exclusions are only relevant to the extent they tend to prove a

meaning of which the language of the policy is reasonably

susceptible. (Pacific Gas, supra, 69 Cal.2d at p. 40, fn. 7.) If a

grant of coverage cannot reasonably be read to include a matter,

even considering the absence of the proffered exclusion, the

language of the exclusion cannot create coverage where none

exists. (Yahoo, supra, 14 Cal.5th at p. 72.)

Another Planet maintains the existence of the standard

exclusion covering viruses “is evidence that insurers like

Vigilant knew that viruses can, and do, cause ‘direct physical

loss or damage to property.’ ” But Vigilant does not contend that

viruses can never cause direct physical loss or damage to

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

property. It explicitly accepts the view of the Massachusetts

Supreme Judicial Court that “the exclusion would have

independent significance where, for example, personal property,

such as food, becomes physically contaminated or infected with

a virus, requiring its destruction or some form of remediation.”

(Verveine, supra, 184 N.E.3d at p. 1278.) Crucially, as the ISO

circular explains, “the nature of the property itself would have

a bearing on whether there is actual property damage,” and it is

self-evident that the nature of the virus (or other contaminant)

is relevant to the existence of direct physical loss or damage as

well. The dispute here revolves around the ability of the

COVID-19 virus to cause direct physical loss or damage to

Another Planet’s property, not the ability of any virus to cause

such loss or damage to any property. The virus exclusion does

not provide any relevant guidance on the specific issue of the

COVID-19 virus’s effect on Another Planet’s property.

Another Planet also relies on statements from an

insurance industry group and Vigilant’s parent company, Chubb

Limited, that acknowledge substantial exposure to losses from

natural disasters, including pandemics. For example, in its

2019 annual report, Chubb stated, “We have substantial

exposure to losses resulting from natural disasters, man-made

catastrophes such as terrorism or cyberattack, and other

catastrophic events, including pandemics. This could impact a

variety of our businesses, including our commercial and

personal lines, and life and accident and health (A&H)

products.” These generalized statements about the effect of a

pandemic on the finances of a diversified insurance company, or

the insurance industry as a whole, do not shed light on the

meaning of direct physical loss or damage to property in Another

Planet’s property insurance policy. The statements are

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

untethered from the policy language, and even from property

insurance itself. The modern insurance industry includes many

different insurance products, from life insurance and health

insurance to liability insurance. Even property insurance

includes many specialized policies and coverage extensions. For

example, although we need not consider it here, one available

extension covers “ ‘direct physical loss or damage to Property

Insured caused by or resulting from a covered communicable

disease event.’ ” (Amy’s Kitchen, supra, 83 Cal.App.5th at

p. 1068, boldface omitted; see fn. 3, ante.) A “ ‘communicable

disease event’ ” is defined as “ ‘an event in which a public health

authority has ordered that a location be evacuated,

decontaminated, or disinfected due to the outbreak of a

communicable disease at such location.’ ” (Amy’s Kitchen, at

p. 1071.) This coverage extension is not part of Another Planet’s

insurance policy, and it illustrates the incongruity of relying on

general industry statements to inform the scope of coverage

here.

Another Planet’s reliance on statements by Chubb

executives after the onset of the COVID-19 pandemic is

similarly unpersuasive. In its 2020 annual report, Chubb

discussed how the COVID-19 pandemic had affected its

business: “Our and the industry’s COVID-related claims come

from a broad range of exposures, principally in four areas. The

first occurred as people suffered from ill health or death, from

front-line workers to ordinary employees, affecting everything

from life and health insurance to workers compensation. The

second source of exposures come from liability-related

insurance, including employment practices, directors and

officers (D&O) and medical malpractice. Next are business

interruption losses, from businesses that had coverage and were

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

shut down during the pandemic. And finally, there are credit-

related exposures, such as surety and trade credit.” This

passage illustrates the variety of Chubb’s insurance products,

beyond property insurance. Another Planet points out that

Chubb acknowledges “business interruption losses, from

businesses that had coverage and were shut down during the

pandemic,” but this statement expressly refers to businesses

“that had coverage.” It does not mandate coverage where none

exists. Indeed, the same document reflects explicit hostility

toward claims like those asserted by Another Planet here. In

Chubb’s view, the COVID-19 pandemic led to “a spree of

litigation that attempts to twist the intent of contracts and

reinterpret insurance contract language to force pay-outs in

situations that in most cases insurers never intended to cover,

and in which no premium was charged for the risk, specifically

when city and state governments mandated pandemic-related

business closures. This litigation relied on implausible

arguments that COVID causes direct physical loss or damage to

a business’s property, in the same way as a fire.” These

statements do not support an understanding of direct physical

damage or direct physical loss that differs from the plain

meaning of those phrases. Another Planet has not established

any ambiguity in the policy language.6

Because the policy language is not ambiguous, its plain

meaning governs. (AIU Insurance, supra, 51 Cal.3d at p. 822.)

We therefore have no occasion to apply the familiar rule that

ambiguous language in an insurance policy should be

interpreted to protect the insured’s objectively reasonable

expectations. (See Yahoo, supra, 14 Cal.5th at pp. 71–72.)

Another Planet has not identified any meaning, other than plain

meaning, to which the policy language is reasonably susceptible.

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

G. The Actual or Potential Presence of the

COVID-19 Virus

The Ninth Circuit asked, “Can the actual or potential

presence of the COVID-19 virus on an insured’s premises

constitute ‘direct physical loss or damage to property’ for

purposes of coverage under a commercial property insurance

policy?” (Another Planet, supra, 56 F.4th at p. 734.) As noted,

while we cannot and do not decide whether the COVID-19 virus

can ever constitute direct physical loss or damage to property,

we conclude Another Planet’s allegations are insufficient to

meet the definition of direct physical loss or damage to property

under California law. Moreover, Another Planet’s allegations

regarding the COVID-19 virus and its effects appear typical of

the allegations offered by many insureds in similar situations.

To the extent the Ninth Circuit’s question is premised on the

split in authority represented on one side by United Talent,

which held that the actual or potential presence of the virus

generally could not cause direct physical loss or damage to

property, and on the other by Marina Pacific, which held that it

could, we further conclude that United Talent was correct.7

Another Planet primarily contends that the COVID-19

virus causes direct physical damage to property by physically

altering surfaces where it lands and attaches. Similarly, the

Marina Pacific court found persuasive, in part, an allegation

Although this proceeding concerns litigation in the federal

courts, we need not consider any differences between federal

and California pleading standards because we conclude Another

Planet’s allegations are insufficient even under the more

permissive California standard. (Cf. Marina Pacific, supra,

81 Cal.App.5th at pp. 109–110; Endeavor, supra,

96 Cal.App.5th at p. 442 & fn. 18, review granted.)

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Opinion of the Court by Guerrero, C. J.

that the COVID-19 virus “not only lives on surfaces but also

bonds to surfaces through physicochemical reactions involving

cells and surface proteins, which transform the physical

condition of the property.” (Marina Pacific, supra,

81 Cal.App.5th at p. 108.) These allegations do not explain how

the property was damaged or harmed by the presence of the

COVID-19 virus. In other words, they do not allege any injury

or impairment to property caused by the COVID-19 virus. The

mere fact of microscopic bonds between the virus and a surface

says little about the effect of such microscopic bonds on that

surface. (See Endeavor, supra, 96 Cal.App.5th at p. 442, review

granted [“the type of viral interaction with surfaces alleged by

[the insured] (and accepted as true) does not, as a matter of law,

satisfy the default definition of ‘direct physical harm or loss to

property’ ”], fn. omitted.) To constitute direct physical damage

to property under California law, a tangible alteration of the

property is necessary but not sufficient. An insured must allege,

and later prove, that the alteration caused physical harm to the

property. The alteration itself is not enough.

Marina Pacific also found persuasive, in part, an

allegation that the COVID-19 virus “alters ordinary physical

surfaces transforming them into fomites through

physicochemical processes, making them dangerous and

unusable for their intended purposes unless decontaminated.”

(Marina Pacific, supra, 81 Cal.App.5th at p. 110.) Another

Planet similarly contends that the COVID-19 virus causes a

“physical alteration from an object to a fomite [which] makes

physical contact with those previously safe, inert surfaces (e.g.,

handrails, doorknobs, bathroom fixtures) unsafe” because a

person could contract COVID-19 through contact with the

object. Accepting these statements as true, they likewise do not

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

sufficiently allege direct physical damage to property. As noted,

a fomite is “ ‘an object . . . that may be contaminated with

infectious agents (such as bacteria or viruses) and serve in their

transmission.’ ” (United Talent, supra, 77 Cal.App.5th at p. 826,

fn. 5.) Describing an object as a fomite primarily reflects a

conceptual or analytical change, not a physical one. And, to the

extent the change is physical, it fails to satisfy the definition of

direct physical damage to property for the same reason that

other allegations of microscopic bonding or adhesion is

insufficient. It does not involve damage or harm to property.

“Fomite-based transmission . . . typifies another way the virus

‘pos[es] health risk to humans,’ as opposed to property.

[Citation.] Though this evidence shows that the COVID-19

virus is ‘harmful,’ it simply does not equate to evidence that any

property suffered physical harm.” (Starr Surplus, supra,

535 P.3d at pp. 264–265.)

To support its allegation of direct physical loss to property,

Another Planet alleges that the actual or potential presence of

the COVID-19 virus rendered its property unusable for its

intended purpose. As noted, such a bare allegation is

insufficient. A property insurance policy does not cover a

particular intended use; it covers the property itself.

(See Simon Marketing, supra, 149 Cal.App.4th at pp. 622–623.)

Moreover, to the extent Another Planet claims it was the

physical presence of the virus that caused its property to become

unusable, it has failed to allege that the virus caused a distinct,

demonstrable, physical alteration to property. Where a

substance is alleged to cause harm to humans, rather than

property, it must still alter the property itself in a lasting and

persistent manner. Although Another Planet contests just how

easily the COVID-19 virus may be cleaned from various

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

surfaces, it does not make any allegations regarding the

remediation necessary to remove the virus. Instead, it focuses

on the difficulty of preventing reintroduction of the virus when

humans reenter and circulate through a property. But

persistence in this context requires the property itself to become

the source of harm. (Starr Surplus, supra, 535 P.3d at p. 265

[“[E]ven when the force does not originate within the property,

it [is] so connected to the property that the property effectively

becomes the source of its own loss or damage”]; see United

Talent, supra, 77 Cal.App.5th at p. 833 [risk of harm

“inextricably linked to the insured property”].) The risk of harm

from reintroduction of the virus is essentially the opposite. The

continuing nature of the risk stems not from the property but

from the presence of other humans. The risk is “untethered to

any property” and “may be reduced or rendered less harmful

through practices unrelated to the property, such as social

distancing, vaccination, and the use of masks.” (United Talent,

at p. 838; see id. at p. 839 [plaintiff “has not alleged that its

properties required unique abatement efforts to eradicate the

virus”].) As one court explained, “This is why the presence of

SARS-CoV-2 is unlike the presence of other substances — such

as unpleasant odors, dangerous chemical contamination, or

asbestos — that permeate the property and require substantial

effort to remove.” (Endeavor, supra, 96 Cal.App.5th at p. 441,

review granted.)8

Another Planet also alleges that the COVID-19 virus

damages air by changing its composition and rendering it

harmful to humans. But it acknowledges in its briefing that an

insured does not own air, in the sense of the physical particles

that happen to fill an interior space or settle above an exterior

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

Some courts have found persuasive the fact that

businesses were required to alter their physical space in order

to minimize virus transmission and safely operate. (See, e.g.,

Shusha, supra, 87 Cal.App.5th at p. 264, review granted

[“ ‘Cleaning of surfaces alone is insufficient,’ and safe operations

would require ‘substantial physical alterations, systems

changes to facilities, and new protocols for air circulation,

disinfection, and disease prevention’ ”].) But such alterations

are neither caused directly by the presence of the virus itself nor

do they remedy its physical effects on property. Instead, they

are preventative; “they aim to redress the way people pose harm

to one another by carrying and transmitting the virus at the

property.” (Starr Surplus, supra, 535 P.3d at p. 265;

see Connecticut Dermatology Group, PC v. Twin City Fire

Ins. Co. (Conn. 2023) 288 A.3d 187, 201 [“plaintiffs’ activities

designed to prevent the transmission of the coronavirus on the

properties were not ‘repairs’ in any ordinary sense of the word”].)

While Another Planet contends such preventative measures are

covered by its insurance policy as efforts at mitigation, such

mitigation efforts are not reimbursable without an underlying

covered loss or damage to property. As discussed, Another

Planet has not alleged any such loss or damage.9

property. In any event, Another Planet’s allegations are

insufficient to show direct physical loss or damage to air for the

reasons we have discussed. (See Tapestry, Inc. v. Factory

Mutual Ins. Co. (Md. 2022) 286 A.3d 1044, 1059–1060.)

We disapprove San Jose Sharks, LLC v. Superior Court,

supra, 98 Cal.App.5th 158; JRK Property Holdings, Inc. v.

Colony Ins. Co., supra, 96 Cal.App.5th 1, review granted;

Shusha, Inc. v. Century-National Ins. Co., supra,

ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO.

Opinion of the Court by Guerrero, C. J.

Finally, we observe that our consideration of this matter

has been framed by the Ninth Circuit’s certified question. Other

issues, in this case or in others, may be dispositive. For

example, the federal district court in this matter appears to have

based its dismissal order, at least in part, on the absence of

causation in light of governmental orders requiring the closure

of Another Planet’s venues. It wrote, “Another Planet does not

have a claim for loss of business income because the closure

orders [by state and local public health authorities] — and not

[the] virus’s alleged presence at Another Planet’s facilities —

caused it to shut down.” The Inns-by-the-Sea court emphasized

a similar lack of causation: “Moreover, [plaintiff] alleges that it

ceased operations ‘as a direct and proximate result of the

Closure Orders.’ It does not make the proximate cause

allegation based on the particular presence of the virus on its

premises.” (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 703.)

In Best Rest, the same court extended its causation analysis

beyond closure orders. The plaintiff in that case, a hotel, was

able to operate during the pandemic. (Best Rest, supra,

88 Cal.App.5th at p. 700.) But it “ ‘experienced a wave of

reservation cancellations,’ ” and its occupancy during the

pandemic was far below normal. (Ibid.) Although the plaintiff’s

business losses were related to the pandemic overall, the Best

Rest court affirmed an adverse summary judgment order on the

grounds that plaintiff’s losses were not caused by the presence

of the COVID-19 virus at its property. (Id. at p. 706.) Instead,

the losses were caused by an overall reduction in the number of

87 Cal.App.5th 250, review granted; and Marina Pacific Hotel

& Suites, LLC v. Fireman’s Fund Ins. Co., supra,

81 Cal.App.5th 96, to the extent they are inconsistent with this

opinion.

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Opinion of the Court by Guerrero, C. J.

people travelling. The court concluded, “[E]ven if Best Rest had

eradicated all traces of COVID-19 from its premises, it still

would have suffered the same lost income.” (Id. at p. 708.)

While we need not consider these issues here, we emphasize

that the focus of our opinion should not be interpreted to

downplay other circumstances that might be dispositive in this

case or others.

III. CONCLUSION

For the reasons stated, we answer the Ninth Circuit’s

question as follows: No, the actual or potential presence of the

COVID-19 virus on an insured’s premises generally does not

constitute “direct physical loss or damage to property” for

purposes of coverage under a commercial property insurance

policy.

GUERRERO, C. J.

We Concur:

CORRIGAN, J.

LIU, J.

KRUGER, J.

GROBAN, J.

JENKINS, J.

EVANS, J.

See next page for addresses and telephone numbers for counsel who

argued in Supreme Court.

Name of Opinion Another Planet Entertainment, LLC v. Vigilant

Insurance Company

__________________________________________________________

Procedural Posture (see XX below)

Original Appeal

Original Proceeding XX on request by 9th Circuit (Cal. Rules of

Court, rule 8.548)

Review Granted (published)

Review Granted (unpublished)

Rehearing Granted

__________________________________________________________

Opinion No. S277893

Date Filed: May 23, 2024

__________________________________________________________

Court:

County:

Judge:

__________________________________________________________

Counsel:

Pasich, Kirk Pasich, Nathan M. Davis, Arianna M. Young and Kayla

M. Robinson for Plaintiff and Appellant.

Hunton Andrews Kurth, Scott P. DeVries, Yosef Y. Itkin, Lorelie S.

Masters and Michael S. Levine for United Policyholders as Amicus

Curiae on behalf of Plaintiff and Appellant.

Covington & Burling, Sabrina T. McGraw and Rani Gupta for Major

League Baseball and National Hockey League as Amici Curiae on

behalf of Plaintiff and Appellant.

Covington & Burling, Thomas Martecchini, David B. Goodwin,

Christine S. Haskett and Billie T. H. Mandelbaum for Ross Stores,

Inc., as Amicus Curiae on behalf of Plaintiff and Appellant.

Reed Smith, John N. Ellison, Richard P. Lewis, Jr., Katherine J.

Ellena and Kathryn M. Bayes for California Pizza Kitchen, Inc.,

French Laundry Partners, LP, KRM, Inc., and Yountville Food

Emporium, LLC, as Amici Curiae on behalf of Plaintiff and Appellant.

Latham & Watkins, Brook B. Roberts, John M. Wilson and Corey D.

McGehee for San Manuel Band of Mission Indians and San Manuel

Entertainment Authority as Amici Curiae on behalf of Plaintiff and

Appellant.

Roxborough, Pomerance, Nye & Adreani, Nicholas P. Roxborough,

Vincent S. Gannuscio and Joseph C. Gjonola for the Santa Ynez Band

of Chumash Mission Indians of the Santa Ynez Reservation of

California as Amicus Curiae on behalf of Plaintiff and Appellant.

Clyde & Co US, Susan Koehler Sullivan, Douglas J. Collodel, Gretchen

S. Carner, Brett C. Safford; O’Melveny & Myers, Jonathan D. Hacker

and Jenya Godina for Defendant and Respondent.

Pacific Law Partners, Clarke B. Holland, David B.A. Demo and

Andrew P. Collier for Oregon Mutual Insurance Company as Amicus

Curiae on behalf of Defendant and Respondent.

Crowell & Moring and Mark D. Plevin for American Property Casualty

Insurance Association and National Association of Mutual Insurance

Companies as Amici Curiae on behalf of Defendant and Respondent.

Lewis Brisbois Bisgaard & Smith, Raul L. Martinez and Elise D. Klein

for California Fair Plan Association as Amicus Curiae on behalf of

Defendant and Respondent.

Jamie Ostroff and Shari Covington for California Medical Association

as Amicus Curiae.

Proskauer Rose, Kyle A. Casazza and Christina H. Kroll for The Los

Angeles Lakers, Inc., as Amicus Curiae.

Counsel who argued in Supreme Court (not intended for

publication with opinion):

Kirk Pasich

Pasich LLP

10880 Wilshire Boulevard, Suite 2000

Los Angeles, CA 90024

(424) 313-7860

Jonathan D. Hacker

O’Melveny & Myers LLP

1625 I Street NW

Washington, DC 20006

(202) 383-5285

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.