Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 1 of 116 Docket No. 20-cv-56020 In the United States Court of Appeals for the Ninth Circuit PLAN CHECK DOWNTOWN III, LLC, a California limited liability company and others similarly situated, Plaintiff-Appellant, v. AMGUARD INSURANCE COMPANY, a Pennsylvania company, and DOES 1 through 20, Defendant-Appellee. Appeal from a Decision of the United States District Court for the Central District of California, No. 2:20-cv-06954 ∙ Honorable George H. Wu BRIEF OF APPELLANT KATHRYN LEE BOYD HECHT PARTNERS LLP 6420 Wilshire Boulevard, 14th Floor Los Angeles, CA 90048 (646) 502-9515 Telephone (646) 492-5111 Facsimile [email protected] Attorneys for Appellant, Plan Check Downtown III, LLC, a California limited liability company and others similarly situated Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 2 of 116 DISCLOSURE STATEMENT Pursuant to Rule 26.1 and Ninth Circuit LAR 26.1, Plan Check Downtown III, LLC declares that it has no parent corporation and no publicly traded corporation currently owns 10% or more of its stock . Dated: February 5, 2021 By: /s/ Kathryn Lee Boyd Kathryn Lee Boyd (SBN 189496) Hecht Partners LLP 6420 Wilshire Boulevard, 14th Floor Los Angeles, CA 90048 (646)502 -9515 Telephone (646) 492-5111 Facsimile [email protected] Attorneys for Appellant Plan Check Downtown III, LLC, and others similarly situated i Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 3 of 116 TABLE OF CONTENTS DISCLOSURE STATEMENT .................................................................................. i TABLE OF CONTENTS ......................................................................................... ii TABLE OF AUTHORITIES ....................................................................................iv INTRODUCTION .....................................................................................................1 JURISDICTIONAL STATEMENT ..........................................................................2 STATUTORY AUTHORITIES ................................................................................3 ISSUES PRESENTED ..............................................................................................3 STATEMENT OF THE CASE .................................................................................3 A. THE POLICY ...........................................................................................3 B. COVID-19 AND RELATED CLOSURE ORDERS ........................................4 C. APPELLANT’S INSURANCE CLAIM AND RESPONDENT’S DENIAL .............5 D. PROCEDURAL AND APPELLATE HISTORY ...............................................6 SUMMARY OF THE ARGUMENT ........................................................................7 STANDARD OF REVIEW .....................................................................................10 ARGUMENT ..........................................................................................................10 A. THE DISTRICT COURT VIOLATED THE CONTRA PROFERENTEM RULE IN INTERPRETING THE POLICY ..................................................................10 B. PLAN CHECK’S INTERPRETATION OF “DIRECT PHYSICAL LOSS OF OR DAMAGE TO” PROPERTY IS REASONABLE ............................................14 C. THE ANALYSIS OF THE DISTRICT COURT AND OF OTHER DISTRICT COURTS CONFRONTING RELATED ISSUES IS UNTENABLE ....................24 ii Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 4 of 116 D. THIS COURT NEED NOT DECIDE THE VIRUS EXCLUSION ISSUE ............29 E. THE VIRUS EXCLUSION DOES NOT BAR APPELLANT’S CLAIM AT THIS STAGE ..........................................................................................31 CONCLUSION .......................................................................................................35 STATEMENT OF RELATED CASES CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE ADDENDUM iii Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 5 of 116 TABLE OF AUTHORITIES Page(s) Federal Cases 10E, LLC v. Travelers Indem. Co., No. 2:20-CV-04418-SVW-AS, 2020 WL 5359653 (C.D. Cal. Sept. 2, 2020) ............................................................................................................... 35 10E, LLC v. Travelers Indemnity Co., No. 2:20-cv-04418-SVW-AS, 2020 WL 6749361 (C.D. Cal. Nov. 13, 2020) ............................................................................................................. 28 AIU Ins. Co. v. Superior Ct., 799 P.2d 1253 (Cal. 1990) ................................................................................. 10 Am. Alternative Ins. Corp. v. Superior Ct., 37 Cal. Rptr. 3d 918 (Cal. Ct. App. 2006) ......................................................... 14 Am. President Lines, Ltd. v. Int’l LonGshore & Warehouse Union, 721 F.3d 1147 (9th Cir. 2013) ............................................................................ 30 Are-east River Sci. Park, LLC v. LexinGton Ins. Co., No. 13-cv-01837-BRO, 2014 WL 12587051 (C.D. Cal. Mar. 27, 2014) ................................................................................................................... 32 Bareno v. Emps. Life Ins. Co. of Wausau, 500 P.2d 889 (Cal. 1972) ................................................................................... 10 Best Rest Motel Inc. v. Sequoia Ins. Co., No. 37-2020-00015679-CU-IC-CTL, 2020 WL 7229856 (Cal. Super. San Diego Cnty. Sept. 30, 2020) ............................................................. 25 Blue SprinGs Dental Care, LLC v. Owners Ins. Co., No. 20-CV-00383-SRB, 2020 WL 5637963 (W.D. Mo. Sept. 21, 2020) ................................................................................................................... 23 Boardwalk Condo. Ass’n v. Travelers Indem. Co., No. 03-cv-505-WQH(WMc), 2007 WL 1989656 (S.D. Cal. July 3, 2007) ............................................................................................................. 31, 32 iv Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 6 of 116 Boxed Foods Co., LLC v. Cal. Cap. Ins. Co., No. 20-CV-04571-CRB, 2020 WL 6271021 (N.D. Cal. Oct. 27, 2020) ................................................................................................................... 35 Cooper v. Travelers Indem. Co. of Ill., No. 10-cv-2400-VRW, 2002 WL 32775680 (N.D. Cal. Nov. 4, 2002) ................................................................................................................... 24 Davis v. Nordstrom, Inc., 755 F.3d 1089 (9th Cir. 2014) ............................................................................ 30 Encompass Ins. Co. v. BerGer, No. 12-cv-08294-MWF, 2014 WL 4987978 (C.D. Cal. Oct. 7, 2014) ................................................................................................................... 32 EOTT EnerGy Corp. v. Storebrand Int’l Ins. Co., 52 Cal. Rptr. 2d 894 (Cal. Ct. App. 1996) ......................................................... 14 F.D.I.C. v. Nichols, 885 F.2d 633 (9th Cir. 1989) .............................................................................. 30 Flintkote Co. v. General Accident Assurance Co., 410 F. Supp. 2d 875 (N.D. Cal. 2006) ............................................................... 18 Founder Inst. Inc. v. Hartford Fire Ins. Co., No. 20-CV-04466-VC, 2020 WL 6268539 (N.D. Cal. Oct. 22, 2020) ................................................................................................................... 35 Franklin EWC, Inc. v. Hartford Fin. Servs. Grp., Inc., No. 20-CV-04434 JSC, 2020 WL 5642483 (N.D. Cal. Sept. 22, 2020) ................................................................................................................... 35 Garvey v. State Farm Fire & Cas. Co., 770 P.2d 704 (Cal. 1989) ................................................................. 31, 32, 33, 34 Gillis v. Sun Ins. Office, Ltd., 47 Cal. Rptr. 868 (Cal. Dist. Ct. App. 1965) ...................................................... 31 Henderson Rd. Rest. Sys., Inc. v. Zurich Am. Ins. Co., No. 20-cv-01239, 2021 WL 168422 (N.D. Ohio Jan. 19, 2021) ............ 13, 16, 25 v Case: 20-56020, 02/05/2021, ID: 11995178, DktEntry: 12, Page 7 of 116 Hill & Stout PLLC v. Mut. of Enumclaw Ins. Co., No. 20-2-07925-1 SEA, 2020 WL 6784271 (Wash. Super. Nov. 13, 2020) ....................................................................................................... 10, 19 Howell v. State Farm Fire & Casualty Co., 267 Cal. Rptr. 708 (Cal. Ct. App. 1990) ............................................................ 34 HuGhes v. Potomac Ins. Co., 18 Cal. Rptr. 650 (Cal. Dist. Ct. App. 1962) .................................... 15, 22, 23, 24 Long Affair Carpet & Rug, Inc. v. Liberty Mut. Ins. Co., No. 20-cv-01713-CJC(JDEx), 2020 WL 6865774 (C.D. Cal. Nov. 12, 2020) ............................................................................................................. 28 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (9th Cir. 2008) ............................................................................ 10 Mark’s EnGine Co. No. 28 Rest., LLC v. Travelers Indem. Co., No. 2:20-cv-04423-AB-SK, 2020 WL 5938689 (C.D. Cal. Oct. 2, 2020) ................................................................................................................... 28 Meridian Textiles, Inc. v. Indemnity Insurance Co. of North America, No. 06-cv-4766 CAS, 2008 WL 3009889 (C.D. Cal. Mar. 20, 2008) ..................................................................................................................