In the wake of the Coronavirus pandemic, countless policyholders made insurance claims with their carriers based on the closure or interruption of their businesses. The insurers with near-uniformity denied coverage, presenting a united front against their insureds.  Thousands upon thousands of cases ensued testing the propriety of the insurers’ denial of coverage.

Many business-interruption insurance policies are meant to cover losses tied to the “direct physical loss or direct physical damage” of (or to) the insured’s premises. Nationwide, courts are facing a complicated question—whether the COVID-19 virus can be said to cause “direct physical loss or direct physical damage.”

In an opinion that is the first of its kind in the California appellate courts, the Second District Court of Appeal, Division 7, has ruled that certain COVID-19-related business losses may be covered by business-interruption insurance (BII) policy provisions.  Marina Pacific Hotels & Suites, LLC v. Fireman’s Fund Ins., No. B316501, 2022 WL 2711886 (Cal. Ct. App. July 13, 2022) (slip op.), available at https://www.courts.ca.gov/opinions/documents/B316501.PDF.

The groundbreaking opinion gives a leg up to policyholders struggling with pandemic-era debt and business losses.  The decision may also inspire the California Supreme Court, other California Courts of Appeal, and the U.S. Court of Appeals for the Ninth Circuit (among other reviewing courts nationwide) to give policyholders the opportunity to prove BII coverage in the context of the pandemic.

When the 9th Circuit issued Monster Energy Company v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019), there was immediate concern over how far the decision would extend and how many cases it would spawn. The decision vacated an arbitral award in favor of Monster Energy. The court found there was evident partiality “given the Arbitrator’s failure to disclose his ownership interest in JAMS, coupled with the fact that JAMS has administered 97 arbitrations for Monster over the past five years.” Id. at 1132.

As the dissent pointed out, the decision left open a number of troubling questions. For example, “how many prior arbitrations must a corporation have engaged in with an arbitration firm for there to be nontrivial business dealings…that require disclosure?” Id. at 1141. Or “must prior arbitrations with the lawyers or law firms representing the parties also be disclosed?” Id. The dissent predicted there would be endless litigations to resolve the questions. Id.  

California Code of Civil Procedure 904.1 is probably not a stranger to appellate lawyers who practice in California, as the statute provides a list of certain types of pre-trial orders from which an appeal may be taken. One of the categories of orders listed is “order[s] granting or dissolving an injunction, or refusing to grant or dissolve an injunction.” The statutory phrase “injunction” is interpreted broadly (subject to some exceptions) and applies to a number of different types of injunction orders. (See Valley Casework, Inc. v. Comfort Const., Inc. (1999) 76 Cal.App.4th 1013, 1019 [preliminary injunctions]; Nakamura v. Parker (2007) 156 Cal.App.4th 327, 332 [temporary restraining orders]; R.D. v. P.M. (2011) 202 Cal.App.4th 181, 187 [civil harassment restraining orders];  North Beverly Park Homeowners Ass’n v. Bisno (2007) 147 Cal.App.4th 762, 765 [postjudgment orders granting or denying requests to modify or dissolve injunctions].)

Under the California Arbitration Act (“CAA”), an adverse award is subject to judicial review. Any party may petition the superior court to either vacate or correct the award. (Code Civ. Proc. § 1285.) But in most instances, such review is limited by statute, and such petitions face a number of substantive and procedural obstacles. Before seeking review of an arbitrator’s award, consider the following principles:

Generally, a party challenging an award may only petition to correct or vacate a final award. Where the award is interim, meaning it did not resolve all issues in the arbitration, a court lacks jurisdiction to vacate or correct it. (See Maplebear, Inc. v. Busick (2018) 26 Cal.App.5th 394, 407.) A party may seek writ review of an interim award, but such writ petitions are “extraordinary,” discretionary, and rarely granted.

When it comes to appealing in California’s state courts, the One Final Judgment Rule governs. Challenges to interim orders must await the final judgment. (Griset v. Fair Political Practices Comm’n (2001) 25 Cal.4th 688, 697 (appeal is taken from a final judgment disposing of all controverted matters); Knodel v. Knodel (1975) 14 Cal.3d 752, 760 (“The reason for the one judgment rule is that piecemeal disposition and multiple appeals in a single action would be oppressive and costly, and … a review of intermediate rulings should await the final disposition of the case”) (internal quotations and citations omitted).) But if there’s one thing taught from the very beginning of law school, it’s that every rule has an exception.

Judicial notice is a powerful tool for litigants to get factual matter in front of a court without a sponsoring witness or all the other burdensome requirements under the rules of evidence. If used properly, facts that are beyond dispute and other universally known facts can be firmly established in the case so that the parties can focus on triable issues that must be resolved by a judge or a jury.

For example, in a burglary case, a trial court may take judicial notice of when the sun set on a certain date in order to conclude whether or not a burglary was committed in the nighttime. (E.g. People v. Helm (1957) 156 Cal.App.2d 343, 344 [analyzing prior Penal Code § 460].) The court can judicially notice that the burglary was committed in the nighttime based on the indisputable fact that the sun set before the burglary—thereby allowing the parties to focus on other disputed facts at trial.