100 Cal.App.5th 1249
Cal. Ct. App.2024Background
- Apex Solutions, Inc., a cannabis business in Oakland, suffered property and business income losses when its facility was burglarized during civil unrest in June 2020.
- Two separate inventory vaults were breached sequentially by unidentified burglars, resulting in the theft of cannabis inventory valued at over $2.5 million.
- Apex held a commercial property insurance policy from Falls Lake National Insurance Company with a $600,000 per occurrence limit for "Cannabis Inventory" and a $2 million limit for lost business income.
- Falls Lake paid $600,000 for the stolen inventory (asserting a single occurrence cap) and $673,477 for business interruption, but Apex claimed it was owed more under both provisions.
- Dispute arose over whether the theft was one or two "occurrences" for coverage purposes and whether Falls Lake owed more for business income loss and extra expenses.
- The trial court granted summary judgment to Falls Lake, and Apex appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Number of "occurrences" for policy limits | Two distinct break-ins by different burglars at different times, thus entitled to two policy limits ($1.2M) | Single coordinated event by one group during a short time, only one occurrence limit ($600k) applies | Single occurrence; $600,000 cap applies |
| Calculation of lost business income payment | Falls Lake underpaid lost business income; incorrect pre-loss income calculation; extra expenses should be reimbursed | Payment discharged its obligation; used proper method; extra expense not covered as claimed | Remand on pre-loss income calculation; no extra expense recovery |
| Entitlement to summary judgment | Trial court should have found for Apex based on undisputed facts | Supported by substantial evidence that loss arose from coordinated group acting as one event | Summary judgment affirmed except for business income calculation issue |
| Admissibility of expert/accountant evidence | Accountant's declaration supports higher business loss | Declaration lacked foundation/was hearsay | Should have ruled on objections; triable issue remains regarding pre-loss income |
Key Cases Cited
- EOTT Energy Corp. v. Storebrand International Insurance Co., 45 Cal.App.4th 565 (adopted causation approach for single vs. multiple occurrences under first-party property insurance, holding that a common plan can give rise to one occurrence)
- B.H.D., Inc. v. Nippon Ins. Co., 46 Cal.App.4th 1137 (distinguished cases based on policy language requiring treatment of thefts as separate occurrences without evidence of a common plan)
- AIU Ins. Co. v. Superior Court, 51 Cal.3d 807 (ambiguity in insurance contracts resolved in favor of insured's reasonable expectations)
- Katelaris v. County of Orange, 92 Cal.App.4th 1211 (requirements for appellate briefing)