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Court of Appeal:
Wildfire Debris Is Not ‘Physical Loss’ Under Insurance Policy
Relying on Recent California Supreme Court Case Dealing with Presence of COVID-19, Opinion Says Ash, Soot From Fire That Burned Within Half Mile of Home Is Not ‘Demonstrable Alteration to Property’
By a MetNews Staff Writer
Div. Two of this district’s Court of Appeal held yesterday that an insured is not entitled to recover for purported damage caused by debris from the 2019 Saddle Ridge fire under a homeowners insurance policy providing coverage for “direct physical loss to property,” saying the plaintiffs failed to show that the resulting ash, smoke, and soot altered the property in a “lasting and persistent manner.”
The question arose after Granada Hills homeowners Hovik Gharibian and Caroline Minasian submitted a claim to their property insurer, Wawanesa General Insurance Company, relating to debris from the fire, which burned within half of a mile from their home. Even though they kept the doors and windows closed, soot and ash managed to enter their home and fall into their swimming pool.
A lingering smell of wildfire smoke was also present but allegedly dissipated within three months after the fire. Wawanesa eventually paid out, over the course of months, an aggregate of $20,718.09 for professional home cleaning services to the homeowners and an additional $2,400 relating to the pool; Gharibian and Minasian opted not to hire professional cleaners and chose to sanitize the property themselves.
On Nov. 17, 2020, the plaintiffs, together with another pair of homeowners in the area, filed a complaint against Wawanesa, asserting causes of action for breach of contract and a violation of the duty of good faith and fair dealing.
In the operative complaint, they allege:
“Due to the wildfire, Plaintiff GHARIBIAN’s Property sustained over $81,661.57 in damages to real and personal property as it damaged the exterior of the home, while the smoke and soot entered the interior of the home damaging personal property. The odor of the smoke was absorbed in clothing and other fabrics inside the home. However, Defendant WAWANESA refused to pay the entirety of the claim as it intentionally underpaid the claim.…”
Inspection Report
Gharibian and Minasian hired L.Y. Environmental Inc. to inspect and write a report. Yonan Benjamin, a senior environmental engineer with the company, reported that debris was present at the property but said that soot does not physically damage a building, and ash only creates structural issues if it is exposed to water and left on metal surfaces.
He further confirmed that there was no burn or heat damage to the home, which he believed could be fully cleaned by wiping down all surfaces, vacuuming with a specialized machine, and power washing the exterior.
After Wawanesa moved for summary judgment, Gharibian and Minasian submitted a declaration from Benjamin, which indicated that the cleaning recommended by L.Y. Environmental may damage some building materials. Based on the declaration, they argued that the property would need to be re-evaluated after the cleaning was finished.
Los Angeles Superior Court Judge Barbara Ann Meiers granted Wawanesa’s motion, saying:
“[B]ottom line, even considering all that is before the court, the court in its role to interpret the insurance policy involved in the case has concluded that no evidence of ‘physical loss’ as that term is used and intended in the policy and in keeping with case law on the subject is before the court, and certainly not enough to create any material issue of fact in this regard.”
Yesterday’s opinion, written by Justice Judith Ashmann-Gerst and joined in by Presiding Justice Elwood Liu and Justice Victoria M. Chavez, affirmed the ensuing judgment.
Supreme Court Jurisprudence
Ashmann-Gerst cited, as controlling precedent, the 2024 California Supreme Court case of Another Planet Entertainment, LLC v. Vigilant Insurance Company, which held that the presence of the COVID-19 virus on an insured’s premises does not establish a “direct physical loss” within the meaning of a commercial property insurance policy.
Chief Justice Patricia Guerrero explained that “direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property” and “[t]he 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.”
Applying those principles, Ashmann-Gerst wrote:
Physical Damage Evidence
The plaintiffs point to deposition testimony by Benjamin that “ash can create physical damage to a structure,” and note that the substance was detected on their property. Unpersuaded, the jurist remarked that “plaintiffs ignore Mr. Benjamin’s qualification that ash only causes physical damage to property when it becomes wet, and no such damage existed on plaintiffs’ property.”
Turning to Benjamin’s statements, in his declaration, indicating that the cleaning may cause further damage to their home, she said:
“There are at least two problems with this statement. First, it contradicts his prior deposition testimony that the debris did not require painting, stucco work, attic insulation or replacement, or HVAC repairs, and that power washing would not cause damage to the structure. It is well-settled that a party cannot create a triable issue of fact with a declaration that contradicts the declarant’s earlier deposition testimony.”
She continued:
“Second, to the extent his declaration is being offered as expert testimony, his statement is, at best, speculative. And we may disregard speculative expert testimony.”
Saying that “the fact that Wawanesa made payments to plaintiffs even though there was no coverage is irrelevant,” she declared that “Wawanesa did not breach (and could not have breached) its insurance policy because plaintiffs did not have a covered claim.”
The case is Gharibian v. Wawanesa General Insurance Company, B325859.
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