Brooklyn Restaurants, Inc. v. Sentinel Ins. Co., Ltd.

Filed 3/20/24; Certified for Publication 3/25/24 (order attached)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

BROOKLYN RESTAURANTS, INC., D081132

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2020-
00024865-CU-IC-CTL)
SENTINEL INSURANCE COMPANY,
LTD.,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Reversed; remanded with directions.
LiMandri & Jonna, Charles S. LiMandri, Paul M. Jonna, and Milan L.
Brandon II for Plaintiff and Appellant.
Steptoe & Johnson, Robyn C. Crowther, Melanie Atswei Ayerh; Wiggin
and Dana, and Tadhg Dooley for Defendant and Respondent.
After its diner was partially shut down during the COVID-19
pandemic, Brooklyn Restaurants, Inc. (Brooklyn) brought suit against its
insurer, Sentinel Insurance Company, Limited (Sentinel), when Sentinel
declined a tender under a commercial property insurance policy. The
superior court granted Sentinel’s motion for judgment on the pleadings,
finding there was no coverage under the subject policy for Brooklyn’s claimed
business loss.
Brooklyn appeals the ensuing judgment of dismissal, arguing this case
is different from the multitude of COVID-19 pandemic related insurance
cases filed in this state. To this end, Brooklyn points out that it has alleged a
direct physical loss, which triggers coverage under the policy. Moreover, it
emphasizes that the subject insurance policy contains a unique provision,
specifically covering losses attributable to a virus. As such, Brooklyn insists,
under that distinctive provision, physical loss includes simply cleaning an
area infected by the coronavirus. We agree that the subject policy is
reasonably susceptible to that interpretation. And Brooklyn has pled that
the coronavirus was present at its premises, and it engaged in sanitization
efforts to remove the virus and remain, at least, partially open.
Consequently, this is one of those rare cases where we conclude an insured
has adequately alleged a direct physical loss or damage under the subject
policy, at least raising the specter of coverage under that policy.
Yet, the subject policy includes certain exclusions and conditions that
are applicable to coverage for a loss or damage stemming from a virus.
Brooklyn, however, argues that these exclusions and conditions render the
subject policy illusory. Because the instant matter is only at the pleading
stage, we agree that Brooklyn has done enough to raise the issue that its
policy is illusory, which in turn raises factual questions that require
discovery and the marshalling of evidence. Accordingly, we reverse the
judgment and remand this matter back to the superior court with
instructions to enter an order denying Sentinel’s motion for judgment on the
pleadings.

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 FACTUAL AND PROCEDURAL BACKGROUND
Brooklyn “operates an iconic local diner and longstanding community
gathering place known as ‘Harry’s Coffee Shop’. ” Harry’s Coffee Shop is
located in La Jolla, California, in “a heavily trafficked pedestrian
thoroughfare that invites visitors to linger, dine, shop, and socialize.” In
addition, Harry’s Coffee Shop benefits from regional theme parks and other
facilities that attract visitors to the area.
In August 2019, Brooklyn renewed its commercial property policy with
Sentinel. The policy was a Spectrum Business Owner’s Policy No. 72 SBA
BB7110 SC (the Policy), which provided coverage for Harry’s Coffee Shop
from August 1, 2019 to August 1, 2020.
The Policy, consisting of 196 pages, includes provisions Brooklyn
argues are relevant here. For example, the Special Property Coverage Form
states that Sentinel “will pay for direct physical loss of or physical damages
to Covered Property at the premises . . . caused by or resulting from a
Covered Cause of Loss.” The Policy further defines a “Covered Causes of
Loss” as “risks of direct physical loss,” except where otherwise excluded or
limited.
The Policy also includes an endorsement for “Limited Fungi, Bacteria,
or Virus Coverage” (the Virus Endorsement). That endorsement contains
provisions that (1) add limited coverage in certain circumstances for “loss or
damage” “caused by” “virus,” subject to certain conditions requiring that the
virus was the “result of” one or more of a list of enumerated causes, and
(2) exclude any “loss or damage caused directly or indirectly by” the
“[p]resence, growth, proliferation, spread or any activity of ‘fungi’, wet rot,
dry rot, bacteria or virus,” subject to an exception where the loss or damage
falls within the limited coverage provided under the Virus Endorsement.

3
 Additionally, the Policy provides Business Income coverage for losses
caused by direct physical loss or damage at dependent properties “caused by
or resulting from a Covered Cause of Loss.” Further, the Policy defines a
dependent property as “property owned, leased or operated by others whom
[Brooklyn] depend[ed] on to: [¶] (a) Deliver materials or services to
[Brooklyn] or to others for [Brooklyn’s] account. But services do not include:
[¶] (i) Water, communication, power services or any other utility services; or
[¶] (ii) Any type of web site, or Internet service. [¶] (b) Accept [Brooklyn’s]
products or services; [¶] (c) Manufacture [Brooklyn’s] products for delivery to
[Brooklyn’s] customers under contract for sale; or [¶] (d) Attract customers to
[Brooklyn’s] business premises.”
In March 2020, Brooklyn submitted a claim under the Policy “for loss of
business income due to the community spread and infection of coronavirus at

[Harry’s Coffee Shop], and the civil response thereto.” 1 Sentinel denied the
claim. Brooklyn then filed suit.
In the first amended complaint, Brooklyn alleged that, beginning in

March 2020, a series of government stay-at-home orders 2 issued in response
to the coronavirus as well as “community infection of COVID-19 adjacent to

1 The actual claim does not appear to be in the record.

2 These orders included: (1) Executive Order N-45-20 that declared a
state of emergency in response to expected impacts arising from the
COVID-19 pandemic; (2) Executive Order N-33-20 that ordered all
individuals living in California to stay home or at their place of residence
subject to certain exceptions; (3) an order from the public health officer of San
Diego County wherein all individuals living in San Diego County were to stay
at home except that they may leave to provide or receive certain essential
services or to engage in certain essential activities; and (4) a reclosure order
that closed indoor dining at restaurants for an additional three weeks in
July 2020.
4
[Harry’s Coffee Shop], have caused a precipitous decline in [Brooklyn’s]
business income.” Although acknowledging that restaurants and food
services were deemed “Essential Critical Infrastructure,” exempting them
from governmental orders, Brooklyn alleged that, in response to an executive
order issued by California’s governor, it was “forced to prohibit on-site dining,
severely limiting the number of customers that [it] could service and
effectuating a disastrous evaporation of [its] business income.”
Brooklyn also averred that “[b]eginning in March 2020, local and state
governments across the country urged their citizens to act as if they were
infected and as if everyone around them was infected with a novel and highly
infectious coronavirus.” As such, Brooklyn claimed Harry’s Coffee Shop was,
“and continue[d] to be, repeatedly infected by individuals coming and going
from the premises until the virus is eliminated in the region.”
Brooklyn further alleged that the United States federal government
issued travel bans, prohibiting “foreign nationals” from several countries
from entering the United States. It also noted that, “[b]ecause of the
presence of COVID-19, which was continually and repeatedly brought
to . . . [Harry’s Coffee Shop] by employees and guests, [Brooklyn] was forced
to reduce operations and move outside, physically losing the use of its interior
dining spaces.”
In addition, Brooklyn represented that “[i]n or about the early weeks of
March 2020, the government, scientific community, and those personally
affected by the virus recognized the coronavirus as a cause of real physical
loss and damage.” Moreover, Brooklyn claimed the coronavirus pandemic
was “exacerbated by the fact that the deadly coronavirus physically infects
and stays on the surfaces of objects or materials for many days. The virus
was also carried into this state by individuals traveling between countries

5
and states who in turn infected others and the facilities they visited, infecting
property in and around . . . [Harry’s Coffee Shop].” (Footnote omitted.)
The operative complaint included allegations regarding the impact of
the coronavirus pandemic on Harry’s Coffee Shop. To this end, Brooklyn
averred that “[t]he presence of COVID-19 also required [Brooklyn] to operate
at reduced capacity and deprived [Brooklyn] of the ability to use the dining
rooms and other facilities at . . . [Harry’s Coffee Shop]. Moreover, the
repeated movement of equipment, tables, and other furniture in and out of
the building in order to respond to the presence of the virus resulted in
physical damage to that equipment, including broken chairs and at least one
broken table.” And Brooklyn alleged that it was required to incur “significant
Extra Expense through enhanced and continual sanitation of . . . [Harry’s
Coffee Shop] in order to help mitigate the impacts of business interruption
and continue operations in some decreased capacity.”
The operative complaint contained causes of action for breach of
contract, breach of the implied covenant of good faith and fair dealing,
declaratory relief, and professional negligence. These causes of action were
based on Sentinel’s denial of Brooklyn’s claim under the Policy.
Sentinel filed a motion for judgment on the pleadings. Brooklyn
opposed that motion, to which, Sentinel filed a reply. The superior court
granted the motion, finding that there was no coverage under the Policy for
Brooklyn’s claims. The court subsequently entered judgment in favor of
Sentinel, dismissing the operative complaint with prejudice. Brooklyn timely
appealed.

6
 DISCUSSION
A. Standard of Review and Relevant Law
“ ‘The standard of review for a motion for judgment on the pleadings is
the same as that for a general demurrer: We treat the pleadings as
admitting all of the material facts properly pleaded, but not any contentions,
deductions or conclusions of fact or law contained therein. . . . We review the
complaint de novo to determine whether it alleges facts sufficient to state a
cause of action under any theory.’ ” (Burd v. Barkley Court Reporters, Inc.
(2017) 17 Cal.App.5th 1037, 1042.) “Denial of leave to amend after granting
a motion for judgment on the pleadings is reviewed for abuse of discretion.”
(Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448.)
This appeal requires us to interpret an insurance policy. “The
principles governing the interpretation of insurance policies in California are
well settled. ‘Our goal in construing insurance contracts, as with contracts
generally, is to give effect to the parties’ mutual intentions. (Bank of the
West v. Superior Court (1992) 2 Cal.4th 1254, 1264; see Civ. Code, § 1636.)
“If contractual language is clear and explicit, it governs.” (Bank of the West,
at p. 1264; see Civ. Code, § 1638.) If the terms are ambiguous [i.e.,
susceptible of more than one reasonable interpretation], we interpret them to
protect “ ‘the objectively reasonable expectations of the insured.’ ” (Bank of
the West, at p. 1265, quoting AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d
807, 822 [(AIU Ins.)].) Only if these rules do not resolve a claimed ambiguity
do we resort to the rule that ambiguities are to be resolved against the
insurer. (Bank of the West, at p. 1264.)’ (Boghos v. Certain Underwriters at
Lloyd’s of London (2005) 36 Cal.4th 495, 501.) The ‘tie-breaker’ rule of
construction against the insurer stems from the recognition that the insurer

7
generally drafted the policy and received premiums to provide the agreed
protection. [Citations.]” (Minkler v. Safeco Ins. Co. of America (2010)
49 Cal.4th 315, 321 (Minkler).)
“To further ensure that coverage conforms fully to the objectively
reasonable expectations of the insured, the corollary rule of interpretation
has developed that, in cases of ambiguity, basic coverage provisions are
construed broadly in favor of affording protection, but clauses setting forth
specific exclusions from coverage are interpreted narrowly against the
insurer. The insured has the burden of establishing that a claim, unless
specifically excluded, is within basic coverage, while the insurer has the
burden of establishing that a specific exclusion applies. [Citations.]”
(Minkler, supra, 49 Cal.4th at p. 322.)
“The existence of a material ambiguity in the terms of an insurance
policy may not, of course, be determined in the abstract, or in isolation. The
policy must be examined as a whole, and in context, to determine whether an
ambiguity exists. (MacKinnon [v. Truck Ins. Exchange (2003)] 31 Cal.4th
635, 648; Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.)”
(Minkler, supra, 49 Cal.4th at p. 322.)
B. Analysis
Here, the Policy includes a Special Property Coverage Form that states
that Sentinel “will pay for direct physical loss of or physical damage to
Covered Property . . . caused by or resulting from a Covered Cause of Loss.”
The Policy provides additional coverages that supplement this basic grant of
first party coverage, including under the Business Income and Extra Expense
provisions. When applicable, the Business Income and Extra Expense
provisions cover Brooklyn’s “actual loss of Business Income” incurred due to a
suspension of operations during the “ ‘period of restoration,’ ” provided that

8
the suspension was caused by “direct physical loss of or physical damage to”
covered property, “caused by or resulting from a Covered Cause of Loss,”
together with “reasonable and necessary Extra Expense” incurred during the
“ ‘period of restoration’ ” that Brooklyn “would not have incurred if there had
been no direct physical loss or physical damage to property” at the insured
premises.
In light of these provisions (and an additional endorsement discussed
post), Brooklyn frames the question to be decided by this appeal as follows:
“The ultimate question presented here is whether Brooklyn’s loss of property
owned, leased, or used by Brooklyn itself or its dependent property
customers, because of unsafe conditions created by COVID-19 infection, in
and around the facilities, is either a ‘damage to property’ or a ‘loss of
property’ under the Policy.” To the extent Brooklyn asks us to address this
question under the Policy regarding the Special Property Coverage Form as
well as the Business Income and Extra Expense provisions discussed ante, we
note that several California courts have found no coverage under similar
policies. (See, e.g., Apple Annie, LLC v. Oregon Mutual Ins. Co. (2022)
82 Cal.App.5th 919, 928–935; United Talent Agency v. Vigilant Ins. Co. (2022)
77 Cal.App.5th 821, 834 (United Talent); Musso & Frank Grill Co., Inc. v.
Mitsui Sumitomo Ins. USA Inc. (2022) 77 Cal.App.5th 753, 760–761;
Inns-by-the-Sea v. California Mutual Ins. Co. (2021) 71 Cal.App.5th 688,
700–701.) In doing so, the appellate courts have determined that, as a
matter of law, the mere presence of the coronavirus on the surface of the
covered premises is insufficient to allege damage to the property or a direct
physical loss. (See Endeavor Operating Co., LLC v. HDL Global Ins. Co.
(2023) 96 Cal.App.5th 420, 440, review granted, Dec. 13, 2023, S282533;
United Talent, at pp. 834, 838.) If this case hinged on Brooklyn’s allegations

9
that the evanescent presence of the virus on the surface of Harry’s Coffee
Shop constituted damage to the property or loss of property under the Policy,
we would follow the cases cited ante and affirm the judgment on the grounds
that Brooklyn has not and cannot allege damage or loss to the insured

premises. 3
For these same reasons, we also reject Brooklyn’s claim that the
presence of the coronavirus on “Dependent Properties” as defined under the
Policy gives rise to coverage here. The only damage or loss Brooklyn claims
may exist at the Dependent Properties is the presence of the coronavirus.
Such allegations are not sufficient to allege the requisite loss or damage as
required under the Policy. (See United Talent, supra, 77 Cal.App.5th at
pp. 834, 838.)
Yet, we do not end our consideration of the appeal here. As Brooklyn
represents, this case is different because the Policy includes the Virus
Endorsement. We thus consider Brooklyn’s claim that coverage exists based
on the allegations of the complaint measured against that endorsement.
The Virus Endorsement actually begins with exclusions, detailing what
Sentinel was not required to pay based on the amendments the endorsement
made to the “Increased Cost of Construction Additional Coverage of the
Standard Property Coverage Form.” In addition, the Virus Endorsement

3 We acknowledge that a minority of appellate courts have concluded
that, in similar insurance coverage cases, the allegations that the virus is
present on the surface of the insured premises is sufficient to withstand
demurrer. (See Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund
Ins. Co. (2022) 81 Cal.App.5th 96, 104–105; Shusha, Inc. v. Century-National
Ins. Co. (2022) 87 Cal.App.5th 250, 262–263, review granted Apr. 19, 2023,
S278614.) However, we do not ascribe to the minority view expressed by this
line of cases.
10
offers other exclusions toward the beginning of the provision (the Virus
Exclusion):
“i. ‘Fungi’, Wet Rot, Dry Rot, Bacteria And Virus

“We will not pay for loss or damage caused directly by any
of the following. Such loss or damage is excluded
regardless of any other cause or event that contributes
concurrently or in any sequence to the loss:

“(1) Presence, growth, proliferation, spread or any activity
of ‘fungi’, wet rot, dry rot, bacteria or virus.

“(2) But if ‘fungi’, wet rot, dry rot, bacteria or virus results
in a ‘specified cause of loss’ to Covered Property, we will
pay for the loss or damage caused by that ‘specified cause of
loss’.”

However, the above exclusion includes a carve out for certain specified causes
as follows:
“This exclusion does not apply:

“(1) When ‘fungi’, wet or dry rot, bacteria or virus results
from fire or lightning; or

“(2) To the extent that coverage is provided in the
Additional Coverage – Limited Coverage for ‘Fungi’, Wet
Rot, Dry Rot, Bacteria and Virus with respect to loss or
damage by a cause of loss other than fire or lightning.

“This Exclusion applies whether or not the loss event
results in widespread damage or affects a substantial area.”

Further, the Virus Endorsement specifically adds language to the
“Additional Coverage” provision of the Special Property Coverage Form (the
Limited Virus Coverage). It provides coverage as follows:
“The coverage . . . only applies when the ‘fungi’, wet or dry
rot, bacteria or virus is the result of one or more of the
following causes that occurs during the policy period and
only if all reasonable means were used to save and preserve

11
 the property from further damage at the time of and after
that occurrence.

“(1) A ‘specified cause of loss’ other than fire or lightning;

“(2) Equipment Breakdown Accident occurs to Equipment
Breakdown Property, if Equipment Breakdown applies to
the affected premises.”

“b. We will pay for loss or damage by ‘fungi’, wet rot, dry
rot, bacteria and virus. As used in this Limited Coverage,
the term loss or damages means:

“(1) Direct physical loss or direct physical damage to
Covered Property caused by ‘fungi’, wet rot, dry rot,
bacteria or virus, including the cost of removal of the
‘fungi’, wet rot, dry rot, bacteria or virus;

“(2) The cost to tear out and replace any part of the
building or other property as needed to gain access to
the ‘fungi’, wet rot, dry rot, bacteria or virus; and

“(3) The cost of testing performed after removal, repair,
replacement or restoration of the damaged property is
completed, provided there is a reason to believe that
‘fungi’, wet rot, dry rot, bacteria or virus are present.”

The Virus Endorsement does not include a definition of “Specified
Cause of Loss.” Nonetheless, elsewhere in the Policy, that phrase is defined
as follows: “ ‘Specified Cause of Loss’ means the following: Fire; lightning;
explosion, windstorm or hail; smoke; aircraft or vehicles; riot or civil
commotion; vandalism; leakage from fire extinguishing equipment; sinkhole
collapse; volcanic action; falling objects; weight of snow, ice or sleet; water
damage.” The parties do not argue that there existed other specified causes
of loss under the Policy except those that we have just identified.
Here, although the Virus Endorsement begins with exclusions and the
parties spend a great portion of their briefs discussing the impact of these
exclusions on the coverage issue before us, we begin with analysis of the
12
coverage provided in the Limited Virus Coverage because if Brooklyn’s claims
are not covered under that provision, we need not consider the endorsement’s
exclusions. (See Hallmark Ins. Co. v. Superior Court (1988) 201 Cal.App.3d
1014, 1017 [“a court must examine the coverage provisions to determine
whether a claim falls within the potential ambit of the insurance. [Citations.]
Where the scope of the basic coverage itself clearly creates no potential
liability under the policy, a court may not give it a ‘strained construction’ to
impose on an insurer a liability the insurer has not assumed”]; Yahoo, Inc. v.
National Union Fire Ins. Co. etc. (2022) 14 Cal.5th 58, 68 (Yahoo) [“When
coverage is in dispute, the initial burden is on the insured . . . to prove that
its claim falls within the scope of potential coverage. [Citation.] If the
insured establishes that the policy provides at least the potential for
coverage, the burden shifts to the insurer . . . to show the claim falls within
one of the policy’s exclusions.”].)
As relevant here, the Limited Virus Coverage requires Sentinel to pay,
subject to certain exclusions and requirements, “loss or damage” caused by a
virus. The Limited Virus Coverage includes a definition for “loss or damage”
specific to its coverage provision. To this end, the Limited Virus Coverage
provides three subsections to define “the term loss or damage”:
“(1) Direct physical loss or direct physical damage to
Covered Property caused by . . . virus, including the cost of
removal of the . . . virus;

“(2) The cost to tear out and replace any part of the
building or other property as needed to gain access to
the . . . virus; and

“(3) The cost of testing performed after removal, repair,
replacement or restoration of the damaged property is
completed, provided there is a reason to believe
that . . . virus [is] present.”

13
 The parties disagree regarding the definition of “loss or damage” in the
Limited Virus Coverage. Brooklyn argues that the definition is more
expansive than what most California courts have considered in similar
insurance coverage cases because it specifically includes the cost of removal
of a virus as a type of loss or damage. Further, Brooklyn emphasizes that its
interpretation of the Limited Virus Coverage is the same as the First
District’s reading of a substantially similar policy in John’s Grill, Inc. v. The
Hartford Financial Services Group, Inc. (2022) 86 Cal.App.5th 1195, review
granted March 29, 2023, S278481 (John’s Grill).
Sentinel disagrees with Brooklyn’s reading of the definition of “loss or
damage” in the Limited Virus Coverage. It contends that provision “simply
clarifies if a virus . . . causes direct physical loss or damage, then the Policy
will pay for that physical loss or damage and also will pay for the cost to
remove the virus . . . that caused the physical loss or damage.” Thus,
Sentinel reads the subject clause, not as further specifying what could be
considered direct physical loss or direct physical damage but as clarifying
what Sentinel would pay for if Harry’s Coffee Shop incurred a direct physical
loss or direct physical damage caused by a virus. Moreover, Sentinel
maintains its reading “comports with the Policy as a whole.” To this end,
Sentinel emphasizes that the “Policy generally requires physical loss or
damage, and the Virus Exclusion separately bars coverage for loss or damage
caused by a virus (or other listed peril).” Although Sentinel acknowledges
that the Limited Virus Coverage “reinstates some of that excluded coverage,”
Sentinel insists the “cost of removal” language only clarifies that “associated
costs like removal and testing will also be covered in certain circumstances,
along with the underlying physical loss or damage.”

14
 In interpreting an insurance policy, the “mutual intention of the parties
at the time the contract is formed governs interpretation. [Citation.] Such
intent is to be inferred, if possible, solely from the written provisions of the
contract.” (AIU Ins., supra, 51 Cal.3d at pp. 821-822.) The words in the
contract are to be interpreted in their “ordinary and popular sense” unless
“used by the parties in a technical sense, or unless a special meaning is given
to them by usage.” (Civ. Code, § 1644.) Any ambiguous terms must be
interpreted “in the sense [the insurer] believed [the insured] understood them
at the time of formation,” and ambiguities must be resolved in favor of
coverage. (AIU Ins., at p. 822, citing Civ. Code, § 1649; Yahoo, supra, 14
Cal.5th at p. 67 [if policy terms “ ‘are ambiguous [i.e., susceptible of more
than one reasonable interpretation], we interpret them to protect “ ‘the
objectively reasonable expectations of the insured.’ ” [Citations.] Only if
these rules do not resolve a claimed ambiguity do we resort to the rule that
ambiguities are to be resolved against the insurer’ ”].)
Here, we begin by interpreting the first of three separate subsections
under the Limited Virus Coverage that provide a definition for “the term loss
or damage” under the Virus Endorsement. The first subsection refers to
“[d]irect physical loss or direct physical damage to [Harry’s Coffee Shop]
caused by [a] . . . virus, including the cost of removal of the . . . virus.”
(italics and bold added.) The word “include” is a transitive verb meaning “to

take in or comprise as part of a whole or group.” 4 As such, the use of the
word “include” indicates that “cost of removal” is part of the whole of the
sentence (here, “[d]irect physical loss or direct physical damage . . . caused by
[a] . . . virus”]). In other words, the first subsection expressly makes “cost of

4 Merriam-Webster’s Online Dict. (2024) [as of March 20, 2024] archived at
.)
15
removal” part of the definition of direct physical loss or direct physical
damage. There does not exist any requirement that some additional “direct
physical loss or direct physical damage” must occur before “cost of removal”
can be considered “loss or damage” under the Limited Virus Coverage. Nor
does the subsection state that if a virus causes direct physical damage or loss
to the insured premises then Sentinel will pay for the cost of removal.
Despite disagreeing that Brooklyn has alleged direct physical loss or
damage giving rise to coverage under the Policy, Sentinel appears to concede
that in using the term “including,” the Limited Virus Coverage makes clear
that “cost of removal” “is ‘contain[ed] as part of’ direct physical loss or
physical damage for purposes of the ‘loss or damage’ definition.”
Nonetheless, Sentinel insists because the cost of removal is part of direct
physical loss or direct physical damage, “[i]t does not, therefore,
independently constitute ‘loss or damage’ as defined in the Limited [Virus]
Coverage.” This argument borders on nonsensical. In essence, Sentinel
seems to be contending that because the Limited Virus Coverage specifically
incorporates “cost of removal” as a part of the definition of “direct physical
loss or direct physical damage,” any “loss or damage” under this provision
must constitute more than the “cost of removal.” Alternatively stated,
according to Sentinel, if the virus causes some direct physical loss or direct
physical damage, independent of the cost of removal, only then is Sentinel
required to pay for the cost of removing a virus. But that is not what the
Policy says. The Limited Virus Coverage does not limit “the term loss or
damage” to only “direct physical loss or direct physical damage” or as it might
be used in other provisions of the Policy. Instead, the first subdivision
plainly states that “[d]irect physical loss or direct physical damage . . . caused
by . . . virus, includ[es] the cost of removal of the . . . virus.” Therefore, for

16
purposes of alleging “loss or damage” that could trigger coverage under the
Limited Virus Coverage, we conclude it is a reasonable interpretation of that
provision that the mere incurring of the cost of removal would be a sufficient
“direct physical loss or direct physical damage.” If we were to adopt
Sentinel’s interpretation of the first subsection of the Limited Virus
Coverage, we would have to ignore the word “include” or otherwise rewrite
this subdivision. We decline to engage in such contract drafting. That is not
our role here.
Further, our understanding of this provision is supported by the First
District’s interpretation of the Limited Virus Coverage in John’s Grill, supra,
86 Cal.App.5th 1195, review granted. There, in explaining a substantially
similar commercial property policy Sentinel provided to a restaurant, the
court noted:
“Unlike the undefined phrase ‘direct physical loss of or
physical damage to’ property in the Special Property
Coverage Form, the key coverage-triggering phrase in the
Limited Virus Coverage grant is simply ‘loss or damage,’
which is specially defined in a manner that not only
contemplates the possibility a virus may ‘cause[ ]’ physical
damage to covered property, but that includes the costs of
‘removal’ of ‘virus’—a phrase capacious enough to include
cleaning the surfaces of the property—as well as testing to
detect whether virus is merely ‘present’ on the property.”
(Id. at p. 1212.)

Thus, we turn to the allegations of the operative complaint to see if
Brooklyn alleged that it incurred “the cost of removal” of the coronavirus.
Although it did not use that exact phrase in the first amended complaint, we
observe that Brooklyn averred that it incurred significant additional
expenses “through enhanced and continual sanitation of . . . [Harry’s Coffee
Shop] in order to help mitigate the impacts of business interruption and
continue operations in some decreased capacity.” Because we must liberally
17
construe the allegations in a complaint when determining whether a plaintiff
has stated a valid cause of action (see, e.g., Gomez v. Lincare, Inc. (2009)
173 Cal.App.4th 508, 522; Code Civ. Proc., § 452), we read the allegations
that Brooklyn engaged in “enhanced and continual sanitation” of Harry’s
Coffee Shop as an allegation that it incurred the cost of removal of the
coronavirus to keep Harry’s Coffee Shop at least partially open. Accordingly,
we conclude that Brooklyn sufficiently alleged that it suffered the requisite
“loss or damage” under the Limited Virus Coverage to potentially trigger
coverage under the Virus Endorsement.
We next address whether the Virus Exclusion establishes as a matter
of law that Brooklyn is not entitled to coverage based on its allegation that it
incurred the “cost of removal” of the coronavirus from the surfaces of Harry’s
Coffee Shop. Sentinel urges us to answer this question in the affirmative,
maintaining that the Virus Exclusion “unambiguously bars coverage for
Brooklyn’s claimed losses.” To this end, Sentinel emphasizes that the Virus
Limitation expressly states Sentinel “will not pay for loss or damage caused
directly or indirectly by” the “[p]resence, growth, proliferation, spread or any
activity of . . . [a] virus.”
However, Sentinel acknowledges that the Virus Exclusion does not
apply when a virus “results from fire or lighting” or “coverage is provided”
under the Limited Virus Coverage “with respect to loss or damage by a cause

of loss other than fire or lightning.” 5 In addition to the defining “loss or
damage” as discussed ante, the Limited Virus Coverage sets forth that its
coverage “only applies when the . . . virus is the result of one or more of the

5 Brooklyn does not allege that the coronavirus was caused by fire or
lightning. Accordingly, we do not discuss possibility of coverage under those
two causes any further.

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following causes . . . and only if all reasonable means were used to save and
preserve the property from further damage at the time of and after that
occurrence.” It further specifies the applicable causes as “[a] ‘specified cause
of loss’ other than fire or lightning” or “Equipment Breakdown Accident
occurs to Equipment Breakdown Property, if Equipment Breakdown applies

to the affected premises.” 6 Although not defined in the Virus Endorsement,
the Policy identifies the following specified causes of loss that will trigger
coverage in general: “Fire; lightning; explosion, windstorm or hail; smoke;
aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire
extinguishing equipment; sinkhole collapse; volcanic action; falling objects;
weight of snow, ice or sleet; water damage.” And Sentinel insists that
Brooklyn has not and cannot allege that the coronavirus resulted from any of
the enumerated specified causes of loss under the Policy. Thus, Brooklyn has
no claim that it is entitled to coverage based on the coronavirus.
In response, Brooklyn points out that it alleged that the coronavirus
was transported to the United States, and eventually to Harry’s Coffee Shop,
by airplanes, which is a specified cause of loss under the Policy. Therefore,
Brooklyn maintains that the allegations that “travelers originating from
other states and countries came to the state [in airplanes and vehicles] where
the insured properties are located and, in turn, infected the insured property
(including associated dependent properties)” is analogous to allegations a
court found the plaintiff had sufficiently pled a covered loss under an
insurance policy wherein a virus was transmitted by wind. (See Curtis O.
Griess & Sons, Inc. v. Farm Bureau Ins. Co. of Nebraska (1995) 247 Neb. 526,

6 “Equipment Breakdown Accident” is defined elsewhere in the Policy.
Sentinel argues, and Brooklyn does not contest, that Brooklyn does not
invoke coverage under the Equipment Breakdown Accident provision. As
such, we eschew any further discussion of it.
19
531 [528 N.W.2d 329, 333] (Curtis O.).) We find Brooklyn’s reliance on
Curtis O. misplaced.
In Curtis O., the Supreme Court of Nebraska determined that a
tornado carried a pseudorabies virus to the plaintiff’s swine “insured by
defendant insurance company for physical loss caused directly by an
applicable peril,” where windstorms were covered perils under the policy.
(Curtis O., supra, 528 N.W.2d at p. 331.) The court determined that the virus
“ha[d] been transmitted by means of a covered peril” and that “[a]bsent the
windstorm, there would have been no infection of plaintiff's swine.” (Id. at
p. 333.) We disagree with Brooklyn that the vehicles and airplanes in the
instant matter are the same as the wind in Curtis O. As Brooklyn explicitly
alleges, it was the people traveling on the airplanes and vehicles that carried
the coronavirus. Thus, it was not airplanes and vehicles themselves that
caused the spread of the virus. Without the people traveling on those
airplanes and vehicles, there would have been no spread of the coronavirus.
Therefore, the airplanes and vehicles are much more attenuated to the
alleged covered loss than the wind transporting the virus in Curtis O.
(See Firenze Ventures LLC v. Twin City Fire Ins. Co. (N.D. Ill. 2021)
532 F.Supp.3d 607, 612–613 [“The fact that human beings use various
conveyances to travel from Point A to Point B does not mean that anything
caused by what they do (intentional or not) at Point B is ‘the result of’ the
conveyance they used. If a person catches a cold in New York one night, flies
to Chicago the next morning, takes an Uber downtown to her hotel, and then
sneezes on her bellhop in the elevator, no speaker of ordinary English would
say that the bellhop’s ensuing cold was ‘the result of’ the aircraft or the
Uber”].)

20
 Despite having rejected Brooklyn’s argument that it has alleged the
coronavirus was the result of a specified cause of loss under the Policy, our
analysis here is not finished. Brooklyn further argues that if an airplane or
vehicle is not a sufficient specific cause of loss under the Policy then nothing
is regarding viruses. In other words, the Policy is illusory.
“In order for a contract to be valid, the parties must exchange promises
that represent legal obligations. [Citation.] An Agreement is illusory and
there is no valid contract when one of the parties assumes no obligation.”
(Scottsdale Ins. Co. v. Essex Ins. Co. (2002) 98 Cal.App.4th 86, 94–95;
see French Laundry Partners, LP v. Hartford Fire Ins. Co. (N.D.Cal. 2021)
535 F.Supp.3d 897, 904 (French Laundry) [under California law, “[a]n
insurance policy provision is only illusory where it results in a ‘complete lack
of any policy coverage’ ”].) Under the rules of contractual interpretation, “we
must interpret the provisions of a contract to avoid rendering the instrument
‘illusory.’ [Citation.] Contracts of insurance do not enjoy any special
exemption from that basic principle.” (John’s Grill, supra, 86 Cal.App.5th at
p. 1219, review granted; see Brandwein v. Butler (2013) 218 Cal.App.4th
1485, 1507 [“when interpreting a contract, we strive to interpret the parties’
agreement to give effect to all of a contract’s terms, and to avoid

interpretations that render any portion superfluous, void or inexplicable”].) 7

7 Relying on Forecast Homes, Inc. v. Steadfast Ins. Co. (2010)
181 Cal.App.4th 1466 at pages 1483 through 1484, Sentinel contends that a
condition in an insurance policy can only render the subject policy illusory if
the existence of that condition is entirely within the insurer’s control. We do
not read that case as establishing whether an insurance policy is illusory so
narrowly. Because insurance policies are a species of contract, we apply the
general rules of determining whether a contract is illusory to the Policy in the
instant action as sort forth ante.
21
 In the instant matter, Sentinel offers two primary reasons why the
Policy is not illusory. First, it points out that the Virus Endorsement is not
limited to only viruses but provides coverage for loss or damage caused by
fungi, wet or dry rot, and bacteria. As long as any one of these perils can
result from a specified cause of loss, Sentinel contends the Policy is not
illusory. We disagree. Further, we think the First District persuasively
addressed this argument in John’s Grill, supra, 86 Cal.App.5th at page 1222,
review granted:
“[Sentinel’s argument] not only flies in the face of the
principle that we must give effect to all the words of the
Policy, but is precisely the kind of ‘heads I win, tails you
lose’ position the illusory coverage doctrine forbids. . . .
Insurers cannot take in premium for a coverage grant that
names a specifically covered risk—here virus
contamination—and then justify denying coverage for it
under all circumstances because some other risk may be
covered under the same coverage grant.”

Next, Sentinel asserts that the Policy is not illusory because, as set
forth in Curtis O., supra, 528 N.W.2d 329, a virus can result from a
windstorm, which is a specified cause of loss. Sentinel further points out that
multiple federal cases have accepted this argument in finding that

substantially similar policies were not illusory, 8 but we agree with the First
District that, for purposes of our analysis here, Curtis O. “is best limited to its
peculiar factual context.” (John’s Grill, supra, 86 Cal.App.5th at p. 1223,
review granted.) Curtis O. concerned the harm a windblown virus caused to
livestock on a farm. (Curtis O., supra, 528 N.W.2d at p. 333.) But Brooklyn

8 See, e.g., Hair Perfect Int’l, Inc. v. Sentinel Ins. Co., Ltd (C.D.Cal.
May 20, 2021, No. LA CV20-03729 JAK (KSx)) 2021 U.S.Dist. LEXIS 102637,
at *23; French Laundry, supra, 535 F.Supp.3d at pp. 903–904; Franklin
EWC, Inc. v. Hartford Fin. Servs. Grp. (N.D.Cal. 2020) 506 F.Supp.3d 854,
861.
22
does not operate a farm, and the insured premises under the Policy is a
restaurant. Unlike the farm in Curtis O., there is no livestock present at
Harry’s Coffee Shop to be harmed by a virus traveling via a windstorm. In
this sense, we concur with the First District that this “oddball scenario[ ]” has
little applicability to the instant matter.
Additionally, in a single sentence of its 58-page brief, Sentinel insists
that the Policy is not illusory because a virus could result from other specified
causes of loss. To this end, Sentinel asserts: “waterborne viruses can result
from ‘water damage,’ and a virus could result from other specified causes like
‘vandalism’ or ‘civil commotion’ at, for example, a virus-testing facility or
virology research lab.” But for this lone, conclusory remark, Sentinel
provides no explanation in its brief how these scenarios are either realistic or
even remotely possible.
Moreover, the reasonableness of these examples was further
undermined by Sentinel’s claim during oral argument that, to the extent the
Virus Endorsement did provide any coverage to Brooklyn, it would only do so
if a virus damaged a living organism, like oysters or plants, at Harry’s Coffee
Shop. Such an argument begs the question why Brooklyn would purchase
such a policy to cover the diner it operates. There is no indication here that
Harry’s Coffee Shop keeps living creatures on its premises or was seeking
specific coverage for any type of husbandry.
Thus, again we are inclined follow John’s Grill on this point. (See
John’s Grill, supra, 86 Cal.App.5th at p. 1224, review granted [“Where an
insured properly raises the issue of illusory coverage, as [the insured] has
done here, unsubstantiated speculation, untethered to the insured’s actual
business circumstances as underwritten by the insurer, is not enough to
defeat the argument”].) Our decision to follow John’s Grill regarding this

23
issue is buttressed by the fact that this case is at the pleading stage and
there is not a sufficient record before us to ascertain the parties’ intentions of
entering into the Policy. (Cf. Bank of the West v. Superior Court, supra,
2 Cal.4th at p. 1264; Civ. Code, § 1636.) Such development of the facts and
evidence appears to be necessary here where the parties seem to be at such

severe loggerheads regarding what the Policy was meant to cover. 9
DISPOSITION
The judgment is reversed. The matter is remanded to the superior
court with directions to enter an order denying Sentinel’s motion for
judgment on the pleadings. Brooklyn is entitled to its costs on appeal.

HUFFMAN, Acting P. J.

WE CONCUR:

DATO, J.

CASTILLO, J.

9 Because we are reversing the judgment based on Brooklyn’s illusory
argument, we need to reach its claim that the Virus Exclusion is
unenforceable because that exclusion was not sufficiently conspicuous, plain,
or clear.
24
Filed 3/25/24
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

BROOKLYN RESTAURANTS, INC., D081132

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2020-
00024865-CU-IC-CTL)
SENTINEL INSURANCE COMPANY,
LTD., ORDER CERTIFYING OPINION
FOR PUBLICATION
Defendant and Respondent.

THE COURT:
The opinion in this case filed March 20, 2024 was not certified for
publication. It appearing the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c), the request pursuant to
rule 8.1120(a) for publication is GRANTED.
IT IS HEREBY CERTIFIED that the opinion meets the standards for
publication specified in California Rules of Court, rule 8.1105(c); and
 ORDERED that the words “Not to Be Published in the Official Reports”
appearing on page one of said opinion be deleted and the opinion herein be
published in the Official Reports.

HUFFMAN, Acting P. J.

Copies to: All parties

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