Case: Gharibian v. Wawanesa Gen. Ins. Co. - 2DCA holds that removable wildfire debris did not cause direct physical loss to plaintiffs’ property in insurance suit

Decided: 2/7/2025

Docket

Case Overview:

Procedural posture: Appeal from the Los Angeles Superior Court’s order granting defendant’s motion for summary judgment

Plaintiffs-appellants: Hovik Gharibian, et al.

Defendant-respondent: Wawanesa General Insurance Company

Second District Court of Appeal, Division Two case no.: B325859

Appeal from: Los Angeles Superior Court (Meiers, J.)

Advocates: Natalie Suri for Gharibian; John Edson and Matthew Halgren for Wawanesa

Question:

(1) Debris from a nearby wildfire entered plaintiffs’ home and property. The wildfire debris could be cleaned by wiping the surfaces, power washing the outside, and other remedial measures. Plaintiffs’ insurance policy covered “direct physical loss to property.”

Did the superior court err in concluding that the wildfire debris was not evidence of “direct physical loss” within the meaning of plaintiffs’ policy?

Answer:

(1) No, the wildfire debris did not cause “direct physical loss” within the meaning of the policy. The superior court did not err. California law requires that a direct physical loss entail “a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury or impairment of the property as property.”

The California Supreme Court’s decision in Another Planet Entertainment, LLC v. Vigilant Ins. Co., 15 Cal. 5th 1106, 1117 (2024), governs the plaintiffs’ case. In Another Planet, the California Supreme Court concluded that allegations of the presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy.

The fact that Wawanesa made payments to the plaintiffs even though there was no coverage is irrelevant to resolving the case.

Facts:

The plaintiffs obtained a Wawanesa homeowner insurance policy that insured against “direct physical loss to property.” One month later, the Saddle Ridge wildfire began within a mile of plaintiffs’ property. Plaintiffs’ property was not burned, but the debris entered their home and fell outside their home and into their swimming pool.

The plaintiffs and Wawanesa hired professionals to determine the cost of cleaning the plaintiffs’ house. Wawanesa hired PuroClean, which estimated $20,718.09 for cleaning. PuroClean was willing to perform the quoted services at the estimated cost, but the plaintiffs did not hire PuroClean. Plaintiffs’ professionals estimated $35,553.10 to clean and remediate.

Plaintiffs sued Wawanesa, alleging claims for breach of contract and breach of the duty of good faith and fair dealing. Wawanesa moved for summary judgment against the plaintiffs, arguing that there was no evidence of a physical loss that fell within the scope of the policy’s coverage. The superior court granted summary judgment in favor of Wawanesa.

Outcome:

The Second District Court of Appeal, Division Two affirmed the superior court’s grant of summary judgment to Wawanesa.

Justice Ashmann-Gerst authored the opinion, joined by Justices Lui and Chavez.

Links:

Westlaw: 2025 WL 426092

Rachel Hudgins and Scott DeVries, Where There’s Smoke, Is There Coverage? A Closer Look at Bottega, LLC v. National Surety and Gharibian v. Wawanesa. Hunton Insurance Recovery Blog. February 13, 2025.