Rani Gupta’s commentary was included in a Law360 article on the California Supreme Court’s decision against San Francisco restaurant John's Grill over insurance coverage for pandemic-related losses. The decision gave greater clarity to the standard of proof as to when coverage is rendered illusory. Rani represented trade organization, United Policyholders, as an amicus in the dispute, which argued that under the illusory coverage doctrine, even if the policy language is clear, the policy must still cover something that's meaningful for the policyholder.
Rani commented on how she believed the appellate court's decision was correct and that the California Supreme Court reversal was fairly narrow. The justices left open for debate how these issues could be litigated in future cases with different facts and policy language as the state high court focused specifically on the language in John's Grill's policy, she said.
Rani also added that many policyholders have been "disappointed" by the way litigation played out. “There are probably policyholders that thought their property and business interruption policies were going to cover these types of losses that might be assessing whether they need different types of coverage, whether they have a gap that they should be concerned about,” she said. But that concern is only a fragment of the larger, ongoing property market. A more pressing issue, Rani continued, is how COVID-19 litigation has differed from other types of claims.
"Just to give an obvious example, it's been historically very rare to get an insurance coverage case dismissed at the pleading state because of the need to do discovery of the facts and the policy language, including evidence that may inform how the policy language is supposed to be interpreted and applied," she said. The concern is that carriers will use those types of decisions, which have come up in pandemic-related loss disputes, to seek dismissal at an earlier stage instead of letting cases play out, she observed. That development is crucial to insurance coverage cases, because the issues can be complex and the policy language could have informative context that a court might not know while reading the language cold.
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