Case Title: Another Planet Entertainment, LLC v. Vigilant Insurance Co.

Citation: 

Docket Number: S277893

State: california

Court: California Supreme Court

Date: 2024-05-23T00:00:00Z

Document:
IN THE SUPREME COURT OF 
CALIFORNIA 
 
ANOTHER PLANET ENTERTAINMENT, LLC, 
Plaintiff and Appellant, 
v. 
VIGILANT INSURANCE COMPANY, 
Defendant and Respondent. 
 
S277893 
 
Ninth Circuit 
21-16093 
 
Northern District of California 
3:20-cv-07476-VC 
 
 
May 23, 2024 
 
Chief Justice Guerrero authored the opinion of the Court, in 
which Justices Corrigan, Liu, Kruger, Groban, Jenkins, and 
Evans concurred. 
 
1 
ANOTHER PLANET ENTERTAINMENT, LLC v. 
VIGILANT INS. CO. 
S277893 
 
Opinion of the Court by Guerrero, C. J. 
 
At the outset of the COVID-19 pandemic, and for some 
time thereafter, many businesses were forced to curtail their 
operations or close entirely.  Some of these businesses sought 
coverage for their financial losses from their commercial 
property insurers under conventional first-party “all risk” or 
“open peril” insurance policies.  These policies generally 
predicate coverage on “direct physical loss or damage” to the 
insured property or nearby property.  State and federal courts 
across the country have considered whether conventional 
property insurance policies provide coverage for pandemic-
related losses, including whether the COVID-19 virus satisfies 
the threshold requirement of direct physical loss or damage to 
property.  California courts have reached different conclusions 
on this issue, and in this case we accepted a request by the 
United States Court of Appeals for the Ninth Circuit to clarify 
California law in this area.  (Cal. Rules of Court, rule 8.548.) 
The Ninth Circuit posed the following question:  “Can the 
actual or potential presence of the COVID-19 virus on an 
insured’s premises constitute ‘direct physical loss or damage to 
property’ for purposes of coverage under a commercial property 
insurance policy?”  (Another Planet Entertainment, LLC v. 
Vigilant Insurance Co. (2022) 56 F.4th 730, 734 (Another 
Planet).) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
2 
The question arises in the context of a civil lawsuit filed 
by Another Planet Entertainment, LLC (Another Planet) 
against its property insurer, Vigilant Insurance Company 
(Vigilant). 
 
Another 
Planet 
operates 
venues 
for 
live 
entertainment.  It suffered pandemic-related business losses 
when its venues closed, and Vigilant denied Another Planet’s 
subsequent claim for insurance coverage.  Another Planet filed 
suit in federal district court, alleging that the actual or potential 
presence of the COVID-19 virus at its venues or nearby 
properties caused direct physical loss or damage to property and 
triggered coverage under its insurance policy.  The district court 
granted Vigilant’s motion to dismiss for failure to state a claim, 
and Another Planet appealed.  According to the Ninth Circuit, 
the issue on appeal “is whether [Another Planet’s] allegations, 
if taken as true, were sufficient to show ‘direct physical loss or 
damage to property’ as defined by California law.”  (Another 
Planet, supra, 56 F.4th at p. 731.)  Because the Ninth Circuit 
concluded that resolution of this question of California law could 
determine the outcome of the case pending before it, the Ninth 
Circuit certified the question to this court. 
We conclude, consistent with the vast majority of courts 
nationwide, that allegations of the actual or potential 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.  Under 
California law, direct physical loss or damage to property 
requires 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 to or impairment of the property as property. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
3 
The factual allegations of Another Planet’s complaint, 
which we accept as true for purposes of this proceeding, do not 
satisfy this standard.  While Another Planet alleges that the 
COVID-19 virus alters property by bonding or interacting with 
it on a microscopic level, Another Planet does not allege that any 
such alteration results in injury to or impairment of the property 
itself.  Its relevant physical characteristics are unaffected by the 
presence of the COVID-19 virus. 
Another Planet focuses on the virus’s risk to humans, and 
it alleges that the actual or potential presence of the virus 
rendered its properties unfit for their intended use.  But the 
mere fact that a property cannot be used as intended is 
insufficient on its own to establish direct physical loss to 
property.  Similarly, the fact that a business was forced to 
curtail its operations, in whole or in part, based on pandemic-
related government public health orders is likewise insufficient.  
The restrictions of a government public health order are legal, 
i.e., intangible, in nature.  They do not constitute direct physical 
loss or damage to property. 
In rare situations, a property may suffer direct physical 
loss where it is not damaged in a conventional sense, including 
where a chemical contaminant or noxious odor infiltrates the 
property and renders it effectively unusable or uninhabitable.  
In such a case, the contaminant or odor may cause direct 
physical loss, but only where the source of the property’s 
unusability or uninhabitability is sufficiently connected to the 
property itself.  This situation may arise when the effect of the 
contaminant or odor is so lasting and persistent that the risk of 
harm is inextricably linked or connected to the property.  
Another Planet’s allegations regarding the effect of the COVID-
19 virus on property fail to meet this standard as well. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
4 
While we conclude Another Planet’s allegations are 
insufficient, and it appears that such allegations represent the 
most common allegations in support of pandemic-related 
property insurance coverage, we cannot and do not in this 
proceeding determine that the COVID-19 virus can never cause 
direct physical loss or damage to property.  Our contemplation 
of the virus and the affected property is necessarily limited by 
Another Planet’s factual allegations.  Nonetheless, given the 
prevalence of similar circumstances, we answer the Ninth 
Circuit’s question as follows:  No, the actual or potential 
presence of COVID-19 on an insured’s premises generally does 
not constitute direct physical loss or damage to property within 
the meaning of a commercial property insurance policy under 
California law. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
“Because this matter is presently on appeal from a 
dismissal under Federal Rules of Civil Procedure, rule 12(b)(6) 
(28 U.S.C.), we recite the facts as alleged in the operative 
complaint.  [Citation.]  The question at this stage of the 
litigation is the legal sufficiency of the pleadings.  We treat the 
factual allegations as true for purposes of addressing the 
certified question[].”  (Kuciemba v. Victory Woodworks, Inc. 
(2023) 14 Cal.5th 993, 1004.) 
Another Planet is an independent operator and promoter 
of live entertainment (including concerts, festivals, and events) 
at several venues in California and Nevada.  It purchased a 
commercial property insurance policy from Vigilant.  The policy 
provided for two main categories of coverage:  (1) building and 
personal property coverage and (2) business income and extra 
expense coverage. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
5 
Under the first category, Vigilant promised, “We will pay 
for direct physical loss or damage to [a building or personal 
property] caused by or resulting from a peril not otherwise 
excluded . . . .”  It also promised, “We will pay the reasonable 
and necessary costs you incur to protect [the building and 
personal property] at the premises shown in the Declarations 
from imminent direct physical loss or damage caused by or 
resulting from a peril not otherwise excluded . . . .”  The policy 
defined “[b]uilding” as “a structure,” “building components,” 
“completed additions,” and “alterations and repairs to the 
structure.”  It excluded “land, water or air, either inside or 
outside of a structure.”   
Under the second category of coverage, Vigilant promised, 
“We will pay for the actual:  [¶]  business income loss you incur 
due to the actual impairment of your operations; and [¶] extra 
expense you incur due to the actual or potential impairment of 
your operations, [¶] during the period of restoration . . . .  [¶]  
This actual or potential impairment of operations must be 
caused by or result from direct physical loss or damage by a 
covered peril to property, unless otherwise stated.”   
The policy defined the “[p]eriod of restoration” as “the 
period of time that, for business income, begins:  [¶]  A.  
immediately after the time of direct physical loss or damage by 
a covered peril to property; or  [¶]  B.  on the date operations 
would have begun if the direct physical loss or damage had not 
occurred, when loss or damage [to new buildings, alterations, or 
personal property] delays the start of operations . . . .”  
Similarly, for extra expense, the period of restoration begins 
“immediately after the time of direct physical loss or damage by 
a covered peril to property.”  The policy provided that the period 
of restoration “will continue until your operations are restored, 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
6 
with reasonable speed, to the level which would generate the 
business income amount that would have existed if no direct 
physical loss or damage occurred, including the time required 
to:  [¶] . . . repair or replace the property.”  The outside limit on 
the length of the period of restoration was “the applicable 
number of days shown as Extended Period in the Declaration, 
beginning on the date that,” as relevant here, “the lost or 
damaged property is actually repaired or replaced and your 
operations are restored.”   
Within this second category, the policy also covered lost 
income and extra expenses incurred as a result of certain 
governmental actions.  Vigilant promised, “We will pay for the 
actual:  [business income loss or extra expense] you incur due to 
the actual impairment of your operations, directly caused by the 
prohibition of access to [your premises or a dependent business 
premises] by a civil authority.  [¶]  This prohibition of access by 
a civil authority must be the direct result of direct physical loss 
or damage to property away from such premises or such 
dependent business premises by a covered peril, provided such 
property is within [either one mile or the miles specified in the 
policy’s declaration] from such premises or dependent business 
premises, whichever is greater.” 
In early 2020, the COVID-19 virus became a widespread 
concern in the United States.  The virus — technically SARS-
CoV-2, which causes the COVID-19 respiratory illness — is 
highly contagious and potentially fatal.  The virus is a physical 
substance.  It primarily spreads from person to person via 
airborne respiratory droplets or aerosols containing the virus. 
According to Another Planet, indoor and outdoor air is 
normally composed of various gaseous elements and particles.  
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
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The introduction of respiratory droplets or aerosols containing 
the COVID-19 virus changes the composition of the affected air 
through the addition of such droplets or aerosols.  Respiratory 
droplets with the COVID-19 virus can also settle on the surfaces 
of real and personal property.  The droplets attach to these 
surfaces and, in Another Planet’s view, physically alter them.  
The virus can remain in the air or on surfaces for hours or days.  
Although it is not a primary mode of transmission, a person can 
contract COVID-19 by touching a surface on which the COVID-
19 virus has been deposited.  Another Planet alleges that the 
presence of the droplets containing the COVID-19 virus 
“requires steps to be taken to minimize their spread, such as 
physical distancing, regular disinfection, air filtration, and 
further physical alterations, such as installation of physical 
barriers restricting the movement of the aerosolized droplets.”  
Another Planet asserts there is evidence that remedial 
measures “cannot be assured to eliminate or exclude” the 
COVID-19 virus from its premises.   
Another Planet further alleges that the COVID-19 virus 
was present at its properties, “or would have been present but 
for its efforts to reduce, prevent, or otherwise mitigate its 
presence on its properties.”  It maintains that the presence or 
potential presence of the COVID-19 virus caused a “distinct, 
demonstrable, physical alteration to property,” and its presence 
or potential presence prevented or impaired the use of Another 
Planet’s property.  Another Planet’s properties were “unsafe and 
unusable.”  Given the danger of the COVID-19 virus, “no 
‘rational persons would be content’ to be in a venue likely to 
cause them to contract COVID-19.”  Another Planet alleged the 
only way to prevent the presence of the COVID-19 virus was to 
close its venues completely.   
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
8 
State and local authorities recognized the public health 
risk of the COVID-19 virus and imposed restrictions on 
individuals and businesses, including Another Planet.  Public 
health orders “prohibited or limited the use and operations of 
Another Planet’s insured locations.”  Another Planet was forced 
to cancel all events scheduled for its venues and could not use 
its insured locations for their intended purpose.  It alleges it 
suffered losses in excess of $20 million.   
In May 2020, Another Planet submitted an insurance 
claim to Vigilant for direct physical loss or damage to its 
properties and consequent economic losses.  Vigilant denied 
coverage.  It maintained that Another Planet had not shown 
“physical loss or damage that would implicate coverage in this 
matter.”   
Another Planet filed a complaint and, later, a first 
amended complaint against Vigilant in federal district court.  It 
alleged causes of action for breach of contract, tortious breach of 
the implied covenant of good faith and fair dealing, and various 
forms of fraud.  It also sought declaratory relief.  Vigilant moved 
to dismiss the first amended complaint for failure to allege facts 
sufficient to state a claim upon which relief can be granted.  
(Fed. Rules Civ.Proc., rule 12(b)(6), 28 U.S.C.)  Vigilant 
primarily argued that Another Planet had not alleged direct 
physical loss or damage to property, which was required to 
trigger coverage under any theory advanced by Another Planet.   
The district court granted Vigilant’s motion to dismiss.  It 
found that “Another Planet does not have a claim for loss of 
business income because the closure orders [by state and local 
public health authorities] — and not [the] virus’s alleged 
presence at Another Planet’s facilities — caused it to shut 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
9 
down.”  The district court also rejected Another Planet’s attempt 
to tie the closure orders to direct physical loss or damage to 
property.  It explained, “[T]hose closure orders were not passed 
as a direct result of property damage at nearby properties.”  
There was no suggestion that the “closure orders were passed 
‘as a direct result’ of the virus having caused actual property 
damage at buildings close to Another Planet’s facilities (or 
anyone else’s facilities for that matter).”  (Fn. omitted.)   
Another Planet appealed.  After briefing and oral 
argument, the Ninth Circuit issued a written order certifying a 
question of law to this court.  (Another Planet, supra, 56 F.4th 
730.)  The order identified “conflicting decisions” of the lower 
California courts “regarding whether allegations like Another 
Planet’s suffice to state a viable claim for ‘direct physical loss or 
damage to property.’ ”  (Id. at p. 733.)  The order stated that the 
resolution of this conflict was potentially dispositive of Another 
Planet’s appeal “because if the allegation of the presence or 
potential presence of the COVID-19 virus is sufficient to show 
‘direct physical loss or damage to property,’ the district court 
erred in dismissing Another Planet’s complaint for failure to 
state a claim, and we would remand to the district court for 
further proceedings.  Alternatively, if the allegation is not 
sufficient, we would affirm the district court.”  (Id. at p. 734.)  As 
noted, we agreed to answer the Ninth Circuit’s question, and 
these proceedings followed. 
II.  DISCUSSION 
A.  General Principles of Property Insurance 
As a leading treatise explains, “The fundamental principle 
of a property insurance contract is to indemnify the owner 
against loss; that is to place the owner in the same position in 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
10 
which he or she would have been had no accident occurred.”  
(10A Couch on Insurance (3d ed. 2005) § 148:1.)  “ ‘Property 
insurance . . . is an agreement, a contract, in which the insurer 
agrees to indemnify the insured in the event that the insured 
property suffers a covered loss.  Coverage, in turn, is commonly 
provided by reference to causation, e.g., “loss caused by . . . ” 
certain enumerated perils.’ ”  (Garvey v. State Farm Fire & 
Casualty Co. (1989) 48 Cal.3d 395, 406 (Garvey).)  Alternatively, 
the coverage grant may cover all perils “ ‘not specifically 
excepted or excluded (as in an “all risks” policy).’ ”  (Ibid.)  “ ‘The 
term “perils” in traditional property insurance parlance refers 
to fortuitous, active, physical forces such as lightning, wind, and 
explosion, which bring about the loss.’ ”  (Ibid.) 
“Historically, property insurance grew out of the 
insurance against the risk of fire which became available for 
ships, buildings, and some commercial property at a time when 
most of the structures in use were made wholly or primarily of 
wood.”  (10A Couch on Insurance, supra, § 148:1.)  “On this side 
of the Atlantic, fire insurance first developed in the middle of 
the eighteenth century. . . .  [T]his was insurance against only 
one cause of loss, or peril — fire.  Over time other insured perils, 
such as wind and hail, were added.  These insured perils were 
each specified in the insurance policy.  For this reason, such 
insurance came to be known as ‘specified-risk’ coverage.  It 
insured property against the risk of damage or destruction 
resulting from specified causes of loss.”  (Abraham, Peril & 
Fortuity in Property & Liability Insurance (2001) 36 Tort Trial 
& Ins. Prac. L.J. 777, 782–783, fn. omitted.)  By contrast, marine 
insurance developed “standardized forms that insured an ocean-
going vessel and its cargo against ‘perils of the high seas.’  
Whereas the development of fire insurance for property on land 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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focused on the danger presented by a specified cause of loss, 
marine insurance typically provided coverage for all risks 
associated with a particular shipment or voyage.”  (5 New 
Appleman on Insurance Law Library Edition (2023) § 41.01[1], 
fn. omitted.)  “[B]y the middle of the twentieth century, insurers 
adopted the marine insurance approach by offering all-risk 
commercial and homeowners’ property insurance.  The 
operative phrase in such policies is contained in the section 
labeled ‘Perils Insured Against,’ and provides coverage against 
the risk of ‘direct physical loss’ to covered property.”  (Abraham, 
at p. 783, fn. omitted.) 
“As with any insurance, property insurance coverage is 
‘triggered’ by some threshold concept of injury to the insured 
property.  Under narrow coverages like theft, the theft is itself 
the trigger.  Under most coverages, however, the policy 
specifically ties the insurer’s liability to the covered peril having 
some specific effect on the property.  In modern policies, 
especially of the all-risk type, this trigger is frequently ‘physical 
loss or damage’ . . . .”  (10A Couch on Insurance, supra, 
§ 148:46.) 
This court has not previously interpreted the phrase 
“physical loss or damage” (or “direct physical loss or damage”) 
as the phrase is commonly used in property insurance policies.  
Even prior to the COVID-19 pandemic, however, the Courts of 
Appeal decided several cases that turned on the meaning of this 
phrase.  Without at this point endorsing their reasoning, we 
summarize the most pertinent of these opinions to provide 
context for the parties’ contentions and our discussion below. 
In one early case, the Court of Appeal considered a 
property insurance policy that “insured plaintiffs against all 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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risks of physical loss of and damage to their dwelling.”  (Hughes 
v. Potomac Ins. Co. (1962) 199 Cal.App.2d 239, 242 (Hughes).)  
The plaintiffs owned a home adjacent to a creek, and one night 
“the earth to the rear of and partially underlying plaintiffs’ 
house slid into the creek, leaving their home standing on the 
edge of and partially overhanging a newly formed 30-foot cliff.  
This landslide resulted in the loss to plaintiffs of a block of earth 
30 feet wide and 100 feet long, and it deprived them of subjacent 
and lateral support essential to the stability of their house.”  (Id. 
at p. 243.)  The insurance company argued it was not 
responsible for the cost of shoring up the hillside because “its 
policy insured the building structure and foundations of 
respondents’ house, but did not insure the soil or land 
underneath the building.”  (Id. at p. 245.) 
The Hughes court disagreed:  “To accept [the insurer’s] 
interpretation of its policy would be to conclude that a building 
which has been overturned or which has been placed in such a 
position as to overhang a steep cliff has not been ‘damaged’ so 
long as its paint remains intact and its walls still adhere to one 
another.  Despite the fact that a ‘dwelling building’ might be 
rendered completely useless to its owners, [the insurer] would 
deny that any loss or damage had occurred unless some tangible 
injury to the physical structure itself could be detected.  
Common sense requires that a policy should not be so 
interpreted in the absence of a provision specifically limiting 
coverage in this manner.  [Plaintiffs] correctly point out that a 
‘dwelling’ or ‘dwelling building’ connotes a place fit for 
occupancy, a safe place in which to dwell or live.  It goes without 
question that [plaintiffs’] ‘dwelling building’ suffered real and 
severe damage when the soil beneath it slid away and left it 
overhanging a 30-foot cliff.  Until such damage was repaired and 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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the land beneath the building stabilized, the structure could 
scarcely be considered a ‘dwelling building’ in the sense that 
rational persons would be content to reside there.”  (Hughes, 
supra, 199 Cal.App.2d at pp. 248–249.) 
Several decades later, a different Court of Appeal 
confronted direct physical loss or damage more directly.  (Ward 
General Ins. Services, Inc. v. Employers Fire Ins. Co. (2003) 
114 Cal.App.4th 548 (Ward).)  Due to human error — “an 
operator inadvertently pressed the ‘delete’ key on the 
keyboard” — the plaintiff suffered a computer “ ‘crash’ ” that 
resulted in the loss of electronically stored data.  (Id. at p. 550 
& fn. 3.)  “Plaintiff incurred extra expenses restoring its data, 
and also suffered the loss of business income because of the 
disruption.”  (Id. at p. 550.)  The plaintiff sought insurance 
coverage on the theory that its lost data constituted a “ ‘direct 
physical loss.’ ”  (Ibid.)  The parties did not submit “any evidence 
suggesting that the phrase ‘direct physical loss’ has some 
technical meaning or special meaning given by usage.”  (Id. at 
p. 556.)  The court therefore construed the terms in accordance 
with their ordinary meanings:  “The word ‘physical’ is defined, 
inter alia, as ‘having material existence’ and ‘perceptible esp. 
through the senses and subject to the laws of nature.’  (Merriam-
Webster’s Collegiate Dict. (10th ed. 1993) p. 875.)  ‘MATERIAL 
implies formation out of tangible matter.’  (Id. at p. 715.)  
‘Tangible’ means, inter alia, ‘capable of being perceived esp. by 
the sense of touch.’  (Id. at p. 1200.)  Thus, relying on the 
ordinary and popular sense of the words, we say with confidence 
that the loss of plaintiff’s database does not qualify as a ‘direct 
physical loss,’ unless the database has a material existence, 
formed out of tangible matter, and is perceptible to the sense of 
touch.”  (Ward, at p. 556.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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Because a database consists of organized information, and 
therefore “the loss of a database is the loss of organized 
information,” the Ward court held that the loss of the database 
was not a direct physical loss.  (Ward, supra, 114 Cal.App.4th at 
p. 556.)  “Plaintiff did not lose the tangible material of the 
storage medium.  Rather, plaintiff lost the stored information.  
The sequence of ones and zeros can be altered, rearranged, or 
erased, without losing or damaging the tangible material of the 
storage medium.”  (Ibid.) 
This requirement of tangible or physical harm took on 
similar importance in Doyle v. Fireman’s Fund Ins. Co. (2018) 
21 Cal.App.5th 33 (Doyle).  In that case, a wine collector 
purchased “close to $18 million of purportedly rare, vintage 
wine,” but it turned out to be counterfeit.  (Id. at p. 36.)  The 
collector’s insurance policy covered “ ‘direct and accidental loss 
or damage to covered property.’ ”  (Id. at p. 38.)  The court 
proceeded from the premise that “ ‘property insurance is 
insurance of property.  While in the modern setting “just about 
any type of property” may be insured, the insured item must 
nonetheless be property.’ ”  (Ibid.)  “ ‘Given this premise, the 
threshold requirement for recovery under a contract of property 
insurance is that the insured property has sustained physical 
loss or damage.  [Citation.]  “The requirement that the loss be 
‘physical,’ given the ordinary definition of that term is widely 
held to exclude alleged losses that are intangible or incorporeal, 
and, thereby, to preclude any claim against the property insurer 
where the insured merely suffers a detrimental economic impact 
unaccompanied by a distinct, demonstrable, physical alteration 
of the property.” ’ ”  (Ibid.)  The same principle applied even 
though the collector’s insurance policy did not use the word 
“physical” in its grant of coverage:  “[G]iven the fundamental 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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nature of property insurance, the policy [the collector] 
purchased only insured him against potential harms to the wine 
itself, such as fire, theft, or abnormal spoilage; [the collector] did 
not insure himself against any potential financial losses.”  (Id. 
at p. 39.)  Thus, “because nothing happened to the covered 
property (i.e., the wine that [the collector] purchased and 
insured),” the property did not suffer any loss and the insurer 
properly denied coverage.  (Id. at p. 38.) 
In MRI Healthcare Center of Glendale, Inc. v. State Farm 
General Ins. Co. (2010) 187 Cal.App.4th 766 (MRI Healthcare), 
the Court of Appeal discussed some of these same concepts.  A 
plaintiff purchased an insurance policy providing coverage for 
“ ‘accidental direct physical loss to business personal property,’ ” 
as well as lost business income as a result of “accidental direct 
physical loss to property . . . caused by an insured loss.”  (Id. at 
p. 771, italics omitted.)  The plaintiff, a healthcare provider, was 
required to “demagnetize[]” or “ ‘ramp[] down’ ” its magnetic 
resonance imaging (MRI) machine in order to facilitate repairs 
to the roof of the building in which it was housed.  (Id. at p. 770.)  
“Once the machine was ramped down, it failed to ramp back up.  
This failure purportedly constituted ‘damage’ to the MRI 
machine and resulted in loss of business income to [the 
plaintiff].”  (Ibid.) 
To determine coverage, the MRI Healthcare court looked 
to general principles described in the Couch treatise:  “In 
modern policies, ‘ “physical loss or damage” ’ is typically the 
trigger for coverage.  [Citation.]  Clearly, this threshold is met 
when an item of tangible property has been ‘physically altered’ 
by perils such as fire or water.  [Citation.]  However, serious 
questions crop up in instances when the structure of the 
property itself is unchanged to the naked eye and the insured 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
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claims its usefulness for its normal purposes has been destroyed 
or reduced.  [Citation.]  That the loss needs to be ‘physical,’ given 
the ordinary meaning of the term, is ‘widely held to exclude 
alleged losses that are intangible or incorporeal, and, thereby, 
to preclude any claim against the property insurer when the 
insured merely suffers a detrimental economic impact 
unaccompanied by a distinct, demonstrable, physical alteration 
of the property.’ ”  (MRI Healthcare, supra, 187 Cal.App.4th at 
pp. 778–779, quoting 10A Couch on Insurance, supra, § 148:46.)  
The court continued, “A direct physical loss ‘contemplates an 
actual change in insured property then in a satisfactory state, 
occasioned by accident or other fortuitous event directly upon 
the property causing it to become unsatisfactory for future use 
or requiring that repairs be made to make it so.’ ”  (MRI 
Healthcare, at p. 779, quoting AFLAC Inc. v. Chubb & Sons, Inc. 
(Ga.Ct.App. 2003) 581 S.E.2d 317, 319.) 
In the court’s view, “there was no ‘distinct, demonstrable 
[or] physical alteration’ of the MRI machine.”  (MRI Healthcare, 
supra, 187 Cal.App.4th at p. 779.)  “The failure of the MRI 
machine to satisfactorily ‘ramp up’ emanated from the inherent 
nature of the machine itself rather than actual physical 
‘damage.’  As [the insurer] suggests, the MRI machine was not 
‘damaged’ in the ordinary meaning of the word.  In effect, the 
machine was turned off and could not be turned back on.  This 
does not constitute a compensable ‘direct physical loss’ under 
the policy.”  (Id. at p. 780.)  “For there to be a ‘loss’ within the 
meaning of the policy, some external force must have acted upon 
the insured property to cause a physical change in the condition 
of the property, i.e., it must have been ‘damaged’ within the 
common understanding of that term.”  (Ibid.)  The plaintiff 
“failed to show any ‘physical loss’ occurred to the MRI machine” 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
17 
and therefore could not recover under its insurance policy.  
(Ibid.) 
B.  The Conflict Underlying the Certified Question 
Against this backdrop, California courts confronted 
insurance claims arising from the COVID-19 pandemic.  In its 
certification order, the Ninth Circuit identified a split in the 
California Courts of Appeal regarding the prospect for insurance 
coverage for pandemic-related losses.  (Another Planet, supra, 
56 F.4th at pp. 733–734.)  United Talent Agency v. Vigilant 
Ins. Co. (2022) 77 Cal.App.5th 821 (United Talent) held, as a 
matter of law, that “the presence or potential presence of the 
[COVID-19] virus does not constitute direct physical damage or 
loss.”  (Id. at p. 838.)  By contrast, Marina Pacific Hotel & 
Suites, LLC v. Fireman’s Fund Ins. Co. (2022) 81 Cal.App.5th 96 
(Marina Pacific) held that a plaintiff had sufficiently alleged 
direct physical loss or damage based on the presence of the 
COVID-19 virus.  (Id. at pp. 108–109.)  We examine each opinion 
in greater detail below. 
In United Talent, the plaintiff was a large talent agency 
representing various professionals in the entertainment 
industry.  (United Talent, supra, 77 Cal.App.5th at p. 824.)  It 
purchased property insurance from Vigilant, in a form 
substantially similar to Another Planet’s policy.  (Id. at pp. 824–
825.)  At the outset of the COVID-19 pandemic, government 
closure orders impaired the talent agency’s ability to use its 
insured locations.  (Id. at p. 826.)  The orders also caused the 
cancellation of live events and motion picture and television 
productions.  (Ibid.)  The talent agency suffered lost profits, lost 
commissions, and lost business opportunities in excess of 
$150 million.  (Id. at p. 825.)  Vigilant denied the talent agency’s 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
18 
insurance claim, and the trial court sustained Vigilant’s 
demurrer to the talent agency’s subsequent complaint.  (Id. at 
pp. 826, 828.) 
On appeal, the talent agency offered “two theories for why 
its losses were covered under the business expense provisions.  
First, [the talent agency] contend[ed] that the ‘danger posed by’ 
the virus, which gave rise to the closure orders and other 
restrictions, caused ‘physical loss’ because it ‘limited [the 
agency’s] use of and operations at its insured locations,’ 
including dependent business premises, such as concert venues, 
thus ‘rendering them unusable for their intended purposes.’  
Second, [the talent agency] assert[ed] that the virus itself in or 
around [the agency’s] insured locations caused ‘physical 
damage.’ ”  (United Talent, supra, 77 Cal.App.5th at pp. 829–
830.) 
The United Talent court relied on MRI Healthcare, supra, 
187 Cal.App.4th 766, and an earlier COVID-19 insurance 
opinion in Inns-by-the-Sea v. California Mutual Ins. Co. (2021) 
71 Cal.App.5th 688 (Inns-by-the-Sea), to discern the scope of the 
talent 
agency’s 
insurance 
coverage, 
particularly 
the 
requirement of direct physical loss or damage.  (United Talent, 
supra, 77 Cal.App.5th at p. 830.)  Initially, the court noted, “In 
the wake of the COVID-19 pandemic, many insureds have 
asserted arguments similar to [the agency’s], and the majority 
of courts have rejected them.  It is now widely established that 
temporary loss of use of a property due to pandemic-related 
closure orders, without more, does not constitute direct physical 
loss or damage.”  (Id. at pp. 830–831.)  In that situation, an 
insured “ ‘cannot reasonably allege that the presence of the 
COVID-19 virus on its premises is what caused the premises to 
be uninhabitable or unsuitable for their intended purpose.’ ”  
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
19 
(Id. at p. 831.)  “[E]ven if [the insured] had eradicated the virus 
by thoroughly sterilizing its properties, ‘[the insured] would still 
have continued to incur a suspension of operations because the 
Orders would still have been in effect and the normal 
functioning of society still would have been curtailed.’ ”  (Id. at 
p. 832.)  The loss alleged by the talent agency “ ‘was not a 
physical deprivation of property, but rather an interruption in 
business operations.’ ”  (Id. at p. 833.)  The “ ‘mere loss of use of 
physical property to generate business income, without any 
other physical impact on the property, does not give rise to 
coverage for direct physical loss.’ ”  (Id. at p. 834.)1 
The United Talent court next confronted the talent 
agency’s alternative argument, that “the physical presence of 
the virus on [its] insured premises constituted ‘physical 
damage.’ ”  (United Talent, supra, 77 Cal.App.5th at p. 834.)  
The agency contended its allegations were “akin to cases that 
‘have recognized that “direct physical loss or damage to 
property” occurs’ in the presence of contaminants such as 
bacteria, smoke, asbestos, fumes, or mold.”  (Ibid.)  The court 
disagreed, identifying numerous cases from other jurisdictions 
that had rejected similar arguments.  (Id. at pp. 835–836 & 
fn. 10.)  It quoted a federal appellate court’s observation that, 
“ ‘[w]hile the impact of the virus on the world . . . can hardly be 
overstated, its impact on physical property is inconsequential:  
deadly or not, it may be wiped off surfaces using ordinary 
 
1  
Shortly before United Talent, the court in Musso & Frank 
Grill Co., Inc. v. Mitsui Sumitomo Ins. USA, Inc. (2022) 
77 Cal.App.5th 753, 756, 759 also followed Inns-by-the-Sea and 
held that government closure orders did not trigger coverage for 
pandemic-related 
losses. 
 
(See United 
Talent, 
supra, 
77 Cal.App.5th at p. 831, fn. 7.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
20 
cleaning materials, and it disintegrates on its own in a matter 
of days.’ ”  (Id. at p. 835.)  The United Talent court also repeated 
the following hypothetical, originally offered by a federal district 
court:  “ ‘If, for example, a sick person walked into one of 
Plaintiffs’ restaurants and left behind COVID-19 particulates 
on a countertop, it would strain credulity to say that the 
countertop was damaged or physically altered as a result.’ ”  
(Ibid.)  The United Talent court reasoned that “the virus exists 
worldwide wherever infected people are present, it can be 
cleaned from surfaces through general disinfection measures, 
and transmission may be reduced or rendered less harmful 
through practices unrelated to the property, such as social 
distancing, vaccination, and the use of masks.  Thus, the 
presence of the virus does not render a property useless or 
uninhabitable, even though it may affect how people interact 
with and within a particular space.”  (Id. at p. 838.)  Thus, the 
court concluded that the talent agency “has not established that 
the presence of the virus constitutes physical damage to insured 
property.”  (Id. at p. 840.) 
Several months later, the Marina Pacific court disagreed.  
(Marina Pacific, supra, 81 Cal.App.5th at pp. 111–112.)  The 
plaintiffs in Marina Pacific were the owners of a hotel and 
adjacent restaurant who alleged that “the COVID-19 virus was 
present on, and had physically transformed, portions of [their] 
insured properties,” thus causing direct physical loss or damage 
and triggering coverage for their pandemic-related economic 
losses.  (Id. at p. 99.)  In large part, the owners’ insurance policy 
was the same as the insurance policy obtained by Another 
Planet.  (Id. at pp. 99–100.)  But the policy also provided 
coverage for losses caused by a “ ‘communicable disease event,’ ” 
which was defined as “ ‘an event in which a public health 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
21 
authority 
has 
ordered 
that 
a 
location 
be 
evacuated, 
decontaminated, or disinfected due to the outbreak of a 
communicable disease at such location.’ ”  (Id. at p. 100, boldface 
omitted.)  The insurer promised to pay “ ‘for direct physical loss 
or damage’ to insured property ‘caused by or resulting from a 
covered communicable disease event,’ including costs necessary 
to repair or rebuild insured property damaged or destroyed by 
the communicable disease and to ‘[m]itigate, contain, remediate, 
treat, clean, detoxify, disinfect, neutralize, cleanup, remove, 
dispose of, test for, monitor and assess the effects [of] the 
communicable disease.’  In addition, business interruption 
coverage was provided for suspension of operations during a 
period of restoration, provided the suspension was ‘due to direct 
physical loss or damage to property at a location caused by or 
resulting from a covered communicable disease event.’ ”  (Ibid.) 
The Marina Pacific plaintiffs alleged that “the COVID-19 
virus does not simply live on the surface of objects.  Rather, ‘it 
also actually bonds and/or adheres to such objects through 
physico-chemical reactions involving, inter alia, cells and 
surface proteins’ and ‘caus[es], among other things, a distinct, 
demonstrable or physical alteration to property.’ ”  (Marina 
Pacific, supra, 81 Cal.App.5th at p. 101.)  They further alleged 
that the virus was present on various objects at the insured 
properties and in the air.  (Ibid.)  Moreover, they alleged, “in 
response to multiple employees of [the hotel] testing positive, 
‘various public health authorities have ordered that [the hotel] 
be evacuated, decontaminated, or disinfected,’ and specifically 
alleged one employee had been ordered by the Los Angeles 
County Department of Health–Environmental Health Division 
to ‘evacuate the hotel and quarantine.’ ”  (Id. at pp. 101–102.)  
“The physical loss or damage to property, the insureds alleged, 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
22 
required the closure or suspension of operations at [the hotel 
and restaurant] or portions of those properties at various times 
and caused them to incur extra expense, adopt remedial and 
precautionary measures ‘to attempt to restore and remediate 
the air and surfaces at the Insured Properties, dispose of 
property damaged by COVID-19 and limit operations at the 
Insured Properties.’ ”  (Id. at p. 102.)  The insurer successfully 
demurred on the ground that these allegations did not state a 
claim for coverage, and the plaintiffs appealed.  (Id. at pp. 103–
104.) 
On appeal, the Marina Pacific court acknowledged MRI 
Healthcare’s interpretation of direct physical loss or damage as 
requiring “ ‘a “distinct, demonstrable, physical alteration” of the 
property.’ ”  (Marina Pacific, supra, 81 Cal.App.5th at p. 107.)  
The court also acknowledged the plaintiffs’ criticism of MRI 
Healthcare’s interpretation, but it found it unnecessary to 
resolve the dispute.  (Id. at pp. 107–108.)  The court held that 
the plaintiffs had alleged direct physical loss or damage to 
property even under MRI Healthcare’s interpretation of the 
phrase.  (Id. at p. 108.)  It emphasized that the plaintiffs had 
alleged the COVID-19 virus was present on surfaces throughout 
their properties, the virus “bonds to surfaces through 
physicochemical reactions involving cells and surface proteins, 
which transform the physical condition of the property,” and the 
presence of the COVID-19 virus caused the plaintiffs to “close or 
suspend operations in whole or in part at various times and 
incur[] extra expense as they adopted measures to restore and 
remediate the air and surfaces at the insured properties.  The 
[plaintiffs] specifically alleged they were required to ‘dispose of 
property damaged by COVID-19 and limit operations at the 
Insured Properties.’ ”  (Id. at pp. 108–109.)  The presence of the 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
23 
virus was therefore a “distinct, demonstrable, physical 
alteration of the property,” which “caused a slowdown in, or 
cessation of, the operation of the insureds’ business while the 
covered property was restored or remediated, thereby triggering 
their business interruption (‘business income and extra 
expense’) coverage.”  (Id. at p. 109.) 
The Marina Pacific court “recognize[d] this conclusion is 
at odds with almost all (but not all) decisions considering 
whether business losses from the pandemic are covered by the 
business owners’ first person commercial property insurance.”  
(Marina Pacific, supra, 81 Cal.App.5th at p. 109.)  It had three 
primary responses.  First, the court noted that “the pleading 
rules in federal court are significantly different from those we 
apply when evaluating a trial court order sustaining a 
demurrer.”  (Ibid.)  California courts do not evaluate the 
plausibility of a plaintiff’s allegations when determining 
whether to accept them as true.  (Ibid.)  Thus, the court 
accepted — “ ‘however improbable’ ” — the owners’ allegation 
that “the COVID-19 virus alters ordinary physical surfaces 
transforming them into fomites[2] through physicochemical 
processes, making them dangerous and unusable for their 
intended purposes unless decontaminated.”  (Id. at p. 110.)  
Second, the court observed that the allegations considered by 
many courts were materially different because they relied on 
government closure orders, rather than the presence of the virus 
itself, as the cause of the insureds’ losses.  (Id. at pp. 110–111.)  
 
2  
A fomite is “ ‘an object . . . that may be contaminated with 
infectious agents (such as bacteria or viruses) and serve in their 
transmission.’ ”  (United Talent, supra, 77 Cal.App.5th at p. 826, 
fn. 5.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
24 
Third, the court emphasized that the insurance policy at issue 
specifically included coverage for communicable diseases, in its 
communicable disease event coverage extension.  (Id. at p. 112.)  
The language of this extension “explicitly contemplates that a 
communicable disease, such as a virus, can cause damage or 
destruction to property and that such damage constitutes direct 
physical loss or damage as defined in the policy.”  (Ibid.)  The 
court explained, “Construing the policy provisions together, as 
we must, this language precludes the interpretation that direct 
physical loss or damage categorically cannot be caused by a 
virus.”  (Ibid.)3 
 
3  
The court in Amy’s Kitchen, Inc. v. Fireman’s Fund Ins. 
Co. (2022) 83 Cal.App.5th 1062, 1068 (Amy’s Kitchen) examined 
a communicable disease event coverage extension in some 
detail.  The court noted that the extension provided coverage for 
“ ‘direct physical loss or damage’ ” to property, including costs 
incurred to “ ‘[m]itigate, contain, remediate, treat, clean, 
detoxify, disinfect, neutralize, cleanup, remove, dispose of, test 
for, monitor, and assess the effects [of] the communicable 
disease.’ ”  (Ibid., boldface omitted.)  It rejected the insurer’s 
argument that such costs were not recoverable “unless the 
communicable disease event physically altered the property.”  
(Id. at p. 1069.)  The court reasoned that the communicable 
disease event extension was unlike the policy provisions where 
courts had found a physical alteration requirement.  (Ibid.)  
Instead, “[o]n reading the phrase ‘direct physical loss or damage’ 
as it appears in the extension, a reasonable layperson would 
assume that the phrase includes costs incurred for each of the 
three purposes specified in” the extension itself.  (Id. at p. 1070.)  
Thus, the court held, “[T]he need to clean or disinfect infected or 
potentially infected covered property constitutes ‘direct physical 
loss or damage’ of that property within the meaning of the 
policy.”  (Id. at p. 1071.)  However, the plaintiff had not alleged 
a “ ‘communicable disease event’ ” sufficient to trigger coverage, 
 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
25 
The Marina Pacific court disagreed with United Talent 
that the ability to remove the COVID-19 virus from surfaces 
precluded coverage.  (Marina Pacific, supra, 81 Cal.App.5th at 
p. 111.)  It stated, “Even if there had been evidence subject to 
proper judicial notice to establish that disinfecting repaired any 
alleged property damage, it would not resolve whether 
contaminated property had been damaged in the interim, nor 
would it alleviate any loss of business income or extra expenses.  
As the insureds argue on appeal, the duration of exposure may 
be relevant to the measure of policy benefits; it does not negate 
coverage.”  (Id. at p. 112.) 
Subsequent California decisions have offered variations 
on the themes of United Talent and Marina Pacific.  Several 
courts followed United Talent (and the earlier Inns-by-the-Sea) 
to hold that government closure orders alone are insufficient to 
trigger coverage because they do not cause direct physical loss 
or damage to property.  (See Starlight Cinemas, Inc. v. 
Massachusetts Bay Ins. Co. (2023) 91 Cal.App.5th 24, 38–39 
(Starlight Cinemas); Tarrar Enterprises, Inc. v. Associated 
Indemnity Corp. (2022) 83 Cal.App.5th 685, 687–688; Apple 
Annie, LLC v. Oregon Mutual Ins. Co. (2022) 82 Cal.App.5th 
919, 923, 934 (Apple Annie).)  Another court extended this 
principle.  (See Best Rest Motel, Inc. v. Sequoia Ins. Co. (2023) 
88 Cal.App.5th 696 (Best Rest).)  It held that even if the COVID-
19 virus was present at an insured property, the plaintiff must 
 
i.e., “ ‘an event in which a public health authority has ordered 
that a location be evacuated, decontaminated, or disinfected due 
to the outbreak of a communicable disease at such location.’ ”  
(Ibid.)  The Amy’s Kitchen court therefore held that the trial 
court properly sustained the insurer’s demurrer, but the 
plaintiff should have been given leave to amend.  (Id. at p. 1072.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
26 
show the presence of the virus — rather than public health 
orders or negative economic conditions overall — caused its 
losses.  (Id. at p. 706.)  The court explained, “The dispositive 
issue in this case is not whether there was COVID-19 in the 
hotel, or whether fomites are a form of physical damage, but 
instead is whether the presence of COVID-19 in or on the 
insured property caused the hotel’s loss of income.”  (Ibid.)  It 
held that the plaintiff had not created a triable issue of fact that 
the virus itself caused its losses:  “[E]ven if [the plaintiff] had 
eradicated all traces of COVID-19 from its premises, it still 
would have suffered the same lost income.”  (Id. at p. 708.) 
By contrast, Coast Restaurant Group, Inc. v. Amguard 
Ins. Co. (2023) 90 Cal.App.5th 332, 340 (Coast Restaurant) held 
that public health orders could trigger coverage in and of 
themselves.  The orders “physically affected the property 
because they affected how the physical space of the property and 
the physical objects (chairs, tables, etc.) in that space could or 
could not be used,” and they constituted a loss because “the 
governmental 
restrictions . . . deprived 
the 
appellant 
of 
important property rights in the covered property.”  (Ibid.)  
Nonetheless, despite the possibility of coverage, the court held 
that the plaintiff could not prevail based on specific policy 
exclusions for loss or damage caused by “ ‘enforcement of any 
ordinance or law’ ” or by “ ‘[a]ny virus, bacterium or other 
microorganism that induces or is capable of inducing physical 
distress, illness or disease.’ ”  (Id. at pp. 343–344.) 
In two later cases, the Marina Pacific court reaffirmed its 
holding that the presence of the COVID-19 virus on an insured’s 
property may constitute direct physical loss or damage to 
property.  (Shusha, Inc. v. Century-National Ins. Co. (2022) 
87 Cal.App.5th 250, 264, review granted Apr. 19, 2023, S278614 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
27 
(Shusha); see JRK Property Holdings, Inc. v. Colony Ins. Co. 
(2023) 96 Cal.App.5th 1, 4, review granted Dec. 20, 2023, 
S282657.)  The court confirmed its view that a plaintiff “is not 
required to provide authority at the pleading stage to support 
its position that contamination with the COVID-19 virus caused 
damage to the surfaces in its premises.”  (Shusha, at p. 265.)  
Importantly, the court extended Marina Pacific’s interpretation 
of direct physical loss or damage even to policies that, unlike 
Marina Pacific, did not extend special coverage to communicable 
disease events.  (Id. at pp. 265–266.)  There was “a sufficient, 
independent basis for lost business income coverage under the 
policy provision for losses due ‘to the necessary suspension of 
[the insured’s] operation during the period of restoration arising 
from direct physical loss or damage to [covered] property.’ ”  
(Ibid.) 
A different court likewise followed Marina Pacific and 
held that allegations of molecular interaction between the 
COVID-19 virus and the surfaces of insured property were 
sufficient to allege direct physical loss or damage.  (San Jose 
Sharks, LLC v. Superior Court (2023) 98 Cal.App.5th 158, 168 
(San Jose Sharks).)  But it determined that the policy’s 
contamination exclusion, which “unambiguously exclude[d] 
physical loss or damage in the form of viral contamination from 
the scope of coverage,” largely precluded recovery.  (Id. at 
p. 171.) 
Reviewing a number of these decisions, the court in 
Endeavor Operating Co., LLC v. HDI Global Ins. Co. (2023) 
96 Cal.App.5th 420, review granted December 13, 2023, 
S282533 (Endeavor), disagreed with Marina Pacific and Shusha 
that the presence of COVID-19 on an insured’s property, and 
allegations that COVID-19 adsorbed or interacted with surfaces 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
28 
of the property, were sufficient to trigger coverage.  (Id. at 
pp. 441–442.)  The Endeavor court explained, “[T]he type of viral 
interaction with surfaces alleged by Endeavor (and accepted as 
true) does not, as a matter of law, satisfy the default definition 
of ‘direct physical harm or loss to property.’ ”  (Id. at p. 442, fn. 
omitted.)  The court further disagreed with Coast Restaurant 
that public health orders, in and of themselves, could constitute 
a physical loss to property.  It observed, “Every other California 
decision has rejected that view and instead held that ‘ “direct 
physical loss or damage” ’ requires ‘physical alteration’ of the 
property, such that mere loss of the property’s use will generally 
not suffice — except when the policy explicitly includes loss of 
use due to a virus as qualifying for coverage.”  (Id. at p. 434.) 
Still another court agreed in principle that a plaintiff “may 
fall within the insurance property damage coverage provisions 
by showing the COVID-19 virus altered its property and caused 
physical damage.”  (Santa Ynez Band of Chumash Mission 
Indians v. Lexington Ins. Co. (2023) 90 Cal.App.5th 1064, 1070, 
review granted July 12, 2023, S280353.)  But, in the context of 
a motion for summary judgment, the court held that a plaintiff 
must show “that the virus actually caused physical damage to 
its property.”  (Id. at p. 1072.)  “If there is alteration of property 
without physical damage, then there is no proof of an economic 
loss that can be compensated under the policy.  The ordinary 
meaning of the term ‘physical damage to property’ does not 
include a virus on the property.”  (Ibid.)  The plaintiff, which 
owned and operated a casino and resort, failed to make a 
sufficient showing of damage.  (Id. at p. 1073.)  It did not provide 
evidence, “for example, that its carpeting, gaming tables, 
gambling devices, and playing cards had to be replaced or could 
not be used again.”  (Ibid.)  The casino and resort’s “physical 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
29 
building structure remained intact and was not changed.  
[Plaintiff’s] employees worked there before, during, and after 
the shutdown. . . .  There was no showing of the type of damage 
that policyholders could reasonably expect to be compensated 
for, such as alteration causing damage by fire, flood, or by 
physical impact to the property.”  (Ibid.) 
Lastly, the court in John’s Grill, Inc. v. The Hartford 
Financial Services Group, Inc. (2022) 86 Cal.App.5th 1195, 
1211, review granted March 29, 2023, S278481, sidestepped 
these disputes and found coverage under a policy’s “Limited 
Fungi or Virus Coverage Endorsement.”  The court interpreted 
the triggering language for coverage under this endorsement as 
“includ[ing] but . . . not restricted to ‘direct’ and ‘physical’ forms 
of loss or damage.”  (Id. at p. 1215.)  While the policy placed 
certain conditions on coverage, the court found the operative 
paragraph “indecipherable when applied to viruses.”  (Id. at 
p. 1221.)  These conditions rendered any coverage under the 
endorsement illusory, and therefore they could not be enforced.  
(Id. at p. 1224.) 
C.  The Parties’ Positions 
As noted, the Ninth Circuit posed the following question:  
“Can the actual or potential presence of the COVID-19 virus on 
an insured’s premises constitute ‘direct physical loss or damage 
to property’ for purposes of coverage under a commercial 
property insurance policy?”  (Another Planet, supra, 56 F.4th at 
p. 734.)  The parties, naturally, disagree about the correct 
answer. 
Another Planet urges an answer in the affirmative.  It 
contends the COVID-19 virus causes both direct physical 
damage and direct physical loss to property.  It notes that the 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
30 
COVID-19 virus is a physical substance, and “[l]ike any physical 
substance, it interacts with its environment, including the cells 
it infects, and the air and other matter it contaminates.”  (Fn. 
omitted.)  The COVID-19 virus bonds or attaches to particles in 
the air and the surfaces of objects.  In Another Planet’s view, 
when the COVID-19 virus “attaches or binds to surfaces and 
objects, it converts those surfaces and objects to active 
fomites. . . .  People can become infected by touching surfaces 
where [the COVID-19 virus] is present, then touching their eyes, 
nose, or mouth.  The physical alteration from an object to a 
fomite makes physical contact with those previously safe, inert 
surfaces (e.g., handrails, doorknobs, bathroom fixtures) unsafe.”  
(Fns. omitted.)  Thus, according to Another Planet, the COVID-
19 virus contaminates physical property and physically 
damages it.  In addition, Another Planet argues the presence of 
the COVID-19 virus causes direct physical loss to property 
because it renders property unusable for its intended use.  It 
relies on Hughes, supra, 199 Cal.App.2d at page 249 for the 
proposition that a property suffers direct physical loss when 
“rational persons” would not “be content” to use the property for 
its intended purpose, given the risk of contracting the COVID-
19 illness.  Another Planet criticizes MRI Healthcare for 
allegedly equating physical loss with physical damage and 
requiring a “ ‘distinct, demonstrable, physical alteration’ of the 
property” for both.  (MRI Healthcare, supra, 187 Cal.App.4th at 
p. 779, quoting 10A Couch on Insurance, supra, § 148:46.)  For 
both physical loss and physical damage, Another Planet relies 
heavily on the opinion of the Supreme Court of Vermont in 
Huntington Ingalls Industries, Inc. v. Ace American Ins. Co. (Vt. 
2022) 287 A.3d 515 (Huntington Ingalls), which held that a 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
31 
plaintiff had stated a claim for insurance coverage based on the 
presence of the COVID-19 virus at its insured properties.   
Vigilant disagrees, citing what it describes as the 
overwhelming majority of state and federal courts to consider 
the issue.  It argues that “because viral particles resting on inert 
physical property do not cause any structural alteration to the 
property, the temporary presence of such particles does not 
qualify as ‘direct physical damage or loss’ to the property as a 
matter of law.”  Vigilant acknowledges that “when viral particles 
contaminate an inert surface . . . the surface may become a 
vector of transmission known as a ‘fomite.’  [Citation.]  But when 
an object becomes a ‘fomite,’ the object itself has not physically 
changed in any way.  The word ‘fomite’ is merely a label used to 
describe an object where viral particles rest and can be 
transferred to other humans who touch the object.”  Vigilant 
contends that such property is not damaged; it need not be 
replaced or repaired.  At most, it should be cleaned, but for 
Vigilant such a cleaning “does not constitute a ‘repair’ of broken 
property any more than does mopping up spilled water or 
brushing off a dusty tabletop.”  Vigilant defends MRI Healthcare 
and asserts that “limitations on the use of undamaged property 
that remains in the insured’s possession do not qualify as a 
‘direct physical loss.’ ”  (Italics omitted.)  In Vigilant’s view, the 
fact that the virus’s physical presence caused a loss of use is 
insufficient without a physical loss:  “[T]he word ‘physical’ 
modifies ‘loss to property,’ not the cause of the loss.”  Vigilant 
allows that a physical force might render property “entirely 
‘unusable or uninhabitable’ for any purpose,” thus causing a 
physical loss, but it contends such a situation is entirely 
distinguishable from the “temporary presence of” the COVID-19 
virus.   
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
32 
D.  Principles of Interpretation 
The Ninth Circuit’s question and the parties’ arguments 
require us to interpret the phrase “direct physical loss or 
damage to property” in the insurance policy Vigilant issued to 
Another Planet.  “As a question of law, the interpretation of an 
insurance policy is reviewed de novo under well-settled rules of 
contract interpretation.”  (E.M.M.I. Inc. v. Zurich American 
Ins. Co. (2004) 32 Cal.4th 465, 470.)  “ ‘ “While insurance 
contracts have special features, they are still contracts to which 
the ordinary rules of contractual interpretation apply.”  
[Citation.]  Thus, “the mutual intention of the parties at the time 
the contract is formed governs interpretation.”  [Citation.]  If 
possible, we infer this intent solely from the written provisions 
of the insurance policy.  [Citation.]  If the policy language ‘is 
clear and explicit, it governs.” ’ ”  (Yahoo Inc. v. National Union 
Fire Ins. Co. (2022) 14 Cal.5th 58, 67 (Yahoo).) 
“ ‘The “clear and explicit” meaning of these provisions, 
interpreted in their “ordinary and popular sense,” unless “used 
by the parties in a technical sense or a special meaning is given 
to them by usage” [citation], controls judicial interpretation.  
[Citation.]’  [Citations.]  A policy provision will be considered 
ambiguous when it is capable of two or more constructions, both 
of which are reasonable.  [Citation.]  But language in a contract 
must be interpreted as a whole, and in the circumstances of the 
case, and cannot be found to be ambiguous in the abstract.  
[Citation.]  Courts will not strain to create an ambiguity where 
none exists.”  (Waller v. Truck Ins. Exchange, Inc. (1995) 
11 Cal.4th 1, 18–19.)  “Thus, if the meaning a layperson would 
ascribe to contract language is not ambiguous, we apply that 
meaning.”  (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 
822 (AIU Insurance).) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
33 
E.  Plain Meaning 
Another Planet’s insurance policy uses the phrase “direct 
physical loss or damage” several times, but it is not defined in 
the policy itself.  It appears undisputed that the adjectives 
“ ‘direct’ ” and “ ‘physical’ ” apply to “ ‘damage,’ ” as well as 
“ ‘loss.’ ”  (Ward, supra, 114 Cal.App.4th at p. 554.)  It also 
appears undisputed that direct physical loss and direct physical 
damage must differ in their meaning somehow, even if they 
overlap.  (See Starr Surplus Lines Ins. Co. v. Eighth Judicial 
Dist. (Nev. 2023) 535 P.3d 254, 262 (Starr Surplus) [“though the 
disjunctive ‘or’ directs that each word retains its own meaning, 
[citation], they are not wholly ‘distinct concept[s]’ ”].)  We 
therefore examine each phrase in turn. 
1.  Direct Physical Damage to Property 
Notwithstanding the split identified by the Ninth Circuit, 
and the parties’ disagreement regarding the ultimate question 
of insurance coverage here, the available authorities in 
California and elsewhere reflect a substantial degree of 
consensus regarding the meaning of direct physical damage to 
property.  As the Inns-by-the-Sea court noted, “The words in the 
phrase ‘direct physical damage’ all have commonly understood 
meanings.  ‘Physical’ is defined as ‘having material existence:  
perceptible especially through the senses and subject to the laws 
of nature.’  [Citation.]  ‘Direct’ is defined as ‘proceeding from one 
point to another in time or space without deviation or 
interruption,’ ‘stemming immediately from a source,’ and 
‘characterized by close logical, causal, or consequential 
relationship.’  [Citation.]  ‘Damage’ is defined as ‘loss or harm 
resulting from injury to . . . property . . . .’ ”  (Inns-by-the-Sea, 
supra, 71 Cal.App.5th at pp. 699–700.)  Another Planet’s 
preferred authority adopted these same definitions, even as it 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
34 
found for the insured.  (See Huntington Ingalls, supra, 287 A.3d 
at pp. 525–526.) 
It is self-evident, of course, that “property insurance is 
insurance of property.  While in the modern setting ‘just about 
any type of property’ may be insured, the insured item must 
nonetheless be property.  [¶]  Given this premise, the threshold 
requirement for recovery under a contract of property insurance 
is that the insured property has sustained physical loss or 
damage.”  (Simon Marketing, Inc. v. Gulf Ins. Co. (2007) 
149 Cal.App.4th 616, 622–623 (Simon Marketing).)  Thus, for 
direct physical damage to property to occur, the property itself 
must have been physically harmed or impaired.  (See Starr 
Surplus, supra, 535 P.3d at p. 262 [“the plain language of ‘direct 
physical . . . damage to covered property’ requires a material or 
tangible harm or injury directed toward the property itself,” fn. 
omitted].) 
It is also evident, based on the plain meaning of direct 
physical damage, that the general requirement of a distinct, 
demonstrable, physical change or alteration to property applies 
here.  As the Supreme Court of Vermont explained, “We 
conclude that direct physical damage requires a distinct, 
demonstrable, physical change to property.  When we combine 
the definitions of ‘direct,’ ‘physical,’ and ‘damage’ provided 
above, the plain meaning is evident.  The three components — 
immediate or proximate causation, [citation], material force or 
effect, [citation], and injury to property, [citation] — when 
logically construed together require that there be a physical 
alteration to the property itself for damage to occur under the 
policy.  [Citation.]  The addition of ‘distinct’ and ‘demonstrable’ 
to this definition is important because it ‘necessarily implicates 
the insured’s burden of showing that a covered loss has 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
35 
occurred,’ i.e. an articulable change to the property.”  
(Huntington Ingalls, supra, 287 A.3d at p. 527.) 
Such a change or alteration need not be visible to the 
naked eye to constitute direct physical damage to property; 
“alterations at the microscopic level may meet this threshold.”  
(Huntington Ingalls, supra, 287 A.3d at pp. 527–528; see Starr 
Surplus, supra, 535 P.3d at p. 263 [“Both physical loss and 
physical damage can arise from invisible or microscopic 
forces”].)  Instead, it is the effect of the change or alteration of 
the property that is determinative.  If the change or alteration 
causes harm or injury to the property itself, such a change or 
alteration may constitute direct physical damage to property.  
Conversely, if a change or alteration does not cause any damage 
or harm to the property, it does not constitute direct physical 
damage to property.  Many physical forces, such as heat and 
cold, cause physical changes or alterations to property, but these 
changes or alterations do not necessarily cause physical 
damage. 
2.  Direct Physical Loss to Property 
Although the precise meaning of direct physical loss to 
property is more contested, its general scope is readily 
ascertainable.  Loss can simply be a more extreme form of 
damage, but its meaning is also broader.  Referencing a common 
dictionary definition, the Inns-by-the-Sea court explained, 
“ ‘Loss’ is often used to refer to ‘destruction’ and ‘ruin’ [citation], 
but its definition also includes ‘the partial or complete 
deterioration or absence of a physical capability or function,’ ‘an 
instance of losing someone or something,’ and ‘the harm or 
privation resulting from losing or being separated from someone 
or something.’ ”  (Inns-by-the-Sea, supra, 71 Cal.App.5th at 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
36 
p. 705, fn. 18.)  Again, the authority cited by Another Planet is 
generally in accord.  (Huntington Ingalls, supra, 287 A.3d at 
p. 525.) 
The 
pairing 
of 
the 
word 
“physical” 
with 
“loss” 
demonstrates “ ‘there must be some physicality to the loss . . . of 
property — e.g., a physical alteration, physical contamination, 
or 
physical 
destruction.’ ” 
 
(Inns-by-the-Sea, 
supra, 
71 Cal.App.5th at p. 707.)  It also encompasses complete 
physical deprivation or dispossession, such as when property is 
stolen.  (See Apple Annie, supra, 82 Cal.App.5th at p. 929, 
fn. 10.) 
This physicality requirement is reinforced by the 
insurance policy’s reference in its business income and extra 
expense provisions to a “period of restoration” following direct 
physical loss or damage, which includes “the time required to 
[¶] . . . [¶] repair or replace the property.”  This language 
“implies that the ‘loss’ or ‘damage’ that gives rise to Business 
Income coverage has a physical nature that can be physically 
fixed.”  (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 707.)  “The 
definition of ‘period of restoration’ provides an indication that 
the phrase ‘direct physical loss of’ property was not intended to 
include the mere loss of use of physical property to generate 
income, without any other physical impact to property that 
could be repaired, rebuilt or replaced.”  (Id. at p. 708.)  “The 
definition of ‘period of restoration,’ by recognizing there will be 
a period of physical repair to the property, is, at a minimum, 
consistent with requirement of a physical alteration to trigger a 
covered loss.”  (Starlight Cinemas, supra, 91 Cal.App.5th at 
p. 40.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
37 
In describing this physicality requirement, the Couch 
treatise does not note any difference between direct physical 
damage and direct physical loss.  It applies the same “distinct, 
demonstrable, physical alteration” requirement to each:  “The 
requirement that the loss be ‘physical,’ given the ordinary 
definition of that term, is widely held to exclude alleged losses 
that are intangible or incorporeal and, thereby, to preclude any 
claim against the property insurer when the insured merely 
suffers a detrimental economic impact unaccompanied by a 
distinct, demonstrable, physical alteration of the property.”  
(10A Couch on Insurance, supra, § 148:46, fns. omitted.)  
Another treatise echoes this description:  “The requirement that 
the loss or damage be ‘physical’ therefore has been found to 
preclude coverage for losses that are solely intangible or 
incorporeal; for example, an economic loss unaccompanied by a 
distinct physical alteration to property.”  (5 New Appleman on 
Insurance Law Library Edition, supra, § 46.03[2].)   
Prior to the COVID-19 pandemic, several California courts 
likewise adopted this description of direct physical loss to 
property.  (See, e.g., Doyle, supra, 21 Cal.App.5th at p. 38; MRI 
Healthcare, supra, 187 Cal.App.4th at p. 779; Simon Marketing, 
supra, 149 Cal.App.4th at pp. 622–623.)  It has also been widely 
adopted in cases rejecting coverage for pandemic-related losses.  
(See, e.g., Endeavor, supra, 96 Cal.App.5th at p. 440, review 
granted; Starlight Cinemas, supra, 91 Cal.App.5th at p. 38; 
Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 706.)  Even cases 
finding the possibility of coverage have assumed this description 
applies.  (See, e.g., San Jose Sharks, supra, 98 Cal.App.5th at 
p. 168; Shusha, supra, 87 Cal.App.5th at p. 264, review granted; 
Marina Pacific, supra, 81 Cal.App.5th at p. 108.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
38 
The longstanding California view that direct physical loss 
to property requires a distinct, demonstrable, physical 
alteration of property is correct.  But this requirement is not as 
restrictive as the Couch treatise has interpreted it.  The Couch 
treatise places its description in opposition to cases “allowing 
coverage based on physical damage despite the lack of physical 
alteration of the property” including one where “the 
uninhabitability of the property was due to the fact that gasoline 
vapors from adjacent property had infiltrated and saturated the 
insured building.”  (10A Couch on Insurance, supra, § 148:46, 
citing Western Fire Ins. Co. v. First Presbyterian Church (Colo. 
1968) 437 P.2d 52.)  But, as the Inns-by-the-Sea court observed, 
it is not self-evident that the physical alteration requirement 
necessarily excludes such a loss:  “[I]t is possible that in the 
context of real property, the ‘distinct, demonstrable, physical 
alteration’ referenced in the Couch treatise [citation] could 
include damage that is not structural, but instead is caused by 
a noxious substance or odor.”  (Inns-by-the-Sea, supra, 
71 Cal.App.5th at p. 706, fn. 19.)   
Inns-by-the-Sea cited case law from other jurisdictions 
where “the presence of noxious substances and odors” was found 
sufficient to constitute direct physical loss or damage to 
property.  (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 701.)  It 
explained, “[C]ase law supports the view that in certain 
circumstances an invisible substance or biological agent might 
give rise to coverage because it causes a policyholder to suspend 
operations due to direct physical loss of or damage to property.”  
(Id. at p. 710, fn. 21.)   
We agree that an invisible substance or biological agent 
may, in some cases, be sufficiently harmful and persistent to 
cause a distinct, demonstrable, physical alteration to property.  
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
39 
As one court explained, a physical contaminant may cause direct 
physical loss or damage where it is “so connected to the property 
that the property effectively becomes the source of its own loss 
or damage.”  (Starr Surplus, supra, 535 P.3d at p. 265; 
see United Talent, supra, 77 Cal.App.5th at p. 833 [risk of harm 
“inextricably linked to the insured property”].)  Notably, such a 
connection will not be found where the substance or biological 
agent can be easily cleaned or removed from the property.  (Inns-
by-the-Sea, supra, 71 Cal.App.5th at p. 703, fn. 17.)  “While 
saturation, ingraining, or infiltration of a substance into the 
materials of a building or persistent pollution of a premises 
requiring active remediation efforts is sufficient to constitute 
‘direct physical loss of or damage to property,’ evanescent 
presence is not.”  (Verveine Corp. v. Strathmore Ins. Co. (Mass. 
2022) 184 N.E.3d 1266, 1276 (Verveine).)   
Given this physicality requirement, Another Planet is 
incorrect that direct physical loss to property may be found 
anytime a property may not be used as intended.  A property 
insurance policy does not cover a particular intended use; it 
covers the property itself.  (See Simon Marketing, supra, 
149 Cal.App.4th at pp. 622–623.)  “In simple terms, under this 
rule, ‘ “Plaintiff[s’] operations are not what is insured — the 
building and the personal property in or on the building are.” ’ ”  
(Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 706.)  The property 
itself must suffer a direct physical loss, i.e., it must be so 
negatively affected that it is rendered effectively unusable or 
uninhabitable. 
Another Planet relies on Hughes, supra, 199 Cal.App.2d 
239, but Hughes does not support Another Planet’s broad 
interpretation of direct physical loss.  The primary issue in 
Hughes was whether the terms “ ‘dwelling’ ” or “ ‘dwelling 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
40 
building’ ” included the soil underneath the insured’s home.  (Id. 
at p. 248.)  The Hughes court concluded the soil was included, 
because “to exclude the underlying land would be to render the 
policy illusory.”  (Ibid.)  Among other things, the court reasoned 
that coverage must exist where the home was “rendered 
completely useless to its owners,” even if no “tangible injury to 
the physical structure itself could be detected.”  (Ibid.)  The 
home “suffered real and severe damage when the soil beneath it 
slid away and left it overhanging a 30-foot cliff.  Until such 
damage was repaired and the land beneath the building 
stabilized, the structure could scarcely be considered a ‘dwelling 
building’ in the sense that rational persons would be content to 
reside there.”  (Id. at p. 249.)  While we need not address the 
specific question before the Hughes court, it does not support 
Another Planet’s view that direct physical loss encompasses any 
loss of intended use.  The loss in Hughes was plainly more severe 
than simply a change in use; the insureds were effectively 
deprived or dispossessed of their property.  (See Endeavor, 
supra, 96 Cal.App.5th at p. 435, review granted [“Hughes did 
not purport . . . to erect a ubiquitous ‘loss of use equals property 
loss or damage’ rule”].) 
Finally, the requirement of a direct physical loss to 
property generally excludes impairments that are purely legal 
in nature.  (See Garvey, supra, 48 Cal.3d at p. 406 [referring to 
“ ‘fortuitous, active, physical forces such as lightning, wind, and 
explosion, which bring about the loss’ ”].)  It does not cover 
situations where there is “a loss of use of property but there is 
no direct physical loss because a government order as opposed 
to a physical condition related to the property caused the 
deprivation.”  (Huntington Ingalls, supra, 287 A.3d at p. 531.)  
This position enjoys near-universal support among the Courts 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
41 
of Appeal:  “[M]ost California appellate courts have held the 
allegation of temporary loss of use of property resulting from 
pandemic-related government closure orders — without any 
physical loss of the property — is not sufficient to support a 
claim against an insurer for business income coverage under a 
policy that requires the suspension be caused by ‘direct physical 
loss of or damage to’ insured property.”  (Starlight Cinemas, 
supra, 91 Cal.App.5th at p. 38; accord, Endeavor, supra, 
96 Cal.App.5th at p. 434, review granted [collecting cases].)   
Coast Restaurant departed from this consensus.  It held, 
“[W]hile physical alteration to covered property could trigger 
coverage under a ‘physical loss or damage’ insuring provision, 
that is not the only possible trigger for coverage.”  (Coast 
Restaurant, supra, 90 Cal.App.5th at p. 343.)  Specifically, the 
Coast Restaurant court believed pandemic-related public health 
orders could cause direct physical loss to property because they 
“affected how the physical space of the property and the physical 
objects (chairs, tables, etc.) in that space could or could not be 
used” and “deprived the [insured] of important property rights 
in the covered property.”  (Id. at p. 340.)   
Neither scenario identified by Coast Restaurant falls 
within the definition of direct physical loss to property.  Both 
reflect changes in the insured’s use of or rights to the property, 
not changes to the physical condition of the property itself.  
(See Endeavor, supra, 96 Cal.App.5th at pp. 434–435, review 
granted; Starlight Cinemas, supra, 91 Cal.App.5th at p. 38 [“We 
disagree with our colleagues in Coast . . . that a temporary 
deprivation of an insured’s right to use covered property 
constitutes a covered loss under policy language covering a 
‘direct physical loss of or damage to property’ ”].)  Although an 
insured may choose to make physical changes to the condition 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
42 
of the property in response to a government order, the 
government order itself has only intangible or incorporeal 
effects — uses and rights — not physical ones.  “[D]eprivation of 
property must be causally linked to a physical event.  The plain 
meaning of ‘direct physical loss’ requires an ‘explicit nexus 
between the purported loss and the physical condition of the 
insured property.’ ”  (Huntington Ingalls, supra, 287 A.3d at 
p. 531.)  Where the deprivation of property is caused by a 
government order, rather than a physical event, no direct 
physical loss to property has occurred.4 
3.  “Property Damage” in Commercial General 
Liability Policies 
Another Planet urges a more expansive interpretation of 
direct physical loss or damage to property, based in part on the 
definition of “property damage” contained in its commercial 
general liability (CGL) insurance policy.  Another Planet 
obtained its CGL policy from Vigilant as well, and it appears as 
a separate section in a single insurance policy packet.  Under 
the CGL policy, Vigilant agreed to pay “damages that the 
insured becomes legally obligated to pay by reason of liability:  
[¶] imposed by law; or [¶] assumed in an insured contract; [¶] 
for bodily injury or property damage caused by an occurrence to 
which this coverage applies.”  (Boldface omitted.)  The CGL 
 
4  
We disapprove Coast Restaurant Group, Inc. v. Amguard 
Ins. Co., supra, 90 Cal.App.5th 332, to the extent it holds that 
pandemic-related government health orders regulating the use 
of property may cause direct physical loss to property.  We need 
not express any view regarding the separate question of whether 
or under what circumstances a governmental seizure of real or 
personal property would constitute a direct physical loss to 
property.  (Cf. American Alternative Ins. Corp. v. Superior Court 
(2006) 135 Cal.App.4th 1239, 1246.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
43 
policy defined property damage as (1) “physical injury to 
tangible property, including resulting loss of use of that 
property” and (2) “loss of use of tangible property that is not 
physically injured.”   
Another Planet is correct that this definition in its CGL 
policy may be relevant to the interpretation of direct physical 
loss or damage in its property insurance policy, whether the two 
policies are considered a single contract (see Civ. Code, § 1641 
[“The whole of a contract is to be taken together, so as to give 
effect to every part, if reasonably practicable, each clause 
helping to interpret the other”]) or not (see id., § 1642 [“Several 
contracts relating to the same matters, between the same 
parties, and made as parts of substantially one transaction, are 
to be taken together”]).  But, for two primary reasons, we 
conclude that this CGL definition does not expand the definition 
of direct physical loss or damage to property described above. 
First, the nature of third party CGL insurance is 
materially different from first party property insurance.  “[A] 
first party insurance policy provides coverage for loss or damage 
sustained directly by the insured (e.g., life, disability, health, 
fire, theft and casualty insurance).  A third party liability policy, 
in contrast, provides coverage for liability of the insured to a 
‘third party’ (e.g., a CGL policy, a directors and officers liability 
policy, or an errors and omissions policy).  In the usual first 
party policy, the insurer promises to pay money to the insured 
upon the happening of an event, the risk of which has been 
insured against.  In the typical third party liability policy, the 
carrier assumes a contractual duty to pay judgments the 
insured becomes legally obligated to pay as damages because of 
bodily injury or property damage caused by the insured.”  
(Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
44 
645, 663 (Montrose).)  Third party coverage therefore turns on 
the insured’s legal liability, rather than the fact of injury to 
property itself. 
Second, and relatedly, the scope of coverage in a standard 
third party CGL policy is materially different from the scope of 
standard first party property coverage at issue here.  Although 
the two types of coverage are often combined in a single 
insurance package, “[t]he scope of coverage and the operation of 
the exclusion clauses . . . are different in the separate policy 
portions and should be treated as such.”  (Garvey, supra, 
48 Cal.3d at p. 406.)  “ ‘Liability and corresponding coverage 
under a third party insurance policy must be carefully 
distinguished from the coverage analysis applied in a first party 
property contract.  Property insurance, unlike liability 
insurance, is unconcerned with establishing negligence or 
otherwise assessing tort liability.’ ”  (Ibid.) 
Moreover, a reasonable person would readily understand 
that property damage in Another Planet’s CGL policy is more 
expansive in scope than direct physical loss or damage to 
property in its property insurance policy.  The first prong of the 
CGL property damage definition covers “physical injury to 
tangible property,” which is analogous to the ordinary 
understanding of direct physical damage to property.  The 
second prong of the CGL property damage definition covers “loss 
of use of tangible property that is not physically injured,” but it 
does not contain the limiting adjectives “direct” or “physical” in 
direct physical loss to property.  Because the definition of 
property damage in Another Planet’s CGL policy is materially 
different, on its face, from the terms used in its property 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
45 
insurance policy, the former carries little weight in interpreting 
the latter.5 
F.  Ambiguity and Extrinsic Evidence 
Another Planet also urges an expansive definition of direct 
physical loss or damage based on what it characterizes as 
extrinsic evidence of a latent ambiguity in the meaning of the 
policy language, as applied to its specific allegations of 
insurance coverage for COVID-19-related losses.  We conclude 
that the evidence proffered by Another Planet is not inconsistent 
with the plain meaning of direct physical loss or damage 
described above, and it does not reveal any ambiguity in the 
policy language. 
“As California courts previously have observed, the 
‘meaning of language is to be found in its applications.  An 
 
5  
For similar reasons, the specific virus exclusion in Another 
Planet’s CGL policy sheds little light on the meaning of direct 
physical damage or loss to property in Another Planet’s property 
insurance policy.  The exclusion states, in part, “[T]his 
insurance does not apply to any damages, loss, cost or expense 
arising out of the actual, alleged or threatened contaminative, 
pathogenic, toxic or other hazardous properties of biological 
agents.”  (Boldface omitted.)  The phrase “biological agents” 
includes “viruses or other pathogens.”  Because the grant of 
coverage in Another Planet’s CGL policy is different from the 
grant of coverage in its property insurance policy, the fact that 
certain losses are excluded from the former does not mean they 
are covered by the latter.  Moreover, to the extent Another 
Planet’s point is that the virus exclusion shows that “ ‘all risks’ 
insurance include[s] coverage for losses caused by a virus” like 
COVID-19, that point is not inconsistent with our interpretation 
of direct physical loss or damage to property.  As discussed 
further in the next section, nothing in that interpretation 
categorically excludes a virus as a potential cause of direct 
physical loss or damage to property. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
46 
indeterminacy in the application of language signals its 
vagueness or ambiguity.  An ambiguity arises when language is 
reasonably susceptible of more than one application to material 
facts.  There cannot be an ambiguity per se, i.e., an ambiguity 
unrelated to an application.’  [Citations.]  [¶]  Accordingly, 
‘[e]ven if a contract appears unambiguous on its face, a latent 
ambiguity may be exposed by extrinsic evidence which reveals 
more than one possible meaning to which the language of the 
contract is yet reasonably susceptible.’  [Citation.]  ‘The test of 
admissibility of extrinsic evidence to explain the meaning of a 
written instrument is not whether it appears to the court to be 
plain and unambiguous on its face, but whether the offered 
evidence is relevant to prove a meaning to which the language 
of the instrument is reasonably susceptible.’ ”  (Dore v. Arnold 
Worldwide, Inc. (2006) 39 Cal.4th 384, 391.)  A court may 
provisionally receive such evidence until it is “in a position to 
determine whether in the light of all of the offered evidence, the 
item objected to will turn out to be admissible as tending to 
prove a meaning of which the language of the instrument is 
reasonably susceptible or inadmissible as tending to prove a 
meaning of which the language is not reasonably susceptible.”  
(Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 
69 Cal.2d 33, 40, fn. 7 (Pacific Gas).)  In this case, Another 
Planet has cited or requested judicial notice of certain extrinsic 
evidence it contends is relevant to the interpretation of its 
insurance policy. 
First, Another Planet relies on a 2006 circular issued by 
the Insurance Services Office, Inc. (ISO) announcing a new 
standard exclusion for “loss or damage caused by or resulting 
from any virus, bacterium or other microorganism that induces 
or is capable of inducing physical distress, illness or disease.”  
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
47 
The ISO is “an organization that develops standard policy forms 
for the insurance industry and collects statistical data and 
estimates risks relevant to the forms.”  (Bank of the West v. 
Superior Court (1992) 2 Cal.4th 1254, 1262.)  It also “publishes 
circulars designed to explain the intent, purpose and effect of its 
standard form provisions.”  (Maryland Casualty Co. v. Reeder 
(1990) 221 Cal.App.3d 961, 971.) 
This ISO circular stated, “Disease-causing agents may 
render a product impure (change its quality or substance), or 
enable the spread of disease by their presence on interior 
building surfaces or the surfaces of personal property.  When 
disease-causing viral or bacterial contamination occurs, 
potential claims involve the cost of replacement of property (for 
example, the milk), cost of decontamination (for example, 
interior building surfaces), and business interruption (time 
element) losses.”  The circular offered examples such as “the 
growth of listeria bacteria in milk” and “viral and bacterial 
contaminants [including] rotavirus, SARS, influenza (such as 
avian flu), legionella and anthrax.”   
Under the heading, “Current Concerns,” the circular 
provided the following explanation for the new virus exclusion:  
“Although building and personal property could arguably 
become contaminated (often temporarily) by such viruses and 
bacteria, the nature of the property itself would have a bearing 
on whether there is actual property damage.  An allegation of 
property damage may be a point of disagreement in a particular 
case.  In addition, pollution exclusions are at times narrowly 
applied by certain courts.  In recent years, ISO has filed 
exclusions 
to 
address 
specific 
exposures 
relating 
to 
contaminating or harmful substances.  Examples are the mold 
exclusion in property and liability policies and the liability 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
48 
exclusion addressing silica dust.  Such exclusions enable 
elaboration of the specific exposure and thereby can reduce the 
likelihood of claim disputes and litigation.”   
The circular continued, “While property policies have not 
been a source of recovery for losses involving contamination by 
disease-causing agents, the specter of pandemic or hitherto 
unorthodox transmission of infectious material raises the 
concern that insurers employing such policies may face claims 
in which there are efforts to expand coverage and to create 
sources of recovery for such losses, contrary to policy intent.  [¶]  
In light of these concerns, we are presenting an exclusion 
relating to contamination by disease-causing viruses or bacteria 
or other disease-causing microorganisms.”   
We have recognized that standardized insurance industry 
provisions and their accompanying interpretative materials 
may be useful in analyzing coverage issues.  (Montrose, supra, 
10 Cal.4th at p. 670.)  This general rule extends to standard 
form exclusions.  But, as with any extrinsic evidence, such 
exclusions are only relevant to the extent they tend to prove a 
meaning of which the language of the policy is reasonably 
susceptible.  (Pacific Gas, supra, 69 Cal.2d at p. 40, fn. 7.)  If a 
grant of coverage cannot reasonably be read to include a matter, 
even considering the absence of the proffered exclusion, the 
language of the exclusion cannot create coverage where none 
exists.  (Yahoo, supra, 14 Cal.5th at p. 72.) 
Another Planet maintains the existence of the standard 
exclusion covering viruses “is evidence that insurers like 
Vigilant knew that viruses can, and do, cause ‘direct physical 
loss or damage to property.’ ”  But Vigilant does not contend that 
viruses can never cause direct physical loss or damage to 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
49 
property.  It explicitly accepts the view of the Massachusetts 
Supreme Judicial Court that “the exclusion would have 
independent significance where, for example, personal property, 
such as food, becomes physically contaminated or infected with 
a virus, requiring its destruction or some form of remediation.”  
(Verveine, supra, 184 N.E.3d at p. 1278.)  Crucially, as the ISO 
circular explains, “the nature of the property itself would have 
a bearing on whether there is actual property damage,” and it is 
self-evident that the nature of the virus (or other contaminant) 
is relevant to the existence of direct physical loss or damage as 
well.  The dispute here revolves around the ability of the 
COVID-19 virus to cause direct physical loss or damage to 
Another Planet’s property, not the ability of any virus to cause 
such loss or damage to any property.  The virus exclusion does 
not provide any relevant guidance on the specific issue of the 
COVID-19 virus’s effect on Another Planet’s property. 
Another Planet also relies on statements from an 
insurance industry group and Vigilant’s parent company, Chubb 
Limited, that acknowledge substantial exposure to losses from 
natural disasters, including pandemics.  For example, in its 
2019 annual report, Chubb stated, “We have substantial 
exposure to losses resulting from natural disasters, man-made 
catastrophes such as terrorism or cyberattack, and other 
catastrophic events, including pandemics.  This could impact a 
variety of our businesses, including our commercial and 
personal lines, and life and accident and health (A&H) 
products.”  These generalized statements about the effect of a 
pandemic on the finances of a diversified insurance company, or 
the insurance industry as a whole, do not shed light on the 
meaning of direct physical loss or damage to property in Another 
Planet’s property insurance policy.  The statements are 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
50 
untethered from the policy language, and even from property 
insurance itself.  The modern insurance industry includes many 
different insurance products, from life insurance and health 
insurance to liability insurance.  Even property insurance 
includes many specialized policies and coverage extensions.  For 
example, although we need not consider it here, one available 
extension covers “ ‘direct physical loss or damage to Property 
Insured caused by or resulting from a covered communicable 
disease event.’ ”  (Amy’s Kitchen, supra, 83 Cal.App.5th at 
p. 1068, boldface omitted; see fn. 3, ante.)  A “ ‘communicable 
disease event’ ” is defined as “ ‘an event in which a public health 
authority 
has 
ordered 
that 
a 
location 
be 
evacuated, 
decontaminated, or disinfected due to the outbreak of a 
communicable disease at such location.’ ”  (Amy’s Kitchen, at 
p. 1071.)  This coverage extension is not part of Another Planet’s 
insurance policy, and it illustrates the incongruity of relying on 
general industry statements to inform the scope of coverage 
here. 
Another Planet’s reliance on statements by Chubb 
executives after the onset of the COVID-19 pandemic is 
similarly unpersuasive.  In its 2020 annual report, Chubb 
discussed how the COVID-19 pandemic had affected its 
business:  “Our and the industry’s COVID-related claims come 
from a broad range of exposures, principally in four areas.  The 
first occurred as people suffered from ill health or death, from 
front-line workers to ordinary employees, affecting everything 
from life and health insurance to workers compensation.  The 
second source of exposures come from liability-related 
insurance, including employment practices, directors and 
officers (D&O) and medical malpractice.  Next are business 
interruption losses, from businesses that had coverage and were 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
51 
shut down during the pandemic.  And finally, there are credit-
related exposures, such as surety and trade credit.”  This 
passage illustrates the variety of Chubb’s insurance products, 
beyond property insurance.  Another Planet points out that 
Chubb acknowledges “business interruption losses, from 
businesses that had coverage and were shut down during the 
pandemic,” but this statement expressly refers to businesses 
“that had coverage.”  It does not mandate coverage where none 
exists.  Indeed, the same document reflects explicit hostility 
toward claims like those asserted by Another Planet here.  In 
Chubb’s view, the COVID-19 pandemic led to “a spree of 
litigation that attempts to twist the intent of contracts and 
reinterpret insurance contract language to force pay-outs in 
situations that in most cases insurers never intended to cover, 
and in which no premium was charged for the risk, specifically 
when city and state governments mandated pandemic-related 
business closures.  This litigation relied on implausible 
arguments that COVID causes direct physical loss or damage to 
a business’s property, in the same way as a fire.”  These 
statements do not support an understanding of direct physical 
damage or direct physical loss that differs from the plain 
meaning of those phrases.  Another Planet has not established 
any ambiguity in the policy language.6 
 
6  
Because the policy language is not ambiguous, its plain 
meaning governs.  (AIU Insurance, supra, 51 Cal.3d at p. 822.)  
We therefore have no occasion to apply the familiar rule that 
ambiguous language in an insurance policy should be 
interpreted to protect the insured’s objectively reasonable 
expectations.  (See Yahoo, supra, 14 Cal.5th at pp. 71–72.)  
Another Planet has not identified any meaning, other than plain 
meaning, to which the policy language is reasonably susceptible. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
52 
G.  The Actual or Potential Presence of the 
COVID-19 Virus 
The Ninth Circuit asked, “Can the actual or potential 
presence of the COVID-19 virus on an insured’s premises 
constitute ‘direct physical loss or damage to property’ for 
purposes of coverage under a commercial property insurance 
policy?”  (Another Planet, supra, 56 F.4th at p. 734.)  As noted, 
while we cannot and do not decide whether the COVID-19 virus 
can ever constitute direct physical loss or damage to property, 
we conclude Another Planet’s allegations are insufficient to 
meet the definition of direct physical loss or damage to property 
under California law.  Moreover, Another Planet’s allegations 
regarding the COVID-19 virus and its effects appear typical of 
the allegations offered by many insureds in similar situations.  
To the extent the Ninth Circuit’s question is premised on the 
split in authority represented on one side by United Talent, 
which held that the actual or potential presence of the virus 
generally could not cause direct physical loss or damage to 
property, and on the other by Marina Pacific, which held that it 
could, we further conclude that United Talent was correct.7 
Another Planet primarily contends that the COVID-19 
virus causes direct physical damage to property by physically 
altering surfaces where it lands and attaches.  Similarly, the 
Marina Pacific court found persuasive, in part, an allegation 
 
7  
Although this proceeding concerns litigation in the federal 
courts, we need not consider any differences between federal 
and California pleading standards because we conclude Another 
Planet’s allegations are insufficient even under the more 
permissive California standard.  (Cf. Marina Pacific, supra, 
81 Cal.App.5th 
at 
pp. 109–110; 
Endeavor, 
supra, 
96 Cal.App.5th at p. 442 & fn. 18, review granted.) 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
53 
that the COVID-19 virus “not only lives on surfaces but also 
bonds to surfaces through physicochemical reactions involving 
cells and surface proteins, which transform the physical 
condition 
of 
the 
property.” 
 
(Marina 
Pacific, 
supra, 
81 Cal.App.5th at p. 108.)  These allegations do not explain how 
the property was damaged or harmed by the presence of the 
COVID-19 virus.  In other words, they do not allege any injury 
or impairment to property caused by the COVID-19 virus.  The 
mere fact of microscopic bonds between the virus and a surface 
says little about the effect of such microscopic bonds on that 
surface.  (See Endeavor, supra, 96 Cal.App.5th at p. 442, review 
granted [“the type of viral interaction with surfaces alleged by 
[the insured] (and accepted as true) does not, as a matter of law, 
satisfy the default definition of ‘direct physical harm or loss to 
property’ ”], fn. omitted.)  To constitute direct physical damage 
to property under California law, a tangible alteration of the 
property is necessary but not sufficient.  An insured must allege, 
and later prove, that the alteration caused physical harm to the 
property.  The alteration itself is not enough. 
Marina Pacific also found persuasive, in part, an 
allegation that the COVID-19 virus “alters ordinary physical 
surfaces 
transforming 
them 
into 
fomites 
through 
physicochemical processes, making them dangerous and 
unusable for their intended purposes unless decontaminated.”  
(Marina Pacific, supra, 81 Cal.App.5th at p. 110.)  Another 
Planet similarly contends that the COVID-19 virus causes a 
“physical alteration from an object to a fomite [which] makes 
physical contact with those previously safe, inert surfaces (e.g., 
handrails, doorknobs, bathroom fixtures) unsafe” because a 
person could contract COVID-19 through contact with the 
object.  Accepting these statements as true, they likewise do not 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
54 
sufficiently allege direct physical damage to property.  As noted, 
a fomite is “ ‘an object . . . that may be contaminated with 
infectious agents (such as bacteria or viruses) and serve in their 
transmission.’ ”  (United Talent, supra, 77 Cal.App.5th at p. 826, 
fn. 5.)  Describing an object as a fomite primarily reflects a 
conceptual or analytical change, not a physical one.  And, to the 
extent the change is physical, it fails to satisfy the definition of 
direct physical damage to property for the same reason that 
other allegations of microscopic bonding or adhesion is 
insufficient.  It does not involve damage or harm to property.  
“Fomite-based transmission . . . typifies another way the virus 
‘pos[es] health risk to humans,’ as opposed to property.  
[Citation.]  Though this evidence shows that the COVID-19 
virus is ‘harmful,’ it simply does not equate to evidence that any 
property suffered physical harm.”  (Starr Surplus, supra, 
535 P.3d at pp. 264–265.) 
To support its allegation of direct physical loss to property, 
Another Planet alleges that the actual or potential presence of 
the COVID-19 virus rendered its property unusable for its 
intended purpose.  As noted, such a bare allegation is 
insufficient.  A property insurance policy does not cover a 
particular intended use; it covers the property itself.  
(See Simon Marketing, supra, 149 Cal.App.4th at pp. 622–623.)   
Moreover, to the extent Another Planet claims it was the 
physical presence of the virus that caused its property to become 
unusable, it has failed to allege that the virus caused a distinct, 
demonstrable, physical alteration to property.  Where a 
substance is alleged to cause harm to humans, rather than 
property, it must still alter the property itself in a lasting and 
persistent manner.  Although Another Planet contests just how 
easily the COVID-19 virus may be cleaned from various 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
55 
surfaces, it does not make any allegations regarding the 
remediation necessary to remove the virus.  Instead, it focuses 
on the difficulty of preventing reintroduction of the virus when 
humans reenter and circulate through a property.  But 
persistence in this context requires the property itself to become 
the source of harm.  (Starr Surplus, supra, 535 P.3d at p. 265 
[“[E]ven when the force does not originate within the property, 
it [is] so connected to the property that the property effectively 
becomes the source of its own loss or damage”]; see United 
Talent, supra, 77 Cal.App.5th at p. 833 [risk of harm 
“inextricably linked to the insured property”].)  The risk of harm 
from reintroduction of the virus is essentially the opposite.  The 
continuing nature of the risk stems not from the property but 
from the presence of other humans.  The risk is “untethered to 
any property” and “may be reduced or rendered less harmful 
through practices unrelated to the property, such as social 
distancing, vaccination, and the use of masks.”  (United Talent, 
at p. 838; see id. at p. 839 [plaintiff “has not alleged that its 
properties required unique abatement efforts to eradicate the 
virus”].)  As one court explained, “This is why the presence of 
SARS-CoV-2 is unlike the presence of other substances — such 
as unpleasant odors, dangerous chemical contamination, or 
asbestos — that permeate the property and require substantial 
effort to remove.”  (Endeavor, supra, 96 Cal.App.5th at p. 441, 
review granted.)8 
 
8  
Another Planet also alleges that the COVID-19 virus 
damages air by changing its composition and rendering it 
harmful to humans.  But it acknowledges in its briefing that an 
insured does not own air, in the sense of the physical particles 
that happen to fill an interior space or settle above an exterior 
 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
56 
Some courts have found persuasive the fact that 
businesses were required to alter their physical space in order 
to minimize virus transmission and safely operate.  (See, e.g., 
Shusha, supra, 87 Cal.App.5th at p. 264, review granted 
[“ ‘Cleaning of surfaces alone is insufficient,’ and safe operations 
would require ‘substantial physical alterations, systems 
changes to facilities, and new protocols for air circulation, 
disinfection, and disease prevention’ ”].)  But such alterations 
are neither caused directly by the presence of the virus itself nor 
do they remedy its physical effects on property.  Instead, they 
are preventative; “they aim to redress the way people pose harm 
to one another by carrying and transmitting the virus at the 
property.”  (Starr Surplus, supra, 535 P.3d at p. 265; 
see Connecticut Dermatology Group, PC v. Twin City Fire 
Ins. Co. (Conn. 2023) 288 A.3d 187, 201 [“plaintiffs’ activities 
designed to prevent the transmission of the coronavirus on the 
properties were not ‘repairs’ in any ordinary sense of the word”].)  
While Another Planet contends such preventative measures are 
covered by its insurance policy as efforts at mitigation, such 
mitigation efforts are not reimbursable without an underlying 
covered loss or damage to property.  As discussed, Another 
Planet has not alleged any such loss or damage.9 
 
property.  In any event, Another Planet’s allegations are 
insufficient to show direct physical loss or damage to air for the 
reasons we have discussed.  (See Tapestry, Inc. v. Factory 
Mutual Ins. Co. (Md. 2022) 286 A.3d 1044, 1059–1060.) 
9  
We disapprove San Jose Sharks, LLC v. Superior Court, 
supra, 98 Cal.App.5th 158; JRK Property Holdings, Inc. v. 
Colony Ins. Co., supra, 96 Cal.App.5th 1, review granted; 
Shusha, Inc. 
v. 
Century-National 
Ins. Co., 
supra, 
 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
57 
Finally, we observe that our consideration of this matter 
has been framed by the Ninth Circuit’s certified question.  Other 
issues, in this case or in others, may be dispositive.  For 
example, the federal district court in this matter appears to have 
based its dismissal order, at least in part, on the absence of 
causation in light of governmental orders requiring the closure 
of Another Planet’s venues.  It wrote, “Another Planet does not 
have a claim for loss of business income because the closure 
orders [by state and local public health authorities] — and not 
[the] virus’s alleged presence at Another Planet’s facilities — 
caused it to shut down.”  The Inns-by-the-Sea court emphasized 
a similar lack of causation:  “Moreover, [plaintiff] alleges that it 
ceased operations ‘as a direct and proximate result of the 
Closure Orders.’  It does not make the proximate cause 
allegation based on the particular presence of the virus on its 
premises.”  (Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 703.)  
In Best Rest, the same court extended its causation analysis 
beyond closure orders.  The plaintiff in that case, a hotel, was 
able to operate during the pandemic.  (Best Rest, supra, 
88 Cal.App.5th at p. 700.)  But it “ ‘experienced a wave of 
reservation cancellations,’ ” and its occupancy during the 
pandemic was far below normal.  (Ibid.)  Although the plaintiff’s 
business losses were related to the pandemic overall, the Best 
Rest court affirmed an adverse summary judgment order on the 
grounds that plaintiff’s losses were not caused by the presence 
of the COVID-19 virus at its property.  (Id. at p. 706.)  Instead, 
the losses were caused by an overall reduction in the number of 
 
87 Cal.App.5th 250, review granted; and Marina Pacific Hotel 
& 
Suites, LLC 
v. 
Fireman’s 
Fund 
Ins. Co., 
supra, 
81 Cal.App.5th 96, to the extent they are inconsistent with this 
opinion. 
ANOTHER PLANET ENTERTAINMENT, LLC v. VIGILANT INS. CO. 
Opinion of the Court by Guerrero, C. J. 
 
58 
people travelling.  The court concluded, “[E]ven if Best Rest had 
eradicated all traces of COVID-19 from its premises, it still 
would have suffered the same lost income.”  (Id. at p. 708.)  
While we need not consider these issues here, we emphasize 
that the focus of our opinion should not be interpreted to 
downplay other circumstances that might be dispositive in this 
case or others. 
III.  CONCLUSION 
For the reasons stated, we answer the Ninth Circuit’s 
question as follows:  No, the actual or potential presence of the 
COVID-19 virus on an insured’s premises generally does not 
constitute “direct physical loss or damage to property” for 
purposes of coverage under a commercial property insurance 
policy. 
 
GUERRERO, C. J. 
We Concur: 
CORRIGAN, J. 
LIU, J. 
KRUGER, J. 
GROBAN, J. 
JENKINS, J. 
EVANS, J.
 
 
See next page for addresses and telephone numbers for counsel who 
argued in Supreme Court. 
 
Name of Opinion  Another Planet Entertainment, LLC v. Vigilant 
Insurance Company 
__________________________________________________________  
 
Procedural Posture (see XX below) 
Original Appeal  
Original Proceeding  XX on request by 9th Circuit (Cal. Rules of 
Court, rule 8.548) 
Review Granted (published) 
Review Granted (unpublished)  
Rehearing Granted 
__________________________________________________________  
 
Opinion No. S277893 
Date Filed:  May 23, 2024 
__________________________________________________________  
 
Court:   
County:   
Judge:   
__________________________________________________________   
 
Counsel: 
 
Pasich, Kirk Pasich, Nathan M. Davis, Arianna M. Young and Kayla 
M. Robinson for Plaintiff and Appellant. 
 
Hunton Andrews Kurth, Scott P. DeVries, Yosef Y. Itkin, Lorelie S. 
Masters and Michael S. Levine for United Policyholders as Amicus 
Curiae on behalf of Plaintiff and Appellant. 
 
Covington & Burling, Sabrina T. McGraw and Rani Gupta for Major 
League Baseball and National Hockey League as Amici Curiae on 
behalf of Plaintiff and Appellant. 
 
Covington & Burling, Thomas Martecchini, David B. Goodwin, 
Christine S. Haskett and Billie T. H. Mandelbaum for Ross Stores, 
Inc., as Amicus Curiae on behalf of Plaintiff and Appellant. 
 
 
 
Reed Smith, John N. Ellison, Richard P. Lewis, Jr., Katherine J. 
Ellena and Kathryn M. Bayes for California Pizza Kitchen, Inc., 
French Laundry Partners, LP, KRM, Inc., and Yountville Food 
Emporium, LLC, as Amici Curiae on behalf of Plaintiff and Appellant. 
 
Latham & Watkins, Brook B. Roberts, John M. Wilson and Corey D. 
McGehee for San Manuel Band of Mission Indians and San Manuel 
Entertainment Authority as Amici Curiae on behalf of Plaintiff and 
Appellant. 
 
Roxborough, Pomerance, Nye & Adreani, Nicholas P. Roxborough, 
Vincent S. Gannuscio and Joseph C. Gjonola for the Santa Ynez Band 
of Chumash Mission Indians of the Santa Ynez Reservation of 
California as Amicus Curiae on behalf of Plaintiff and Appellant. 
 
Clyde & Co US, Susan Koehler Sullivan, Douglas J. Collodel, Gretchen 
S. Carner, Brett C. Safford; O’Melveny & Myers, Jonathan D. Hacker 
and Jenya Godina for Defendant and Respondent. 
 
Pacific Law Partners, Clarke B. Holland, David B.A. Demo and 
Andrew P. Collier for Oregon Mutual Insurance Company as Amicus 
Curiae on behalf of Defendant and Respondent. 
 
Crowell & Moring and Mark D. Plevin for American Property Casualty 
Insurance Association and National Association of Mutual Insurance 
Companies as Amici Curiae on behalf of Defendant and Respondent. 
 
Lewis Brisbois Bisgaard & Smith, Raul L. Martinez and Elise D. Klein 
for California Fair Plan Association as Amicus Curiae on behalf of 
Defendant and Respondent. 
 
Jamie Ostroff and Shari Covington for California Medical Association 
as Amicus Curiae. 
 
Proskauer Rose, Kyle A. Casazza and Christina H. Kroll for The Los 
Angeles Lakers, Inc., as Amicus Curiae.
 
 
Counsel who argued in Supreme Court (not intended for 
publication with opinion): 
 
Kirk Pasich 
Pasich LLP 
10880 Wilshire Boulevard, Suite 2000 
Los Angeles, CA 90024 
(424) 313-7860 
 
Jonathan D. Hacker 
O’Melveny & Myers LLP 
1625 I Street NW 
Washington, DC 20006 
(202) 383-5285