NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SELANE PRODUCTS, INC., on behalf of 

itself and all others similarly situated, 

Plaintiff-Appellant, 

 v. 

CONTINENTAL CASUALTY 

COMPANY, 

Defendant-Appellee.

No. 21-55123 

D.C. No. 

2:20-cv-07834-MCS-AFM 

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

Mark C. Scarsi, District Judge, Presiding

Argued and Submitted August 11, 2021

San Francisco, California

Before: CHRISTEN and FORREST, Circuit Judges, and ANELLO,** District 

Judge.

After state and local orders resulting from the COVID-19 pandemic required 

Selane Products, Inc. (Selane) and other class members to suspend their business 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The Honorable Michael M. Anello, United States District Judge for 

the Southern District of California, sitting by designation.

FILED

OCT 1 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

operations, those businesses sought coverage under their policies (the Policy) with 

Continental Casualty Company (Continental). Continental denied the claims,

concluding that the presence of SARS-CoV-2—the virus that causes COVID-19—

did not cause “direct physical loss of or damage to” property. Selane filed this 

putative class action lawsuit, alleging that Continental improperly denied its claims.

Continental moved to dismiss, arguing that Selane did not allege any “direct physical 

loss of or damage to” its property. The district court agreed and dismissed the 

complaint. We review de novo a district court’s order granting a motion to dismiss 

under Federal Rule of Civil Procedure 12(b)(6). Carlin v. DairyAmerica, Inc., 705 

F.3d 856, 866 (9th Cir. 2013). We have jurisdiction under 28 U.S.C. § 1291, and we 

affirm. 

1. To establish coverage under the Business Income and Extra Expense 

endorsements, Selane must allege it suffered from some “direct physical loss of or 

damage to” its property. As established in this court’s decision in Mudpie, Inc. v. 

Travelers Casualty Insurance Co. of America, No. 20-16858, __ F.4th __ (9th Cir. 

Oct. 1, 2021), California courts would construe “direct physical loss of or damage 

to” as requiring an insured to allege a physical alteration of its insured property. Id.

at 14. Here, Selane did not plausibly allege that its property sustained any physical 

alterations for two reasons. First, Selane did not allege that SARS-CoV-2 was 

present on its property to cause any damage. Second, Selane alleged that the stay-at-
3 

home orders caused it to suspend its operations, but it did not plausibly allege that 

the stay-at-home orders caused its property to sustain any physical alterations. Thus, 

there is no coverage under the Business Income and Extra Expenses endorsements. 

2. Selane also argues that the Policy’s microbe exclusion establishes that 

microscopic organisms could cause physical loss or damage to property and, 

therefore, by extension so could viruses.

1 We are not persuaded. But even if we were, 

this argument is unavailing because Selane did not allege that SARS-Cov-2 was 

present on its property to cause any damage.

3. Additionally, Selane failed to plausibly allege coverage under the Civil 

Authority endorsement. Under this provision, Selane must prove three requirements: 

(1) there must be “direct physical loss of or damage to” property at locations, other 

than the insured premises; (2) a civil authority action was required because of that 

physical loss or damage; and (3) the civil authority action prohibited access to 

Selane’s property. As noted above, Selane has not alleged any direct physical loss 

of or damage to property. 

4. The district court did not err in excluding Selane’s extrinsic evidence. 

In California, “[t]he test of admissibility of extrinsic evidence to explain the meaning 

of a written instrument is . . . whether the offered evidence is relevant to prove a 

1

Continental did not rely on the microbe exception in seeking dismissal of 

plaintiffs’ First Amended Complaint.
4 

meaning to which the language of the instrument is reasonably susceptible.” Pac. 

Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co., 442 P.2d 641, 644 (Cal. 

1968). “[I]t is reversible error for a trial court to refuse to consider . . . extrinsic 

evidence on the basis of the trial court’s own conclusion that the language of the 

contract appears to be clear and unambiguous.” Circle Star Ctr. Assocs., L.P. v. 

Liberate Techs., 55 Cal. Rptr. 3d 232, 238 (Ct. App. 2007). Although the district 

court did not analyze the extrinsic evidence, the evidence Selane proffered is 

irrelevant to proving the meaning of “physical loss of or damage to” property as used 

in this Policy. 

5. It was not error for the district court not to address Selane’s mitigation 

claim. Under California insurance law, “[a]n insurer is liable . . . [i]f a loss is caused 

by efforts to rescue the thing insured from a peril insured against.” Cal. Ins. Code 

§ 531(b). Here, because the “peril”—SARS-CoV-2—was not “insured against,” this 

provision is not appliable. 

6. The district court did not err in dismissing the remainder of Selane’s 

claims because they all required that the presence of SARS-CoV-2 caused “physical 

loss of or damage to” property. As noted above, there was no allegation of “physical 

loss of or damage to” Selane’s property. 
5 

AFFIRMED.

2

2

Selane’s motion to take judicial notice of unpublished cases [Dkt. 20] is 

GRANTED.