NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WORTHY HOTELS, INC.; et al., 

Plaintiffs-Appellants, 

and 

VITA COFFEE, LLC, DBA Caffe Vita 

Coffee Roasting Co., a Washington limited 

liability company; et al., 

Plaintiffs, 

 v. 

FIREMAN'S FUND INSURANCE 

COMPANY, 

Defendant-Appellee, 

and 

NATIONAL SURETY CORPORATION, an 

Illinois corporation, 

Defendant.

No. 21-35495 

D.C. No. 2:20-cv-01079-BJR 

AMENDED MEMORANDUM*

VITA COFFEE, LLC, DBA Caffe Vita 

Coffee Roasting Co., a Washington limited 

liability company, 

No. 21-35511 

D.C. No. 2:20-cv-01079-BJR 

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

except as provided by Ninth Circuit Rule 36-3.

FILED

MAY 15 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

Plaintiff-Appellant, 

and 

ES RESTAURANT GROUP, INC.; et al., 

Plaintiffs, 

 v. 

FIREMAN'S FUND INSURANCE 

COMPANY, 

Defendant-Appellee, 

and 

NATIONAL SURETY CORPORATION, an 

Illinois corporation, 

Defendant.

ES RESTAURANT GROUP, INC.; et al., 

Plaintiffs-Appellants, 

and 

VITA COFFEE, LLC, DBA Caffe Vita 

Coffee Roasting Co., a Washington limited 

liability company; et al., 

Plaintiffs, 

 v. 

FIREMAN'S FUND INSURANCE 

COMPANY, 

No. 21-35646 

D.C. No. 2:20-cv-01079-BJR 
3 

Defendant-Appellee, 

and 

NATIONAL SURETY CORPORATION, an 

Illinois corporation, 

Defendant.

Appeal from the United States District Court

for the Western District of Washington

Barbara Jacobs Rothstein, District Judge, Presiding

Submitted March 26, 2024**

San Francisco, California

Before: PAEZ, NGUYEN, and BUMATAY, Circuit Judges.

Plaintiffs-Appellants are two groups of hotels and restaurants. They seek 

reimbursement from Fireman’s Fund Insurance Company and its wholly owned

subsidiary, National Surety Corporation (together “Defendant-Appellees”), for 

business losses incurred because of the risk or presence of COVID-19 on their 

properties. The district court, applying Washington law, granted DefendantAppellees’ motion to dismiss all claims and denied Plaintiffs-Appellants’ motion for 

leave to amend.

We have jurisdiction under 28 U.S.C. § 1291. “We review de novo an order 

** The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).
4 

granting a motion to dismiss for failure to state a claim under Federal Rule of Civil 

Procedure 12(b)(6).” Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 15 F.4th 885, 

889 (9th Cir. 2021). And “[w]e review for abuse of discretion the district court’s 

denial of leave to amend.” Garmon v. Cnty. of Los Angeles, 828 F.3d 837, 842 (9th 

Cir. 2016). We affirm in part, reverse in part, and remand. 

1. The district court properly granted Defendant-Appellees’ motion to dismiss

concerning all claims which include the triggering language “direct physical loss or 

damage” to property. Under Washington law, application of these policies turns on 

the meaning of that triggering phrase. Hill & Stout, PLLC v. Mut. of Enumclaw Ins. 

Co., 200 Wash. 2d 208, 218 (2022) (explaining “insurance policy provisions” are 

interpreted “as a matter of law”). The Washington Supreme Court recently 

interpreted “direct physical loss” to require that the “property . . . has been physically 

destroyed or that one is deprived of [the property] in that the property is no longer 

in their physical possession.” Id. at 219. And the court “recognized that . . . to 

recover under a property insurance policy for physical loss of or damage to the 

property, something physically must happen to the property.” Id. at 222. 

That settled the matter. The court held “the claim for loss of intended use and 

loss of business income” was “not a physical loss of property” because the dental 

practice “was still able to physically use the property.” Id. at 220. With that 

conclusion, the court joined the “strong, if not unanimous, consensus around the 
5 

country” that COVID-19 “do[es] not amount to ‘direct physical loss of property.’” 

Id. at 224. 

This case is no different. Plaintiffs-Appellants fail to show a physical loss 

because they continued using their properties while the virus or its risk was present. 

Even more, they are unable to show they physically lost functional use of their 

properties because of the virus. See Hill & Stout, 200 Wash. 2d at 221–22 (“[T]here 

was no alleged imminent danger to the property, no contamination with a

problematic substance, and nothing that physically prevented use of the property or 

rendered it useless.”). Further, Plaintiffs-Appellants have not demonstrated that the 

virus caused any physical damage to their properties. So we conclude, as did the 

Washington Supreme Court, that the district court got it right here. Id. at 223 n.6 

(“We agree with Judge Rothstein’s overall conclusion about ‘direct physical 

loss.’”).1

2. Because amendment here is futile for claims requiring direct physical loss 

or damage to property, the district court did not abuse its discretion in denying 

Plaintiffs-Appellants’ motion for leave to amend those claims. Typically, a court 

should grant leave to amend under Federal Rule of Civil Procedure 15(a)(2) “unless 

[it] determines that the allegation of other facts . . . could not possibly cure the 

1 Because the district court correctly interpreted “direct physical loss or damage,” it 

also properly dismissed Plaintiffs-Appellants’ other claims including such 

language. 
6 

deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 

(9th Cir. 1986). Put differently, a court may deny leave to amend when “amendment 

would be futile.” Sonoma Cnty. Ass’n of Retired Emps. v. Sonoma Cnty., 708 F.3d 

1109, 1117 (9th Cir. 2013). No amount of further pleading or fact-finding here could 

cure the deficiency in Plaintiffs-Appellants’ argument—COVID-19 does not cause 

direct physical loss or damage to property. Oregon Clinic, PC v. Fireman’s Fund 

Ins. Co., 75 F.4th 1064, 1073–74 (9th Cir. 2023) (“[N]o additional facts or 

allegations could cure the deficiency” where “allegations depend on an incorrect 

interpretation of the phrase ‘direct physical loss or damage.’”). 

One clause, however, does not contain any language about “direct physical 

loss or damage”—the ES Restaurant Group, Inc.’s (“ESR”) Crisis Event provision.2 

By its terms, that provision requires a “necessary suspension” to trigger coverage. 

And a “necessary suspension” must result from a “necessary closure of [the] covered 

premises.” The district court determined ESR could not sufficiently allege it 

suffered a necessary closure or suspension because it offered “small take-out menus 

from selected locations during shortened hours.” But given the lack of binding 

precedent on this question, we cannot say that no further allegations could cure the 

2 The Worthy Plaintiffs’ policies also include a Crisis Management provision 

containing substantially similar language to the ESR Crisis Event provision. While 

the Worthy Plaintiffs did not argue this claim here, they incorporated by reference 

all of ESR’s arguments in their briefs.
7 

defects in ESR’s Crisis Event claim. Thus, we reverse the district court’s denial of 

leave to amend for ESR’s Crisis Event and Worthy Plaintiffs’ Crisis Management 

claims.

3

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED. 

3 We DENY the Renewed Motion to Certify (Dkt. 101), and we GRANT the two 

Motions to File Amicus Briefs (Dkt. 50, 126).