Opinion ID: 2674882
Heading Depth: 3
Heading Rank: 3

Heading: Pyramid’s Claim of Business Interruption

Text: Pyramid submitted, withdrew, re-submitted, and then modified its business interruption claim. The only lost business currently claimed by Pyramid is from WMS, a potential customer. The burden is on Pyramid to initiate and support this claim under the Policy. See 1231 Euclid, 37 Cal. Rptr. 3d at 802. Thus, to defeat summary judgment against its business interruption claim against Hartford, Pyramid must show that there are material factual issues about whether its loss of potential WMS business is a covered loss under the Policy. Business interruption is covered under the Policy, through an endorsement entitled “Gross Earnings” that deleted and replaced the Policy’s original “Business Income” and “Extra Expense” provisions. The Gross Earnings endorsement provides: We will pay for the actual loss of Business Income you sustain and the actual, necessary and reasonable Extra Expense you incur due PYRAMID TECH. V. ALLIED PUBLIC ADJUSTERS 27 to the necessary interruption of your business “operations” during the “Period of Restoration” due to the direct physical loss of or direct physical damage caused by or resulting from a Covered Cause of Loss to property at “Scheduled Premises.” Pyramid must, therefore, show that it actually lost business income from WMS because of the flood in order to prevail on its claim that Hartford breached the insurance contract by failing to cover Pyramid’s alleged business interruption. Pyramid fails to show that there are material issues of fact that it actually lost WMS business as a result of the flood. Whether WMS would have contracted with Pyramid if there was no flood, and for what amount, is too speculative to support Pyramid’s claim. Although Carmine Greco, the senior buyer at WMS, testified that he had “committed” to buy at least $1 million dollars of inventory from Pyramid, he also explained that any purchase by WMS from Pyramid was subject to the approval of WMS quality control people and subject to additional negotiation. Pyramid and WMS, thus, were still negotiating and had not yet entered into a binding and enforceable contract. Greco further testified that he and Pyramid had discussed contract terms for only a few parts, although he “anticipated” more parts would be purchased from Pyramid. He added that after learning of the flood, he needed the inventory tested before he would consider purchasing any of it. He also stated that if the product had been tested, he “probably” would have bought it. 28 PYRAMID TECH. V. ALLIED PUBLIC ADJUSTERS WMS’s quality control manager, Nick Savich, also participated in the site visit at Pyramid. Savich sent a letter to Pyramid after the visit, stating that WMS did not approve Pyramid as a supplier based on water intrusion. Savich testified at deposition, however, that if he had known that Pyramid did not have humidity control in its warehouse, that fact alone would have disqualified Pyramid as a supplier. To find for Pyramid on its claim of business interruption, a jury would need to speculate that Savich would not have discovered the fact that the warehouse did not have humidity control, that WMS quality control people would have signed off on Pyramid as a supplier, that Greco and Pyramid would have successfully negotiated pricing and other terms for many additional parts, and that Greco would have followed through with a large purchase. The record evidence does not support – and the law does not permit – such speculation. See Neely, 584 F.2d at 346 (“Parties are entitled to have the determination of their rights rest on more than speculation and guesswork. Here, the connection between the proffered evidence and the conclusions is too tenuous to permit a jury to make it.”). Accordingly, we affirm the district court’s grant of the motion for summary judgment against Pyramid on the claim of business interruption.