Court Opinion

ID: 9375055
Source: CourtListenerOpinion
Date Created: 2023-02-24 19:02:21.254984+00
Date Added: 2024-06-11T17:16:55.471360
License: Public Domain

Filed 2/24/23
                        CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                DIVISION ONE

                           STATE OF CALIFORNIA

 BEST REST MOTEL, INC.,                     D079927

         Plaintiff, Cross-defendant and
         Appellant,

         v.                                (Super. Ct. No. 37-2020-00015679-
                                           CU-IC-CTL)
 SEQUOIA INSURANCE COMPANY,

         Defendant, Cross-complainant
         and Respondent.

       APPEAL from a judgment of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Affirmed.
       LiMandri & Jonna, Charles S. LiMandri, Paul M. Jonna, Milan L.
Brandon II for Plaintiff, Cross-defendant and Appellant.
       Nicolaides Fink Thorpe Michaelides Sullivan, Sara M. Thorpe, Timothy
P. Kitt, and Kimberly A. Hartman for Defendant, Cross-complainant and
Respondent.
       Latham & Watkins, John M. Wilson, Brook B. Roberts, Christine G.
Rolph, Steven Lesan, Corey McGehee and Erin Hallagan for Amici Curiae
San Manuel Band of Mission Indians and San Manuel Entertainment
Authority on behalf of Plaintiff, Cross-defendant and Appellant.
      Covington & Burling, Rani Gupta and David B. Goodwin for Amicus
Curiae United Policyholders for Defendant, Cross-complainant and
Respondent.
      Crowell & Moring and Mark D. Plevin for Amicus Curiae American
Property Casualty Insurance Association Policyholders for Defendant, Cross-
complainant and Respondent.

      This appeal from a summary judgment in favor of Sequoia Insurance
Company (Sequoia) is one of thousands of cases nationwide involving a claim
for business interruption coverage arising out of the COVID-19 pandemic.
The outcome here turns on whether there is evidence creating a triable issue
that the insured, Best Rest Motel, Inc. (Best Rest), sustained lost business
income “due to the necessary ‘suspension’ ” of its operations “caused by direct
physical loss of or damage” to the insured property.
      In Inns-by-the-Sea v. California Mut. Ins. Co. (2021) 71 Cal.App.5th
688 (Inns), this court confronted the same legal issue and policy language,
albeit in a different procedural context (a demurrer). In that case, we held
there was no coverage where the complaint alleged that “COVID-19 strains
physically infect and can stay alive on surfaces for extended periods” and
government shut-down orders required the insured to cease operations.
(Id. at pp. 692, 693‒694.)
      Although Inns might thus seem to undermine if not entirely foreclose
Best Rest’s case, we limited our holding by positing in dicta a “hypothetical
scenario” where “an invisible airborne agent would cause a policyholder to
suspend operations because of direct physical damage to property.” (Inns,
supra, 71 Cal.App.5th at p. 704.) We thus left open the possibility that if a
business “ ‘which could have otherwise been operating’ ” was required to

                                       2
“ ‘shut down because of the presence of the virus within the facility,’ ” then
“ ‘perhaps’ ” the business “ ‘could successfully’ ” demonstrate “ ‘that the virus
created physical loss or damage in the same way some chemical contaminant
might have.’ ” (Id. at pp. 704‒705, italics added.)
      Best Rest contends its case “falls directly within the exception
discussed by this [c]ourt in [Inns].” Supported by an infectious disease
expert’s declaration, Best Rest maintains that virus-infected droplets landed
on surfaces in the hotel, and the presence of these droplets—known as
fomites—caused physical loss or damage, rendering the property incapable of
safely providing lodging.
      As we explain, Best Rest’s argument fails because the record contains
no evidence creating a triable issue that the hotel “could have otherwise been
operating” but for the presence of COVID-19 on the premises. Indeed, Best
Rest’s own evidence established the exact opposite was true. Its vice
president and operating partner, Evans Salem, testified that the phones were
“ringing off the hook[ ]” with cancellations—not because of COVID-19 in the
hotel, but because of government shut down orders and travel restrictions
that shuttered tourism The hotel’s general manager, Yasmine Zaya,
similarly testified in deposition:
         “Q: So you had said that there were—there was a
         reduction in people traveling. [¶] So other than a
         reduction in people traveling, was there any reason why
         you could not rent out the rooms at the motel?
         “A: No.”

What we said in Inns is also true here—even if “ ‘a cleaning crew Lysol-ed
every inch of the [hotel], it could still not’ ” rent out its rooms. (Inns, supra,
71 Cal.App.5th at p. 704.) Accordingly, we affirm summary judgment in

                                         3
Sequoia’s favor because there is no evidence creating a triable issue that
COVID-19 in the hotel caused the claimed lost income.

              FACTUAL AND PROCEDURAL BACKGROUND

      Best Rest owns and operates a 126-room Holiday Inn Express franchise
in San Diego. Its business comes mostly from tourists who stay at the hotel
while visiting Sea World, the San Diego Zoo, Safari Park, Legoland, and
other local attractions. Families attending graduation ceremonies at the
nearby Marine Corps Recruit Depot, as well as cruise ship passengers and
people attending events at the San Diego Convention Center, also account for
a significant number of its guests.
      In 2019, Best Rest purchased a commercial multiperil insurance policy
(the Policy) from Sequoia. It included “Business Income (and Extra Expense)
Coverage.” Sequoia agreed to “pay for the actual loss of Business Income”
that Best Rest sustained “due to the necessary ‘suspension’ ” of its operations
“caused by direct physical loss of or damage to” the insured property from a
covered cause of loss. (See, e.g., Shaw Mort. Corp. v. Peerless Ins. Co.
(S.D.Cal. 2009) 615 F.Supp.2d 1172, 1174 [coverage for loss of business
income during restoration where fire destroyed store].)
      The Policy also included a “Coverage Form Extender.” Among other
things, it provided that Sequoia would pay for the actual loss of business
income that Best Rest sustained due to the necessary suspension of its
operations caused by “direct physical loss or damage to ‘dependent
property.’ ” “Dependent Property” is defined to include “property operated by

                                       4
others whom you depend on to: [¶] . . . [¶] Attract customers to your

business . . . .”1
      Before March 2020, Best Rest enjoyed an average occupancy rate of
about 94 percent. In March 2020, however, it “experienced a wave of
reservation cancellations.” Customers explained “that they were cancelling
because of the coronavirus and because major tourist attractions and
businesses in the San Diego area were closed, or were in the process of
closing.” More cancellations occurred because the Marine Corps suspended
public graduation ceremonies. Conventions were also cancelled. Salem
testified that travel reductions had a “[m]assive impact” on the business.
In a declaration, he added:
          “As a result of the closure of these businesses, and the
          cancellations of conventions and graduations due to
          coronavirus, in total, business dropped off at Best Rest by
          about 90% during the second half of March 2020.”

      The hotel nevertheless continued to operate during the pandemic,
albeit at a much reduced occupancy. Plexiglass barriers and sanitation
stations were installed. Management posted signs encouraging social
distancing.
      But despite these precautions, several employees and guests became
infected with COVID-19. One guest was taken from the room on a stretcher
by men in hazmat suits. Hotel personnel “intensively sanitized” those areas
and could not use them until they were “safe to enter.”

1      For example, a raw material supplier’s factory might be destroyed by
fire, compelling the insured to curtail operations for lack of these goods.
(See Tarr, Where Have All the Customers Gone-Business Interruption
Coverage for Off-Premises Events (2001) 30 Brief 21, 28.)
                                        5
      Additionally, due to the suspected presence of COVID-19 and/or risk of
transmission, the hotel closed its gym and swimming pool, and changed the
breakfast area to take-out only. Significantly, however, in deposition
testimony Salem conceded that the hotel did not shut down any guest rooms.
      In March 2020, Best Rest submitted a claim to Sequoia under the
business income coverage. A few weeks later, Sequoia denied coverage on the
grounds that “there was no direct physical damage” to the covered property
and no “direct physical loss of or damage to property, other than at the
described premises, caused by or resulting from any Covered Cause of Loss.”
      In May 2020 (more than a year before our Inns decision), Best Rest
sued Sequoia for breach of contract, breach of the implied covenant of good
faith and fair dealing, and declaratory relief. In a section of the complaint
entitled “The Loss,” excerpts of which are quoted below, Best Rest alleged
that its lost business income was the result of (1) state government shut
down orders, (2) federal border closings, and (3) community-wide COVID-19
infections, all combining to cause massive reductions in tourism and travel.
Key allegations in the complaint included:
   • “Because tourism and non-essential business travel were suspended
     pursuant to Governor Newsom’s Executive Order, Best Rest suffered a
     dramatic surge of reservation cancellations and a disastrous
     evaporation of business income.”
   • In March 2020, the federal government closed its border with Mexico
     and Canada to any nonessential travel. “These closures further
     exacerbated damage to [Best Rest’s] business.”
   • “As a result of the Emergency Order, Executive Order, Local Order,
     and community infection of COVID-19 in and around Old Town San
     Diego, the tourist-oriented businesses adjacent to the Insured Property,
     as well as regional theme parks and other facilities that attract visitors
     to the area, have been closed. Large conventions like Comic-Con 2020,
     university graduations, and other large community gatherings on
     which Best Rest has historically relied to fill vacancies have been

                                       6
         canceled. . . . [T]he combined impacts of these and other actions taken
         to comply with the Emergency Order, Executive Order, and Local Order,
         as well as community infection of COVID-19 adjacent to the subject
         property, have caused a precipitous decline in business income.” (Italics
         added.)2

         Sequoia moved for summary judgment in April 2021. The timing is
important because this was several months before our opinion in Inns. As a
result, although causation is addressed in the motion, it was not the focal
point.
         Relying on MRI Healthcare Center of Glendale, Inc. v. State Farm
General Ins. Co. (2010) 187 Cal.App.4th 766 (MRI Healthcare), Sequoia
asserted that “direct physical loss or damage requires a ‘distinct,
demonstrable, physical alteration of the property.’ ” Colorfully stating that
COVID-19 “ ‘harms people, not property,’ ” Sequoia maintained there was no
coverage as a matter of law. Alternatively, Sequoia maintained “there is no
nexus between Best Rest’s losses and the alleged presence of COVID-19 at
the motel.” It asserted, “Other than the fact that there are fewer people
traveling, there is no reason Best Rest could not rent its motel rooms.”
         Opposing the motion, Best Rest submitted a declaration from a board-
certified infectious disease specialist, Erik Dubberke. He explained that
COVID-19 is transmitted by “respiratory droplets” that can “remain viable
and infectious” on surfaces for “days.” Accordingly, when a person “touches”

2     In its opening brief, Best Rest claims that it “asserted in its
complaint . . . that at least part of its facilities were closed as a result of the
COVID-19’s presence on its insured property.” But the only citation given to
support that assertion is not to the complaint, but rather to Zaya’s
declaration submitted in opposition to the summary judgment motion.
                                          7
an infected surface, “fomite transmission” can occur.3 Dubberke opined that
COVID-19 causes “direct physical damage to surfaces and air by making
them infectious.”
      Best Rest also emphasized the absence of a “virus exclusion” in its
Sequoia policy. It maintained that “ ‘direct physical loss or damage to

property’ encompasses ‘loss of use.’ ”4 On the issue of causation, Best Rest
claimed the evidence created a triable issue that “the coronavirus itself, as
well as orders relating to the presence of the” virus “independently” caused
its business losses. It distinguished MRI Healthcare on numerous grounds,
including that it involved a mechanical failure in medical equipment, not an
“external force” like a virus. In sum, Best Rest asserted that if Sequoia
intended “direct physical loss of or damage to” property to mean structural or

tangible alteration, it should have plainly said so.5
      After conducting a hearing, the superior court granted summary
judgment in Sequoia’s favor. Citing MRI Healthcare, the court concluded

3      A fomite is an object that “may be contaminated with infectious agents
(such as bacteria or viruses) and serve in their transmission.” (Merriam
Webster Dictionary 
[as of Feb. 24, 2023] archived at .)
4      In Inns, we held that “ ‘direct physical loss’ of property” does not
include loss of use. (Inns, supra, 71 Cal.App.5th at p. 705, fn. 18.) But we
left open the possibility that in some other factual scenarios, direct physical
damage to property could result in a covered loss of use. (Id. at pp. 704‒705.)
5     In the trial court, Best Rest also claimed that its lost income as well as
expenses it incurred to avoid or minimize the suspension of business
operations were also covered losses under the Civil Authority provisions in
the policy. The trial court rejected that argument. As Sequoia points out,
Best Rest has not challenged that aspect of the ruling in its opening brief.
Therefore, the point is deemed abandoned. (Behr v. Redmond (2011) 193
Cal.App.4th 517, 538.)
                                        8
that as a matter of law, “there was no direct physical damage or loss of
property” that would trigger coverage. About two weeks later, this court
issued its opinion in Inns.

                                   DISCUSSION

      This case is strikingly similar to Inns. Both involve a lodging facility’s
claim for business losses as a result of the COVID-19 pandemic. (See Inns,
supra, 71 Cal.App.5th at pp. 692‒693.) In deciding that case, we assumed
that “ ‘at some point, a person infected with COVID-19 was known to have
been present at one or more of [the insured’s] lodging facilities.’ ” (Id. at
p. 699.) As here, the insurance policy covered actual loss of business income
“caused by direct physical loss of or damage to [covered] property at [the]
premises . . . caused by or result[ing] from any [c]overed [c]ause of [l]oss.”
(Id. at p. 694, italics omitted.) The policy in Inns did not define “ ‘direct,’ ”
“ ‘physical,’ ” “ ‘loss,’ ” or “ ‘damage.’ ” (Id. at p. 699, fn. 13.) Neither does
Best Rest’s.
      In Inns, the insured argued that even though COVID-19 did not
physically alter the structure of property, it gave rise to “ ‘physical damage’ ”
by rendering it uninhabitable and unavailable for its intended use. (Inns,
supra, 71 Cal.App.5th at p. 701.) We acknowledged there were analogous
cases involving noxious odors, gases, and vapors that might support that

proposition. (Id. at pp. 701‒702, 703.)6

6      For example: Permeating or pervasive unpleasant odors such as
“ ‘locker room’ ” smell (Essex Ins. Co. v. BloomSouth Flooring Corp. (1st Cir.
2009) 562 F.3d 399, 406); cat urine (Mellin v. N. Sec. Ins. Co., Inc. (N.H. 2015)
115 A.3d 799, 801); toxic gas (TRAVCO Ins. Co. v. Ward (E.D.Va. 2010) 715
F.Supp.2d 699, 708 [physical damage to the property is not necessary where
the building “has been rendered unusable by physical forces”]); and gasoline
                                           9
      Indeed, more than 60 years ago, an insurer raised the same argument
that Sequoia advocates in this appeal—that coverage is limited to instances
in which tangible injury to the physical structure itself has occurred. (See
Hughes v. Potomac Ins. Co. (1962) 199 Cal.App.2d 239, 249 (Hughes).)
Hughes rejected the argument, stating:

         “Common sense requires that a policy should not be
         . . . interpreted” in such a way that an insured home “might
         be rendered completely useless to its owners, [yet] [the
         insurer] would deny that any loss or damage had occurred
         unless some tangible injury to the physical structure itself
         could be detected.” (Ibid.)7

      Nevertheless, Inns determined there was no coverage for direct
physical damage because the insured did not allege (and could not truthfully
amend the complaint to allege) that the presence of COVID-19 on its
premises caused the facility to be uninhabitable. (Inns, supra, 71
Cal.App.5th at p. 703.) Government closure orders were issued because the
virus was present throughout the state—not because of any particular
presence on the hotel’s premises. (Ibid.) The insured in Inns alleged it
ceased operations “ ‘as a direct and proximate result’ ” of the government
shut-down orders; it did not allege the particular presence of virus on its
premises proximately caused its closure. (Ibid.) Thus, there was a fatal
“lack of causal connection between the alleged physical presence of the virus
on [the insured’s] premises and the suspension of [its] operations . . . .”

vapors saturating a building, making it uninhabitable (Western Fire Ins. Co.
v. First Presbyterian Church (1968) 165 Colo. 34, 39).
7     Inns characterized Hughes as the “central relevant California opinion”
on this point. (Inns, supra, 71 Cal.App.5th at p. 701.) Hughes was
disapproved on other grounds in Sabella v. Wisler (1963) 59 Cal.2d 21, 34.
                                        10
(Id. at p. 704.) The insured’s business “ ‘would have . . . remained shut
regardless of whether the virus was present in its facilities.’ ” (Id. at p. 705.)
      Inns also rejected the insured’s argument that “ ‘direct physical loss
of’ ” property occurs merely because the insured property cannot function as
intended. (Inns, supra, 71 Cal.App.5th at p. 705.) We explained that
argument “collapses coverage for ‘direct physical loss’ into ‘loss of use’
coverage” and was unsupported by the policy language as a whole as well as

case law. (Ibid.) We followed Couch’s treatise8 as well as “numerous courts
[that] have observed the words ‘direct’ and ‘physical’ preclude the argument
that coverage arises in a situation where the loss incurred by the policyholder
stems solely from an inability to use the physical premises to generate
income, without any other physical impact to the property.” (Inns, at p. 706.)
Inns explained that “although the dictionary definition of ‘loss’ could
encompass the mere loss of use of real property, the surrounding context of
the word ‘loss’ in the [p]olicy unambiguously indicates that ‘direct physical
loss of’ property cannot reasonably be interpreted to have that meaning.”
(Id. at p. 705, fn. 18.) Citing Couch, we held that to trigger coverage for
direct physical loss, there must be a “ ‘distinct, demonstrable, physical

alteration of the property.’ ”9 (Inns, at p. 706.)

8     10A Couch on Insurance (3d ed. 2016) § 148:46 (Couch).
9     An article published after Inns was submitted for decision has
questioned the validity of Couch’s summary. (Lewis, et al., Couch’s “Physical
Alteration” Fallacy: Its Origins and Consequences (2021) 56 Tort, Trial &
Ins. Prac. L.J. 621, 624.) Based in part on that article, amicus curiae San
Manuel Band of Indians asks that we “reject the Couch standard as an
incorrect statement of law.” It is a fascinating question, but we decline to
consider it because, as we will explain, Best Rest’s case fails for a different
reason—lack of causation.
                                        11
      We further noted that even where other courts have found that
“ ‘contamination of a structure’ that seriously impairs or destroys its function
may qualify as direct physical loss”—they decline to find coverage for “short-
lived” contamination. (Inns, supra, 71 Cal.App.5th at p. 703 and fn. 17.) The
paradigm example may be Mama Jo’s Inc. v. Sparta Ins. Co. (11th Cir. 2020)
823 Fed. Appx. 868. There, a restaurant sought lost income coverage when
dust and debris from nearby road construction decreased customer traffic.
(Id. at p. 871.) Rejecting the claim, the Eleventh Circuit stated, “an item or
structure that merely needs to be cleaned has not suffer a ‘loss’ which is both
‘direct’ and ‘physical.’ ” (Id. at p. 879; see also Kim-Chee LLC v. Phila. Indem.
Ins. Co. (W.D.N.Y. 2021) 535 F.Supp.3d 152, 160‒161 [collecting similar

cases].)10
      Nevertheless, Inns left one coverage door slightly ajar. Looking to the
cases involving noxious gases and odors, we observed in dicta, “[I]t could be
possible, in a hypothetical scenario, that an invisible airborne agent would
cause a policyholder to suspend operations because of direct physical damage
to property.” (Inns, supra, 71 Cal.App.5th at p. 704.) We posed the example
of “ ‘a business—which could have otherwise been operating—[but] had to
shut down because of the presence of the virus within the facility.’ ” (Ibid.)
For instance, “ ‘a restaurant might need to close for a week if someone in its

10     Applying this reasoning here, if the virus can be quickly cleaned up
with commonly available disinfectants, and there is no evidence that surfaces
where fomites once were remain dangerous, it follows there is no physical
loss of or damage to property. (See Verveine Corp. v. Strathmore Ins. Co.
(Mass. 2022) 184 N.E.3d 1266, 1276 [“Evanescent presence of a harmful
airborne substance that will quickly dissipate on its own, or surface-level
contamination that can be removed by simple cleaning, does not physically
alter or affect property”].)
                                       12
kitchen tested positive for COVID-19, requiring the entire facility to be
thoroughly sanitized and remain empty for a period.’ ” (Id. at pp. 704‒705.)
      Now on appeal, Best Rest has reconfigured its arguments to embrace
the Inns dicta. It contends that its case “directly embodies the principles
applicable to the hypothetical situation envisioned by this [c]ourt in [Inns].”
It maintains there is a triable issue that “it suffered various COVID-19
contaminations, which necessitated the closure of hotel facilities and the loss
of hotel rooms for substantial periods of time.” The hotel insists it submitted
evidence to support a finding that its vacant rooms were not “because of any
civil order, or as a precaution” but instead “because COVID-19 was on the
premises.” (Underscore omitted.)
      Setting aside any ramifications from the shift in legal theory, the
evidence simply does not support Best Rest’s assertions. Our analysis
logically starts with Governor Newsom’s Executive Order No. N-33-20,
colloquially referred to as the “stay-at-home order” issued in March 2020. It
directed California residents to “immediately heed” public health directives,
including instructions that individuals “stay home” except as needed for
“critical infrastructure sectors.” Best Rest was not a target of a specific
closure order. Almost the entire state economy was ordered to shut down.
      Of course, on summary judgment we credit Best Rest’s evidence that
the virus was present in or on the insured premises at some point. (See
Fajardo v. Dailey (2022) 85 Cal.App.5th 221, 226.) We also accept as true
Dubberke’s opinion that COVID-19 has physical properties and when virus
particles are expelled, objects they land on and the surrounding air is
rendered temporarily unsafe for human habitation.
      But the difficulty for Best Rest is that without evidence creating a
triable issue on causation, none of that matters. The dispositive issue in this

                                       13
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.
      This nexus is required because the policy covers “direct physical loss of
or damage to” certain property. When used here—as an adjective—“direct”
commonly means “stemming immediately from a source,” or as “characterized

by close logical, causal, or consequential relationship.”11 (See Huntington
Ingalls Industries, Inc. v. Ace American Ins. Co. (Vt. Sup.Ct. 2022) 2022 VT
45, at ¶33 [“[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.’ ”].)
      In deposition, Salem testified hotel reservations were cancelled because
would-be guests “can’t travel” and because San Diego attractions were
closed—not because of the virus’s presence in hotel property:
          “Q: So you said that in March of 2020, at the time you
          made this insurance claim, you had already seen a
          reduction in tourists, is that right?

          “A: Definitely, yes.

          “Q: What did you observe in that regard?

          “A: Phones are ringing off the hook[ ], people trying to
          cancel their stay[ ], because they can’t travel or, you know,
          all the attractions are around us and other properties,
          dependent properties are closed.” [¶] . . . [¶]

          “Q: I see. So if graduations aren’t happening, then you are
          not going to have those people staying at the motel; correct?

11     [as of Feb. 24, 2023] archived at .
                                       14
         “A: Yes.

         “Q: And if people aren’t traveling for conventions, you don’t
         have those people staying at the motel; right?

         “A: Yes.

         “Q: And if people aren’t going to the tourist attractions,
         you are not going to have people staying at the motel;
         right?

         “A: Yes.”

      He further testified that the hotel lost “many reservations on the books
for conventions in March, April, May, June, July and August” but they were
“canceled because of coronavirus . . . they could not hold those events.” Best
Rest also lost “30 to 40 percent” of its occupancy when the Marine Corps
suspended public graduation ceremonies. Salem explained that as a result,
the hotel “had to cancel tons of reservations,” creating a “huge” loss.
      Similarly, general manager Zaya testified that a “major” reduction in
tourism “[b]ecause of the pandemic” had “a direct impact on [the hotel’s]
business.” She also explained that one guest had apparently become infected
while at the hotel. That room was sanitized and cordoned off for 10 days.
But even then, Best Rest did not lose any guest business. A fair reading of
Zaya’s deposition testimony is that people were not staying at the hotel
because “[p]eople are afraid to travel” and “a lot of corporate conventions
were cancelled,” not because “of anything specific” to the Best Rest property.
When some employees contracted COVID-19, the hotel redoubled its
sanitizing efforts. Yet still, it did not close any portion of the hotel as a result
of an employee contracting the virus. To the contrary, Zaya conceded that
“other than a reduction in people traveling,” there was no other reason the
hotel could not rent out its rooms:

                                        15
         “Q: So other than a reduction in people traveling, was
         there any reason why you could not rent out the rooms at
         the motel?

         “A: No.”12

      Moreover, although Best Rest closed one floor of the hotel, that was for
the convenience of hotel staff. As she explained:
         “[F]or example, why do I have to vacuum a hallway that
         has 25 rooms if I rented one room in that building or that
         floor? So I put them on one floor instead of scattering into
         three.”

Zaya further conceded that the hotel always had rooms available for
customers wanting to stay there:
         “Q: But you always had rooms available to rent if you had
         customers willing to occupy those rooms?

         “A: Absolutely.”

      As we explained in Inns, even if Best Rest had eradicated all traces of
COVID-19 from its premises, it still would have suffered the same lost
income. Because there is no evidence creating a triable issue that Best Rest’s
claimed business loss was caused by the presence of the virus in or on the

insured property, Sequoia was entitled to summary judgment.13

12    Salem similarly testified that Best Rest did not shut down any
guestrooms in 2020.
13     Not having the benefit of our opinion in Inns, the trial court granted
summary judgment on different grounds—finding there was no direct
physical loss of or damage to property. Nevertheless, we may affirm an order
granting summary judgment if it is correct on any of the grounds asserted in
the trial court regardless of the trial court’s stated reasons. (Grebing v. 24
Hour Fitness USA, Inc. (2015) 234 Cal.App.4th 631, 637.)
       Our disposition makes it unnecessary to address Best Rest’s contention
that COVID-19 in the hotel constitutes damage to property, or alters
                                      16
      In urging the opposite result, Best Rest insists it presented evidence
that “the presence of the coronavirus compelled [it] to close its breakfast
seating area” and it loss the “use of hotel rooms . . . for a period of over a
week.” But to support those assertions, it does not cite any deposition
testimony. Rather, it relies on lawyer-prepared declarations signed by Salem
and Zaya.
      These declarations are very carefully written. For example, Zaya’s
declaration states that after a guest was removed from the hotel by
ambulance, “we were unable to rent the room to guests and were physically
unable to use the room for any purpose.” We accept this as true. But it’s a
half-truth. Left unsaid is that Best Rest could not have suffered any lost
income as a result because the hotel had plenty of other vacant rooms. The
problem was not too few rooms, but no customers. In any event, Zaya’s
deposition testimony—that the hotel “always had rooms available to rent if
[it] had customers willing to occupy those rooms”—contradicts the suggestion
of lost occupancy income in her declaration—and therefore does not create a
triable issue of fact. A party cannot create a triable issue of fact by providing

property, within the meaning of the policy. Likewise, it is unnecessary to
address several other issues raised by the parties, including (1) whether the
trial court correctly relied on MRI Healthcare in determining that no covered
loss occurred; (2) the effect (if any) on the lack of a virus exclusion in the
hotel’s policy; or (3) whether coverage is precluded under the policy’s “loss of
use” exclusion. As amicus curiae United Policyholders points out, appellate
courts generally will not address issues whose resolution is unnecessary to
disposition of the appeal.
       Finally, because Best Rest’s breach of contract claim fails, so
necessarily must its claim for breach of the implied covenant of good faith
and fair dealing. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1,
36.) For this reason, we have not addressed the parties’ arguments regarding
the handling of the claim.
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a declaration that contradicts its prior deposition testimony. (See Shin v.
Ahn (2007) 42 Cal.4th 482, 500, fn. 12.)
      Best Rest’s brief is also very carefully written. The hotel asserts, “[T]he
only reason that [its] facilities were shut was because the virus was present.”
The hotel cites a portion of Zaya’s declaration stating, “The pandemic also
caused a number of rooms to be placed ‘out of order’ and remain unoccupied
for extended periods of time.” In its brief, the hotel asserts that as a result of
the virus’s presence in those rooms, Best Rest was “precluded” from “renting
out its rooms after COVID-19 infected individuals stayed in them” and also
“prohibited Best Rest from using certain public areas of the hotel.”
      We accept all this as being true. The problem is that it ignores the real
issue. The question is whether there is evidence creating a triable issue that
cordoned off guest rooms and closing the gym and other public areas caused
any loss of business income. The deposition testimony, which we quoted
above, clearly and unequivocally states it did not.
      Turning to its expert’s declaration, Best Rest also contends the
evidence created a triable issue that COVID-19 “altered” its property. It
points to the virologist’s opinion that COVID-19 infected persons “will cause
direct physical damage to surfaces and air” by occupying indoor areas and
touching surfaces. (Italics added.)
      But this argument suffers from the same problem. We accept as true,
for purposes of reviewing summary judgment, that COVID-19 fomites were in
the hotel, and for at least some period of time rendered the hotel or parts of it
uninhabitable. To trigger coverage, the damage or loss must be “direct,” and
as explained, there is no evidence creating a triable issue that fomites—as

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distinguished from massive reductions in tourism—caused any of Best Rest’s

lost income.14
      For similar reasons, we are not persuaded by Best Rest’s reliance on
Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund Insurance Co. (2022)
81 Cal.App.5th 96 and Shusa, Inc. v. Century-National Insurance Company
(2022) 87 Cal.App.5th 250. Each of those appeals arose from a judgment of
dismissal after a demurrer was sustained without leave to amend. The
procedural setting is important because under the applicable standard of
review, both the trial and appellate courts were required to accept the well-
pleaded allegations as true. In Marina Pacific, the plaintiff alleged that
COVID-19 bonded or adhered to objects in the hotel which “required the
closure or suspension of [its] operations.” (Id. at pp. 101‒102.) Similarly, in
Shusa, the plaintiff (restaurant) alleged it suffered physical loss or damage to
its dining rooms and other property “ ‘caused by the actual presence of virus
droplets in the air and on the surfaces in the vicinity of and in [its]
restaurant.’ ” (Shusa, at p. 104.) Given those allegations, deemed true on
demurrer, the appellate courts found the required nexus between the virus
and the lost income adequately alleged for purposes of withstanding a
demurrer. In sharp contrast here, Best Rest’s appeal from summary
judgment requires admissible evidence. We do not assume the truth of the
allegations in the complaint. (Code. Civ. Proc., § 437c, subd. (p)(2); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850–851; Bushling v. Fremont
Medical Center (2004) 117 Cal.App.4th 493, 506.)

14    Additionally, the virologist’s assertion that COVID-19 constitutes
“direct physical damage” is an inadmissible legal conclusion. In the trial
court, Sequoia properly objected on these grounds.
                                        19
      For many of these same reasons, we also reject Best Rest’s related
argument that it established a triable issue under the “Dependent
Properties” provisions in its Sequoia policy. It provides coverage “for the
actual loss of Business Income” that Best Rest sustained “due to the
necessary suspension of [its] operations” where the suspension is “caused by
direct physical loss of or damage to ‘dependent property.’ ” Best Rest
contends that when local tourist attractions such as Sea World and the San
Diego Zoo (i.e. dependent properties) closed during the pandemic, its hotel
business “evaporated.” But even assuming that tourist attractions such as
Sea World and the San Diego Zoo are “dependent properties,” there is no
evidence creating a triable issue that those businesses closed due to their
own “direct physical loss of or damage”—as distinguished from government

shut down orders and the lack of sufficient tourists.15

15      We granted leave to permit the filing of several amicus curiae briefs.
Generally, they were quite helpful as they approached the issues from
different angles. But one urged us to affirm because to impose “this type of
risk” on insurers would cost the industry hundreds of billions of dollars per
month and “distort the insurance mechanism.” The same brief also went
outside the record to inform us that Best Rest was the beneficiary of nearly
$700,000 in government relief stemming from the pandemic. These types or
arguments play no role in our decision. We reiterate the comments of the
Supreme Court in Aerojet-General Corporation v. Transport Indemnity
Co. (1997) 17 Cal.4th 38, rejecting a similar doomsday argument by the
insurance industry: “[T]he pertinent policies provide what they provide.
[The policyholder] and the insurers were generally free to contract as they
pleased. They evidently did so. They thereby established what was ‘fair’ and
‘just’ inter se. We may not rewrite what they themselves wrote. We must
certainly resist the temptation to do so here simply in order to adjust for
chance—for the benefits it has bestowed on one party without merit and for
the burdens it has laid on others without desert.” (Id. at p. 75.)
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                              DISPOSITION

     The judgment is affirmed. Respondent is entitled to costs on appeal.

                                                                   DATO, J.
WE CONCUR:

HUFFMAN, Acting P. J.

IRION, J.

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