Court Opinion

ID: 9881476
Source: CourtListenerOpinion
Date Created: 2023-10-02 19:04:24.969071+00
Date Added: 2024-06-11T14:08:33.786960
License: Public Domain

Filed 10/2/23
            CERTIFIED FOR PARTIAL PUBLICATION *

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                        DIVISION SEVEN

JRK PROPERTY HOLDINGS,                   B321806
INC.,
                                         (Los Angeles County
       Plaintiff and Appellant,          Super. Ct. No.
                                         21STCV19983)
       v.

COLONY INSURANCE
COMPANY et al.,

       Defendants and Respondents.

       APPEAL from an order of dismissal of the Superior Court
of Los Angeles County, Daniel S. Murphy, Judge. Affirmed in
part, reversed in part, and remanded.
       Spertus, Landes & Umhofer, Kevin J. Minnick; Cohen
Ziffer Frenchman & McKenna, Robin Cohen, Meredith Elkins
and Orrie A. Levy, for Plaintiff and Appellant.

*     Pursuant to California Rules of Court, rules 8.1100 and
8.1110, this opinion is certified for publication with the exception
of part D of the Discussion.
      Clyde & Co. US, Susan Koehler Sullivan, Douglas J.
Collodel and Brett C. Safford for Defendants and Respondents
Endurance American Specialty Insurance Company and Maxum
Indemnity Company.
      Duane Morris, Max H. Stern, Jessica E. La Londe and
Holden Benon for Defendants and Respondents Ironshore
Specialty Insurance Company, Ategrity Specialty Insurance
Company, RSUI Indemnity Company and Certain Underwriters
at Lloyd’s, London Subscribing to Policy No. (UMR)
B0180PG1903066, and Certain Underwriters at Lloyd’s, London
Subscribing to Policy No. (UMR) B0180PG1902622.
      Cummins & White, Larry M. Arnold, Margaret R.
Miglietta, Noura K. Rizzuto; Stewart Smith and William F.
Stewart for Defendant and Respondent Colony Insurance
Company.
      Kennedys CMK and Susan Frances Dent for Defendant and
Respondent Crum & Forster Specialty Insurance Company.
      Phelps Dunbar, Jay R. Sever; Selman Leichenger, Edson,
Hsu, Newman & Moore and Meka Moore for Defendant and
Respondent Scottsdale Insurance Company.
      Dickinson Wright and Bennett Evan Cooper for Defendant
and Respondent Evanston Insurance Company.
      Akerman and Michael R. Weiss for Defendants and
Respondents Homeland Insurance Company of New York and
Hallmark Specialty Insurance Company.
      Faegre Drinker Biddle & Reath, Kristopher S. Davis;
Rinker Danzig Scherer Hyland & Perretti, Brian E. O’Donnell
and Maura C. Smith for Defendant and Respondent Mitsui
Sumitomo Insurance Company of America.

                             2
                    _________________________

       JRK Property Holdings, Inc. appeals from the order of
dismissal with prejudice entered after the trial court granted
without leave to amend the motion for judgment on the pleadings
filed by primary insurer Ironshore Specialty Insurance Company
(Ironshore) and excess insurers RSUI Indemnity Company
(RSUI), Evanston Insurance Company (Evanston), and others
(collectively, Insurers). 1 JRK sued Insurers for breach of contract
and declaratory judgment after Insurers denied coverage for
JRK’s lost business income that resulted from its restricted
operations and diminished rental revenue due to the COVID-19 2
pandemic and associated government orders.
       On appeal, we again address whether the alleged presence
of the COVID-19 virus on an insured’s properties constitutes

1      Insurers also include excess insurers Certain Underwriters
at Lloyd’s, London subscribing to Policy No. (UMR)
B0180PG1903066, Certain Underwriters at Lloyd’s, London
subscribing to Policy No. (UMR) B0180PG1902622, Ategrity
Specialty Insurance Company, Colony Insurance Company, Crum
& Forster Specialty Insurance Company, Endurance American
Specialty Insurance Company, Hallmark Specialty Insurance
Company, Homeland Insurance Company of New York, Maxum
Indemnity Company, Mitsui Sumitomo Insurance Company of
America, and Scottsdale Insurance Company. The motion was
also brought on behalf of other primary insurers, but the trial
court denied the motion as to those insurers because their
policies provided coverage for interruption by communicable
disease. Those insurers are not parties to this appeal.
2     For ease of reference, we refer to the SARS-CoV-2 virus, its
variants, and the coronavirus disease caused by them as COVID-
19.

                                 3
“direct physical loss or damage” to the insured properties,
providing coverage under the insurance policies at issue. In the
unpublished portion of the opinion, we conclude JRK adequately
alleged for purposes of Insurers’ motion for judgment on the
pleadings that contamination from the COVID-19 virus
physically altered the premises of its properties.
       In the published part of this opinion, we address Insurers’
argument in the alternative that coverage was barred by a
pollution exclusion that applied to pollution caused by, among
other things, the release, discharge, or dispersal of pollutants or
contaminants, where the terms “pollutants or contaminants” are
defined to include a contaminant that can cause or threaten harm
to human health or damage to property, including a “bacteria,
virus, or hazardous substances” listed under specified
environmental laws. The Supreme Court in MacKinnon v. Truck
Ins. Exchange (2003) 31 Cal.4th 635, 639-640 (MacKinnon) held
that the historical background of the pollution exclusion shows
its inclusion in insurance policies was intended to address only
traditional sources of environmental pollution. We reject
Insurers’ argument that inclusion of the term “virus” in the
definition of a contaminant transforms an exclusion that applies
to “pollution” (and typically environmental pollution) into one
that encompasses the spread of a virus due to the normal human
activities of breathing and touching surfaces.
       JRK also challenges the trial court’s holding with respect to
RSUI and Evanston that their policies’ pathogen exclusions bar
coverage. We conclude in the published portion of the opinion
that the RSUI pathogen exclusion applies because it bars
coverage for “losses or damage” caused by the discharge or
dispersal of a “pathogenic” material. Clearly the COVID-19 virus

                                 4
is a pathogen. Although the exclusion uses the traditional
discharge terms of art addressed in MacKinnon, the exclusion
contains no reference to pollution. And the Evanston pathogen
exclusion specifically bars loss or damage caused by the spread of
an organic pathogen, defined to include a virus.
       We reverse as to all Insurers except Evanston and RSUI.

      FACTUAL AND PROCEDURAL BACKGROUND

A.     JRK’s Business and Insurance Policies
       As alleged in the complaint, JRK was a real estate
investment firm with investments in approximately 100 hotel
and residential properties across 22 states at the time the
COVID-19 pandemic took hold. JRK had $250 million in
business interruption property insurance coverage it purchased
“in a layered program” from Insurers, with each insurer
providing a specified share of the total coverage. The insurance
policies (Policies) provided substantially identical coverage
incorporating or following a “master property policy” (with
limited exceptions discussed below). The Policies were in effect
from June 1, 2019 to June 1, 2020.
       The Policies provided business interruption coverage for
“loss resulting from necessary interruption of business conducted
by the Insured and caused by direct physical loss, damage, or
destruction by any of the perils covered herein.” However, the
Policies included a pollution exclusion for “[p]ollution caused
directly or indirectly by the release, discharge, dispersal, seepage,

                                 5
migration, or escape of pollutants or contaminants.” 3 “Pollutants
or contaminants” were defined as any “solid, liquid, gaseous or
thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste, which after its release
can cause or threaten damage to human health or human welfare
or causes or threatens damage, deterioration, loss of value,
marketability or loss of use to property insured hereunder,
including, but not limited to, bacteria, virus, or hazardous
substances as listed in the Federal Water, Pollution Control Act,
Clean Air Act, Resource Conservation and Recovery Act of 1976,
and Toxic Substances Control Act or as designated by the U.S.
Environmental Protection Agency.”

       Two of the Policies included insurer-specific exclusions
precluding coverage for pathogenic materials or pathogens
(pathogen exclusions). The RSUI policy excluded “loss or damage
caused directly or indirectly by the discharge, dispersal, seepage,
migration, release, escape or application of any pathogenic or
poisonous biological or chemical materials.” The RSUI exclusion
did not define the term “pathogenic.”
       The Evanston policy excluded loss or damage directly or
indirectly caused by the “[p]resence, growth, proliferation, spread
or any activity of ‘organic pathogens.’” It defined an “organic
pathogen” to include “[a]ny organic irritant or contaminant,
including, but not limited to, ‘fungus’, . . . bacteria, virus, or other
microorganisms of any type” and “[a]ny disease-causing agent as
classified by the Environmental Protection Agency.” The

3     We have omitted capitalization and boldface when quoting
from the insurance policies.

                                   6
Evanston pathogen exclusion applied regardless of whether there
was direct physical loss or damage to covered property or loss of
use, occupancy or functionality or decreased valuation of covered
property, or loss of business income. Further, the pathogen
exclusion replaced any policy exclusion for “‘fungus’, wet rot, dry
rot and bacteria.”

B.     The Complaint
       JRK filed this action on May 27, 2021 alleging causes of
action for breach of contract and declaratory relief premised on
Insurers’ refusal to cover JRK’s losses and reservation of rights,
in which Insurers stated they did not have sufficient information
to provide coverage.
       As alleged, the outbreak of the COVID-19 pandemic in
early 2020 had an acute impact on JRK’s business. Because the
virus could spread by airborne droplets and smaller aerosols that
linger in the air, creating “fomites” on surfaces “physically
affected by the coronavirus,” the highly contagious virus caused
loss and damage to JRK’s large residential properties, hotels, and
commercial establishments. Specifically, “[t]he virus hangs in
the air and attaches to property for extended periods of time.
Studies have shown that fomites—physical surfaces that promote
infection—can become infectious on a whole range of surfaces,
including stainless steel, wood, paper, plastic, glass, ceramic,
cardboard, and cloth, many of which are used throughout JRK’s
properties.” The virus could survive for days on surfaces,
compromising the “physical integrity of the structures it
permeates” and posing an “imminent risk of physical damage to
all other structures.” Thus, “[b]etween contagious surfaces and
invisible particles suspended in the air, the coronavirus turned

                                 7
JRK’s properties into a gauntlet of deadly particles.” Moreover,
because the virus was resilient, simple cleaning was not
sufficient to sterilize the properties, and no amount of cleaning
could remove the aerosolized virus particles, which had the
potential to generate new infectious fomites.
       In response to the outbreak of COVID-19, state and local
governments imposed “sweeping restrictions on residents’ daily
lives and property to protect them.” Each of the states in which
JRK owned property imposed some form of lockdown order
restricting travel, directing residents to remain at home, and
closing non-essential businesses. These orders had “wide-
reaching impacts, including reduced travel and loss of jobs,
resulting in tenants failing to pay market rents.”
       Residents at JRK’s properties tested positive for COVID-19
as early as mid-March 2020; in total, its properties had at least
178 confirmed cases, including tenants and employees. At least
60 of JRK’s residential properties had at least one confirmed
positive test from a resident, and JRK alleged it was “statistically
certain” the virus was present at all of its properties at some
point since the pandemic began. In addition, JRK’s residential
properties were “uniquely vulnerable to the physical loss or
damage the virus causes, as its apartment properties face[d]
increased exposure when tenants [were] ordered to ‘stay home,’
yet the public areas such as lobbies and elevators [were] required
to be open for safety and building use.”
       Accordingly, the pandemic caused JRK to suffer significant
financial losses, including substantial costs incurred to respond
to on-site cases. The lockdown orders also “devastated JRK’s
business” by prohibiting residential evictions, deferring rental
payments, and closing popular tourist destinations, bars,

                                 8
restaurants, and venues that provided the draw for travelers to
stay at JRK’s hotels.
       JRK provided prompt notice of its claim to Insurers in
March 2020. Insurers responded through their adjuster on
July 6, 2020 with a reservation of rights indicating they lacked
sufficient information to determine “‘whether or not there may be
coverage under the Policies’” but failing to request any specific
information.
       JRK provided a second notice on August 17, 2020 to its
higher-level excess carriers. On October 5, 2020 the adjuster
responded with a “supplemental reservation of rights letter that
was materially similar to the July 6 [l]etter.” On March 29, 2021,
after JRK provided requested information, Insurers again
reserved their rights and “effectively denied coverage.”

C.     Insurers’ Motion for Judgment on the Pleadings
       On January 21, 2022 Insurers filed a motion for judgment
on the pleadings, arguing JRK failed to allege facts showing a
distinct “‘physical alteration’” to its covered property as required
to establish “‘direct physical loss or damage’” under California
law, making only conclusory assertions. Further, temporary loss
of use did not constitute “‘direct physical loss or damage.’”
Insurers argued Inns-by-the-Sea v. California Mutual Ins. Co.
(2021) 71 Cal.App.5th 688 (Inns-by-the-Sea) and the federal
appellate courts were unanimous in rejecting insurance coverage
for economic losses arising from the COVID-19 pandemic.
Insurers also argued specific exclusions precluded coverage,
including the pollution exclusion in all of the policies, and the
pathogen exclusions in two of the policies. Finally, Insurers
urged the trial court to deny leave to amend because no amount

                                 9
of “artful pleading” could remedy the legal deficiencies in the
complaint.
       In its opposition JRK argued it sufficiently alleged “‘direct
physical loss or damage’” by pleading the actual presence of
COVID-19 on the insured properties, which altered the air and
surfaces of the properties and rendered the properties
functionally useless. JRK distinguished Inns-by-the-Sea on the
basis the alleged loss there resulted from the government orders,
not physical loss or damage from the virus. JRK asserted the
pollution exclusion did not apply because it was limited to
traditional environmental pollution, and the pathogen exclusions
likewise did not apply. JRK requested leave to amend if its
allegations were inadequate.
       After a hearing, on April 18, 2022 the trial court granted
the motion without leave to amend as to primary insurer
Ironshore and the excess insurers. In granting the motion, the
court concluded JRK suspended its operations as a result of the
government orders, not the presence of the virus on its
properties. The court also found the pollution and pathogen
exclusions barred coverage. The court denied the motion with
respect to the primary insurers other than Ironshore (not parties
on appeal), finding a triable issue of fact as to whether a
communicable disease provision applicable only to those insurers
barred coverage. 4 The communicable disease provision did not

4     The communicable disease provision provided coverage for
“the actual loss sustained and extra expense incurred by the
insured during the period of liability if access to a location owned,
leased or rented by the insured is limited, restricted or prohibited
as a result of [¶] a) [a]n order of an authorized governmental
agency regulating the actual not suspected presence of

                                 10
apply to the excess insurers because the provision was subject to
a $2.5 million cap, and the excess insurers’ policies attached
above that level.
       On May 10, 2022 the court entered an order of dismissal in
favor of Insurers and awarded costs in an amount to be
determined. JRK timely appealed.

                          DISCUSSION

A.     Standard of Review
       “‘A judgment on the pleadings in favor of the defendant is
appropriate when the complaint fails to allege facts sufficient to
state a cause of action. [Citation.] A motion for judgment on the
pleadings is equivalent to a demurrer and is governed by the
same de novo standard of review.’” (People ex rel. Harris v. Pac
Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777; accord,
Starlight Cinemas, Inc. v. Massachusetts Bay Ins. Co. (2023)
91 Cal.App.5th 24, 31 (Starlight).) “‘“We treat the pleadings as
admitting all of the material facts properly pleaded, but not any
contentions, deductions or conclusions of fact or law contained
therein.”’” (Tarin v. Lind (2020) 47 Cal.App.5th 395, 403-404;
accord, Starlight, at p. 31.) “‘If a judgment on the pleadings is
correct on any theory of law applicable to the case, we will affirm
it regardless of the considerations used by the superior court to
reach its conclusion.’” (Environmental Health Advocates, Inc. v.

communicable disease; or [¶] b) [a] decision of an officer of the
insured as a result of the actual not suspected presence of
communicable disease.” The Ironshore policy included a
provision stating coverage for [c]ommunicable [d]isease is
[e]xcluded.”

                                11
Sream, Inc. (2022) 83 Cal.App.5th 721, 729; accord, Starlight, at
p. 31.)
       “‘Denial of leave to amend after granting a motion for
judgment on the pleadings is reviewed for abuse of discretion.’”
(Environmental Health Advocates, Inc. v. Sream, Inc., supra,
83 Cal.App.5th at p. 729; accord, Starlight, supra, 91 Cal.App.5th
at p. 31.) An abuse of discretion occurs if “‘there is a reasonable
possibility that the defect can be cured by amendment.’” (Loeffler
v. Target Corp. (2014) 58 Cal.4th 1081, 1100 [reviewing an order
sustaining demurrer without leave to amend]; accord, Starlight,
at p. 32.) “‘The plaintiff has the burden of proving that [an]
amendment would cure the legal defect, and may [even] meet this
burden [for the first time] on appeal.’” (Sierra Palms
Homeowners Assn. v. Metro Gold Line Foothill Extension
Construction Authority (2018) 19 Cal.App.5th 1127, 1132; accord,
Ko v. Maxim Healthcare Services, Inc. (2020) 58 Cal.App.5th
1144, 1150; see Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th
962, 971.)

B.     Interpretation of Insurance Contracts
       “In general, interpretation of an insurance policy is a
question of law that is decided under settled rules of contract
interpretation.” (State of California v. Continental Ins. Co. (2012)
55 Cal.4th 186, 194; accord, Shusha, Inc. v. Century-National Ins.
Co. (2022) 87 Cal.App.5th 250, 259, review granted February 28,
2023, S278614 (Shusha).) “‘Our goal in construing insurance
contracts, as with contracts generally, is to give effect to the
parties’ mutual intentions. [Citations.] “If contractual language
is clear and explicit, it governs.” [Citations.] If the terms are
ambiguous [i.e., susceptible of more than one reasonable

                                12
interpretation], we interpret them to protect “‘the objectively
reasonable expectations of the insured.’” [Citations.] Only if
these rules do not resolve a claimed ambiguity do we resort to the
rule that ambiguities are to be resolved against the insurer.”
(Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th 315, 321;
accord, Montrose Chemical Corp. of California v. Superior Court
(2020) 9 Cal.5th 215, 230; Marina Pacific Hotel & Suites, LLC v.
Fireman’s Fund Ins. Co. (2022) 81 Cal.App.5th 96, 105 (Marina
Pacific).)
       “The ‘tie-breaker’ rule of construction against the insurer
stems from the recognition that the insurer generally drafted the
policy and received premiums to provide the agreed protection.”
(Minkler v. Safeco Ins. Co. of America, supra, 49 Cal.4th at
p. 321; accord, Marina Pacific, supra, 81 Cal.App.5th at p. 106.)
“[I]n cases of ambiguity, basic coverage provisions are construed
broadly in favor of affording protection, but clauses setting forth
specific exclusions from coverage are interpreted narrowly
against the insurer. The insured has the burden of establishing
that a claim, unless specifically excluded, is within basic
coverage, while the insurer has the burden of establishing that a
specific exclusion applies.” (Minkler, at p. 322; accord, Montrose
Chemical Corp. of California v. Superior Court, supra, 9 Cal.5th
at p. 230; Marina Pacific, at p. 106.)

C.    Coverage for COVID-19 Pandemic-related Losses
      At the time the trial court sustained the motion for
judgment on the pleadings, only one California appellate court
(Inns-by-the-Sea, supra, 71 Cal.App.5th 688) had examined
whether business losses caused by the COVID-19 pandemic were
covered by commercial property insurance. There, a hotel

                                13
operator sued its insurer over the denial of a claim for loss of
business income, alleging it ceased operations at its properties
due to county health orders. (Id. at p. 693.) Division One of the
Fourth Appellate District affirmed the trial court’s order
sustaining the insurer’s demurrer without leave to amend. The
court concluded hotel operations were not suspended due to
“‘direct physical loss of or damage to’” the hotels because the
hotel operator did not allege a physical alteration of the hotel
premises, but rather, it alleged economic loss caused by the
government closure orders. (Id. at pp. 705-706.) The court
rejected the contention “‘a detrimental economic impact
unaccompanied by a distinct, demonstrable, physical alteration of
the property’” would be sufficient for coverage. (Ibid., italics
omitted, quoting 10A Couch on Insurance (3d ed. 2016) § 148:46,
pp. 148-96 to 148-98; see MRI Healthcare Center of Glendale, Inc.
v. State Farm General Ins. Co. (2010) 187 Cal.App.4th 766, 779-
80 (MRI Healthcare) [failure of an MRI machine to function after
it was “‘ramped down’” was not a covered loss because “there was
no ‘distinct, demonstrable [or] physical alteration’”].)
       This court first considered a coverage dispute arising from
the COVID-19 pandemic in Marina Pacific, supra,
81 Cal.App.5th 96. There, a hotel operator alleged the presence
of the COVID-19 virus caused physical damage to its insured
property. (Id. at p. 110.) Reversing the trial court’s order
sustaining the insurer’s demurrer without leave to amend, we
assumed the policy term “‘direct physical loss or damage’” meant
there must be an external force acting on the property, causing a
“distinct, demonstrable, physical alteration” as stated in MRI
Healthcare, supra, 187 Cal.App.4th 766, 778-779. (Marina
Pacific, at pp. 107-108.) We concluded the hotel’s complaint

                               14
adequately alleged physical alteration, explaining, “Assuming, as
we must, the truth of those allegations, even if improbable,
absent judicially noticed facts irrefutably contradicting them, the
insureds have unquestionably pleaded direct physical loss or
damage to covered property within the definition articulated in
MRI Healthcare.” (Id. at p. 109.) This court reached a similar
conclusion in Shusha, supra, 87 Cal.App.5th at page 266, review
granted, holding a restaurant’s allegations that it suspended
operations due to both physical alteration of its premises by the
presence of the COVID-19 virus and government closure orders
were sufficient to survive a demurrer. (See John’s Grill, Inc. v.
The Hartford Financial Services Group, Inc. (2022)
86 Cal.App.5th 1195, 1201 [on demurrer, policy definition of “‘loss
or damage’” was broad enough to include “pervasive infiltration of
virus particulates on the surfaces of covered property,” which
insured restaurant had alleged], review granted March 29, 2023,
S278481.)
       We recognize most California appellate courts have found
allegations that losses resulted from the presence of the COVID-
19 virus on covered property were insufficient to provide coverage
for direct physical loss or damage to property. (See Apple Annie,
LLC v. Oregon Mutual Ins. Co. (2022) 82 Cal.App.5th 919, 934
[rejecting insured’s contention that no physical alteration was
necessary]; United Talent Agency v. Vigilant Ins. Co. (2022)
77 Cal.App.5th 821, 838 [the “presence or potential presence of
the virus does not constitute direct physical damage or loss”];
Musso & Frank Grill Co., Inc. v. Mitsui Sumitomo Ins. USA Inc.
(2022) 77 Cal.App.5th 753, 761 [no “direct physical loss of or
damage” to a restaurant as a result of the COVID-19 pandemic
and related government orders]; see also Tarrar Enterprises, Inc.

                                15
v. Associated Indemnity Corp. (2022) 83 Cal.App.5th 685, 687-689
[adopting reasoning of Apple Annie but finding leave to amend
should have been granted].)
       The Supreme Court will address this split of authority in
John’s Grill, Inc. v. The Hartford Financial Services Group, Inc.,
supra, 86 Cal.App.5th 1195, review granted, and Shusha, supra,
87 Cal.App.5th at page 266, review granted. In addition, the
Supreme Court has granted a request for certification by the
Ninth Circuit on the following question of California law: “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 Ins. Co. (9th Cir. 2022) 56 F.4th 730, request for
certification granted Mar. 1, 2023, S277893.) 5

5     The Supreme Court also granted the Ninth Circuit’s
request for certification in French Laundry Partners, LP v.
Hartford Fire Ins. Co. (9th Cir. 2023) 58 F.4th 1305, 1307,
request for certification granted Mar. 29, 2023, S278492 on the
question of California law: “Is the virus exclusion in [the
restaurant’s] insurance policy unenforceable because enforcing it
would render illusory a limited virus coverage provision allowing
for the possibility of coverage for business losses and extra
expenses allegedly caused by the presence and impacts of
COVID-19 at an insured’s properties, including the loss of
business due to a civil authority closure order?” We decline
JRK’s request to hold our decision in this case pending guidance
from the Supreme Court.

                               16
D.     JRK Adequately Stated Causes of Action for Breach of
       Contract and Declaratory Judgment
       We agree with JRK that the complaint adequately alleges
loss resulting from physical alteration of the insured property to
support its causes of action for breach of contract and declaratory
relief. “‘[T]he elements of a cause of action for breach of contract
are (1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.’” (Marina Pacific, supra,
81 Cal.App.5th at p. 108; accord, Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821.) The Insurers’ motion
challenged only the third element, contending they did not breach
their obligation to pay benefits under the Policies because JRK
failed to allege direct physical damage or loss to its properties
within the meaning of the policy. 6
       The parties’ coverage dispute is a proper basis for a cause of
action for declaratory relief. (See Code Civ. Proc., § 1060
[authorizing any person to bring “an original action . . . for a

6      Because we conclude JRK adequately alleged loss of
business income caused by direct physical loss of or damage to its
properties, we do not reach whether JRK adequately alleged
entitlement to coverage under the provisions for interruption by
civil authority, ingress/egress, or interruption by communicable
disease. We deny JRK’s request to take judicial notice of four
amicus curiae briefs filed by state medical organizations in other
cases addressing whether the COVID-19 virus damages property,
which are not relevant to this appeal from an order granting a
motion for judgment on the pleadings, and we do not consider the
portion of JRK’s opening brief discussing the briefs. We deny
Insurers’ motion to strike the discussion of the amicus briefs in
JRK’s brief.

                                 17
declaration of his or her rights and duties” “under a contract”];
Lee v. Silveira (2016) 6 Cal.App.5th 527, 546 [identifying “two
essential elements” for declaratory relief: “‘(1) a proper subject
. . . , and (2) an actual controversy involving justiciable questions
relating to the rights or obligations of a party’”].)
         The allegations in JRK’s complaint fall squarely within the
type of allegations we found sufficient to allege coverage in
Marina Pacific and Shusha. In Marina Pacific, the insureds
alleged that “COVID-19 . . . not only lives on surfaces but also
bonds to surfaces through physiochemical reactions involving
cells and surface proteins, which transform the physical condition
of the property.” (Marina Pacific, supra, 81 Cal.App.5th at
p. 108; see Shusha, supra, 87 Cal.App.5th at p. 264 [noting
allegations “the virus ‘can remain on smooth surfaces for at least
28 days,’ and it ‘adheres to, attaches to and alters the surfaces of
the property and surfaces’ it comes into contact with, creating
‘fomites,’ which are ‘objects, previously safe to touch, that now
serve as agents and mechanism for transmission of deadly,
infections viruses and diseases’”], review granted.)
         JRK similarly alleged the COVID-19 virus “hangs in the air
and attaches to property for extended periods of time. Studies
have shown that fomites—physical surfaces that promote
infection—can become infectious on a whole range of surfaces,
including stainless steel, wood, paper, plastic, glass, ceramic,
cardboard, and cloth, many of which are used throughout JRK’s
properties . . . . [¶] [¶] . . . The virus thus compromises the
physical integrity of the structures it permeates . . . .” Further,
“[g]iven the ubiquity and pervasiveness of the coronavirus, no
amount of cleaning or ventilation intervention will prevent an
infected and contagious person—even one who is pre-

                                 18
symptomatic or asymptomatic—from entering an indoor space
and exhaling millions of viral particles into the air, which: (a)
fills the air with aerosolized coronavirus that can be inhaled,
sometimes with deadly consequences; and (b) deposits
coronavirus particles on the surfaces, physically altering and
transforming them into disease-transmitting fomites.” (Italics
added.) JRK therefore had to take significant measures “far
beyond ordinary or routine cleaning or improved ventilation” to
“repair the properties from their unsafe, hazardous, and
potentially deadly condition.”
        Finally, the insureds in Marina Pacific alleged that as a
direct result of the presence of the virus, “the insureds were
required to close or suspend operations in whole or in part at
various times and incurred extra expense as they adopted
measures to restore and remediate the air and surfaces at the
insured properties.” (Marina Pacific, supra, 81 Cal.App.5th at
pp. 108-109; see Shusha, supra, 87 Cal.App.5th at p. 264 [“La
Cava lost business revenues and incurred substantial costs to
mitigate the damage by reconfiguring its property and increasing
its sanitization procedures.”], review granted.) Similarly, JRK
alleged “the ubiquitous presence of COVID-19 and the
coronavirus, including in infected guests, customers, employees
and residents at JRK’s insured properties, has interrupted that
business model by causing physical loss and/or damage to the
insured properties and rendering them unusable for their
intended purpose.” Further, JRK “incurred substantial costs and
financial losses directly responding to documented onsite cases,”
including costs related to converting “physical leasing offices into
virtual leasing systems,” closing “various common spaces,” and

                                 19
expending “substantial sums of money to disinfect contaminated
spaces after documented cases.”
      Insurers contend JRK’s allegations are insufficient to state
a claim because the complaint failed to allege the destruction or
disposal of property, citing our observation in Marina Pacific that
the “insureds specifically alleged they were required to ‘dispose of
property damaged by COVID-19 and limit operations at the
Insured Properties.’” (Marina Pacific, supra, 81 Cal.App.5th at
p. 109.) However, we found sufficient in Shusha the allegations
that the restaurant incurred costs and lost revenue to mitigate
the damage from the COVID-19 virus by reconfiguring its
property and increasing its sanitization procedures, without
alleging it needed to dispose of contaminated property. (See
Shusha, supra, 87 Cal.App.5th at pp. 264-265, review granted.)
As discussed, JRK similarly alleged it had to reconfigure its
physical leasing offices and close common spaces in response to
COVID-19 infections at its properties. And further, “JRK has
undertaken many of these heightened measures in its insured
properties in an attempt to repair the properties from their
unsafe, hazardous, and potentially deadly condition, but no
amount of diligence can actually prevent coronavirus from
causing physical loss or damage to surfaces and air within
insured properties.”
      Insurers also argue JRK’s allegations of damage are
conclusory. However, we rejected similar contentions in Marina
Pacific and Shusha. As we explained in Shusha, supra,
87 Cal.App.5th at page 265, review granted, “[T]he insured 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.” (See id. at p. 266 [“it is a

                                 20
question of fact for a summary judgment motion or trial whether
the restaurant closure and modifications resulted from damage
caused by the COVID-19 virus or the government orders”];
accord, Marina Pacific, supra, 81 Cal.App.5th at p. 109.) JRK’s
allegations are likewise sufficient to establish direct physical
damage or loss under the Policies. 7

E.     The Exclusions from Coverage
       1.    The pollution exclusion does not bar coverage
       Insurers contend the Policies’ pollution exclusion bars
coverage for JRK’s losses because it covers the dispersal and
migration of pollutants and contaminants, which terms are
specifically defined to include a virus. We agree with JRK that
the pollution exclusion does not apply here because a reasonable
interpretation of the exclusion is that it applies only to
traditional sources of environmental pollution, as the Supreme
Court held in MacKinnon, supra, 31 Cal.4th at pages 639 to 640.
       In MacKinnon, the Supreme Court addressed whether a
standard pollution exclusion clause in a comprehensive general
liability (CGL) insurance policy applied to a landlord’s allegedly
negligent spraying of pesticides that caused the death of a tenant.
The policy exclusion barred coverage for bodily injury or property
damage resulting from the “‘actual, alleged, or threatened
discharge, dispersal, release or escape of pollutants: (a) at or from
the insured location.’” (MacKinnon, supra, 31 Cal.4th at p. 639.)

7      Because we find sufficient allegations of direct physical loss
or damage to insured property, we do not reach whether the
Policies covered JRK’s alleged residential rental income loss and
loss resulting from reduced hotel occupancy as a result of the
government orders.

                                 21
The policy defined “‘Pollution or Pollutants’” as “‘mean[ing] any
solid, liquid, gaseous or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste materials.’” (Ibid.) Reversing the Court of Appeal’s
affirmance of summary judgment in favor of the insurer, the
Supreme Court held the pollution exclusion did not “clearly
exclude ordinary acts of negligence involving toxic chemicals such
as pesticides.” (Ibid.)
       In reaching its decision, the MacKinnon court reviewed the
historical background of the pollution exclusion, observing the
exclusion was incorporated into insurance policies in response to
the expansion of federal environmental laws, including the Clean
Air Act (42 U.S.C. § 7401 et seq.), and later, the Comprehensive
Environmental Response, Compensation, and Liability Act
(CERCLA; 42 U.S.C. § 9601 et seq.), which required increased
environmental remediation and placed greater economic burdens
on insurance underwriters. (MacKinnon, supra, 31 Cal.4th at
pp. 643-645.) The court observed that “[e]ven commentators who
represent the insurance industry recognize that the broadening of
the pollution exclusion was intended primarily to exclude
traditional environmental pollution rather than all injuries from
toxic substances.” (Id. at p. 644.)
       The court rejected the insurer’s contention that the
pesticides were “‘irritant[s]’” or “‘pollutant[s]’” and the spraying
was a “‘discharge’” or “‘dispersal,’” describing as a “basic fallacy”
that the dictionary definition of a single term, such as “‘irritant’”
or “‘discharge,’” would show how a layperson would reasonably
interpret the exclusion. (MacKinnon, supra, 31 Cal.4th at
p. 649.) The court added that if the insurer’s interpretation were
accepted, there would never be coverage under the policy because

                                 22
“[v]irtually any substance can act under the proper circumstances
as an ‘irritant or contaminant.’” 8 (Id. at p. 650.)
       The court explained, “‘The drafters’ utilization of
environmental law terms of art (“discharge,”
“dispersal,” . . . “release,” or “escape” of pollutants) reflects the
exclusion’s historical objective—avoidance of liability for
environmental catastrophes related to intentional industrial
pollution.’” (MacKinnon, supra, 31 Cal.4th at p. 653, quoting
Motorists Mut. Ins. Co. v. RSJ, Inc. (Ky.Ct.App. 1996) 926 S.W.2d
679, 681.) The court concluded, “While pesticides may be
pollutants under some circumstances, it is unlikely a reasonable
policyholder would think of the act of spraying pesticides under
these circumstances as an act of pollution.” (MacKinnon, at
p. 654.)
       As in MacKinnon, the exclusion here applied to “[p]ollution
caused directly or indirectly by the release, discharge, dispersal,
seepage, migration, or escape of pollutants or contaminants.”

8     The Supreme Court observed, “[M]any courts have taken a
position that the current pollution exclusion is not ambiguous in
encompassing acts of negligence involving toxic substances—acts
that are outside the scope of traditional environmental pollution.
These courts tend to find the meaning of the key words, as
defined in a dictionary, to unequivocally cover forms of
contamination other than traditional environmental pollution.”
(MacKinnon, supra, 31 Cal.4th at p. 646.) The MacKinnon court
rejected the broad definition in those cases, including Peace v.
Northwestern Nat. Ins. Co. (1999) 228 Wis.2d 106, 110 [596
N.W.2d 429, 431], in which the Wisconsin Supreme Court found a
similar pollution exclusion barred coverage for a tenant’s action
against a landlord for lead paint ingestion. (MacKinnon, at
pp. 646-647.)

                                 23
The only terms not found in the policy at issue in MacKinnon are
“seepage” and “migration,” which are used to describe the action
that caused the pollution, and the addition of the term
“contaminants” to the exclusion. The Policies defined “pollutants
and contaminants” to have the same meaning as the term
“pollutants” used in the MacKinnon policy: “any solid, liquid,
gaseous or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals and waste.” But the
Policies added the language “which after its release can cause or
threaten damage to human health or human welfare or causes or
threatens damage . . . to property insured hereunder, including,
but not limited to, bacteria, virus, or hazardous substances as
listed in the Federal Water, Pollution Control Act, Resource
Conservation and Recovery Act of 1976, and Toxic Substances
Control Act or as designated by the U.S. Environmental
Protection Agency.”
       Insurers contend the “widespread dispersal and migration”
of the COVID-19 virus, as alleged, caused the losses JRK claims,
thus falling within the pollution exclusion. But as the
MacKinnon court found, terms like dispersal or migration have
technical definitions in the context of environmental pollution,
and they therefore apply to specific types of dispersal and
migration. With respect to the term “dispersal,” for example,
when used “in conjunction with ‘pollutant,’ [it] is commonly used
to describe the spreading of pollution widely enough to cause its
dissipation and dilution.” (MacKinnon, supra, 31 Cal.4th at
p. 651; see County of Maui v. Hawaii Wildlife Fund (2020) __ U.S.
__, 140 S.Ct. 1462, 1469 [the Clean Water Act “defines the term
‘discharge of a pollutant’ as ‘“any addition of any pollutant to
navigable waters . . . from any point source”’”]; 33 U.S.C.

                               24
§ 1362(16) [defining “‘discharge’”]; 42 U.S.C. § 9605(c)(2) [“[T]he
President shall take into account the potential migration of any
hazardous substance or pollutant or contaminant through such
surface water to downstream sources of drinking water.”].)
       Unlike the dictionary definition, the reasonable
interpretation of “dispersal” in the environmental pollution
context does not encompass the spread of a virus resulting from
people simply breathing and touching surfaces. (See Northwell
Health, Inc. v. Illinois Union Ins. Co. (S.D.N.Y. Mar. 29, 2022,
No. 20-CV-6893-LTS-OTW) 2022 U.S. Dist. Lexis 57432, *13 [“A
sick patient’s delivery of COVID-19 into one of Northwell’s
hospitals or other medical facilities ‘by merely breathing,
speaking, or touching objects and surfaces,’ . . . or ‘through some
medical procedures,’ . . . cannot reasonably be characterized as
constituting the ‘discharge, dispersal, release, escape, migration,
or seepage’ of any ‘waste materials.’”].)
       Notwithstanding MacKinnon, Insurers contend the
inclusion of “virus” within the definition of “pollutant or
contaminant” makes clear the pollution exclusion applies here,
citing out-of-state cases declining to limit pollution exclusions to
traditional environment pollution where the exclusion defines a
pollutant or contaminant to include a “virus.” For example,
Insurers rely on Northwell Health, Inc. v. Lexington Ins. Co.
(S.D.N.Y. 2021) 550 F.Supp.3d 108, 121 (Northwell), in which the
district court applied New York law to a policy provision
excluding “‘loss or damage caused by . . . actual, alleged or
threatened release, discharge, escape or dispersal’ of
‘contaminations or pollutants,’ and defin[ing] contamination to
include disease-causing microorganisms, bacteria, and viruses.”
(Ibid.) Although the court acknowledged New York case law

                                 25
holding the terms “‘discharge’” and “‘dispersal’” used in a
pollution exclusion were “terms of art in environmental law,”
citing Belt Painting Corp. v. TIG Ins. Co. (2003) 100 N.Y.2d 377,
386-390 [795 N.E.2d 15], the court declined to limit the exclusion
to environmental or industrial pollution because the term
“contaminants” was defined to include viruses. (Northwell, at
p. 121.) 9
        Insurers also rely on Zwillo V, Corp. v. Lexington Ins. Co.
(W.D.Mo. 2020) 504 F.Supp.3d 1034, 1041 (Zwillo), which applied
Missouri law in concluding losses from the spread of the COVID-
19 virus were covered by an exclusion for “loss or damage caused
by . . . actual, alleged or threatened release, discharge, escape or
dispersal of contaminants or pollutants.” (Capitalization
omitted.) The exclusion defined “contaminants or pollutants” to
include any “virus.” (Ibid.) The court declined to limit the
exclusion to “traditional environmental and industrial pollution,”
explaining, “Missouri precedent directs a different result because

9     In Belt Painting Corp. v. TIG Ins. Co., supra, 100 N.Y.2d at
page 387, the New York Court of Appeals held an insurance
policy’s pollution exclusion did not apply to personal injuries
caused by indoor exposure to paint fumes because “the terms
used in the exclusion to describe the method of pollution—such as
‘discharge’ and ‘dispersal’—are ‘terms of art in environmental law
with reference to damage or injury caused by disposal or
containment of hazardous waste.’” The court reasoned, “Even if
the paint or solvent fumes are within the definition of ‘pollutant,’
the exclusion applies only if the underlying injury is caused by
‘discharge, dispersal, seepage, migration, release or escape’ of the
fumes. It cannot be said that this language unambiguously
applies to ordinary paint or solvent fumes that drifted a short
distance from the area of the insured’s intended use and allegedly
caused inhalation injuries to a bystander.” (Id. at pp. 387-388.)

                                26
the exclusion at bar includes ‘virus’ as a part of its definition.”
(Ibid.) Finally, Insurers rely on Circus Circus LV v. AIG
Specialty Ins. Co. (D.Nev. 2021) 525 F.Supp.3d 1269, 1277-1278,
affd. (9th Cir. Apr. 15, 2022, No. 21-15367) 2022 Lexis 10298
(Circus Circus), which considered under Nevada law an exclusion
like the one in Zwillo and concluded because COVID-19 was a
virus, the exclusion barred coverage. 10
       The exclusions at issue in Northwell, Zwillo, and Circus
Circus differ from the pollution exclusion at issue here in that all
three exclude “‘loss or damage’” caused by the “‘release,
discharge, escape, or dispersal’” of contaminants (or
contaminations) or pollutants, with contaminants defined to
include a virus. (Northwell, supra, 550 F.Supp.3d at p. 121;
Zwillo, supra, 504 F.Supp.3d at p. 1041; Circus Circus, supra,
525 F.Supp.3d at p. 1277, affd. (9th Cir. Apr. 15, 2022, No. 21-

10    Insurers also rely on out-of-state authority interpreting
exclusions for “contaminants,” defined to include a virus, as
examples of exclusions barring coverage for COVID-19. (See, e.g.,
OTG Management PHL LLC v. Employers Ins. Co. of Wausau
(D.N.J. 2021) 557 F.Supp.3d 556, 566; Ascent Hospitality
Management Co., LLC v. Employers Ins. Co. of Wausau (N.D. Ala.
2021) 537 F.Supp.3d 1282, 1288-1289, affd. (11th Cir. 2022,
No. 21-11924) 2022 Lexis 1161.) These cases provide no guidance
on applicability of pollution exclusions with environmental
dispersal language where the terms pollutant and contamination
are defined to include a virus. In-N-Out Burgers v. Zurich
American Ins. Co. (9th Cir. Mar. 10, 2023, No. 22-55266)
__F.4th__ [2023 Lexis 5728] is also distinguishable because the
contamination exclusion at issue there made no reference to
pollution and applied to “‘any condition of property due to the
actual presence of any foreign substance, . . . virus, . . . mold or
mildew.’” (Id. at *2.)

                                 27
15367) 2022 Lexis 10298.) By contrast, the policy here more
closely tracks the pollution exclusion in MacKinnon, excluding
“pollution” (not loss or damage) caused by the “release, discharge,
dispersal, seepage, migration, or escape of pollutants or
contaminants,” with a specific reference to the Clean Air Act and
CERCLA. This distinction is significant because none of the
three cases cited by Insurers analyzes how the term virus is used
in the context of a pollution exclusion (that is, whether a
reasonable person would consider the spread of a virus due to
humans breathing and touching objects to be a form of dispersal
of pollution).
       There is no question that COVID-19 is a virus, just as there
was no question the pesticide in MacKinnon could be considered
an “irritant” or a “contaminant.” (MacKinnon, supra, 31 Cal.4th
at pp. 650-652 [“Virtually any substance can act under the proper
circumstances as an ‘irritant or contaminant.’”]; id. at p. 654
[“pesticides may be pollutants under some circumstances”].)
Rather, under MacKinnon, the appropriate inquiry in
interpreting the pollution exclusion is whether pollution caused
by the release, discharge, or dispersal of a virus in the ordinary
sense of those terms encompasses the spread of a virus due to the
normal human activities of breathing and touching surfaces.
(See MacKinnon, supra, 31 Cal.4th at p. 649.) It does not. Just
as a reasonable policyholder would not consider the spraying of
pesticides in an apartment building the dispersal of pollution
under the policy in MacKinnon, a reasonable policyholder would

                                28
not consider the dispersal of the COVID-19 virus from natural
human activity to be pollution. 11
       Our interpretation of the pollution exclusion not to include
the spread of the COVID-19 virus does not render the inclusion of
the term “virus” in the exclusion meaningless. There are other
scenarios in which the dispersal of a virus would fall within the
pollution exclusion. For example, if an environmental disaster at
a plant causes the release of virus-laden sewage into the
surrounding area, the spread of the virus would likely fall within
the exclusion as “pollution” caused by the discharge, dispersal, or
release of a “pollutant or contaminant.”
        Insurers’ effort to distinguish MacKinnon on the ground
that in Shusha and Marina Pacific we referred to the COVID-19
virus as a form of contamination also fails. (See Shusha, supra,
87 Cal.App.5th at p. 253; Marina Pacific, supra, 81 Cal.App.5th
at p. 112.) Our isolated use of the word “contamination” in a
different context (describing alleged contamination that caused

11     We also reject Insurers’ contention the Policies’ “broad”
pollution exclusion is analogous to virus exclusions, which courts
applying California law have found bar coverage for losses from
COVID-19. (See e.g. Musso & Frank Grill Co., Inc. v. Mitsui
Sumitomo Ins. USA Inc., supra, 77 Cal.App.5th at p. 761 [virus
exclusion “expressly bars coverage for all loss or damage caused
by or resulting from ‘any virus, bacterium or other micro-
organism that induces or is capable of inducing physical distress,
illness or disease’”]; Mudpie, Inc. v. Travelers Casualty Insurance
Company of America (9th Cir. 2021) 15 F.4th 885, 893 [applying
policy 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.’”].) The
typical virus-exclusion language differs sharply from the
pollution exclusion at issue here.

                                29
physical damage) is not relevant to interpretation of the
definition of “pollutant or contaminant” as used in the pollution
exclusion.
       Insurers also fail to articulate why, as they contend,
interpretation of a pollution exclusion in a business interruption
policy (at issue here) should differ from interpretation of the
same exclusion used in a CGL policy, at issue in MacKinnon.
Interpretation of both types of policies involves consideration of
whether a reasonable policyholder would believe the dispersal
resulted from pollution. (MacKinnon, supra, 31 Cal.4th at p. 654;
see Minkler v. Safeco Ins. Co. of America, supra, 49 Cal.4th at
p. 321 [“‘If the terms are ambiguous [i.e., susceptible of more than
one reasonable interpretation], we interpret them to protect “‘the
objectively reasonable expectations of the insured.’”’”]; The Villa
Los Alamos Homeowners Assn. v. State Farm General Ins. Co.
(2011) 198 Cal.App.4th 522, 535 [holding with respect to coverage
for injuries from asbestos pollution, MacKinnon’s interpretation
of a pollution exclusion in a standard CGL policy applied to a first
party property insurance policy, explaining “a reasonable insured
would expect both exclusions to apply to environmental
pollution”].)

      2.     The pathogen exclusions bar coverage
      JRK contends the RSUI and Evanston policies’ pathogen
exclusions should be interpreted narrowly under MacKinnon’s
reasoning because the RSUI exclusion uses the “discharge” or
“dispersal” terms of art and the Evanston exclusion defines
“organic pathogens” as “irritants or contaminants.” We do not
read MacKinnon so broadly.

                                30
       As discussed, MacKinnon focused on the fact the dispersal
language used in the pollution exclusion was the same language
historically used to describe environmental pollution, reasoning
the inclusion of the language was intended to limit insurers’
liability for the expanding costs of environmental remediation.
(MacKinnon, supra, 31 Cal.4th at pp. 643-645.) But as the
Supreme Court cautioned, the terms “‘discharge, dispersal,
release or escape,’ by themselves,” may not be “environmental
law terms of art” unless “used in conjunction with ‘pollutant.’”
(Id. at p. 653.)
        There is no reference in the RSUI or Evanston virus
exclusions to pollution. Rather, RSUI’s exclusion applied to
losses or damage caused by “the discharge, dispersal . . . or
application of any pathogenic or poisonous biological or chemical
materials.” And the Evanston exclusion applied to losses or
damage caused by the “[p]resence, growth, proliferation, or
spread of any ‘organic pathogens,’” defining “organic pathogen” to
include a “virus.” Although RSUI’s exclusion uses the four
traditional discharge terms of art from MacKinnon, it does not
follow that use of those terms without any reference to pollution
limits the exclusion to environmental pollution. And the
Evanston virus exclusion uses neither the pollution nor dispersal
language.
       Further, Evanston’s exclusion explicitly defines an “organic
pathogen” to include a “virus.” Although the RSUI exclusion does
not define “pathogenic . . . materials,” the term “pathogenic” is
defined as “causing or capable of causing disease.” (Merriam-
Webster’s Online Dict. (2023) <https://www.merriam-
webster.com/dictionary/pathogenic> [as of September 28, 2023],
archived at <https://perma.cc/YEZ8-WR8Y>.) Similarly,

                                31
“pathogen” is defined as “a specific causative agent (such as a
bacterium or virus) of disease.” (Merriam-Webster’s Online Dict.
(2023) <https://www.merriam-webster.com/dictionary/pathogen>
[as of September 28, 2023], archived at <https://perma.cc/F793-
Y68T>.) COVID-19 aerosols and droplets expelled from humans
and capable of creating infectious fomites, as alleged in the
complaint, are therefore unambiguously “pathogenic materials”
or “pathogens.”
       Other courts have similarly interpreted the term
“pathogenic,” as used in pathogen exclusions, to cover losses from
COVID-19. (See Glynn Hospitality Group, Inc. v. RSUI
Indemnity Co. (D.Mass. Nov. 12, 2021, No. 21-cv-10744-DJC)
2021 U.S. Dist. Lexis 218885, at *5, *8-9 [citing Merriam-
Webster’s definitions of “pathogen” and “pathogenic” and
concluding under Massachusetts law the pathogen exclusion’s
“plain language applie[d] to loss or damage caused by COVID-
19”]; id. at *24 [“the Pathogen Exclusion plainly applies to the
discharge, dispersal or release of ‘pathogenic’ material—as
opposed to pollutants generally—which is the circumstance
here”]; Till Metro Entertainment v. Covington Specialty Ins. Co.
(N.D. Okla. 2021) 545 F.Supp.3d 1153, 1166 [concluding under
Oklahoma law with respect to an exclusion identical to the RSUI
pathogen exclusion that “the ordinary and plain meaning of
‘pathogenic . . . materials’ includes COVID-19”].)
       The Evanston pathogen exclusion, specifically barring
coverage for losses from a virus, likewise precludes coverage for
COVID-19. (See L&L Logistics and Warehousing Inc. v.
Evanston Ins. Co. (E.D. Va. 2021) 533 F.Supp.3d 299, 305
[finding Evanston’s pathogen exclusion under California law
“quite clearly excludes viruses from the realm of ‘covered causes,’

                                32
even where the loss or damage was only indirectly caused by a
virus”].)
       As to both pathogen exclusions, JRK contends that
interpreting them to bar COVID-19 coverage is inconsistent with
the Policies’ communicable disease coverage. However, the
communicable disease coverage provision does not apply to the
policies JRK negotiated with Evanston and RSUI. The Policies
limited coverage for communicable diseases to a $2.5 million
sublimit “per occurrence,” but the Evanston and RSUI policies
provided excess coverage only for losses per occurrence above
$10 million. Likewise, JRK’s argument that an ambiguity is
created by the lack of a virus exclusion lacks merit because there
is no inconsistency—given the pathogen exclusions that applied
to viruses, there was no need for a virus exclusion.
       The trial court did not err in concluding the RSUI and
Evanston pathogen exclusions unambiguously preclude coverage
for losses from COVID-19, and the court did not abuse its
discretion in denying leave to amend as to these two insurers.

                                33
                        DISPOSITION

       The order of dismissal is reversed except as to RSUI and
Evanston. The matter is remanded for the trial court to vacate
its order granting the motion for judgment on the pleadings and
to enter a new order granting the motion without leave to amend
as to RSUI and Evanston and denying the motion as to all other
defendants. JRK is to recover its costs on appeal with respect to
Insurers except for RSUI and Evanston. RSUI and Evanston are
to recover their costs on appeal.

                                         FEUER, J.
We concur:

             PERLUSS, P. J.

             MARTINEZ, J.

                               34