Happy Valley Road LLC v. Amguard Insurance Company

Background

Happy Valley Road LLC sued Amguard Insurance Company under an insurance policy for lost short-term-rental income incurred during the COVID-19 pandemic. In an earlier order, the court dismissed the plaintiff’s claim in part because the policy provision covering “direct physical loss” did not cover the alleged loss and in part because the plaintiff had not alleged other requirements for coverage.

The California Supreme Court was scheduled to decide whether the actual or potential presence of the COVID-19 virus on insured premises constitutes “direct physical loss or damage to property” under a commercial property insurance policy.

Motion to Stay

Happy Valley Road LLC moved to stay, or pause, the case until the California Supreme Court resolved that coverage question. The court applied the rule that federal courts may stay proceedings to manage their dockets, while weighing possible harm, hardship, and whether a stay would simplify the issues or legal questions.

The court denied the motion. It reasoned that the plaintiff had not alleged other coverage requirements, such as that the rented portion of the property was made unfit for habitation because of direct physical loss. A stay concerning the disputed coverage provision would not help if the plaintiff could not otherwise plead a viable claim. The court said the plaintiff could renew the motion if it pleaded viable claims.

Disposition

Magistrate Judge Laurel Beeler denied the motion to stay and resolved the motion identified as ECF No. 29. The court ordered the plaintiff to file an amended complaint within 28 days and to attach a blackline comparison showing the changes from the operative complaint.