In its brief, UP reasons that under California law, real and personal property sustains “direct physical loss or damage” when the proliferation of a deadly virus and ensuing government closure orders deprive that property of its intended use. Its reasoning is that California has set a precedence of adherence to the “common sense” position that property that is physically lost or damaged when its use or function is materially impaired by a fortuitous peril, even if the property’s basic structure remains intact.
UP argues these five main points
- Physical property suffers “direct physical loss or damage” when a fortuitous peril compromises the property’s use or function.
- The “physical” injury requirement only guards against intangible or non-fortuitous losses, not unexpected loss of use of real or personal property.
- Damage to the usability of property due to a viral pandemic and related government orders constitutes direct physical loss and damage
- The federal precedents CCC invokes are inapposite and unpersuasive
- CCC cannot credibly oppose coverage for a viral pandemic under a policy with no virus exclusion