California Appeals Court Rules in Favor of Dispensary in Insurance Coverage Dispute over Burglary Damages

The California appeals court ruled that a burglary at a marijuana dispensary in June 2020 constituted only one occurrence under the insurance policy. However, the court found that the trial judge had made an error in determining that the insurer was not required to make an additional payment for business losses.

In the case of Apex Solutions Inc. v. Falls Lake Insurance Management Company Inc., the First Appellate District stated in a published ruling that there was a narrow triable issue regarding the calculation of Apex’s lost business income. The three-judge panel pointed out that the trial judge did not address opposing arguments from both parties on how to calculate Apex’s business losses and did not rule on Falls Lake’s objection to William Funderburke’s declaration for hearsay and lack of foundation.

The burglary at Apex’s Oakland store occurred during civil unrest following George Floyd’s death. The company’s policies with Falls Lake provided $600,000 in coverage per occurrence for property damage and up to $2 million in coverage for business losses. Despite claiming $2.5 million in lost inventory due to the burglary, Apex received only $600,000 from the insurer as payment for property damage and a second payment of $673,477 for business losses.

Apex filed a lawsuit against Falls Lake for breach of contract and bad faith when the parties could not resolve disagreements over business loss calculations. The company argued that the burglary should be considered two occurrences since inventory was stolen from two vaults, but after competing summary judgment motions, the trial judge ruled in favor of Falls Lake.

Apex appealed the decision, claiming that the trial judge was mistaken in defining the burglary as one occurrence and that Falls Lake incorrectly calculated its business losses.

Representatives for both parties declined to comment on the ruling.