MIRLAN, DBA Vinyard Valley Center v. Affiliated Fm Insurance Company, a Corporation

This disposition is not appropriate for publication and is not precedent*
except as provided by Ninth Circuit Rule 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MIRLAN, DBA Vinyard Valley Center,
Plaintiff - Appellant,
v.
AFFILIATED FM INSURANCE
COMPANY, a Corporation,
Defendant - Appellee,
and
AXIS SPECIALTY US SERVICES, INC.,
a Corporation,
Defendant.
No. 09-55662
D.C. No. 5:08-cv-00119-VAP
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding
Argued and Submitted November 1, 2010
Pasadena, California
Before: SCHROEDER, TALLMAN and M. SMITH, Circuit Judges.
FILED
NOV 08 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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2
Plaintiff-Appellant Mirlan appeals the district court’s denial of its motion for
summary judgment and grant of summary judgment in favor of Defendant-
Appellee Affiliated FM Insurance Company. We have jurisdiction under 28
U.S.C. § 1291. As the facts and procedural history are familiar to the parties, we
do not recite them here except as necessary to explain our disposition. We affirm.
In an action on an insurance policy, “it is well settled that ‘[t]he burden is on
an insured to establish that the [event] forming the basis of its claim is within the
basic scope of insurance coverage .’” Dart Inds., Inc. v. Commercial Union Ins.
Co., 52 P.3d 79, 87 (Cal. 2002). Here, the insurance policies cover “the actual loss
of income sustained by the insured resulting directly from the necessary
untenantability, caused by loss, damage or destruction by any of the perils covered
herein . . . to real or personal property.” Mirlan must therefore show that its losses
resulted directly from the necessary untenantability caused by the fire, rather than
its own conduct after the fire.
After the fire rendered three tenant spaces untenantable, Mirlan represented
to its tenants that they would not have to continue paying rent. However, Mirlan’s
tenant leases provided that the tenants were required to continue paying rent even
if fire made the spaces untenantable or there were repairs made to the property.
The leases also required the tenants to purchase business interruption insurance.

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3
Based on these provisions, Mirlan’s tenants would have been required to continue
paying rent but for Mirlan’s own representations that they had no obligation to do
so. Because there is no evidence in the record that Mirlan would have incurred
rental income losses after the fire, Mirlan does not meet its burden to show that its
claim falls within the scope of insurance coverage. Because this issue is
dispositive, we do not reach the remaining issues.
AFFIRMED.

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