In re: GARDEN FRESH RESTAURANTS, LLC v. Travelers Property Casualty Company of America

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NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: GARDEN FRESH RESTAURANTS,
LLC,
Debtor,
LESLIE T. GLADSTONE, Chapter 7
Trustee for Garden Fresh Restaurants, LLC,
Plaintiff-Appellant,
v.
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA; and THE
TRAVELERS LLOYDS INSURANCE
COMPANY,
Defendants-Appellees.
No. 22-56205
D.C. No.
3:21-cv-01440-JLS-KSC
MEMORANDUM*
Appeal from the United States District Court
for the Southern District of California
Janis L. Sammartino, District Judge, Presiding
Submitted November 7, 2023**
Phoenix, Arizona
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
FILED
NOV 15 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Before: COLLINS and HAWKINS, Circuit Judges, and SEEBORG,*** District
Judge.
Plaintiff Leslie T. Gladstone is the Chapter 7 Trustee for Garden Fresh
Restaurants, LLC. Defendants are, collectively, Travelers Property Casualty
Company of America and Travelers Lloyds Insurance Company. Plaintiff bought a
commercial insurance policy from Defendants spanning the period of April 1, 2019
to April 1, 2020. Plaintiff now seeks insurance coverage of business losses
stemming from the COVID-19 pandemic. Plaintiff appeals from the district court’s
order dismissing her complaint with prejudice.
We have jurisdiction under 28 U.S.C. § 1291. An appellate court reviews de
novo an order granting a motion to dismiss for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). See Steckman v. Hart Brewing, Inc., 143
F.3d 1293, 1295 (9th Cir. 1998). The factual allegations in the complaint are
accepted as true and construed in the light most favorable to the Plaintiff. L.A.
Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir. 2017).
We affirm the district court’s dismissal of Plaintiff’s complaint. Plaintiff
contends that Defendants must cover business losses arising from COVID-19.
However, the insurance policy contains a virus exclusion provision that bars
coverage for “loss or damage caused directly or indirectly by…[a]ny virus,
*** The Honorable Richard Seeborg, Chief United States District Judge
for the Northern District of California, sitting by designation.

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bacterium or other microorganism that induces or is capable of inducing physical
distress, illness or disease.” This provision bars coverage of the losses Plaintiff
alleges. See Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 15 F.4th 885, 893 (9th
Cir. 2021).
Plaintiff fails plausibly to aver that anything other than the COVID-19
pandemic is the efficient proximate cause of the losses. See Mudpie, 15 F.4th at
894 (citation omitted). Furthermore, California has not adopted the doctrine of
regulatory estoppel, so we reject Plaintiff’s argument that the virus exclusion
provision is unenforceable. Because the virus exclusion provision serves as an
independent basis to affirm the district court, we need not reach Plaintiff’s
contention that COVID-19 caused direct physical loss or damage to the insured
property, but we note that the Ninth Circuit has certified that question to the
California Supreme Court in Another Planet, Entertainment LLC v. Vigilant
Insurance Co., 56 F.4th 730 (9th Cir. 2022). No additional question need be
certified to the California Supreme Court.
The virus exclusion provision independently bars coverage of Plaintiff’s
losses. The district court’s grant of Defendants’ motion to dismiss is AFFIRMED.

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