California Court of Appeal Finds Lingering Smoke From Wildfire is not Direct Physical Loss

    On the heals of a decision from a federal district court that smoke damaged was a direct physical loss, the California Court of Appeal affirmed the trial court's grant of summary judgment to the insurer regarding the insureds' claim for loss due to smoke damage. Gharibian v. Wawanesa General Ins. Co., 2025 Cal. App. LEXIS 64 (Cal. Ct. App. Feb. 7, 2025). The prior, federal case, Bottega, LLC, et al. v. National Surety Corporation-Chicago, IL, 2025, U.S. Dist. LEXIS 5666 (N.D. Cal. Jan. 10, 2025) is here.

    On October 10, 2019, the Saddle Ridge wildfire began in the foothills of northern Los Angeles County. The fire burned about half a mile away from plaintiffs' property. Plaintiffs' property did not suffer any burn damage. Debris still entered their home, however, with more debris falling outside their home and in their swimming pool. While there was the smell of wildfire smoke, it dissipated over time. 

    Plaintiffs' insurer, Wawanesa General Insurance Company, sent PuroClean to inspect the property. PuroClean prepared an estimate of $4,308.90 for what it would cost to clean the property. Plaintiffs did not hire PuroClean to do the work. 

    Plaintiffs hired L.Y. Environmental, Inc., to inspect the property and write a report. The engineer who inspected testified that soot and ash were present at the property. But, soot by itself did not physically damage a structure. And ash only created physical damage to a structure if left on metal or vinyl and was then exposed to water. The engineer did not find any evidence of rusting metal or oxidised vinyl. He further confirmed that there was no burn or heat damage at the property. Thus, he concluded that the home could be fully cleaned by wiping the surfaces, vacuuming, and power washing the outside.

    Thereafter, Wawanesa paid plaintiffs $2,308.90, representing the PuroClean estimate less the $2,000 deductible. 

    Plaintiffs did not hire professional cleaners and instead cleaned the interior and exterior of their home, including the pool, on their own. Plaintiffs were not aware of anything at their property that was physically damaged. 

    Plaintiffs then retained The Croisdale Group Inc. to estimate the cost of cleaning the house. Croisdale prepared an estimate of $35,553.10, which included general cleaning, as well as interior painting, exterior wood and stucco painting, replacement of attic insulation, swimming pool work, and cleaning the HVAC system. 

    After another inspection, PuroClean revised its estimate to $20,718.09 to include disputed cleaning services. Wawanesa issued supplemental checks totalling $16,409.19, bringing the total payments to $20,718.09. Wawanesa also paid an additional $2,400 for pool cleaning. 

    Plaintiffs filed suit against Wawanesa, alleging claims for breach of contract and breach of the duty of good faith and fair dealing. Wawanesa moved for summary judgment, arguing there was no evidence of a physical loss. The trial court granted the motion. 

    The Court of Appeals affirmed. Under California law, direct physical loss or damage to property required a distinct, demonstrable, physical alteration to property. The physical alteration did not have to be visible to the naked eye, nor did it have to be structural, but it had to result in some injury to or impairment of the property as property. Here there was no evidence of any "direct physical loss the the property." The wildfire debris did not alter the property itself in a lasting and persistent manner. Any debris was easily cleaned or removed from the property. Such debris did not constitute "direct physical loss to property." 

    The judgement of the trial court was affirmed.