Calif. Odor Case Stinks For Businesses With CGL Policies

California court says commercial general liability policy does not apply as pure economic loss is not a “loss of use” of tangible property.

April 11, 2014

Law360, New York (April 11, 2014, 3:53 PM ET) ‐‐ The U.S. District Court for the Northern District of California recently confirmed that purely economic loss is not a “loss of use” of tangible property and therefore does not constitute property damage under a commercial general liability policy. The district court determined that a restaurant’s reduced profits from loss of customers due to bad odors emanating from an adjacent restaurant is merely economic loss and is not covered property damage.

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