A federal court in California was recently presented with an interesting question: was an insured entitled to recover the costs associated with retaining a feng shui consultant? The case, Patel v. American Economy Insurance Company, et al.,1 stemmed from a fire that began in the basement of a commercial building where the insured, Namrata Patel, operated her dental practice. According to the federal court’s Order, Ms. Patel submitted various claims to her insurance carrier, American Economy Insurance Company, including the $50,275 Ms. Patel incurred to place her damaged business property back to the feng shui state it was in prior to the loss.
American Economy subsequently moved for partial summary judgment with respect to the feng shui portion of Ms. Patel’s claim. American Economy argued the feng shui expenses were not covered because such services neither arose from “direct physical loss” to covered property nor were they a necessary “extra expense” under the terms of the policy, which provided:
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
1. Covered Property
b. Business Personal Property located in or on the buildings at the described premises or in the open (or in a vehicle) within [1,000] feet of the described premises, including:
(1) Property you own that is used in your business;
. . .
(3) Tenant’s improvements and betterments. Improvements and betterments are fixtures, alternation, installations or additions:
(a) Made a part of the building or structure you occupy but do not own; and
(b) You acquired or made at your expense but cannot legally remove;
5. Additional Coverages
g. Extra Expense
(1) We will pay necessary Extra Expense you incur during the “period of restoration” that you would not have incurred if there had been no direct physical loss or damage to property at the described premises . . . .
(2) Extra Expense means expense incurred:
(i) Repair or replace any property;
(4) We will only pay for Extra Expense that occurs within 12 consecutive months after the date of direct physical loss or damage. This Additional Coverage is not subject to the Limits of Insurance of Section I — Property.
In her response2 to American Economy’s Motion, Ms. Patel explained that the application of feng shui included “the placement of furniture and dealing with forces of Qi (energy).” Here, “[i]n order for Patel to replace the damaged personal property she utilized feng shui which she first utilized when she originally placed the property.” Thus, Ms. Patel asserted that the feng shui was an existing element correlating to her damaged business personal property. Ms. Patel further argued that the provision for extra expenses was ambiguous because it “simply does not specify that feng shui services utilized by an insured in the past would not be compensable when there is a casualty requiring the premises to be restored to ‘as was’ condition.”
Unfortunately for Ms. Patel, U.S. District Judge William H. Orrick of the Northern District of California was not convinced by these arguments and granted partial summary judgment American Economy’s favor. The federal judge’s ruling was largely based on the fact that that Ms. Patel provided no summary evidence demonstrating that the costs of the feng shui services were a “direct physical loss” or “necessary” “extra expense” under the terms of the policy. Thus, the court determined that Ms. Patel failed to meet her burden of proving that a genuine issue of material fact existed whether the feng shui services fell within the policy’s coverage.
One could only speculate whether the court would have reached a different opinion had the insured presented some sort of evidence to support her feng shui claim. Because feng shui practices are not widely understood in American society, the role it plays regarding the condition of a property is often understated and misunderstood. Perhaps an affidavit from a feng shui expert demonstrating how the services are truly necessary to restore the property back to its pre-loss condition would have evidenced enough of a factual question to preclude summary judgment. I am sure this will not be the last time feng shui expenses are raised in the property insurance dispute, and it will be interesting to see how others will approach the issue in the future.
1 Patel v. American Economy Ins. Co., No. 12-04719 (N.D. Cal. 2012).
2 2014 WL 2572728.