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July 22, 2014

A federal judge recently ruled that an insurer was not obligated to pay $50,000 for a feng shui consultant following a fire loss in a dentist’s office. Patel v. American Economy Insurance Co. et al., No. 12-cv-04719, 2014 WL 1862211 (N.D. Cal. May 8, 2014). While the cost to repair the physical damage from the fire was insured under the policy, the court found that the cost to repair damage to any invisible forces that may have been at work in the office was not.

In 2009, a fire occurred in the dental office of Namrata Patel, DDS. Dr. Patel was insured through American Economy Insurance Company, and she sought coverage for damage to equipment, inventory, cleaning and related loss of business income. Among the items claimed was a “Five Elements Feng Shui Invoice” in the amount of $50,275 for a feng shui consultant hired by Dr. Patel to “change crystals and perform cures to help to restore the location to its original condition.” After its investigation, the insurer covered some claimed losses totaling more than $110,000 but denied others including the claim for the feng shui consultant.

Patel filed suit against the insurer in 2011, alleging breach of contract and bad faith. In evaluating the carrier’s motion for partial summary judgment, the court considered whether feng shui consultancy fees qualified as a direct physical loss. Dr. Patel argued that the consultant was necessary to “restore energy balance” and determine the “placement of furniture and dealing with forces of Qi.” Delivering some negative energy to the insured, the court found that direct physical loss involves objects of a “material existence, formed out of tangible matter and perceptible to the sense of touch,” and held that the feng shui fees were not insured. The court also found that the fees were not a “necessary expense” under the policy’s extra expense coverage. The court’s ruling avoided the stickier question of whether the office’s Feng Sui was damaged in the first place. This would present a unique issue on the burden of proof to establish damage to the office’s good spirits and energy balance. Not to mention the potential that the court could have ordered an appraisal of the damage to the “forces of Qi.”