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Vol. 3, Iss. 11
July 16, 2014

Feng Shui And Insurance Coverage


I read a lot of coverage cases. And if you read Coverage Opinions with any regularity you know that I have a soft spot for coverage cases with unusual facts. The recent case of Patel v. American Economy Ins. Co., No. 12-4719 (N.D. Cal. May 8, 2014) is in the unusual facts category.

Namrata Patel’s dental office sustained smoke damage from a fire in the basement of a commercial building. Patel sought coverage from her property insurer, American Economy Insurance, for direct physical damage, loss of business income for twelve months (she was forced to relocate her business when the building closed for repairs) and necessary extra expenses. So far nothing out of the ordinary. Hold on.

Patel also sought coverage for $50,275 for a Feng Shui consultant she hired before reopening the office after the fire. She used a Feng Shui consultant to “restore energy balance” and determine “placement of furniture and dealing with forces of Qi.” [I had to look up Qi. Despite there being a long Wikipedia entry on the subject I still don’t understand exactly what it is.]

The court held that coverage for the Feng Shui consultant was not owed “[b]ecause Patel has failed to provide evidence that the cost of Feng Shui consultant services are a ‘direct physical loss’ or a ‘necessary’ ‘extra expense’ under the terms of the policy.”

The court’s conclusion was that “[c]ourts have interpreted the words ‘direct physical loss’ and similar provisions in insurance contracts to mean damage to tangible, material objects.” The court rejected Patel’s argument that the words ‘direct physical loss’ include Feng Shui services because ‘in order for Patel to replace the damaged personal property she utilized Feng Shui which she first utilized when she first placed the property.’”

Further, “[t]hat Patel chose to use a feng shui consultant does not mean that the expense for those services were ‘necessary’ ‘[t]o avoid or minimize the suspension of business’ as defined under the ‘Extra Expense’ provision of the policy. She argues that the policy is ‘vague’ because it does not specifically exclude coverage for feng shui consultants. Accepting her argument would lead to the illogical result that American Economy must explicitly define all possible services that do not fall under its coverage.”

I have no doubt that Feng Shui is an important part of many people’s lives. But as far as Feng Shui costs being the subject of damages in an insurance claim, Patel v. American Economy Ins. Co. is the first-ever reported decision to address the issue. So Dr. Patel did not go home empty handed in the Feng Shui department.

As a curious George-type I wondered the extent to which Feng Shui has been at issue in all legal cases -- of every shape and size. Conclusion: Feng Shui has just about eluded the legal system -- period. It kinda makes sense that it would know how to do that.

Here are a couple of decisions where Feng Shui was a key component:

Clay v. Mercado, 224 S.W.3d 277 (Tex. Ct. App. 2005): A huge salt water aquarium was delivered to a customer by its manufacturer. The customer was practicing Feng Shui and wanted to place the aquarium in a certain location on a tile floor. The manufacturer told her that it would leak because the floor was uneven. The customer insisted that it be installed there anyway. The manufacturer complied even though he knew it would leak. You know where this is going. Twenty months later the entire side of the aquarium tank blew out, spilling 220 gallons of saltwater, fish and coral unto the floor. The fish died. The court went on to address claims under the Texas Deception Trade Practices Act.

Le v. C.I.R., No. 5957–09S (U.S. Tax Ct. 2010): The U.S. Tax Court held that a taxpayer was a professional gambler and, thus, his gambling losses were deductible as business expenses. The court rejected the IRS’s argument, that the taxpayer’s use of Feng Shui, to determine “lucky days” on which to gamble, was irrational and not businesslike. The court explained: “The standard, however, requires only that the profit objective be actual and honest. It would be difficult to find on the record before the Court that petitioner’s approach to making a profit was irrational. For example, if someone’s investment in a stock or a business were based on Feng Shui or some other cultural judgment, that would not per se be ‘irrational’. Petitioners used their best judgment and successfully tested their business approach. Ultimately, the fact that their approach was unsuccessful does not make it irrational.”

 
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