In Barnett v. State Farm, a California court recently dealt with an interesting issue:  whether property seized pursuant to a police search warrant constitutes a loss under an all-risk policy.  Adding to the intrigue was the fact that the property seized was a number of marijuana plants.  Although plaintiff was initially arrested, ultimately the prosecutor opted not to pursue criminal charges.  However, the prosecutor refused to return the plants, so plaintiff became embroiled in a further criminal proceeding seeking recovery of the plants.

At the same time, plaintiff filed a claim under his homeowner’s policy with State Farm that provided coverage for “direct physical loss of property” that included plants, but State Farm denied the claim and plaintiff filed suit.   State Farm prevailed in a motion for summary judgment, and the appellate court agreed, finding that the officers’ seizure of marijuana pursuant to a search warrant was not a “theft” because it was not criminal, nor was there any intent to “deprive plaintiff of his property permanently and in a criminal manner, rather than by due process of law.“

The Court also held that awaiting the outcome of the criminal proceeding before issuing a coverage opinion was irrelevant, because the coverage issue did not depend upon whether plaintiff was criminally culpable, but rather, the police’s conduct.

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