A federal district court in Oregon, ruling in favor of an insurance carrier, has decided that an “all risk” property insurance policy did not cover a partial collapse of a building where the collapse was not directly and immediately caused “only” by the weight of contents and equipment in the building as required by the policy.
Similaire à Court Rejects Coverage under All Risk Property Policy Where Partial Collapse of Building Was Not Caused "Only" by Weight of Contents and Equipment
Similaire à Court Rejects Coverage under All Risk Property Policy Where Partial Collapse of Building Was Not Caused "Only" by Weight of Contents and Equipment (20)
The Ultimate Guide to Drafting Your Separation Agreement with a Template
Court Rejects Coverage under All Risk Property Policy Where Partial Collapse of Building Was Not Caused "Only" by Weight of Contents and Equipment
1. The Insurance Coverage Law Information Center
The following article is from National Underwriter’s latest online resource,
FC&S Legal: The Insurance Coverage Law Information Center.
COURT REJECTS COVERAGE UNDER ALL-RISK PROPERTY POLICY
WHERE PARTIAL COLLAPSE OF BUILDING WAS NOT CAUSED “ONLY”
BY WEIGHT OF CONTENTS AND EQUIPMENT
May 27, 2014 Steven A. Meyerowitz, Esq., Director, FC&S Legal
A federal district court in Oregon, ruling in favor of an insurance carrier, has decided that an “all risk” property insurance
policy did not cover a partial collapse of a building where the collapse was not directly and immediately caused “only” by
the weight of contents and equipment in the building as required by the policy.
The Case
The Tarleton Building, a partial two story built in the 1940s and framed with five wood bowstring roof trusses, originally
served as a farm supply store but was converted into an office building during the 1970s. Tarleton LLC acquired the
building in 1998 and, since then, has leased the building for use as an office.
Tarleton said that after it remodeled the building to add ceilings, platforms, duct work, steel pipes, electrical equipment,
mechanical equipment, and sprinklers, one of the bowstring trusses ruptured, causing a collapse. Tarleton said that it
repaired the building, installing conditioning units, wires, suspended ceilings, ceiling joists, and insulation.
A few years later, another truss ruptured, fell five to eight inches, and landed on a non-load-bearing wall.
Tarleton filed an insurance claim with State Farm Fire and Casualty Company, which had issued it an “all-risk” property
insurance policy insuring the building.
An engineer hired by State Farm to investigate the collapse concluded:
We do not believe that the [truss] failure can be attributed to any particular single event. Rather, the damage appears
to be the result of inadequately-sized truss members and connections from the original design and construction, with a
progression of degradation of truss integrity over many decades along with likely increases in dead loads, which finally
reached a tipping point....
State Farm denied Tarleton’s insurance claim, and Tarleton sued. State Farm moved for summary judgment.
The Policy
The all-risk property insurance policy insured against:
accidental direct physical loss
to covered property.
An “Amendatory Collapse Endorsement” specified that State Farm would cover losses resulting from a building collapse
if the collapse was:
directly and immediately cause[d] only by one or more of the following:
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
2. a. any of the “Specified Causes of Loss” or breakage of building glass, only as insured against in this policy.
b. weight of contents, equipment, animals or people
c. weight of ice, snow, sleet or rain which collects on a roof; or
d. use of defective material or methods in the construction (includes remodeling or renovation) of the building if the
collapse occurs during the course of the construction of the building.
The Court’s Decision
The court granted State Farm’s motion.
In its decision, the court first rejected Tarleton’s argument that summary judgment was inappropriate because the
collapse was covered under the general “losses insured” section. In this case, the court found, the “accidental direct
physical loss” language articulated policy coverage in very general terms, whereas the collapse endorsement specifically
defined the bounds of coverage relating to “direct physical loss to covered property involving the sudden, entire collapse
of a building or any part of a building.” Thus, the court ruled, the specific language of the collapse endorsement
controlled the more general language of the “losses insured” section, and precluded recovery under the policy’s
“accidental direct physical loss” language.
With respect to the collapse endorsement, the court first agreed with Tarleton that the building’s roof, ceilings, electrical
wiring, duct work, and other building materials that exhibited dead weight on the trusses were “contents and equipment”
as contemplated by the parties. It then explained that, for Tarleton’s claim to survive summary judgment, the collapse
must have been “directly and immediately caused only by” the weight of contents and equipment. In the court’s view, the
phrase was open to multiple interpretations, and was ambiguous. However, it continued, the plain meaning of “only” as
used in the policy meant that the policy would cover Tarleton’s loss “if the bowstring trusses ruptured due to the weight of
contents and equipment alone, without another direct and immediate cause contributing to the collapse.”
The court pointed out that Tarleton’s expert had opined that hot air in the building’s attic prior to the collapse had
weakened the wooden trusses and had contributed to the collapse, going so far as to call the attic temperatures a
“trigger” of the collapse. The court then ruled that the collapse was not caused by the weight of contents and equipment
“without anyone or anything else,” but that it had occurred due to the combination of multiple causes:
Here, dead load in the form of air conditioning equipment, “wires, suspended ceilings, ceiling joists, and insulation”
were added …, but the truss did not collapse immediately after the new equipment was installed. The cause which
had the closest temporal relationship to the collapse, and was most variable in the time-period preceding the
collapse, was the attic temperature. If there is one direct and immediate cause which was “closest in time” to the
events in question, it was the high temperature in the Tarleton building’s attic.
Thus, the court concluded, Tarleton’s loss was not “directly and immediately caused only” by the weight of contents and
equipment, and State Farm had not breached the insurance policy by refusing coverage.
The case is Tarleton LLC v. State Farm Fire and Cas. Co., No. 3:12–CV–00989–AC (D. Ore. May 21, 2014). Attorneys
involved include: Christopher Grady, Dean E. Aldrich, Aldrich Eike, PC, Portland, OR, for Plaintiff; Diane L. Polscer, Brian C.
Hickman, Paul A. Mockford, Gordon & Polscer, LLC, Portland, OR, for Defendant.Resident in the firm’s Newark, New
Jersey, office, the authors may be contacted at frederic.giordano@klgates.com and robert.pawlowski@klgates.com,
respectively.
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com