The Insurance Coverage Law Information Center
The following article is from National Underwriter’s latest online resource,...
a. any of the “Specified Causes of Loss” or breakage of building glass, only as insured against in this policy.
b. weight ...
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
Copyright © 2014 The National Underwri...
Upcoming SlideShare
Loading in …5
×

Court Rejects Coverage under All Risk Property Policy Where Partial Collapse of Building Was Not Caused "Only" by Weight of Contents and Equipment

402 views

Published on

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.

Published in: Law
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
402
On SlideShare
0
From Embeds
0
Number of Embeds
7
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Court Rejects Coverage under All Risk Property Policy Where Partial Collapse of Building Was Not Caused "Only" by Weight of Contents and Equipment

  1. 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. 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
  3. 3. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com Copyright © 2014 The National Underwriter Company. All Rights Reserved. NOTE: The content posted to this account from FC&S Legal: The Insurance Coverage Law Information Center is current to the date of its initial publication. There may have been further developments of the issues discussed since the original publication. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought. For more information, or to begin your free trial: • Call: 1-800-543-0874 • Email: customerservice@SummitProNets.com • Online: www.fcandslegal.com FC&S Legal guarantees you instant access to the most authoritative and comprehensive insurance coverage law information available today. This powerful, up-to-the-minute online resource enables you to stay apprised of the latest developments through your desktop, laptop, tablet, or smart phone —whenever and wherever you need it.

×