Superior Court holds no coverage for collapse of retaining wall

Plaintiffs Marc Levine and Ute Groening owned a house in Brookline.  The property behind theirs is at a higher elevation.  A 10 foot tall stone retaining wall sat on the property line for a century. 

A new owner purchased the rear property.  In order to level that property they installed a timber wall near the property line and backfilled the space with soil.  The plaintiffs alleged that the weight and pressure of the timber wall and additional soil overburdened the stone retaining wall, causing it to bow and crack.  They sought coverage from Merrimack Mutual Fire Insurance Company, their homeowner's insurer, for the loss.  Merrimack denied the claim.  The retaining wall subsequently collapsed entirely. 

In Levine v. Aljasa Realty LLC, 2016 WL 872903 (Mass. Super.), the Massachusetts Superior Court held that there was no coverage under the Merrimack policy.  Coverage B for "other structures" may have been initially triggered, but an exclusion for "loss involving collapse" applied.  Although there were exceptions to the exclusion, the exceptions did not apply to loss to a retaining wall "unless the loss is a direct result of the collapse of the building or any part of the building."   

U.S. District Court interprets earth movement exclusion

Habit OPCO leased a building that was damaged by construction at an adjacent site owned by the Greater Boston Food Bank.

The building rested on concreted piles and on fill. On December 7, 2007 GBFB began construction of a new building on the adjacent property. It drove concrete piles to a depth of almost 190 feet. Within a couple of weeks Habit employees noticed damage to its building such as cracked door frames. By mid-February the building had floor heaves, its ceiling tiles were shifting, and walls were cracking.

Habit's insurer, Philadelphia Indemnity, hired an expert who opined that the damage was caused by vibrations from the pile driving on the GBFB property.

Philadelphia Indemnity denied the claim for structural damage, citing the policy's earth movement exclusion. Habit argued that the earth movement exclusion bars coverage only for damage from naturally occurring earth movements and not from man-made events.

In Mulhern v. Philadelphia Indem. Co., __ F. Supp. 2d __, 2011 WL 3563126 (D. Mass.), the United States District Court for the First Circuit noted that the exclusion includes loss from "improperly compacted soil," which is a man-made condition. The court held that Philadelphia Indemnity was entitled to judgment to the extent that Habit is precluded from arguing that the policy covers damages caused by defects in the fill.

Philadelphia Indemnity argued that the anti-concurrent causation clause in the earth movement exclusion precluded coverage under Habit's theory that shock waves generated by the pile driving caused the structural damage to the building. The court denied summary judgment on that issue because there was a disputed issue of fact as to whether improperly compacted soil was a cause of damage or whether vibrations emanating from the pile driving were the exclusive cause.

Finally, the court held there was no coverage under the collapse clause of the policy because the damage to the building was not "an abrupt falling down or caving in of a building or any part of a building with a result that the building cannot be occupied for its intended purpose, because the claim was the the roof split, leaving a gap of .75 inches, and then cracked.

U.S. District Court adopts broader definition of "part" in collapse coverage

A wall in a building in Holyoke owned by Puerta de la Esperanza settled between six and ten inches, with resulting damage to floors, walls, and plumbing fixtures. The settling was caused by the collapse of a load-bearing brick pier.

Puerta de la Esperanza requested coverage from its insurer, Middlesex, who sought a declaratory judgment that the pier's failure was not a "collapse." The policy defined collapse as "an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose[.]"

The pier was a component of the building but not an area of the building. Middlesex argued that the word "part" refers only to a physical area but not a structural component of the building. Puerta de la Esperanza argued that the term "part" can mean either an area or a component of the building.

In Middlesex Mut. Ass. Co. v. Puerta de la Esperanza, LLC, ___ F. Supp. 2d ___, 2010 WL 2639859 (D. Mass), the United States District Court adopted the broader definition of "part," and held that there was coverage because the pier, a component of the building, collapsed.

Good article on the meaning of "collapse" in property damage policies (national scope)

I posted here and here on the Massachusetts interpretation of "collapse," which is generally an undefined term in property damage policies. Massachusetts takes the narrow view that coverage is limited to the actual falling down of a covered structure.

Here's an interesting article, Insurance Coverage for Collapse - How Has It Changed and Why? in Adjusting Today, a publication of Adjusters International, Inc., a public adjusting company. The article covers the history and interpretation of "collapse" nationally.

Massachusetts Appellate Division rules in favor of insurer in 93A/176D claim because insured presented no evidence of inadequate investigation

In O'Sullivan v. Hingham Mut. Fire Ins. Co., 2009 WL 2438329 (Mass. App. Div.), the Massachusetts Appellate Division overturned a trial judge's ruling that an insurer violated Mass. Gen. Laws ch. 93A.

O'Sullivan owned a building with a package store in it. (For blog readers not familiar with Massachusetts vernacular, a package store is a liquor store.) The store had a walk-in beer cooler. O'Sullivan discovered in October, 2004 that the back of the cooler had fallen through the floor to the crawl space below. She sought coverage from her businessowner's policy with Hingham.

The policy covered "loss caused by direct physical loss involving collapse . . . ." According to the policy terms collapse "does not include cracking, shrinking, bulging, or expanding."

Hingham sent an adjuster to inspect the floor. He concluded that the floor had "settled," not "collapsed."

A jury returned a verdict for O'Sullivan, finding that a collapse had occurred within the coverage. The trial judge then ruled that Hingham had violated Mass. Gen. Laws chs. 93A and 176D because its adjuster had conducted only a "cursory" inspection.

On appeal the Massachusetts Appellate Division upheld the jury's finding that the cooler had collapsed. However, the Appellate Division reversed the trial judge's ruling on the 93A count:

To prevail in an action for unfair settlement practices under G.L. c. 176D, § 3(9)(d), the plaintiff must show that the defendant "refus[ed] to pay claims without conducting a reasonable investigation based upon all available information." O'Sullivan made no such showing. She presented no evidence, expert or otherwise, of what Popoli had failed to do, or what additional steps he should have taken, in other words, what a reasonable investigation would have entailed. To the contrary, evidence was presented that Popoli spend between 30 and 45 minutes inspecting the outside and inside of the store, inspecting and taking measurements of the cooler, viewing the rot and deterioration beneath the floor though gaps in the raised boards, taking a number of photographs, and collecting a history from O'Sullivan. Far from a "cursory" inspection, the trial judge noted in his findings that [the adjuster] had "much probity and experience" and merely erred in this case.

New decision on collapse

I posted recently on the meaning of "collapse." The Massachusetts Appeals Court has issued an unpublished decision affirming that "there are no degrees of collapse."

In 529 E. Broadway Condo. Trust v. Vermont Mut. Ins. Co., an unpublished decision of the Massachusetts Appeals Court, condominium owners asked their all-risk insurer to cover the cost of structural repair when an outside brick wall was detaching from the building. The insurer's investigator concluded that the problem was a result of water infiltration.

The court held that the detaching wall did not meet the definition of collapse, which, as established by case law, includes "both a temporal element of suddenness . . . and a visual element of altered appearance that comprises a structural collapse, distinct from the degenerative process causing the collapse."

The meaning of "collapse"

This has been a great winter for taking my kids sledding. But the snow is not so fun when its weight is bending the roof of your building. And it's even worse if your insurance doesn't cover the damage.

Policies with coverage for property damage may insure “against the risk of direct physical loss or damage involving collapse of a building or any part of a building” due to causes including the "weight of ice and snow or sleet.” “Collapse” is an undefined word in the policies.

Nationally, the cases discussing collapse coverage generally fall into one of three camps. The narrow view is that the coverage is limited to the actual falling down of a covered structure. The broad view is that any substantial structural impairment that threatens collapse comes within the coverage. A "moderate" view is that the coverage includes the threat of imminent collapse.

Massachusetts courts take the narrow view. In Dreiblatt v. Trustees of the Shipway Place Condominium Ass’n, 264 F.3d 126 (1st Cir. 2001), a building suffered roof damage as a result of a heavy snowstorm. The United States Court of Appeals for the First Circuit held that under Massachusetts law, “collapse” requires three elements: “suddenness, a perceptible change in appearance, and completeness.” Where the damage consists of the outside walls leaning inward, cracks appearing in the ceilings and interior walls, and a two-inch drop in the roof as a result of faulty design combined with the weight of snow, no collapse has occurred. Driscoll v. Providence Mut. Fire Ins. Co., 69 Mass. App. Ct. 341, 345 (2007).