Tred R. Eyerly | Insurance Law Hawaii
The federal district court found that a breezeway that collapsed during a party was covered by the commercial property policy. DENC, LLC v. Philadelphia Indem. Ins. Co., 2019 U.S. Dist. LEXIS 179083 (M.D. N.C. Oct. 15, 2019).
DENC owned an apartment complex that was insured by Philadelphia under an all-risk policy. During an early morning party, a large number of students gathered on the second-floor breezeway for a party. The students started jumping in the breezeway when a certain song started playing. The floor abruptly collapsed underneath the students.
Philadelphia sent an adjuster to inspect the breezeway a couple days later. He wrote to Philadelphia that “the sole and proximate cause of the loss is water damage occurring over an extended period of time causing the second floor breezeway to sage and the light weight concrete to crack.” Shortly thereafter, the building was condemned. A structural engineer found multiple ways in which water had seeped into the breezeway’s wood framing and photographed the resulting biological growth and wood decay. He concluded that the building had sustained significant long-term water intrusion which resulted in the wood framing inability to support the loads. The water intrusion was caused by the failure to properly install a water management system on the walls, a properly integrated waterproof system for the walkway slab and framing configuration, and improper venting of dryers.
DENC retained an engineer who testified that the breezeway was sagging because the concrete had broken.
Philadelphia denied coverage and DENC sued Motions for summary judgment were filed.
A collapse endorsement provision in the policy provided coverage in certain circumstances and excluded coverage in others, in a confusing morass of definitions, exclusions, and exceptions. An abrupt falling down or caving in of a building was excluded. On the same page, however, a collapse resulting on a “covered Cause of Loss” was covered. Collapsed caused by weight of people was a Covered Cause of Loss.
DENC presented circumstantial evidence that the collapse was at least partially caused by the weight of people. The breezeway fell while a large number of people were standing, jumping, and dancing on it. This was enough to establish coverage.
Philadelphia argued there was no coverage for parts of buildings that were “standing.” Here, the building itself remained standing, but the breezeway, which was party fo the building, was no longer standing. The evidence was undisputed that it had fallen approximately one foot and that part of the breezeway was on the ground below. Thus, part of the building was not standing and the exclusion did not apply.
Therefore, the collapse of the second floor breezeway was a covered loss under Philadelphia’s policy.