Collapse Requires Actual Abrupt Falling Down
Homeowners learn the hard fact that concrete is not impervious. Chemicals in soil can react with the concrete and cause it to deteriorate, crack and if not repaired break and fall in. Insurance policies insure against direct fortuitous physical loss. It is not designed to cover losses due to wear and tear, deterioration, or defective construction.
In Bart Zamichiei And Tammy Zamichiei v. CSAA Fire & Casualty Insurance Company, No. 3:16-cv-739 (VAB), United States District Court District Of Connecticut (February 20, 2018) the USDC was asked by the plaintiffs to ignore the clear and unambiguous wording of a policy and provide coverage to the Zamichieis for slow deterioration of their basement under the collapse provisions of the policy.
CSAA moved for summary judgment, arguing that the insurance policy at issue unambiguously covers only abrupt collapses—not an ongoing condition from which damage results.
The Zamichieis live at 39 Old Monson Road in Stafford Springs, Connecticut (“Property”).
CSAA issued a homeowners insurance policy (“Policy”), effective January 23, 2015 through January 23, 2016 that excluded: “(f) Settling, shrinking, bulging or expansion, including resultant cracking, of . . . foundations, [and] walls . . . .” It also excluded collapse which it defined as: “Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or any part of the building cannot be occupied for its current purpose. (2) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse. (3) A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building. (4) A building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.”
The Zamichieis built the Property in 1989, moved into it in January 1990, and have lived there continuously since it was completed. Three-to-four years ago, Mr. Zamichiei observed a horizontal crack in the basement adjacent to the hatchway door of the external stairs.
On September 16, 2015, William Neal, P.E., a consulting engineer, inspected the Property. He attributed the “spider-web cracks” to Alkali Silica Reaction (“ASR”) and recommended replacement of the concrete. Mr. Neal testified that putting “poor aggregate” into the concrete when it was mixed was a “singular event” that “caused” the cracking. According to Mr. Neal, the concrete was “doomed” from the day it was poured, and impairment of it was “inevitable” based on the use of defective materials.
At the time of Mr. Neal’s inspection, the Property’s foundation did not require immediate replacement and was not structurally dangerous. The Zamichieis are using the Property for its intended purpose, namely to live in it.. The Property has neither caved in, fallen down, nor is it in imminent danger of falling down or caving in.
The Zamichieis sought coverage under the Policy’s Collapse provision. CSAA denied coverage of the Zamichieis’ claim.
This case, like a number of other recent decisions in the District of Connecticut, requires the Court to examine the provisions of an insurance policy, after homeowners have discovered that the concrete supporting the walls of their house is deteriorating. The issue here is whether progressive deterioration caused by a chemical reaction and resulting in cracking concrete falls within a provision of Plaintiffs’ homeowner’s insurance policy covering collapses.
The Court must read the words of the policy with their natural and ordinary meaning, and resolve any ambiguity in favor of the insured. The Court must construe the contract language in favor of the insured unless there is a high degree of certainty that the policy language clearly and unambiguously excludes the claim.
POLICY COVERAGE FOR COLLAPSE
CSAA argues that the Policy does not cover the Zamichieis’ alleged loss because the loss does not constitute a “Collapse” under the Policy. Specifically, CSAA argues that “because the [Property] is still standing, has not sustained an abrupt falling down or caving in and is still being used for its intended purpose, the [Property] has not ‘collapsed’ as contractually defined.” CSAA also argues that the Policy unambiguously does not cover losses caused by a chemical reaction because the technical source of the cracking is irrelevant when the Zamichieis’ loss consists of the foundation settling, shrinking, bulging or expanding, all excluded causes of loss.
Under Connecticut law, the substantial impairment of a wall’s structural integrity is sometimes considered a collapse. In this case, the court concluded that the contract’s language, unlike the language in earlier cases, includes the phrase “abrupt,” and not the word “ensue.” This case turns on whether “abrupt,” attached to “falling down or caving in,” “expressly . . . define[s] the term to provide for the limited usage.”
The Zamichieis acknowledged that the chemical reaction that resulted in the impairment of the concrete was “inevitable,” and suggested that the concrete was “doomed” from the day it was poured, but argue that the definition of “collapse” is merely a definition of terms, whereas the remaining provisions clarify instances when collapse has not occurred. The Zamichieis therefore argue that the term “collapse” is ambiguous in light of the qualifying language in the policy, e.g., the Policy covers hidden decay, which the Zamichieis argue is a gradual process.
The Court disagreed. By any reasonable interpretation, a contract provision requiring a “sudden” collapse in order to trigger coverage, would not include a barely perceivable chemical reaction that slowly reduces the structural integrity of concrete over a period of years. Because the term “sudden,” as used in the collapse coverage provision, means temporally abrupt, the insureds must point to evidence that the loss for which they seek coverage occurred abruptly, and not merely unexpectedly, for it to be a covered collapse.
Since the CSAA Policy required “an abrupt falling down or caving in,” the term “abrupt” therefore is unambiguous and must be “accorded its natural and ordinary meaning.” The CSAA insurance policy unambiguously covers only “abrupt” collapse, and the Zamichieis have not shown that their home has collapsed within the meaning of the Policy.
The Zamichieis’ expert stated that, at the time of inspection, the Property’s foundation did not require immediate replacement and was not structurally dangerous. Furthermore, the Zamichieis continue to use the Property for its intended purpose, and it has neither caved in nor fallen down, and it is not in imminent danger of falling down or caving in.
POLICY COVERAGE FOR A CHEMICAL REACTION
Alternatively, the Zamichieis argue that a chemical reaction constitutes a “risk of direct physical loss to property” under the Policy and therefore would be a covered loss. CSAA responded that the Zamichieis “cannot plausibly allege that the ‘loss’ was the chemical reaction itself while at the same time alleging that the ‘loss’ consists of ‘damages caused by a chemical reaction.'”
Importantly, the Policy also excludes coverage for “latent defect, inherent vice, or any quality in property that causes it to damage or destroy itself,” and “[f]aulty . . . [m]aterials used in . . . construction.” Here, the cracking concrete at issue was faulty at the time it was used in the construction of the Property and is specifically excluded.
The Zamichieis have, therefore, not raised a genuine issue of material fact as to whether the Policy covers chemical reactions.
Because the Zamichieis’ policy covers only “an abrupt falling down or caving in of a building,” and not the gradual deterioration of property over time, the Court concluded that CSAA’s policy excludes coverage for the damage to the Zamichieis’ basement, and granted CSAA’s motion for summary judgment
But for the use of the word “abrupt” instead of the word “ensue” in the policy the Zamicheieis’ had no coverage. CSAA carefully worded the terms of the policy and successfully excluded a risk of loss no insurer truly wants to cover – the slow deterioration of property. In fact, if, as time goes on and the structure finally collapses there would be no coverage because, based on the expert’s testimony, the loss is not fortuitous but inevitable.
© 2018 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
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