Collapse Exclusion Upheld by Appellate Division
In Rapp B. Properties, LLC vs. RLI Insurance Company, 1st Dept., September 15, 2009, the plaintiff sought coverage under its insurers’ policies for damage to its building’s south wall resulting from alleged collapse. The complaint alleged damage resulting from “severe cracking, bulging, splaying and displacement of the exterior brick façade” of the building. The insurers disclaimed coverage on the ground that the damage was caused by wear and tear and gradual deterioration.
The policies at issue defined collapse as follows:
- 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 part of the building cannot be occupied for its intended purpose;
- 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;
- 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;
- A building that is standing 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 lower court denied motions for summary judgment by the plaintiff and defendants. On appeal, the Appellate Division modified the lower court’s decision, and granted summary judgment to the defendant insurers.
The Court noted that the plaintiff’s managing member testified that the south wall of the building was still standing three months after the damage was first observed in July, 2005. This belied any claim that the collapse was “abrupt” within the policy definition. The Court also observed that the plaintiff’s architect alleged displacement of brick masonry units, and opined that there was “imminent risk that the wall would completely collapse.” However, the Court pointed out that the policy excluded imminent collapse from the definition.
The Court cited its 2006 decision in Rector Street Food Enterprises, Ltd. vs. Fire & Casualty Insurance Company of Connecticut, 35 A.D.3d 177 (1st Dept. 2006) which held that a building that was “shown to have had two 2-to-3-inch-wide cracks in its façade and was sinking, out of plumb and leaning” did not come within a “materially identical definition of collapse.” The Court rejected the plaintiff’s claim that bricks had fallen from the inside of the wall where it had been covered by sheetrock and tile, also noting that the wall was still standing.
This decision is another interpretation of the recent amendment to the collapse coverage definitions under some policies in which the term collapse is specifically defined as set forth above. Under those situations, the First Department has consistently upheld the application of the exclusion in circumstances where the building, or a portion thereof, is standing, but in danger of collapse.
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