West Virginia's highest court, the Supreme Court of Appeals, has ruled that the term “collapse” as used (but not defined) in a homeowner's insurance policy was ambiguous, meant something less than “complete falling in” of a kitchen floor, and included “substantial impairment of the structural integrity” of the floor. The court also held that whether an insured should have known that decay was causing her kitchen floor to sink was a genuine issue of material fact that had to be decided by a jury.

The Case

Freda Marie Bradley filed a claim under her homeowner's insurance policy for damage to her kitchen and bathroom floor. An engineer retained by the insurance company, Farmers & Mechanics Mutual Insurance Company of West Virginia, inspected Ms. Bradley's home and attributed the damage to Ms. Bradley's kitchen floor to long term rotting and decay resulting from inadequate perimeter drainage and lack of a vapor barrier. The report assigned damage to the bathroom floor to water leaking from the toilet drain associated with a faulty wax seal. Farmers then denied Ms. Bradley's claim, citing a policy exclusion for water damage below the surface of the ground, fungi, wet or dry rot, or bacteria.

Ms. Bradley sued, alleging that her floor had “collapsed to the extent that the kitchen became unsafe and unusable. The only thing holding the floor up was the linoleum floor covering.”

The trial court ruled in favor of Farmers, and the case reached West Virginia's highest court.

The Policy

The policy provided:

8. Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following: … b. Hidden decay[.]
….
Collapse does not include settling, cracking, shrinking, bulging or expansion.

The West Virginia Supreme Court of Appeals Decision

The court reversed.

In its decision, it explained that the policy did not define the term “collapse” except to indicate that it did “not include settling, cracking, shrinking, bulging or expansion.” It then found that the term “collapse” was ambiguous in “light of the split among courts regarding the definition of the term 'collapse.'” The court declared that, strictly construing the term against Farmers and in favor of the insured, the term “collapse” in Ms. Bradley's insurance policy “should be construed to mean something less than the complete falling in of Ms. Bradley's kitchen floor and to include substantial impairment of the structural integrity of the floor.” Accordingly, the court concluded that the trial court had erred in finding as a matter of law that the term “collapse” in Ms. Bradley's insurance policy was not ambiguous and that Ms. Bradley's kitchen floor did not collapse.

The court also ruled that whether Ms. Bradley should have known that decay was causing her kitchen floor to sink was a genuine issue of material fact that had to be decided by a jury.

The case is Chafin v. Farmers & Mechanics Mutual Ins. Co. of West Virginia, No. 12–0769 (W.Va. Nov. 7, 2013). Attorneys involved include: Carte P. Goodwin, Esq., James A. Kirby, III, Esq., Mary R. Rowe, Esq., Goodwin & Goodwin, LLP, Charleston, WV, for Petitioner; James A. Varner, Sr., Esq., Debra Tedeschi Varner, Esq., Michael D. Crim, Esq., McNeer, Highland, McMunn and Varner, L.C., Clarksburg, WV, for Respondent.

FC&S Legal Comment

Courts have divided as to whether to define the term “collapse” narrowly to include only the complete falling down of a structure (the more traditional view) or more broadly so that a complete destruction or falling down is not required (the more modern view).

For example, in Dominick v. Statesman Ins. Co., 692 A.2d 188 (Pa.Super.Ct.1997), the court found that the term “collapse” in an insurance policy was not ambiguous and meant that a structure must fall together or fall in.

Numerous other courts, however, have reached the opposite conclusion. See, e.g., Ercolani v. Excelsior Ins. Co., 830 F.2d 31 (3rd Cir.1987) (predicting that New Jersey would follow other states in holding that collapse required only “serious impairment of structural integrity”); Island Breakers v. Highlands Underwriters Ins. Co., 665 So.2d 1084 (Fla.Dist.Ct.App.1995) (Cope, J., concurring) (finding collapse coverage applied if there was a “substantial impairment of the structural integrity” of part of the building); Nationwide Mut. Fire Ins. Co. v. Tomlin, 352 S.E.2d 612 (Ga.Ct.App. 1986) (holding that collapse included any “reasonably detectable serious impairment of structural integrity” because such a definition “more realistically reflects the purposes of the policy”); Gov't Emps. Ins. Co. v. DeJames, 261 A.2d 747 (Md. 1970) (holding collapse was ambiguous because verb had restrictive meaning and noun had more liberal meaning, including “breakdown in strength,” and thus resolving ambiguity in favor of insured to include any serious impairment of structural integrity); Royal Indem. Co. v. Grunberg, 553 N.Y.S.2d 527 (N.Y.App.Div. 1990) (agreeing with “numerical majority of American jurisdictions [that] a substantial impairment of the structural integrity of a building is said to be a collapse” because to require the building to fall down would be “unreasonable” in light of an insured's duty to protect property from further damage); Thomasson v. Grain Dealers Mut. Ins. Co., 405 S.E.2d 808 (N.C.Ct.App. 1991) (holding that the word collapse was ambiguous because to “require that the house fall in completely” would render the coverage illusory).

In Monroe Guaranty Ins. Co. v. Magwerks Corp., 829 N.E.2d 968 (Ind.2005), the Supreme Court of Indiana discussed at length the meaning of the term “collapse” when it was not defined in an insurance policy:

What constitutes a collapse has been the subject of a number of articles and treatises. Under the traditional definition, a “collapse” is limited to an event that occurs suddenly and results in complete disintegration. 43 Am.Jur.2d Insurance § 1282 (2004). This definition typically disallows coverage under an insurance policy where only a “part of a part” of a building falls. Monroe Guaranty v. Magwerks, 796 N.E.2d 326, 332 (Ind.Ct.App.2003). In short, under the traditional view, collapse coverage applies only if an insured building is reduced to flattened form or rubble. By contrast, the broader and so-called modern definition, which is followed by a majority of jurisdictions, defines “collapse” as a “substantial impairment of the structural integrity of the building or any part of a building.”

See, also, Alan R. Miller et al., What Constitutes a Collapse Under A Property Insurance Policy, 29—WTR Brief 20 (2000); Powell on Real Property § 2.02 (Michael Allan Wolf ed., Matthew Bender); Annotation, What Constitutes “Collapse” of a Building Within Coverage of Property Insurance Policy, 71 A.L.R.3d 1072 § 3 (1976 & Supp.2002); Paul B. Tarr et al., Insurance Coverage for Collapse Claims: Evolving Standards and Legal Theories, 35 Tort & Ins. L.J. 57 (1999).

Originally published on FC&S Legal: The Insurance Coverage Law Information Center. FC&S Legal is the industry's ONLY single-source, comprehensive portal developed specifically for insurance coverage law professionals. To find out more, visit www.fcandslegal.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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West Virginia Determines Difference Between 'Collapse' and 'Complete Falling In' of a Floor

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