West Virginia's highest court, the Supreme Court of Appeals, hasruled that the term “collapse” as used (but not defined) in ahomeowner's insurance policy was ambiguous, meant something lessthan “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 thatdecay was causing her kitchen floor to sink was a genuine issue ofmaterial fact that had to be decided by a jury.

TheCase

Freda Marie Bradley filed a claim under her homeowner'sinsurance policy for damage to her kitchen and bathroom floor. Anengineer retained by the insurance company, Farmers & MechanicsMutual Insurance Company of West Virginia, inspected Ms. Bradley'shome and attributed the damage to Ms. Bradley's kitchen floor tolong term rotting and decay resulting from inadequate perimeterdrainage and lack of a vapor barrier. The report assigned damage tothe bathroom floor to water leaking from the toilet drainassociated with a faulty wax seal. Farmers then denied Ms.Bradley's claim, citing a policy exclusion for water damage belowthe surface of the ground, fungi, wet or dry rot, or bacteria.

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

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

ThePolicy

The policy provided:

8. Collapse. We insure for direct physical loss to coveredproperty involving collapse of a building or any part of a buildingcaused only by one or more of the following: … b. Hiddendecay[.]

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….

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Collapse does not include settling, cracking, shrinking, bulgingor expansion.

The West Virginia Supreme Court of Appeals Decision

The court reversed.

In its decision, it explained that the policy did not define theterm “collapse” except to indicate that it did “not includesettling, cracking, shrinking, bulging or expansion.” It then foundthat the term “collapse” was ambiguous in “light of the split amongcourts regarding the definition of the term 'collapse.'” The courtdeclared that, strictly construing the term against Farmers and infavor of the insured, the term “collapse” in Ms. Bradley'sinsurance policy “should be construed to mean something less thanthe complete falling in of Ms. Bradley's kitchen floor and toinclude substantial impairment of the structural integrity of thefloor.” Accordingly, the court concluded that the trial court haderred in finding as a matter of law that the term “collapse” in Ms.Bradley's insurance policy was not ambiguous and that Ms. Bradley'skitchen floor did not collapse.

The court also ruled that whether Ms. Bradley should have knownthat decay was causing her kitchen floor to sink was a genuineissue 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., DebraTedeschi Varner, Esq., Michael D. Crim, Esq., McNeer, Highland,McMunn and Varner, L.C., Clarksburg, WV, for Respondent.

FC&S LegalComment

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 completedestruction or falling down is not required (the more modernview).

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

Numerous other courts, however, have reached the oppositeconclusion. See, e.g., Ercolani v. Excelsior Ins.Co., 830 F.2d 31 (3rd Cir.1987) (predicting that New Jerseywould follow other states in holding that collapse required only“serious impairment of structural integrity”); Island Breakersv. Highlands Underwriters Ins. Co., 665 So.2d 1084(Fla.Dist.Ct.App.1995) (Cope, J., concurring) (finding collapsecoverage applied if there was a “substantial impairment of thestructural 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 seriousimpairment of structural integrity” because such a definition “morerealistically reflects the purposes of the policy”); Gov'tEmps. Ins. Co. v. DeJames, 261 A.2d 747 (Md. 1970) (holdingcollapse was ambiguous because verb had restrictive meaning andnoun had more liberal meaning, including “breakdown in strength,”and thus resolving ambiguity in favor of insured to include anyserious impairment of structural integrity); Royal Indem. Co.v. Grunberg, 553 N.Y.S.2d 527 (N.Y.App.Div. 1990) (agreeingwith “numerical majority of American jurisdictions [that] asubstantial impairment of the structural integrity of a building issaid to be a collapse” because to require the building to fall downwould be “unreasonable” in light of an insured's duty to protectproperty from further damage); Thomasson v. Grain Dealers Mut.Ins. Co., 405 S.E.2d 808 (N.C.Ct.App. 1991) (holding that theword collapse was ambiguous because to “require that the house fallin completely” would render the coverage illusory).

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

What constitutes a collapse has been the subject of a number ofarticles and treatises. Under the traditional definition, a“collapse” is limited to an event that occurs suddenly and resultsin complete disintegration. 43 Am.Jur.2d Insurance § 1282(2004). This definition typically disallows coverage under aninsurance 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, collapsecoverage applies only if an insured building is reduced toflattened form or rubble. By contrast, the broader and so-calledmodern definition, which is followed by a majority ofjurisdictions, defines “collapse” as a “substantial impairment ofthe structural integrity of the building or any part of abuilding.”

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

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