Stucco Visibly Hanging Loose from Wall Suffered “Collapse”

 

In Hennessy v. Mutual of Enumclaw Ins. Co., 2009 WL 1140143 (Or.App), the plaintiff owned a commercial building insured by the defendant. Until 2005, the building's exterior was covered by a layer of a stucco product called marblecrete. In late 2003, the plaintiff discovered that a piece of stucco had visibly separated from the building's underlying wall, so she hired a contractor to remove the damaged stucco. She then filed a claim with the defendant, which the defendant denied. Plaintiff later replaced the remaining stucco and, again, filed a claim with the defendant.

 

After the defendant denied her claims, the plaintiff brought a breach of contract action against the insurer. The plaintiff argued that her policy entitled her to coverage, under the policy's coverage for “collapse,” for the cost of removing and replacing the stucco from the building's exterior walls.

 

The trial court found for the plaintiff and awarded her the costs of initially removing the visibly separated stucco, replacing a window damaged during the removal, and subsequently removing the remaining stucco, as well as designing and installing a new exterior. The defendant appealed, contending that the trial court erred when it denied defendant's motion for judgment as a matter of law.

 

The Court of Appeals of Oregon affirmed the decision, holding that the portion of stucco that came loose and was visibly hanging loose from the exterior wall of the insured's commercial building had suffered a “collapse,” and thus the cost of removing and repairing the hanging portion of the stucco was covered under the insured's property insurance policy.

 

The appeals court explained that although “collapse” referred to a situation where an object, acting under the force of gravity, descended or dropped, it was not clear that the definition required a total or complete descent. In addition, the policy specified that various conditions, such as “settling, cracking, shrinkage, bulging or expansion” did not constitute collapse. The exclusion established only that, to the extent that the stucco's behavior consisted of those conditions, coverage was excluded. It did not answer the question of whether, as used in the policy, a collapse must be total or complete.

 

As the remainder of the policy also did not contain any language that was helpful in resolving that question, the court construed the policy against the defendant and concluded that, as used in the policy, “collapse” did not require a complete falling down. Rather, it required only that an object fall some distance.

 

In addition, the court determined that the removal and replacement of the stucco that was not hanging loose from the exterior walls of the insured's commercial building was not caused by a “collapse” within the meaning of the insured's property insurance policy. Thus, the cost of removal and replacement was not covered by the policy, even if it was reasonable to remove all of the stucco after removing the portion of stucco that was visibly hanging loose. The stucco that had not come so loose as to visibly separate from the wall had not “collapsed”.