Debris-Producing Event is not a Collapse
The insured filed an action against the insurer alleging breach of an all risk insurance policy. The dispute centered on the meaning of “collapse”. This case is Council Tower Association v. Axis Specialty Insurance Company, 630 F.3d 725 (2011).
The east exterior wall of Council Tower 's twenty-seven story building was covered with a decorative brick veneer, twenty-six stories tall, attached to the concrete wall by steel shelf angles and anchor bolts. One day, every brick below the eighth story of the east wall fell to the ground, along with several of the supporting steel shelf angles. Council Towers filed a timely claim under its commercial property policy for reimbursement of its loss.
Axis Insurance denied coverage on the ground that the loss was caused by inadequate design or construction and was therefore excluded. When an expert reported that a loss of lateral stability had caused the bricks to collapse somewhat vertically, Council Tower commenced this lawsuit for breach of contract. The insurance policy did cover loss caused by collapse of a building or any part of a building insured under the coverage form.
The insurer argued that the loss was excluded by the wear and tear and faulty design or construction exclusions. The insured countered that the east wall failure was a collapse of a part of a building caused by hidden decay of the anchor bolts and so, the loss was covered. The district court granted summary judgment to the insurer and Council Tower appealed.
The court of appeals said that the narrow issue before it was whether, under Missouri law, the falling of seven stories of a twenty-six story exterior brick veneer building was a collapse of a building or any part of a building. There was no question that, after the fall, there was some rubble on the ground, but the entire building was not reduced to a flattened form. So, was this collapse of a part of a building?
The court reviewed Missouri law and found that case law held that the phrase “or any part thereof” obviously referred to collapse of a part of a building, not partial collapse of a part or the whole of a building. Where the claim pertains to a collapse of a part of a building, there must be a collapse of that part. A partial collapse of a part is entirely outside the contemplation of the parties to the insurance contract. In this instance, the collapse of the lower seven stories of the brick veneer was not a collapse of a part of a building; fallen bricks alone do not establish that part of the building collapsed.
The court of appeals affirmed the ruling of the district court that the falling of less than one-third of Council Tower 's decorative brick veneer was not a collapse of a part of the building within the meaning of the policy language.
Editor's Note: The U.S. Court of Appeals, Eighth Circuit, noted the question of the meaning of “collapse” is not free from doubt. It discussed two competing interpretations of the word from various state courts. One side holds that a collapse means falling into a confused mass, or into a flattened form by loss of rigidity or support, or giving way or caving in. The other side (the majority view) maintains that a collapse is determined by whether a substantial impairment of the structural integrity of a building or part of a building occurs.
In this instance, the appeals court agreed that the latter interpretation of “collapse” is the proper view. The court affirmed the opinion of the district court that the falling of seven out of twenty-six stories of decorative brick veneer did not impair the structural integrity of the building and that there was no collapse here.