Court Finds That Insured Building Did Not "Collapse"

PROPERTY – "COLLAPSE" COVERAGE – NO AMBIGUITY FOUND
Yat-Saint Chiang v. Public Serv. Mut. Ins. Co.
(Sup. Ct., Queens Co., decided 12/4/2008)

Plaintiff's property was damaged during excavation and construction work being performed at the lot adjoining the plaintiff's property due to a failure to provide proper shoring and/or bracing.  Plaintiff claimed that the lack of underpinning resulted in the cracking and collapse of a third of the width of plaintiff's driveway, as well as the cracking of the foundation and several interior walls and ceilings of plaintiff's building.  Plaintiff submitted a claim under its multi-peril Dwelling Policy with Public Service Mutual for the damages to her property.  PSM disclaimed coverage on the ground that "earth movement" was not a covered peril and that the loss claimed was not a covered loss since it was not a collapse of a building resulting from a named peril.  Plaintiff commenced this action for breach of the insurance contract, and both parties moved for summary judgment.

In granting Public Service Mutual's motion and denying the plaintiff's cross motion, Queens County Supreme Court Justice Allan Weiss initially noted that although Public Service Mutual had disclaimed based in part on the earth movement exclusion in the policy, both parties were seeking summary judgment under the section of the policy entitled "Other Coverages: Collapse".

The "Collapse" section of plaintiff's policy provided, in pertinent part:

We insure for risk of 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:

*  *  *  *  *

f.  use of defective material or methods in construction, remodeling, or renovation, if the collapse occurs during the course of the construction, remodeling, or renovation.

Loss to * * * pavement, * * * foundation, [or] retaining wall, * * * is not included under items  * * * f, unless the loss is a direct result of the collapse of a building.

Collapse does not include settling, cracking, shrinking, bulging, or expansion.

In support of its motion, Public Service Mutual asserted that the plaintiff's loss was not covered loss because it did not involve the collapse of a building caused by an enumerated cause, specifically, defective construction on the insured premises.

In opposition plaintiff argued that the policy's "Collapse" provision was ambiguous because: (1) New York courts have found a "substantial impairment of the structural integrity of the building" constitutes a collapse without the need for the building to actually fall down; and (2) the policy did not define where the defective construction, a named cause of a collapse, must take place to trigger coverage.

In ruling in favor of Public Service Mutual and dismissing plaintiff's complaint, Justice Weiss found that there was no coverage under the policy's "Collapse" provision:

The court finds no ambiguity in the term "collapse" in this case inasmuch as the policy specifically defines collapse as not including settling, cracking, shrinkage, bulging or expansion. The plaintiff's building did not "collapse" for purposes of coverage under the additional coverage for collapse provision of the policy. The only damage to the building reported by plaintiff's expert are cracks in the foundation and interior walls (see Graffeo v. U.S. Fidelity & Guaranty Co., 20 AD2d 643 [1964], lv to appeal dismissed 14 NY2d 685 [1964]).

Even deeming the term collapse to be ambiguous and accepting plaintiff's argument that a substantial impairment of the structural integrity of the building can constitute a collapse of a building (see Royal Indem. Co. v. Grunberg, 155 AD2d 187, 188-190 [1990], there is no evidence of such impairment. Nowhere in the plaintiff's expert's report is there any claim that the structural integrity of the building is impaired much less that it is "substantially" impaired. While the plaintiff's expert reports that a portion of the driveway collapsed such a collapse is not the collapse of a building.  In addition, the policy expressly excludes loss to pavement unless caused by the collapse of a building. The damage to the driveway was not the result of the collapse of a building.

Inasmuch as the court has determined that the plaintiff's property did not sustain a collapse, the issue of whether an ambiguity exists as to the location of the construction which causes a collapse is irrelevant.