Insurer's Motion for Judgment on Pleadings to Dismiss Collapse Case Denied

    The court rejected the insurer's attempt to dismiss a collapse case on a Motion for Judgment on the Pleadings.  Peoria Prop. Invs. LLC v. Cincinnati Indemn. Co. , 2020 U.S. Dist. LEXIS 17350 (C.D. Ill. Jan. 31, 2020).

    The policy covered a nine-story building which had offices on the first floor, a six-floor parking tower on floors two through seven, and more commercial offices on floors eight and nine. 

    Peoria submitted a claim to Cincinnati reporting a "large boom" and shaking at the property. An inspection revealed the ceiling in the northwest corner of the fourth level and floor of the fifth level of the parking structure had displaced downward approximately eight inches. Vehicles could not park in the impacted areas. Repairs exceeded one million dollars. A Cincinnati inspector confirmed that the concrete slab had dropped as much as eight inches. Further, there were many areas throughout the parking structure where reinforcing bars were exposed due to deterioration in the concrete and previous repairs were not done properly.

    Cincinnati denied the claim. The policy covered collapse, defined as "an abrupt falling down or caving in of a building . . . with the result that the building or part of the building cannot be occupied for its intended purpose," where caused by decay hidden from view. Cincinnati claimed that various exclusions applied, including those for deterioration, defective construction, and maintenance.

    Peoria filed suit and Cincinnati moved for judgment on the pleadings. Cincinnati argued because the property was still standing, it had not collapsed under the policy definition. 

    The court noted that "caving in" was separate and distinct from the terms "falling down" in the policy's definition of collapse. Further, the phrase, "with the result that the building or part of the building cannot be occupied for its intended purpose" suggested that the policy intended the definition of collapse to include less than a complete falling down. A building that had fallen down could never be occupied for its intended purpose, but a building that caved in could potentially be occupied. The policy language suggested that a building must be to the point that it would be impossible to occupy the building or a part thereof for its intended purpose. 

    The collapse provision in the policy also stated that a building that was standing was not considered to be in a state of collapse. One could reasonably conclude that this subsection did not apply to loss caused by collapse because a building or any part of one that collapsed was no longer standing. The policy did not define standing, but it was commonly defined as upright on the feet or base; erect." A building or any part of one that collapsed was not at the same level or degree as before the collapse. Since a policy provision that excluded coverage was considered liberally in favor of the insured, the court found that Cincinnati failed to meet its burden showing the loss was not covered by the policy's collapse provisions. 

    There was also an issue of fact concerning whether the decay that caused the collapse was hidden from view. Therefore, Cincinnati's request for a declaratory judgment was denied. 


[Author: Tred Eyerly]

Tags: Insurance, Collapse, Cincinnati, Peoria, Tred Eyerly, First Party Insurance, Pleadings Peoria Prop Invs LLC, Cincinnati Indemn Co


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