First-Party Building Collapse Claim
The S.O. Beach Corp. v. Great American Ins. Co. of New York, No. 17-22254-CIV-MORENO, 2018 WL 1732176 (S.D. Fla. April 10, 2018)
In a dispute regarding the application of a policy’s collapse coverage, the United States District Court for the Southern District of Florida, Miami Division, granted summary judgment in favor of Great American against S.O. Beach and Larios on the Beach, a restaurant owned by musicians Gloria and Emilio Estefan.
Larios sued Great American for allegedly breaching the policy by failing to pay Larios’ $2.4 million claim for property damage and business income loss, arguing that the damage was caused by “collapse” and therefore covered. Great American, however, established that a covered collapse did not occur.
First, the policy defined “collapse” as “an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.” Citing to Kings Ridge Community Ass’n v. Sagamore Ins. Co., 98 So.3d 74, 77 (Fla. 5th DCA 2012), the district court confirmed that “‘abrupt’ is defined as ‘characterized by or involving action or change without preparation or warning: unexpected.’”
Next, Great American argued that coverage was excluded because the damage did not occur suddenly, but instead occurred gradually over an extended period of time and the insured knew about the progressive deterioration for several years before reporting the claim. The court agreed, holding that “the gradually occurring deterioration of Plaintiffs’ Building does not qualify as a covered loss given that the applicable policy defines collapse as a ‘abrupt falling down or caving in.’” Further, the court concluded that “[b]ecause Plaintiffs received inspection reports and emails detailing structural problems and recommending immediate repairs, the Court cannot accept Plaintiffs’ conclusory statement that they had no knowledge of the Building’s deterioration.”
Finally, the court agreed with Great American that because the evidence indicated that “the damage occurred gradually over an extended period of time and Plaintiffs knew about the Building’s gradual deterioration well before the day they allege the collapse occurred, … Plaintiffs cannot prove that any portion of the building abruptly fell down or caved in during the 2013 Policy period, and thus, cannot survive Great American’s motion for summary judgment.”