The S.O. Beach Corp. v. Great American Insurance Company of New York, 791 Fed. Appx. 106 (11th Cir. Oct. 31, 2019)
In this case, the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court’s grant of summary judgment to Great American Insurance Company of New York. The insureds, S.O. Beach Corp. and Larios on the Beach, Inc., owned property on Ocean Drive in Miami Beach, Florida. In 2013, they notified Great American that they had purportedly discovered that several floors in their building had caved in to varying degrees as a result of water damage to the building’s sill plate. The insureds sued Great American for breach of contract before a final coverage determination was reached, seeking $2.4 million in property damage and business income loss under their all-risk insurance policy.
The central dispute between the parties concerned whether the damage was covered under the collapse coverage provision in the policy, which provides coverage for damage “caused by collapse of a building or any part of a building that is insured under” the policy so long as the collapse is caused by a specified cause of loss or “decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse.” Collapse is defined to include only “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.” In resolving competing motions for summary judgment in Great American’s favor, the district court held that the collapse coverage provision was not ambiguous and that the insureds’ loss was not covered since the uncontroverted evidence established that the damage occurred gradually and, therefore, an abrupt falling down or caving in as required by the policy did not occur.
On appeal, the insureds argued Great American was not entitled to summary judgment on the issue of whether the damage was covered under the collapse coverage provision. The Eleventh Circuit rejected the insureds’ contention that the provision was ambiguous because it defined a collapse as abrupt, but permitted coverage if the collapse was caused by hidden decay, which denotes a gradual process. In so ruling, the court explicitly rejected the insureds’ argument “that abrupt collapses result only from abrupt causes and not from gradual causes.” Having determined the provision was not ambiguous, the court went on to find that the insureds failed to rebut Great American’s evidence that the purported collapse was gradual or raise a triable issue of fact on this issue. The Eleventh Circuit similarly rejected the insureds’ procedural arguments, holding that they were not supported by the record.