The insured sued for conversion of his premiums after the insurer denied its claim for collapse of a retaining wall. Lead GHR Enterprises, Inc. v. Am States Ins. Co., 2019 U.S. Dist. LEXIS 29412 (D. S. D. Feb. 25, 2019).
Suit was filed after the insured’s claim was denied. Cross motions for summary judgment were filed. The insurer sought to dismiss the conversion claim as a matter of law. The court agreed that the insured could not attempt to recover premiums on a conversion theory because it believed the insurer breached the policy. A breach of contract action was the appropriate remedy in such circumstances.
The policy excluded coverage for collapse except when caused by specifically listed causes, including hidden decay. The court referred to this additional coverage for hidden decay as the “give-back provision.” The insured argued that the collapse give-back provision covered the loss of the retaining wall and was not subject to the anti-concurrent causation clause found elsewhere in the policy. The court disagreed and denied summary judgment on this issue. If the insured successfully invoked the policy’s give-back coverage for collapse caused by hidden decay, the coverage would be limited by the policy’s general exclusions, including the anti-concurrent causation clause.
The insured also argued that the term “decay” in the policy encompassed the disintegration of nonorganic material, such as the retaining wall. The insured contended that the decay and deterioration were synonymous and neither required the corroding item to be organic in nature. The insured asked the court to find the policy’s use of the word decay had no organic/inorganic element. The insurer cited dictionary definitions associating decay with “organic material.” The court noted that no definition given by Merriam-Webster specified the decaying object must be organic in nature. Even the dictionary cited by the insured listed in a second definition of decay as “to decline in excellence, prosperity, health, etc., deteriorate.”
There was no basis for the court to conclude decay necessarily entailed an organic component on the part of the decaying object. If the parties intended to contract for insurance coverage for collapse involving only organic decay, they could have so stated. Without such explicit language, the court could not import additional meaning into the policy’s provisions. Accordingly, the court granted summary judgment to the insured on this issue. The question of whether the wall’s collapse was caused by internal decay did not hinge on whether the wall was organic.