The Eleventh Circuit agreed with the insurer that there was no coverage for a collapse under the policy. S.O. Beach Corp. v. Great Am. Ins. Co.,2019 U.S. App. LEXIS 32569 (11th Cir. Oct. 31, 2019).
S.O. Beach Corporation and Larios on the Beach, Inc (“Larios”) owned a building in Miami Beach. Sometime between march 4, 2012 and April 10, 2013, Larios discovered that parts of the first three floors of its building had caved in to varying degrees. The primary cause of the collapse was a wooden support beam that had severely rotted. Larios found a broken pipe that was gushing water onto the beam, causing deterioration. Larios was forced to evacuate the building until the damage was repaired.
Larios submitted a claim under its all-risk policy with Great American. The policy required that a collapse an “abrupt falling down or caving in of a building or any part of a building” to be covered. Before a coverage decision was made, Larios sued for breach of contract. The parties filed cross-motions for summary judgment. The district court granted Great American’s motion and denied Larios’ motion.
On appeal, the court noted that Larios carried its initial burden under the all-risk policy of showing that a loss – the purported collapse – happened while the policy was in effect. The burden shifted to Great American to prove that the cause of the purported collapse was excluded under the terms of the policy. Great American produced documentary evidence along with testimony from expert witnesses and fact witnesses showing that the purported collapse was gradual, not abrupt.
Therefore, the burden shifted back to Larios to prove that an exception to the exclusion applied. Larios argued the policy was ambiguous. But the court found there was no conflict between explicitly covering collapses that resulted from a gradual cause like decay and limiting coverage to collapses that were abrupt. Decay was just one of over a dozen covered causes listed in the policy’s collapse coverage provisions. Some of the causes were abrupt, like “lightning” or an “explosion.” Others were more gradual, like “decay” or “water damage.” But regardless of whether the cause of a collapse was gradual or abrupt, the collapse itself was covered only if it was abrupt. Larios’ contention that the collapse provisions were ambiguous was rejected and the district court was affirmed.