Feenix Parkside LLC owed a commercial building that incurred a partial collapse to their ceiling. When Feenix sought coverage for the collapse, the insurer—Berkley North Pacific—denied coverage for the loss. When Feenix reported the loss, they stated the collapse was due to decay, which was a gradual decline in strength and soundness.
Berkley declined coverage due, in part, to the opinion generated by their engineer who concluded the roof collapsed because 1) the configuration of the truss plate connection adjacent to the rear exterior bearing wall had inadequate strength to resist the applied loads; 2) higher than normal temperatures reduced the strength of the wood trusses by up to 30 percent. Berkley denied the claim because the loss was caused by “defective methods in construction and excessive temperatures in the attic” which are not covered causes of loss under the policy’s collapse coverage.
Feenix hired their own engineer who determined the collapse was due to the combined effects of both an elevated temperature in the attic space as well as a moisture content exceeding 19% for an extended period of time.
After the trial court granted Berkley’s Motion for Summary Judgment, Feenix appealed1 stating that the term “decay” was ambiguous and that the trial court erred in finding the term umambiguous.
The appellate court noted that Webster’s dictionary defines “decay” as “the condition of a person or thing that has undergone a decline in strength, soundness, or prosperity or has been diminished in degree of excellence or perfection.” Feenix cited to a case which I blogged about earlier this year, Easthampton Congregational Church v. Church Mutual Insurance Co., 322 F.Supp3d 230 (D. Mass. 2018).
Using the same reasoning that was in Easthampton, and overturning the trial court decision, the court opined that if Berkley wanted to limit coverage for collapse to collapse caused or contributed to by “rot,” as opposed to “decay,” it could have done so. The court ultimately concluded that the trial court erred by stating the “only reasonable interpretation” of “decay” is one that indicates some kind of decomposition of the material and rejecting Feenix’s definition.
This is a good trend for insureds in that the courts are now holding insurance companies accountable for the complicated language and methods they use to find exclusions in the policy to decline coverage rather than finding exceptions or endorsements in the policy to apply coverage. Since insurance companies are the ones who write out these contracts of adhesion, they should be made to define every term in the policy clearly and how they would like it to be applied. It should not be incumbent on the insureds to have to file suit to get a judge to interpret policy language when the insurance company could have easily added language to explain. I hope more judges and jurisdictions adopt the reasoning in Easthampton and now in Feenix.
I leave you with a quote from the late American-German painter, Hans Hofmann:
The ability to simplify means to eliminate the unnecessary so that the necessary may speak.
1 Feenix Parkside LLC v. Berkley North Pacific and Continental Western Ins. Co., Docket No. 77303-8-I (Wash. April 8, 2019).