Oregon District Court Rejects Insurer's Challenge To A Collapse Verdict
In Malbco Holdings, LLC v. Amco Ins. Co., 2010 U.S. Dist. LEXIS 61848 (June 22, 2010), the Oregon District Court denied the insurer’s motion for judgment as a matter of law or, in the alternative, for a new trial, following a $941,268.00 verdict in a first-party collapse case. The subject 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 a building cannot be occupied for its intended purpose,” and also provided several examples of circumstances that did not qualify as a “collapse,” including where a “part of a building is standing … even if it has separated from another part of a building.”
The insurer argued that there could be no “collapse” because the building was still standing even though there was evidence of “a downward movement of several inches in the hotel caused by an abrupt snapping of the trusses.” The insured responded that the incorporation of a habitability requirement in the definition of “collapse” (“… with the result that the building … cannot be occupied…”) necessarily suggested that something short of a complete falling to the ground could qualify as a collapse. Because the alleged “collapse” had rendered some rooms unsafe and unusable, the insured argued that there was sufficient evidence for a jury to find that a covered “collapse” had occurred. The Court agreed with the insured, noting that the habitability requirement “stands as a proxy for a substantial impairment of integrity by adding a life and/or safety element to the definition.”
The Malbco Court distinguished a prior “collapse” decision by the Oregon District Court, Association of Unit Owners of Nestani v. State Farm, 670 F. Supp. 2d 1156 (D Or 2009), wherein summary judgment was granted for the insurer. The policy at issue in Nestani defined “collapse” as “actually fallen down or fallen into pieces” and, importantly, did not include any habitability requirement. The dichotomy between these two decisions – Malbco and Nestani – re-affirms the importance, especially in Oregon, of focusing on the particular policy language at issue rather than relying upon general standards for general categories of alleged losses.
