QUEEN ANNE PARK HOMEOWNERS ASSOCIATION, a Washington non-profit corporation, v. STATE FARM FIRE AND CASUALTY COMPANY, a foreign insurance company, June 18 2015
Copy of Case 2015-Queen-Anne-Park-v-State-Farm
The Washington Supreme Court held that collapse means substantial impairment of structural integrity. The dissent argued collapse means “collapse”. Part or all of the building fell down.
The Ninth Circuit Court of Appeals asked the court to decide this question:
What does “collapse” mean under Washington law in an insurance policy that insures “accidental direct physical loss involving collapse,” subject to the policy’s terms, conditions, exclusions, and other provisions, but does not define “collapse,” except to state that “collapse does not include settling, cracking, shrinking, bulging or expansion?”
The insured building was found to have “hidden decay” that had substantially impaired the walls’ ability to resist lateral loads according to the owner’s inspector. Hidden decay that caused a collapse was expressly covered by the policy.
“Construction of an insurance policy is a question of law for the courts, the policy is construed as a whole, and the policy ‘should be given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.”‘1Queen City Farms, Inc. v. Cent. Nat’l Ins. Co. of Omaha, 126 Wn.2d 50, 65, 882 P.2d 703 (1994) (internal quotation marks omitted) (quoting Grange Ins. Co. v. Brosseau, 113 Wn.2d 91, 95,776 P.2d 123 (1989) ).
The court held that “collapse” is ambiguous because it is subject to more than one reasonable interpretation. In this case there were two conflicting rules of interpretation: 1) plain meaning versus 2) favor the insured if policy terms are ambiguous. The court reasoned:
Undefined terms in an insurance policy “are to be interpreted in accord with the understanding of the average purchaser of insurance, and the terms are to be given their plain, ordinary and popular meaning.”2Queen City Farms, Inc., 126 Wn.2d at 77.
Importantly, It is Hornbook law that where a clause in an insurance policy is ambiguous, the meaning and construction most favorable to the insured must be applied, even though the insurer may have intended another meaning.3Jeffries v. General Casualty Co. of America, 46 Wn.2d 543, 283 P.2d 128 (1955); Kane v. Order of United Commercial Travelers of America, 3 Wn.2d 355, 100 P.2d 1036 (1940). Ambiguous exclusionary clauses, particularly, should be construed in the manner most favorable to the insured.4Brown v. Underwriters at Lloyd’s, 53 Wn.2d 142, 332 P.2d 228 (1958); Murray v. Western Pacific Ins. Co., 2 Wn. App. 985, 472 P.2d 611 (1970).
It did not help State Farm that it had agreed that “collapse” in another case meant “‘substantial impairment of structural integrity.”5Mercer Place Condo. Ass ‘n v. State Farm Fire & Cas. Co., 104 Wn. App. 597, 600, 17 P.3d 626 (2000)
Footnotes
| 1. | ↑ | Queen City Farms, Inc. v. Cent. Nat’l Ins. Co. of Omaha, 126 Wn.2d 50, 65, 882 P.2d 703 (1994) (internal quotation marks omitted) (quoting Grange Ins. Co. v. Brosseau, 113 Wn.2d 91, 95,776 P.2d 123 (1989) ). |
| 2. | ↑ | Queen City Farms, Inc., 126 Wn.2d at 77. |
| 3. | ↑ | Jeffries v. General Casualty Co. of America, 46 Wn.2d 543, 283 P.2d 128 (1955); Kane v. Order of United Commercial Travelers of America, 3 Wn.2d 355, 100 P.2d 1036 (1940). |
| 4. | ↑ | Brown v. Underwriters at Lloyd’s, 53 Wn.2d 142, 332 P.2d 228 (1958); Murray v. Western Pacific Ins. Co., 2 Wn. App. 985, 472 P.2d 611 (1970). |
| 5. | ↑ | Mercer Place Condo. Ass ‘n v. State Farm Fire & Cas. Co., 104 Wn. App. 597, 600, 17 P.3d 626 (2000) |