PHILADELPHIA – A trial is upcoming in an insurance case in which Delaware County wants insurance coverage to the tune of $32 million, for damages it alleges it suffered when a 12-ton panel fell on one of its parking garages and adjacent buildings.
Delaware County, headquartered in Media, initially filed a complaint on May 1, 2019 in the Delaware County Court of Common Pleas against Travelers Property Casualty Co. of America of Hartford, Conn., alleging breach of contract, statutory bad faith and breach of the implied covenant of good faith and fair dealing.
The case was removed to the U.S. District Court for the Eastern District of Pennsylvania on June 4, 2019 by the defendant.
According to the complaint, the plaintiff owns a municipal parking garage in Media that was constructed in the 1970’s and on July 27, 2018, an incident occurred where a non-structural spandrel panel collapsed from the roof.
The suit stated no one was injured, but the garage and two adjacent structures, the Toal and Sweeney buildings, were severely damaged.
The plaintiff alleged it immediately notified the defendant of the incident and the defendant denied insurance coverage in October 2018, stating that the policy’s collapse exclusion applied and precluded any coverage.
In response to the complaint, the defendant filed an amended answer on May 20, asserting no less than 34 affirmative defenses.
Among them, that the plaintiff’s complaint fails to state a claim upon which relief can be granted; the plaintiff failed to set forth a cause of action under the policy upon which relief can be granted; the plaintiff’s complaint is barred by the terms, conditions, exclusions and/or limitations of the policy and Travelers denies having breached any contractual duty allegedly due and owing to plaintiff.
“Plaintiff’s claim is barred by the following provision found at Section C. Exclusions: ‘We will not pay for loss or damage caused by or resulting from any of the following: Collapse, including any of the following conditions of property or any portion of the property: (a) An abrupt falling down or caving in; (b) Loss of structural integrity, including separation of portions of the property or property in danger of falling down or caving in; or (c) Any cracking, bulging, sagging, bending, leaning, settling, shrinkage, or expansion as such condition relates to Paragraphs (a) or (b) above,” the defendant’s motion read, in part.
“Prior to the subject loss and at the time it contracted for the subject policy, plaintiff was aware of or reasonably should have been aware of conditions, deficiencies, and problems in the garage that caused the subject loss and therefore, plaintiff’s loss is barred by the known loss doctrine.”
The plaintiff is seeking declaratory judgment that Travelers must indemnify it under the terms of the coverage, in excess of $50,000, attorney fees and court costs.
UPDATE
Delaware County filed a pre-trial memorandum on April 3, ahead of a soon-to-be-announced trial anticipated to last six to 10 days, and arguing that a “hidden decay” caused the collapse.
According to the County, the cause of the spandrel collapse was “the failure of a series of welds, several of which could not be seen while the others were obstructed by what appeared to be zinc rich paint," and “the failure of the welds were caused by a progressive hidden decay of the welds and connected steel elements that were subjected to cyclical loads throughout the life of the building.”
“The County has met its prima facie burden of showing that it suffered physical damages caused by an abrupt collapse due to hidden decay. That means that Travelers must disprove the application of the Abrupt Collapse Additional Coverage, not that the County must prove certain factors do not apply in order to demonstrate coverage,” the memorandum stated.
“Thus, for example, where the Abrupt Collapse Additional Coverage states that an ‘abrupt collapse’ is a covered cause of loss where there is ‘building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse,’ the initial burden is on the County to show there was an ‘abrupt collapse’ caused by hidden decay – i.e., an ‘abrupt falling down or caving in of a building or any portion of a building with the result that the building or portion of the building cannot be occupied for its intended purpose.’ The burden is then on Travelers to prove that the policyholder knew of the decay that caused the abrupt collapse before it happened.”
The County is seeking $32,589,630 in insurance coverage for its damages, for the demolition and replacement of the parking garage and Toal and Sweeney buildings.
On April 5, Travelers filed its own pre-trial memorandum, citing “rust and corrosion” as the cause of the collapse and identifying the requested damages as being needed not just for coverage, but for the wholesale replacement of the damaged structures.
“Travelers’ position is that (1) The collapse was not caused by decay but, rather, rust and corrosion; (2) The rusted steel connection that failed was not hidden from view; and (3) The County was aware of the threat of damage from extensive rust and corrosion of welded steel connections in the garage for years before the incident,” the insurer’s memorandum stated.
“In fact, the County already had plans to replace the garage before the incident and its claim consists not of the cost to repair the failed panel but, rather, pre-loss estimates to replace the garage and two adjoining buildings in their entirety.”
The insurer then countered that the County was allegedly aware of structural problems in the garage dating back to 2013, after an inspection of the premises was conducted.
Both parties currently have motions for summary judgment pending before the Court, which will be decided before trial.
The plaintiff is represented by Pamela Dianne Hans, Allen R. Wolff, Ethan W. Middlebrooks and Nicholas M. Insua of Anderson Kill, in Philadelphia and New York City.
The defendant is represented by Adam B. Masef, Andrea R. Procton and Richard D. Gable Jr. of Butler Pappas Weihmuller Katz Craig in Philadelphia, plus Michael J. McLaughlin of Keane & Associates, in Hartford, Conn.
U.S. District Court for the Eastern District of Pennsylvania case 2:19-cv-02430
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com