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Tarleton LLC v. State Farm Fire and Casualty Co.

United States District Court, D. Oregon

May 21, 2014

TARLETON LLC, an Oregon limited liability company Plaintiff,
v.
STATE FARM FIRE AND CASUALTY COMPANY, an Illinois insurance business corporation, Defendant.

OPINION AND ORDER

JOHN V. ACOSTA, Magistrate Judge.

Introduction

This case arises out of a dispute between Tarleton LLC ("Tarleton") and State Farm Fire and Casualty Company ("State Farm") over the meaning of and coverage by an "all risk" property insurance policy. Tarleton alleges State farm improperly denied its insurance claim after a partial collapse of a building Tarleton owns ("the Building"). State Farm now moves for summary judgment on Tarleton's claims. The court concludes there is no coverage for the collapse under the policy and no genuine dispute of fact exists that the collapse was not directly and immediately caused only by the weight of contents and equipment in the building. Accordingly, summary judgement in State Farm's favor is granted.

Factual Background

The Tarleton Building is a partial two-story built in the 1940s and framed with five wood bowstring roof trusses. (Declaration of Brian Hickman in Support of State Farm Fire and Casualty Company's Motion for Summary Judgment ("Hickman Decl.") Ex. 4 at 3.) It originally served as a farm-supply store, but was converted into an office building during the 1970s. (Hickman Decl. Ex 4 at 3.) Tarleton acquired the building in 1998, and since then has leased the Building for use as an office.

Tarleton purchased an "all-risk" property insurance policy ("the Policy") from State Farm insuring the building from August 1, 2005 through August 1, 2012. (Declaration of Christopher C Grady in Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgment ("Grady Decl.") Ex. 13.) The Policy insures against "accidental direct physical loss" to covered property, but contains an "Amendatory Collapse Endorsement" ("Collapse Endorsement"), which specifies State Farm will cover losses resulting from a building collapse only if the collapse is "directly and immediately cause[d] only by one or more of the following:"

a. any of the "Specified Causes of Loss"[1] or breakage of building glass, only as insured against in this policy.
b. weight of contents, equipment, animals or people
c. weight of ice, snow, sleet or rain which collects on a roof; or
d. use of defective material or methods in the construction (includes remodeling or renovation) of the building if the collapse occurs during the course of the construction of the building.

(Grady Decl. Ex. 13 at 47.)

Over the years, Tarleton commissioned several improvement projects to the Building. In 2005, Tarleton hired Mark Nelson ("Nelson") to update and remodel the Building (the "2005 remodel"). (Hickman Decl. Ex 4 at 1-2). During the 2005 remodel, Nelson added ceilings, platforms, duct work, steel pipes, electrical equipment, mechanical equipment, and sprinklers to the Building. ( Id. 4-5, Ex. 11 at 4-5.) Unfortunately, Nelson failed to analyze the impact of the added infrastructure on the original trusses which were not designed to withstand significant dead loads. In 2006, one of the bowstring trusses ruptured, causing a collapse. (Hickman Decl. at 1, 5.) Nelson again designed and implemented repairs. ( Id. ) Thereafter, Tarleton installed conditioning units, "wires, suspended ceilings, ceiling joists, and insulation, " all of which exerted dead weight on the trusses. (Gilbert Decl. at ¶ 5.)

In July 2011, another truss ruptured, fell five to eight inches, and landed on a non-load-bearing wall ("2011 collapse"). (Hickman Decl. Ex. 4 at 5.) Tarleton filed an insurance claim with State Farm to cover the loss and hired Nelson to design repairs and determine the cause of the collapse. (Gilbert Decl. at ¶ 9.) Nelson recommended that Tarleton hire Wade Younie ("Younie"), a specialist in wood bowstring truss systems, to analyze the collapse and design permanent repairs for the Building.[2] ( Id. at ¶ 8.)

On July 22, 2013, Younie issued an expert-witness report pursuant to Federal Rule of Civil Procedure 26 outlining his investigation, analyzing the likely causes of the collapse, and recommending repairs (the "Younie Report"). (Hickman Decl. Ex 4.) In that report, Younie articulates his conclusions regarding the 2011 collapse:

1. The sudden roof collapse in 2011 caused property damage to the building. The bottom chord of Truss D ruptured suddenly and the truss fell 5 to 6 inches at the time of the rupture, crushing the non-structural demising wall. The wall prevented the truss from falling onto the floor.
2. The roof collapse in 2011 was directly and immediately caused by the weight of the contents and equipment. Over the years, ceilings, roofing, access platforms, draft-steps, mechanical and electrical equipment were added. This added weight of contents and equipment overloaded the truss.
3. The roof collapse was triggered by a sudden rupture of the bottom chord at one of the splice connections at Truss D. Examination of the splice joint found a wood failure near a knot in the wood.
4. Mark Nelson could have prevented the roof failure in 2011, but failed to fully understand the hazards associated with the trusses supporting the roof of the Tarleton Building. Mr. Nelson has involvement with the building dating back to 2005, but never considered checking the bowstring trusses for fitness for continued service. He went through the collapse of the similar Truss C in 2006 and never warned the owners that the building was unsafe after the truss repairs were completed in 2006.
5. In 2005, Mr. Nelson allowed the addition of new mechanical equipment and ceilings to the roof without any analysis or evaluation of the five trusses. Even after Truss C suddenly collapsed in 2006, Mr. Nelson did not analyze the truss or evaluate the cause of the failure. His repairs only addressed the failure of truss C. He failed to warn the owners, in such a way that they could understand the immediate danger still associated with the other four trusses.
6. The work performed in 2011 to 2012 by DCI and Conway General Contracting was reasonable and necessary to repair the property damage involving the 2011 roof collapse.

( Id. at 1-2.) Younie also opined in his report that several other factors likely contributed to the 2011 collapse. ( Id. at 4-9.) In the "Analysis" section of the report, Younie notes that, "the timber used to fabricate the wood trusses was installed green.'" ( Id. at 5.) Green wood, he explains, shrinks as it dries, causing minor ruptures in the wood. ( Id. ) Younie also noted that high attic temperatures in July 2011, likely "trigger[ed]" the collapse. (Id. at 8.) Ultimately, Younie concluded that "the sudden roof collapse in 2011 was directly and immediately caused by the weight of contents and equipment, but the wood deterioration and elevated attic temperatures contributed to the collapse." ( Id. )

When Tarleton filed the insurance claim, State Farm hired engineer Nathan White ("White") to investigate the collapse. (Grady Decl. Ex 11.) White issued a report explaining his analysis of the collapse (the "White Report") as well as a second report rebutting the opinions expressed in the Younie Report (the "White Rebuttal Report"). (Grady Decl. Exs. 11, 12.) In his report, White concluded:

We do not believe that the [truss] failure can be attributed to any particular single event. Rather, the damage appears to be the result of inadequately-sized truss members and connections from the original design and construction, with a progression of degradation of truss integrity over many decades along with likely increases in dead loads, which finally reached a tipping point....

( Id. at 25.) The White Rebuttal report is irrelevant to the court's decision here except for White's rebuttal of "DCI Conclusion No. 2: The roof collapse in 2011 was directly and immediately caused by the weight of contents and equipment... '" ( Id. at 1.) White disagrees both with Younie's use of the word "immediate" as well as the word "direct." Regarding "direct, " White opines: "the failure was not directly caused by the weight of additional contents and equipment; rather, the original inadequate design with long-term degradation, and to a lesser extent influence from slight increases in load, caused the failure in July 2011." ( Id. at 2.)

On the basis of White's conclusions, State Farm denied Tarleton's insurance claim, prompting Tarleton to file suit to recover damages it claims are owed to it under the Policy. Tarleton also filed a parallel suit in Oregon State court against Nelson for negligent design and repair. (Hickman Decl. Ex. 5.) State Farm now moves for summary judgment on all of Tarleton's breach of contract claim and asks the court to strike portions of the Declaration of Wade Younie in Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgment ("Younie Declaration") which are inconsistent with Younie's deposition testimony and Rule 26 report.

Legal Standard

A court should grant a motion for summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(a). The moving party bears the burden of establishing that no issue of fact exists and that the nonmovant cannot prove one or more essential elements of a claim or defense. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the movant meets his burden, the nonmovant must "go beyond the pleadings [ ] by her own affidavits... [to] designate specific facts showing that there is a genuine issue for trial." Id. (internal quotation marks omitted). On summary judgment, the court is bound to view ...


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