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A Washington state appeals court has overturned a lower court ruling and held a W.R. Berkley Corp. unit’s definition of the word “decay” in denying a roof damage claim was too narrow.
A portion of the roof truss system of a 40-year-old Auburn, Washington, commercial building owned by Seattle-based Feenix Parkside LLC failed in July 2015, and that portion of the roof collapsed, according to Monday’s ruling by the Washington state appeals court in Seattle in Feenix Parkside LLC v. Berkley North Pacific and Continental Western Insurance Co.
Feenix insurer Bellevue, Washington-based Berkley North Pacific, a W.R. Berkley Corp. unit, denied coverage for the loss because it said it 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, according to the ruling.
Feenix filed suit against Berkley in state court, citing a policy provision that provided coverage for “decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse.”
Feenix proposed that “decay” be defined, based on Webster’s’ Ninth Collegiate Dictionary definition, as “a gradual decline in strength, soundness.”
The trial court ruled in Berkley’s favor, stating the term decay, as used in the policy is ambiguous, and the idea it would mean a decline in strength is not a reasonable use of the term in the policy’s context.
Berkley argued that Feenix’s broader definition of decay was unreasonable and nothing more than an attempt to “recharacterize the perils of excessive heat (in the attic space) and excessive moisture content in the trusses…as ‘decay.”
The unanimous three-judge appeals court panel disagreed. The “only reasonable implication is that the plain and ordinary meaning of decay as used in the Policy encompasses decay in the broader sense of a gradual deterioration or decline in strength or soundness,” said the appeals court, in reversing the lower court’s ruling.
Feenix attorney Thomas D. Adams, a shareholder with Karr Tuttle Campbell PS in Seattle, said in a statement the company “is pleased with the Court’s decision, which aligns fully with similar decisions issued by other courts, and gratified that it should now receive the collapse coverage it believed it had all along.”
Berkley’s attorney could not immediately be reached for comment.
W.R. Berkley Corp. reported lower profits for the fourth quarter of 2018, but higher profits for the year overall despite elevated catastrophe risks and volatility in the securities markets.