The federal district court predicted the California Supreme Court would find the definition of collapse, calling for the abrupt falling down or caving in of a building or part of a building, to be ambiguous. Hoban v. Nova Cas. Co., 2018 U.S. Dist. LEXIS 139116 (N.D. Cal. Aug. 15, 2018).
The insureds' bowling center had two roof trusses that helped support the roof. The truss failures caused the building ceiling, overhead monitors, and disco ball to drop approximately six to ten inches, and also caused ceiling tiles and a layer of insulation to fall from the ceiling. A general contractor, named Tom Powers, and the county building inspector inspected the damage. The building inspector immediately ordered the business closed until necessary repairs could be completed. Powers was hired to shore up the roof support system to prevent a complete collapse. Thereafter, the insureds were able to re-open the bowling alley.
The insureds' policy with Nova covered an abrupt collapse. This was defined as the abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building could not be occupied for its intended purpose. After hiring a structural engineer, Nova denied coverage, deciding the roof did not collapse and the building was still standing.
The insureds sued and motions for summary judgment were filed by both parties. There were no California cases interpreting the exact language of the policy on collapse. The court therefore determined that the policy language was ambiguous because there was more than one reasonable interpretation of its intended meaning. One reasonable meaning of "caving in" was Nova's understanding that the building must completely collapse to the ground. However, a building could "cav[e] in . . . with the result that the building . . . cannot be occupied for its intended purpose" by having its roof or ceiling fall an appreciable distance, even if the building as a whole did not completely collapse to the ground.
Further, coverage that applied to the "abrupt" collapse of either "a building" or "any part of a building" suggested the policy was intended to cover a partial collapse of part of the building, so long as it occurred abruptly, not only a total or complete collapse. Moreover, specifying that the collapse must render the building or part of the building so that it "cannot be occupied for its intended purpose" would be unnecessary and redundant if the policy required the building or any part of a building to have collapsed to the ground.
Because the policy language was ambiguous, California law required it be interpreted in favor of the insured. Therefore, the court granted the insureds' motion for summary judgment.
Nova also moved for summary judgment on the insureds' claim for breach of the covenant of good faith and fair dealing. The court granted Nova's motion because its decision that there was no coverage for collapse was based on a genuine dispute about coverage.