After carefully dissecting the earth movement exclusion, the court denied the insurer's motion for summary judgment. High Street Lofts Condominium Assoc., Inc. v. Am. Family Mut. Ins. Co., 2011 U.S. Dist. LEXIS 109043 (D. Colo. Sept. 26, 2011).
The City of Boulder performed road repair work near High Street's property, some of which involved the use of a vibrating compactor to compact and set the roadbed. High Street noticed damage to its building, such as cracks in walls, sloping of floors and separations of porches from the building itself. High Street contacted the City of Boulder, who forwarded the complaint to its contractor, Concrete Express, Inc.
High Street also filed a claim with its business insurer, American Family, who denied the claim. American Family relied on an opinion letter by High Street's engineer. The letter indicated that the damage was the result of "soil consolidation/settlement," in response to the construction activities. Based on this letter American Family concluded the claim was excluded under the policy's earth movement exclusion.
High Street sued American Family, who moved for summary judgment. High Street opposed the motion by contending there was a genuine issued of fact regarding the cause of the damage to the building. The court determined the property was damaged by ground vibrations caused by Concrete Express' work.
Next, the court turned to whether the policy covered property damage arising from these conditions. The exclusion barred coverage for damage caused by earth movement as follows:
Earth sinking, rising, or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include . . . improperly compacted soil . . . .
Perhaps, under this exclusion, American Family could show that the vibrations caused harm to High Street's building because the soil under the around the building's foundation was "improperly compacted" in such a way that the property was susceptible to damage from vibrations caused by Concrete Express. On the other hand, High Street may be able to show that the soil was properly compacted and the shifting of the earth was not caused in party or whole by defective compaction.
Because this determination depended on a factual finding , i.e., the degree to which improper soil compaction allowed the vibrations to transmit earth movement to the building, American Family's motion for summary judgment was denied.
Thanks to my Damon Key colleague, Christi-Anne Kudo Chock, for sending this case my way. Christi noted the insurer, carrying the burden to show the exclusion is applicable, may have a tough time proving conditions of the soil retroactively.
