Tustin Field Gas & Food, Inc. v. Mid-Century Ins. Co.

219 Cal. Rptr. 3d 909, 13 Cal. App. 5th 220, 2017 WL 2839138, 2017 Cal. App. LEXIS 602
CourtCalifornia Court of Appeal, 5th District
DecidedJuly 3, 2017
DocketB268850
StatusPublished
Cited by8 cases

This text of 219 Cal. Rptr. 3d 909 (Tustin Field Gas & Food, Inc. v. Mid-Century Ins. Co.) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tustin Field Gas & Food, Inc. v. Mid-Century Ins. Co., 219 Cal. Rptr. 3d 909, 13 Cal. App. 5th 220, 2017 WL 2839138, 2017 Cal. App. LEXIS 602 (Cal. Ct. App. 2017).

Opinion

HOFFSTADT, J.

*222This case involves a question of insurance coverage: When has a building or *911part of a building "collapsed" if that term is left undefined in an insurance policy? The gas station owner in this case demanded that its insurance company pay up when the fiberglass sheath of one of its underground gasoline storage tanks split after resting on a rock for 16 years. On cross-motions for summary judgment and/or adjudication, the trial court ruled that this was not a collapse as a matter of law. We agree, and affirm. *223FACTS AND PROCEDURAL BACKGROUND

I. Facts

A. The underground storage tanks

Tustin Field Gas & Food, Inc. (plaintiff) owns a gas station and minimart in Palm Springs, California. The station stores the gas dispensed by its pumps in two underground 15,000-gallon tanks. The tanks are located approximately 30 feet from the minimart, and are buried beneath a six or seven inch concrete slab and five or six feet of dirt. The tanks themselves are cylinders approximately 30 feet long and nine feet in diameter, and are double-walled: They have an inner wall made of steel, wrapped in a synthetic honeycomb, and then sheathed with an outer wall made of "fragile" fiberglass. The tanks are connected to the pumps through pipes carrying the fuel and are connected to the minimart with electrical conduit.

When these tanks were originally placed underground in 1997, the installer did not follow the tank manufacturer's instructions to bury them in pea gravel or crushed rock. Instead, the installer just dug a hole, placed the tanks into that hole, and then covered them with "native soil" containing rocks, boulders, chunks of asphalt, rusted pipes, and other debris. The first tank, referred to as Underground Storage Tank-1 or "UST-1," was set atop a boulder with a nine-inch diameter as well as atop pockets of air.

B. Discovery of damage to UST-1's fiberglass sheath

In September 2013, plaintiff conducted its annual test of UST-1's integrity and learned that its fiberglass sheath was no longer intact. (Health & Saf. Code, § 25284.2 [requiring annual testing of underground tanks].) This was the first time either tank had failed a test in the 16 years since the tanks were installed. The tanks were excavated. The fiberglass sheath on the underside of UST-1 had a long, narrow crack that partially touched the nine-inch boulder, which had itself cracked in two. UST-1's inner steel wall was still intact, and UST-1's outer fiberglass sheath had not lost its cylindrical shape. There was no "imminent danger" that UST-1's inner steel wall would be crushed inward. Plaintiff paid to have UST-1's fiberglass sheath patched.

C. Claim against insurance policy

At the time of the testing, plaintiff had an insurance policy (the Policy) covering property damage with defendant Mid-Century Insurance Company (defendant). Plaintiff presented a claim for the cost of excavating and repairing UST-1.

*224The Coverage section of the Policy (Section A) provides that defendant "will pay for direct physical loss of or damage to Covered Property at the premises ... caused by or resulting from any Covered Cause of Loss."

As pertinent here, Section A.1. of the Policy defines Covered Property to include *912"[b]uildings, meaning the buildings and structures at the premises ..., including ... (2) Fixtures, including outdoor fixtures; [and] (3) Permanently installed: (a) Machinery; and (b) Equipment."

Also as pertinent here, Section A.3. of the Policy defines "Covered Causes of Loss" as "Risks Of Direct Physical Loss unless the loss is ... Excluded in Section B., Exclusions ..." In its Exclusions section (Section B), the Policy provides that defendant "will not pay for loss or damage caused directly or indirectly by any of the following.... regardless of any other cause or event that contributes concurrently or in any sequence to the loss," and goes on to specify, in pertinent part, "Collapse, except as provided in the Additional Coverage for Collapse" (Section B.2.i.).

The Collapse subsection of the Additional Coverages section (Section A.5.d. of the Policy) provides that defendant "will pay for direct physical loss or damage to Covered Property, caused by a collapse of a building or any part of a building insured under this policy, if the collapse is caused by one or more of the following: ... (b) Hidden decay; ... (d) Weight of people or personal property; ... (f) Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. However, if the collapse occurs after construction, remodeling or renovation is complete and is caused in part by [an enumerated] cause of loss ..., [defendant] will pay for the loss or damage even if use of defective material or methods in construction, remodeling or renovation, contributes to the collapse." This subsection also specifies that "Collapse does not include settling, cracking, shrinkage, bulging or expansion." (Accord, Section B.2.k.(4) [excluding from Covered Causes of Loss "[s]ettling, cracking, shrinking or expansion"].)

In a letter, defendant denied plaintiff's demand for coverage on two grounds: (1) the damage to UST-1 did not qualify as "damage to a building or any part of a building"; and (2) "it does not appear that the efficient proximate cause [of that damage] is Collapse."

II. Procedural Background

Plaintiff sued defendant for (1) breach of contract, (2) bad faith denial of insurance coverage, in violation of the implied covenant of good faith and fair dealing, and (3) declaratory relief pronouncing defendant's "duty to indemnify Plaintiff up to the limit of liability."

*225Plaintiff then moved for summary adjudication of its declaratory relief action, and defendant moved for summary judgment. The trial court viewed the motions as "essentially cross-motions."

In a 10-page order, the trial court granted summary judgment for defendant and denied summary adjudication for plaintiff. The court concluded that UST-1 constituted Covered Property under the Policy, reasoning that (1) defendant "appear[ed] to have conceded" that point, and (2) UST-1 otherwise qualified as "permanently installed equipment" and as a "fixture," both of which satisfied the Policy's definition of "building" and hence of Covered Property.

The court nevertheless concluded that there was no Covered Cause of Loss because there had been no "collapse." Specifically, the court ruled that plaintiff had to show an "actual" collapse of UST-1. The court noted that the Policy did not define the term collapse.

*913Doheny West Homeowners' Assn. v. American Guarantee & Liability Ins. Co.

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Bluebook (online)
219 Cal. Rptr. 3d 909, 13 Cal. App. 5th 220, 2017 WL 2839138, 2017 Cal. App. LEXIS 602, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tustin-field-gas-food-inc-v-mid-century-ins-co-calctapp5d-2017.