Thiele v. Ky. Growers Ins. Co., 2015-SC-000158-DG

• Decision Date: 15 June 2017
• Docket Number: 2015-SC-000158-DG
• Citation: 522 S.W.3d 198
• Parties: Wanda Jean THIELE, et al., Appellants v. KENTUCKY GROWERS INSURANCE COMPANY, Appellee
• Court: United States State Supreme Court — District of Kentucky

522 S.W.3d 198

Wanda Jean THIELE, et al., Appellants

v.KENTUCKY GROWERS INSURANCE COMPANY, Appellee

2015-SC-000158-DG

Supreme Court of Kentucky.

JUNE 15, 2017

COUNSELLOR APPELLANTS: Robert R. Baker, Danville, RANKIN & BAKER, PLLC.

COUNSEL FOR APPELLEE: Don Arlie Pisacano, Elizabeth C. Woodford, Lexington, MILLER, GRIFFIN & MARKS, P.S.C.

COUNSEL FOR AMICUS CURIAE AMERICAN INSURANCE ASSOCIATION and INSURANCE INSTITUTE OF KENTUCKY: Michael Shea Maloney, Stephen Conner Keller, Louisville,

SCHILLER BARNES MALONEY PLLC.

OPINION OF THE COURT BY JUSTICE CUNNINGHAM

In 2004, Hiram Campbell purchased a homeowner's insurance policy from the Appellee, Kentucky Growers Insurance Company ("Insurer"). The policy provided coverage for Hiram's home located in Brodhead, Kentucky. The policy was self-renewing and continued in effect after Hiram died in late 2005. Following Hiram's death, his daughter, Appellant Wanda Thiele ("Thiele"), moved into Hiram's residence. She was also the executrix of Hiram's estate.

In January 2011, Thiele moved the refrigerator and discovered termite infestation. Additional termite damage was discovered throughout the home, including damage to wall paneling and flooring. Upon discovering the damage, Thiele contacted Insurer to make a claim under the homeowner's policy provision covering collapse. That provision provides:

8. Collapse—"We" pay for direct physical loss ... involving the collapse of a building or part of a building caused by only the following:

...

(b) hidden insect or vermin decay;

Collapse does not mean settling, cracking, bulging, or expanding. Because no collapse had occurred, Insurer denied Thiele's claim. As a result, Thiele filed a declaration of rights claim in Rockcastle Circuit Court. Insurer answered and filed a motion for a declaratory judgment in its favor. The trial court conducted a hearing and subsequently issued a judgment in Thiele's favor. On appeal, a unanimous Court of Appeals' panel reversed the trial court. Having reviewed the record and the law, we affirm the Court of Appeals' decision and remand this case to the trial court for further proceedings.

Analysis

"It is well settled that the proper interpretation of insurance contracts generally is a matter of law to be decided by a court; and, thus, an appellate court uses a de novo, not a deferential, standard of review." Cincinnati Ins. Co. v. Motorists Mut. Ins., 306 S.W.3d 69, 73 (Ky. 2010). The controlling case here is Niagara Fire Ins. Co. v. Curtsinger , 361 S.W.2d 762, 763 (Ky. 1962). Curtsinger defined collapse as follows:

The word ‘collapse’ in connection with a building or other structure' has a well-understood common meaning. Webster's Collegiate dictionary defines the word as, ‘(1) To break down or go to pieces suddenly, especially by falling in of sides; to cave in.’

...

It seems to us that the mere subsidence of the floor of the porch, which pulled it and the roof away from the building a few inches, cannot be regarded as the collapse of any part of the building, and that the trial court should have so ruled as a matter of law.

Id. at 764-65.

The damage to Thiele's residence may have been more extensive than that discussed in Curtsinger. However, it is undisputed that Thiele's residence has not "collapsed" under Curtsinger's definition. Therefore, applying Curtsinger would foreclose recovery under the insurance policy at issue here.

Thiele requests that we abrogate Curtsinger, and instead adopt the more lenient majority rule. Under the majority rule, "[t]he structure need not be in imminent danger of collapse, but the damage to it must substantially impair the structural integrity of the building. That is, the damage must alter the basic stability or structure of the building in order to constitute a ‘collapse.’ " 11 Couch on Insurance, § 153:81 (3d ed., June 2016 Update) (quoting Sandalwood Condominium Ass'n at Wildwood, Inc. v. Allstate Ins. Co., 294 F.Supp.2d 1315, 1318 (M.D. Fla. 2003) ). See also 71 A.L.R.3d 1072. We decline Appellant's invitation to adopt the majority rule.

We have consistently held that "[t]he words employed in insurance policies, if clear and unambiguous, should be given their plain and ordinary meaning." Nationwide Mut. Ins. Co. v. Nolan, 10 S.W.3d 129, 131 (Ky. 1999) (citations omitted). The meaning of "collapse" is clear. Moreover, a significant number of states still adhere to a plain language interpretation of "collapse." E.g., Heintz v. U.S. Fidelity & Guar. Co., 730 S.W.2d 268, 269 (Mo. App. 1987) ("There must have been a falling down or collapsing of a part of a building. A condition of impending collapse is insufficient."). Therefore, we believe that Curtsinger was rightly decided and see no reason to depart from its holding.

As a practical matter, any long range effect of our decision could easily be minimized by the insurance companies in simply re-defining the "collapse" exemption to meet our judicial definition. We refuse to contort the common sense meaning of that word to the breaking point for such an ephemeral consequence.

Conclusion

For the foregoing reasons, we hereby affirm the Court of Appeals' decision reversing the trial court's judgment and remanding.

Minton, C.J.; Cunningham, Hughes, Keller, Venters and Wright, JJ., sitting.

Minton, C.J.; Hughes, Keller, and Venters, JJ., concur.

Wright, J., dissents by separate opinion.

VanMeter, J., not sitting.

WRIGHT, J., DISSENTING:

I respectfully dissent from the majority's affirming the Court of Appeals' decision reversing the trial court's judgment. I agree with the majority's holding that Niagara Fire Ins. Co. v. Curtsinger , 361 S.W.2d 762 (Ky. 1962), is the law in Kentucky. Where I must respectfully dissent from the majority is with its conclusion that "it is undisputed that Thiele's residence has not ‘collapsed’ under Curtsinger's definition." That is a factual determination for the trial court, and there is substantial evidence to support its finding that a part of the building has collapsed.

In Curtsinger, our predecessor court adopted Webster's Collegiate Dictionary's definition of collapse: "(1) To break down or go to pieces suddenly...." 361 S.W.2d at 762. There are two parts to this definition. The first is "to break down"; the second, "to go to pieces suddenly." Each describes a separate condition of collapse. Kentucky Growers's analysis of whether collapse has occurred is focused totally on the second, "to go to pieces suddenly." I agree that the facts in this case fail to meet that condition. But there was substantial evidence that parts of the residence had broken down, meeting the first part of the definition of collapse.

The engineering firm's pictures make it clear that it would be impossible for some parts of the residence to collapse due to hidden insect damage because four of the walls are made of concrete block. Photograph 35¹ shows the concrete block walls of the garage and photograph 1 shows that the garage is attached to the house and under the single continuous roof. Photographs 1 and 3 show two chimneys penetrating the roof. Photographs 13 and 19 show that the chimneys are masonry block and would be impervious to termite damage. Photograph 1 also shows that the masonry chimneys, which are attached to and support the single continuous roof, are spaced equally across the side of the building unsupported by masonry walls. The masonry walls and supports would make it impossible, or at least highly unlikely, for this residence to go to pieces suddenly and fall to the ground. If only the second clause of the definition of collapse counts, then Kentucky Growers would seem to have sold an insurance policy that provides only illusory coverage for insect-damage collapse given the residence's masonry supports.

A closer examination of the evidence makes it clear that there is substantial evidence that parts of this residence had broken down due to hidden insect decay. Kentucky Growers policy provides coverage for:

8. Collapse—"We" pay for direct physical loss ... involving the collapse of a building or part of the building caused by only the following:

...

(b) hidden insect or vermin decay....

It is undisputed that there is extensive termite damage to the residence. The question now becomes is there sufficient evidence to show collapse or break down of part of the residence?

Hidden insect decay has caused the floor to drop throughout the residence. Photographs 5, 6, and 13 show that support of the floor has broken down so that the floor has dropped even where it was attached to masonry walls and chimneys. It is impossible to tell from these photographs how much the floor has dropped.

The best evidence of how much parts of this building have broken down and fallen is Photograph 24. It shows that the wall is attached to the roof and adjoining walls and has a steel pipe projecting from the masonry chimney through the wall. The wall has broken down to such degree that the steel pipe has ripped through the wall instead of supporting it. This photograph also shows that the wall and floor have fallen at least 4 inches in spite of being attached to the supporting sidewalls, roof and having the metal pipe sticking through it.

The insurance policy provides coverage if a part of the building collapses due to hidden insect decay. The floors are part of the building. The wall depicted in Photograph 24 is part of the residence. These parts of the residence have broken down as described in the insurance policy.

Termites access their food sources by hidden tunnels and in such manner as to keep them concealed from potential predators. They also eat the wood in such a manner as to keep themselves concealed and the wood standing for as long as possible. This enables the termites to consume as much of the wood as possible before it breaks down and they are exposed to potential predators. The hidden pathways and consumption of the wood that supports this residence is shown by Photographs 7 and 8. The result of this is that by the time the floors and...