{"id":807407,"date":"2015-07-01T06:00:58","date_gmt":"2015-07-01T12:00:58","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=807407"},"modified":"2015-06-11T09:01:51","modified_gmt":"2015-06-11T15:01:51","slug":"missouri-court-clarifies-what-constitutes-an-ensuing-loss-2","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/missouri-court-clarifies-what-constitutes-an-ensuing-loss-2\/","title":{"rendered":"Missouri Court Clarifies what Constitutes an Ensuing Loss"},"content":{"rendered":"

Richard C. Bennett | Cozen O’Connor | June 9, 2015<\/p>\n

Last week in Performance Arts Cmty. Improvement Dist. v. ACE Amer. Ins. Co., 2015 WL 3491292, 2015 U.S. Dist. LEXIS 71592 (W.D. Mo., June 3, 2015), a federal court in Missouri shot down an insured\u2019s arguments that a wall collapse caused by the excluded peril of defective design was a covered ensuing loss under a builder\u2019s risk policy.\u00a0 The developer admittedly erred in calling an for excess amount of concrete slurry to be pumped behind the structure, but the policyholder contended that the collapse that that mistake caused was a separate loss by \u201cexcessive lateral pressure.\u201d\u00a0 The court analogized to that to arguing that the collapse of a defectively-designed building was a separate loss caused by the covered peril of gravity.<\/p>\n

The policyholder had contracted for the construction for a parking garage adjacent to a performing arts center in Kansas City, and the project included the installation of a 50\u2019 high concrete retaining wall between the structure and an adjacent limestone rock face.\u00a0 The original design called for up to 18\u201d of concrete slurry to be poured between the wall and the limestone embankment, but, at the general contractor\u2019s insistence, it was modified to permit up to 36\u201d of the fill material to be installed. While the slurry was being pumped in place, the wall cracked and failed, and it was uncontested that the change to 36\u201d of fill was a design defect.<\/p>\n

The insured made claim under its builder\u2019s risk policy, but the carrier denied because the contract of insurance barred coverage for a loss caused by \u201c[e]rror, omission or deficiency in design, plans, specifications, engineering or surveying.\u201d\u00a0 That exclusion was prefaced by an ensuing loss exception that restored coverage when \u201cdirect physical loss or damage by an insured cause of loss ensues,\u201d however.\u00a0 The policyholder brought suit, contending that excessive pressure caused by the additional fill constituted a covered ensuing loss.<\/p>\n

Last Wednesday, the Western District of Missouri granted the carrier\u2019s motion for summary judgment, holding that the insured\u2019s arguments were \u201cnot legally viable.\u201d\u00a0 As Senior District Judge Ortrie Smith explained, the policyholder\u2019s contention sought \u201cto separate the defective design from the losses incurred because the defective design was actually utilized\u201d which was tantamount to saying that the only loss that was but wasn\u2019t excluded was the cost of obtaining non-defective plans.\u00a0 That effectively meant that \u201cthe ensuing loss exception \u2026 swallow[ed] the exclusion to which it [was] appended.\u201d<\/p>\n

The court held that an ensuing loss must be a distinct loss that comes after the excluded loss.\u00a0 In words of the opinion:<\/p>\n

an ensuing loss is one that occurs subsequent to the excluded loss.\u00a0 Plaintiff characterizes the wall\u2019s physical failure as an \u201censuing loss\u201d by characterizing the provision of defective plans as an event distinct from the use of those plans to create a wall that was defective.\u00a0 The problem is that there was only one event and only one loss so there is nothing \u201censuing[.]\u201d<\/p>\n

* * *<\/p>\n

If a defective-designed building collapses, one does not characterize the effect of gravitational forces as a distinct and separate event, and the cost of replacing the collapsed building is not an ensuing loss.\u00a0 Similarly \u2013 as here \u2013 if a defectively designed retaining wall fails to retain the pressure it was intended to retain, one does not characterize the pressure as a distinct and separate event, and the resulting need to replace the defectively designed wall is not an ensuing loss.<\/p>\n

via Missouri court clarifies what constitutes an ensuing loss – Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Richard C. Bennett | Cozen O’Connor | June 9, 2015 Last week in Performance Arts Cmty. Improvement Dist. v. ACE Amer. Ins. Co., 2015 WL 3491292, 2015 U.S. Dist. LEXIS 71592 (W.D. Mo., June 3, 2015), a federal court in Missouri shot down an insured\u2019s arguments that a wall collapse caused by the excluded peril… Continue reading Missouri Court Clarifies what Constitutes an Ensuing Loss<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,3],"tags":[546,8402,11],"class_list":["post-807407","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-defective-design","tag-ensuing-loss","tag-insurance-claim","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nMissouri Court Clarifies what Constitutes an Ensuing Loss - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/missouri-court-clarifies-what-constitutes-an-ensuing-loss-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Missouri Court Clarifies what Constitutes an Ensuing Loss - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Richard C. 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