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

California Court of Appeals, Second District, Second Division

July 3, 2017

TUSTIN FIELD GAS & FOOD, INC., Plaintiff and Appellant,
v.
MID-CENTURY INSURANCE COMPANY, Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of Los Angeles County No. BC555247 Michael M. Johnson, Judge. Affirmed.

          Murray M. Sinclair & Associates and Murray M. Sinclair for Plaintiff and Appellant.

          Tharpe & Howell, Timothy D. Lake and Eric B. Kunkel, for Defendant and Respondent.

          HOFFSTADT, J.

         This case involves a question of insurance coverage: When has a building or part 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.

         FACTS 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.

         The 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 “[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 ...


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