MacHeca Transport Co. v. Philadelphia Indemnity Insurance
2011 U.S. App. LEXIS 16367
| 8th Cir. | 2011Background
- Macheca operated a refrigerated warehouse; on November 18, 2001 an ammonia leak occurred after a pipe ruptured due to the ceiling support system failing under ice weight.
- Macheca had an all-risk policy with Philadelphia Indemnity Insurance; Philadelphia denied coverage after an engineer's investigation.
- Macheca, through attorney Horvath, sought the engineer's report and asserted two coverage theories: weight of ice as a specified loss, and collapse under additional coverage.
- The district court granted partial summary judgment against Macheca on collapse and vexatious-refusal-to-pay; weight-of-ice claim remained, and Horvath was later disqualified.
- On remand, the district court granted Philadelphia summary judgment on collapse and vexatious-refusal-to-pay; weight-of-ice remained a live issue but summary judgment was denied.
- The jury ruled for Philadelphia on the remaining theory; on appeal, the Eighth Circuit reversed in part, holding weight of ice could be a specified loss, vacating the collapse ruling, and affirming vexatious-refusal dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Collapse interpretation under policy | Macheca contends collapse should cover substantial impairment of structural integrity of pipes/building parts. | Philadelphia argues collapse requires actual fall or rubble as defined by Missouri appellate law. | Ambiguity governs; district court erred by adopting restrictive Missouri appellate definition; reverse and remand on collapse. |
| Weight of ice as a specified loss | Weight of ice should be a specified loss under Paragraph F.11, triggering coverage via collapse or pollutant exception. | Weight of ice is not a specified loss since ice is an element of weather or not clearly defined. | Weight of ice is reasonably ambiguous; interpret for insured's benefit; weight-of-ice is a specified loss. |
| Vexatious refusal to pay | Philadelphia's denial was vexatious and without reasonable cause. | Philadelphia acted with reasonable belief in no liability and meritorious defense. | Affirm the summary judgment dismissing vexatious-refusal-to-pay claim. |
| Liability under weight-of-ice claim | Weight of ice caused pipe collapse and subsequent ammonia release, triggering coverage. | Liability depends on proximate cause and exclusions; weight of ice alone may not suffice. | Macheca entitled to partial summary judgment on liability under weight-of-ice claim. |
Key Cases Cited
- Williams v. State Farm Fire & Cas. Co., 514 S.W.2d 856 (Mo.Ct.App.1974) (collapse ambiguous; weather-related vs structural impairment)
- Eaglestein v. Pac. Nat'l Fire Ins. Co., 377 S.W.2d 540 (Mo.Ct.App.1964) (definition of collapse in policy context)
- Heintz v. U.S. Fid. & Guar. Co., 730 S.W.2d 268 (Mo.Ct.App.1987) (need for actual collapse, not mere impending collapse)
- Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300 (Mo.1993) (insurance policy interpretation; favorable to insured where ambiguous)
- Krombach v. Mayflower Ins. Co., 827 S.W.2d 208 (Mo.1992) (construction of ambiguous policy language; insured-favorable approach)
- Oak River Ins. Co. v. Truitt, 390 F.3d 554 (8th Cir.2004) (ambiguity and harmonization in insurance contracts)
- American Home Assurance Co. v. Pope, 591 F.3d 992 (8th Cir.2010) (insured-favorable interpretation when language ambiguous)
- Council Tower Ass'n v. Axis Specialty Ins. Co., 630 F.3d 725 (8th Cir.2011) (modern vs restrictive collapse definitions; policy context)
- Weaver v. State Farm Mut. Auto. Ins. Co., 936 S.W.2d 818 (Mo.1997) (courts would follow current trend on ambiguous issues)