This case involves the scope of coverage of a homeowner's insurance policy. Arthur and Helen Grebow (the "Grebows") own a home that was insured by Mercury Insurance Company ("Mercury"). In May 2013, the Grebows asked a general contractor to inspect the rear deck of the house because of recurring watermarks. The contractor discovered severe decay in the steel beams, which, with steel poles, supported the second floor of the house. He reported that the supporting beams and poles could not support the upper portion of the house, and that a large portion of the house would fall.
A structural engineer inspected the property and agreed with the general contractor's assessment. The engineer believed the failure of the poles and beams was caused by decay and corrosion, which were concealed by the deck floor and patio ceiling. Because of the corrosion, the upper portion of the house was in danger of falling and the Grebows were advised not to enter the top portion of their house until repair work was done. On May 17, 2013, the Grebows authorized the purchase of material for shoring and had it installed the next day. On May 28, 2013, the Grebows entered into a construction contract. On June 19, 2014, they orally notified Mercury of their claim for reimbursement of their repair expenses, and on June 20, 2013, sent a written claim for the reimbursement. Mercury responded that it would investigate, and on October 22, 2013, it denied the claim. The Grebows spent $91,000 to have the home remediated.
The Grebows sued Mercury for causes of action for breach of contract and tortious breach of insurance contract. The trial court granted a motion for summary judgment in favor of Mercury and denied the Grebows' motion for summary adjudication.
On appeal, the Grebows' argument was that, because at least a portion of the house had collapsed, the remaining expenditure was necessary to avoid imminent insurable damage and to mitigate damages. The Grebows assert that the deck supporting the rear portion of the residence is a part of the building, that there was a collapse of that deck as that term is used in the policy because certain elements of the structure had become detached, and the collapse was due to hidden decay. Thus, the Grebows claim the insurance policy applied.
Mercury contended that the Grebows' claim under their homeowner's insurance policy was not covered because the damage to their property did not constitute a "collapse" as defined by the policy. The definition of a collapse is a "sudden and complete breaking down or falling in or crumbling into pieces or into a heap of rubble or into a flattened mess." Mercury also argued that it had no obligation to reimburse for expenditures to avoid an insurable loss and there was no mitigation as that term is used in the policy.
The Appellate Court agreed with Mercury, finding that the undisputed facts show there was no "sudden and complete breaking down or falling in or crumbling into pieces or into a heap of rubble or into a flattened mass," one of which is required by the policy for there to be a collapse. Further, the Appellate Court held that the duty to mitigate arises only after a loss from a collapse, and Mercury had no duty, express or implied, to reimburse the Grebows for costs to prevent imminent insurable damage. Thus, for the Grebows to have been able to collect under their policy, they would have had to let the house fall down and then make a claim.
