LOS ANGELES (Legal Newsline) – On July 3, a California appeals court upheld a lower court’s ruling that a gas station cannot claim a crack in an underground fuel tank on insurance as a structural collapse.

In a unanimous decision, the three-judge appellate panel of the California 2nd District Court of Appeals Division Two ruled that Tustin Field Gas & Food, a gas station and minimart in Palm Springs, could not claim that a split in the fiberglass shell around an underground steel fuel tank amounted to a structural collapse according to its insurance policy with Mid-Century Insurance Co. 

Justice Brian Hoffstadt, supported by justices Victoria Chavez and Judith Ashmann-Gerst, affirmed the ruling of a trial court that the crack in the tank’s shell, caused by the tank sitting on a small boulder for 16 years, could not be legally considered a collapse because “a ‘substantial impairment of structural integrity’ is not a ‘collapse’ as a matter of law.”

The plaintiff had two 15,000 gallon fuel tanks installed in 1997. However, the construction company that installed the tanks allegedly failed to follow manufacturer recommendations to surround the tank and its shell with a layer of pea gravel. 

Instead, one tank was allowed to rest on a nine-inch boulder surrounded by a number of air pockets, the suit states. In September 2013, it was discovered that both the boulder and the shell had split under the weight of the tank. The plaintiff had the shell exhumed and patched, and claimed the costs of repair on their insurance policy with the defendant.

Although the plaintiff’s insurance policy covered structural collapse as a result of “hidden decay,” “the weight of people or personal property,” or the usage “of defective material or methods in construction,” the opinion states, the defendant denied the insurance claim on the grounds that the split did not qualify as a structural collapse. 

The plaintiff then sued for breach of contract, bad faith denial of insurance coverage and requested declaratory relief obligating the defendant to reimburse the plaintiff according to the terms of the insurance policy liability claim.

The trial court ruled that no collapse had occurred because there was no evidence that the tank in question met the legal definition of collapse, as it had not “suffered a complete change in structure and lost its distinctive character as an [underground storage tank].” The trial court then issued a summary judgment on behalf of the defendant.

The plaintiff appealed on the grounds that the damage to the fiberglass shell, although not causing damage to the steel tank itself, made the tank unusable according to the law until it was repaired. Therefore, since it was unusable, the tank could be defined as “collapsed.”

On July 3, the appellate panel rejected this definition of a structural collapse, and upheld the trial court’s summary judgment in favor of the defendant.

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