In Tustin Field Gas & Food, Inc. v. Mid-Century Ins. Co., 219 Cal.Rptr.3d 909, ___ P.3d ___ (Cal. 2d DCA, Div. 2, July 3, 2017), a California DCA held that an underground storage tank or "UST" did not "collapse" within the meaning of a standard property insurance policy. Its holding rested on undisputed evidence and unambiguous policy language in that case, that the policy exempted damage caused by "settling" from a covered "collapse." (The appellate court erroneously termed the exemption an "exclusion.") The court held:
Several key facts are undisputed. It is undisputed that the construction company that placed UST-1 in the ground did so negligently because it placed UST-1 on a big rock and next to several air pockets, and then buried it with debris-filled “native soil.” It is undisputed that, 16 years later, UST-1's fiberglass sheath and the big rock both split. And it is undisputed that UST-1's inner steel wall remains intact and that UST-1's fiberglass sheath retained its cylindrical shape, but that UST-1 was not usable until its fiberglass sheath was patched.
These undisputed facts show that the damage to UST-1 constitutes at most a “substantial impairment of [its] structural integrity.” However, because the Policy excludes “settling” and the like, a “substantial impairment of structural integrity” is not a “collapse” as a matter of law.
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