When is a Collapse Not a Collapse? The Importance of Proving Damages for Partial Losses

Collapse cases and collapse coverage are often complex. A recent builders risk insurance dispute out of Tennessee 1 involving collapse caught my attention because of the opening facts recited by the court:

How many fallen bricks does a collapse make? Parties can contract to answer that question however they want. Here, Tahini Main Street and GCC Construction said that a collapse occurs when a building abruptly falls. So when bricks tumbled off an old building in Tennessee, there was a partial collapse. But a partial collapse doesn’t mean the whole building abruptly fell. ….

Bricks are the building blocks of civilization, dating back to at least 7,500 BC when early Syrians labored to erect Tell Aswad close to present-day Damascus. Since then, bricks’ sturdiness have provided a firm foundation for buildings near and far. For that reason, they’re also baked into popular culture, standing for prudence and permanence in stories ranging from the Three Little Pigs to the Tower of Babel. Indeed, bricks even provided the famed foundation of the walls of Jericho.

But individual bricks are only as good as the mortar that binds them into walls. When that mortar fails, bricks can come tumbling down. In some cases, as with Jericho’s fabled walls, all the bricks might give way. In others, only a few bricks might come loose or slide off. And, in still more scenarios, perhaps many bricks might fall while hundreds remain. This case deals with the aftermath of just such a tumbling. Tahini Main Street (‘Tahini’) bought a century-old brick building in Chattanooga, Tennessee. Tahini’s structure was built using what masons call three-wythe construction. That phrase means that the building’s walls consisted of three brick layers—each layer is a ‘wythe’—that sit next to each other. When Tahini renovated the building so it could lease it out, it hired GCC Construction, LLC (‘GCC’) to make a few changes. Relevant here, GCC planned to add windows. To do that, they cut a new opening into the building’s western wall, boring straight through all three brick layers. When they finished slicing through the wall, some bricks rained down from the opening’s top. The middle row emptied itself into the new gap, leaving the two outside rows with nothing in between. In short, the wall lost its middle.

The builders realized this was a problem. So they asked an engineer named David Cartwright to assess the damage. He thought the wall was ‘falling out’ and ‘crumbly.’ He concluded that ‘due to the severe unforeseen deterioration only recently uncovered inside the existing west brick wall,’ the wall couldn’t carry the renovated building’s load anymore. So he suggested that Tahini build a new structural wall and demolish the old brickwork.

Tahini and GCC asked their insurer, Builders Mutual Insurance Company (‘Builders Mutual’), to pay for this new wall and any damage that resulted from the falling bricks. Because the construction crew had an insurance policy that said Builders Mutual would cover a state of failure or collapse, Tahini and GCC thought the window incident entitled them to compensation. After all, if a bunch of bricks abruptly fell, wasn’t that a collapse?

Tahini and GCC submitted a claim to Builders Mutual Insurance Company under a builder’s risk policy, which promised to cover “direct physical loss” caused by a “collapse” resulting from hidden decay. Builders Mutual denied the claim, arguing that the damage did not meet the policy’s requirements for collapse coverage. The denial triggered a legal battle centered on the meanings of “direct physical loss,” “collapse,” and the policyholder’s burden to prove damages.

The court acknowledged that a “physical loss: and a “collapse” occurred—or at least, a partial collapse. However, the critical issue was not whether the collapse was covered but whether the policyholder proved the extent of the loss attributable to that partial failure. Builders Mutual argued that the evidence presented focused solely on the cost of rebuilding the entire wall—essentially, a total collapse scenario—rather than the actual damage caused by the partial collapse. The court agreed, ruling that the policyholder failed to meet its burden of proving the specific amount of damage caused by the partial collapse.

This distinction was significant. The builders risk policy required proof of “direct physical loss,” meaning the actual and measurable damage caused by the collapse. Presenting evidence of a total rebuild—which included pre-existing issues and unrelated structural concerns—was not sufficient to tie the claimed costs to the partial collapse event. The court emphasized that Tennessee law places the burden of proving damages squarely on the policyholder. Without clear, specific evidence linking the collapse to quantifiable damage, the claim could not succeed.

The policyholder’s brief also pointed to hidden decay as the trigger for coverage, arguing that the deteriorated mortar was unseen and unexpected. However, the court determined that the hidden decay merely exacerbated pre-existing structural deficiencies rather than causing a full or substantial collapse. Builders Mutual successfully argued that the policy did not cover costs unrelated to the partial collapse, such as the expenses for addressing pre-existing deterioration.

This outcome highlights a critical issue in collapse claims: proving causation and the extent of damage is just as important as establishing that a collapse occurred. In this case, the policyholders’ failure to isolate and quantify the damage from the partial collapse ultimately defeated their claim. The court’s reasoning was clear: a policyholder cannot recover damages unless they demonstrate a direct connection between the claimed loss and the covered event.

This case is very complex and deserves a part two discussion for tomorrow. For readers of the blog who wish to study the issue, we will be delving into the arguments made by the parties in briefs. The “total loss” discussion by the court seemed to be a “red herring,” except that the concept crept into the reasoning that collapse coverage does not pay for the costs of the “decayed” property.

For further study, Nick Conklin wrote, Partial Collapse – Collapse Coverage Does Not Require “Total Destruction.” We explored partial collapse under California law in Do All Insurance Policies Require a Total Collapse to Trigger Collapse Coverage? Property insurance coverage nerds who wish to understand collapse coverage should be familiar with the issues discussed in Collapse Coverage: Is Coverage Triggered When the Building Shows Signs Of Distress, When Collapse Is Imminent, Or When It Crumbles To The Ground?

Thought For The Day  

“A house built on sand may collapse. A house built on lies will surely collapse.”

—Buddha

1 Builders Mut. Ins. Co. v. GCC Construction, LLC, No. 24-5152, — F.3d —, 2024 WL 5074878 (6th Cir. Dec. 11, 2024)