This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1994).




Floyd E. Siefferman, Jr., et al.,



United Services Automobile Association, d/b/a USAA,


Filed October 1, 1996

Affirmed in part and remanded in part

Crippen, Judge

Hennepin County District Court

File No. 9416888

Nicholas M. Wenner, Floyd E. Siefferman, Jr., Saliterman & Siefferman, 1000 Northstar Center East, 608 Second Avenue South, Minneapolis, MN 55402 (for Respondents)

Robert W. Kettering, Jr., James M. Susag, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214 (for Appellant)

Considered and decided by Crippen, Presiding Judge, Parker, Judge, and Short, Judge.



Appellant insurer appeals the trial court's summary judgment declaring that the respondent homeowners' insurance contract covered the partial collapse of respondents' home. Seeking the additional recovery of attorney fees incurred, respondents assert that the trial court abused its discretion by failing to decide respondents' motion to amend their pleadings to add a cause of action under the Prevention of Consumer Fraud Act. We affirm the trial court's summary judgment order for respondents and remand the issue concerning respondents' motion to amend.


In August 1993, part of the floor in respondents' house slipped downward about one and one half inches when rotting decay of the floor joists caused the floor to drop from the foundation plate onto the foundation itself. Upon investigation, respondents also found that the main rim joists and the sheathing within the walls of that part of the house had completely deteriorated. Overwhelming evidence indicated that hidden decay, a result of fungi, moisture, and the warm temperature of respondents' home, caused the partial collapse. The source of the moisture was a small hole in the roof; the interior walls, the exterior brick masonry, and the perimeter rim insulation in the basement had concealed the deterioration of the joists and sheathing. Respondents had a homeowner's insurance policy issued by appellant insurer.

Respondents settled a claim with the builder for the collapse and received an initial payment of $2911.55 from appellant. After a conciliation court ruled for appellant, respondents filed a complaint in district court. While cross-motions for summary judgment were pending, the respondents moved to amend their initial complaint to add a cause of action under Minnesota's Prevention of Consumer Fraud Act. The trial court granted respondents' summary judgment motion, denied appellant's motion for partial summary judgment, and "abstained" from deciding respondents' motion to amend. The parties subsequently stipulated to damages of $20,000, subject to this appeal.


Summary judgment should be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted. Id.

The interpretation of an insurance contract is a question of law as applied to the facts presented. Meister v. Western Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992). The policy at issue provided in pertinent part:

Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following: * * * hidden decay * * *.

* * *

We do not insure for loss caused by any of the following. However, any ensuing loss which is not excluded or excepted in this policy is covered. * * *

Faulty, Inadequate or defective: * * * design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction * * * of part or all of any property whether on or off the residence premises.

The policy expressly provides coverage for damage "caused" by hidden decay, but excludes damage "caused" by defective construction. Both parties concede that hidden decay caused the partial collapse of respondents' home, but viewing the evidence most favorable to appellant, defective construction also has led to the hidden decay. These conflicting provisions create an ambiguity in the insurance policy. Where an insurance contract is ambiguous, the court must interpret the ambiguity in favor of the insured. State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992); Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn. 1986). Thus, we must interpret the ambiguity between the coverage and exclusion provisions in favor of respondents and declare that the exclusion for defective construction does not deny coverage where hidden decay caused the collapse.

Furthermore, exclusion and restriction clauses in insurance are construed narrowly against the insurer. SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 314 (Minn. 1995); Atwater Creamery Co. v. Western Nat'l Mut. Ins. Co., 366 N.W.2d 271, 276 (Minn. 1985). Thus, in resolving a conflict between a coverage clause and an exclusion clause, the court must read the exclusion clause narrowly. Because this court must construe the exclusion for defective construction strictly and resolve ambiguities in favor of the insureds, we conclude that the contract excludes collapses due to defective construction except where the faulty construction has led to hidden decay causing the collapse.

The appellant argues that the court must go beneath the immediate cause to the ultimate cause of the collapse. According to appellant, because the defective construction led to the moisture entering through the roof that caused the hidden decay, the defective construction, an excluded cause, becomes the sole direct and proximate cause of the partial collapse. Appellant's argument is a plausible interpretation of the contract, but it is only one of two such interpretations. Under the other plausible interpretation, hidden decay, a covered cause, is a proximate and direct cause of the collapse. To recover, an insured need only prove that one covered cause was a direct cause. SCSC Corp, 536 N.W.2d at 314. Because this second plausible interpretation favors coverage, we must construe this ambiguity in favor of the insureds. Id. (holding that where separate covered and excluded causes contributed to the damage, the excluded cause does not result in denial of coverage); Henning Nelson, 383 N.W.2d at 653 (same); Fawcett House, Inc. v. Great Cent. Ins. Co., 159 N.W.2d 268, 270 (Minn. 1968) (allowing recovery under policy excluding any loss caused by a change in temperature, but covering acts of vandals, where vandals' sabotage directly caused the heating and plumbing systems to freeze during cold temperatures). This result coincides with decisions interpreting nearly identical language in other jurisdictions. Norfolk & Dedham Mut. Fire Ins. Co. v. DeMarta, 799 F. Supp. 33, 35-36 (E.D. Pa. 1992) (holding that although the removal of rain gutters was an excluded cause and led to hidden decay, the policy "unambiguously" covered collapse caused by hidden decay), aff'd mem., 993 F.2d 225 (3d Cir. 1993); West Am. Ins. Co. v. Chateau LaMer II, 622 So. 2d 1105, 1108 (Fla. Ct. App. 1993) ("[C]ollapse due to hidden decay or insect damage is covered and the exclusions for negligent construction, design, or maintenance apply to damage other than that resulting from collapse due to hidden decay and insects."); Wilson v. Aetna Casualty & Sur. Co., 619 So. 2d 1213, 1216 (La. Ct. App. 1993) (holding that under a policy covering collapses caused by hidden decay but excluding collapses caused by wet rot, "the clear implication of the relevant policy provisions is that wet rot is excluded except where its presence causes hidden decay leading to collapse").

Appellant also argues that the policy's language, stating "any ensuing loss which is not excluded or excepted in this policy is covered," does not include the partial collapse of respondents' house because the policy generally excludes collapse from coverage. But the policy expressly covers collapse caused by hidden decay. Thus, the collapse of respondents' house due to hidden decay is a covered "ensuing loss."

Because the parties concede that hidden decay in part caused the collapse, no genuine issue of material fact remains. Thus, respondents were entitled to summary judgment declaring that the policy covers the partial collapse of their house.

Finally, respondents assert that the trial court abused its discretion by failing to decide their motion to amend to add a cause of action under the Prevention of Consumer Fraud Act, Minn. Stat. SSSS 325F.68-.70 (1994 & Supp. 1995). We remand respondents' motion with directions that the trial court determine whether respondents are entitled to relief under the Prevention of Consumer Fraud Act, under which they seek only the recovery of attorney fees incurred in the case.

Affirmed and remanded.