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Columbiaknit, Inc. v. Affiliated FM Ins. Co.

United States District Court for the District of Oregon

August 4, 1999, Decided

Civil No. 98-434-HU

Opinion

OPINION AND ORDER

HUBEL, Magistrate Judge

Plaintiff insured disputes defendant insurer's denial of coverage for alleged losses under an "all-risks" property and business interruption insurance contract. Before the court is defendant's motion (# 16) for partial summary judgment. For the reasons set out below, defendant's motion is denied in part and granted in part.

BACKGROUND

Plaintiff, a clothing manufacturer, is owned by Jakob Kryszek and his sons, Jerry and Al. Plaintiff held an insurance policy, dated August 8, 1996, issued by defendant for its warehouse (the White Stag Building) and the garments and fabric it stored there. The policy insured against "all risks of direct physical loss of or damage to the property insured except as hereinafter excluded." Pl.'s Ex. A, at 13. On September 14, 1996, rainwater [*2]  entered the White Stag Building and saturated some of the fabric and garments. The remaining contents of the building were exposed to high humidity for a prolonged period while salvage crews hired by defendant worked to dry out the building. Pl. resp. to def.'s mot. for sum. jdmt. at 3.

Defendant hired Maxson Young Associates, Inc. ("Maxson Young") to assist the cleanup. Pl.'s SMF at 2. Maxson Young hired MF Bank, a salvage company, to separate wet goods from dry goods. MF Bank employees went through the building and pulled out goods that appeared to be wet or damp. Def.'s SMF at 2. These wet or damp goods were removed from the building. Id. The dry goods were repackaged and remained in the building. Id. Plaintiff maintains that MF Bank employees may have mixed wet goods with dry goods during the repackaging process. Exam. J. Kryszek at 114.

Maxson Young also hired Dow Columbia to dry out and clean up the building. McDonald depo. at 32. During the drying out process, Dow Columbia applied antimicrobial agents throughout the building, to reduce the possibility of mold or mildew. Dow depo. at 30. In response to plaintiff's concerns regarding the possibility of elevated microbial [*3]  levels in the building, Maxson Young hired Clayton Environmental Consultants ("CEC") to conduct a "microbial evaluation" of the White Stag Building, which CEC completed in October, 1996. The evaluation sought to "distinguish between building related sources of microorganisms and microorganism growth related to flood damage." Def.'s Ex. 4, at 4. The microbial evaluation revealed higher than normal concentrations of penicillium inside the building. Keeth depo. at 28. Sampling of boxes remaining in the building indicated elevated fungal concentrations (compared to outdoor air), with a few exceptions. Id. At 7. However, the evaluation was inconclusive as to whether the elevated fungal concentrations resulted from exposure to other wet items or from the ambient air. Keeth depo. at 42. CEC's report also noted that because all of the dry goods were moved to the second floor after repackaging, it was impossible to determine which goods came from what part of the building and which, boxes, if any, contained both wet and dry goods. Id. The report concluded that microbial concentrations in several areas not directly affected by the September, 1996, rainwater intrusion were higher than [*4]  some areas that were directly affected. Def.'s Ex. 4 at 7. The report noted evidence of a long history of water intrusion to the White Stag Building prior to September 14, 1996. Id. at 4, 7-8. The report stated:

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1999 U.S. Dist. LEXIS 11873 *; 1999 WL 619100

COLUMBIAKNIT, INC., an Oregon Corporation, Plaintiff, v. AFFILIATED FM INSURANCE CO., a Deleware Corporation, Defendant.

Disposition:  [*1]  Defendant's motion for partial summary judgment GRANTED in part, and DENIED in part.

CORE TERMS

physical loss, insured, garments, odor, coverage, all-risks, ambiguous, Def, physical damage, damages, wet, summary judgment, property insurance, policy language, microbial, dry goods, intrusion, fabric, mildew, boxes, partial summary judgment, defense motion, material fact, intangible, clothing, genuine, losses, stored, hired, jdgt

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Genuine Disputes, Burdens of Proof, General Overview, Movant Persuasion & Proof, Opposing Materials, Insurance Law, Property Insurance, Coverage, All Risks, Property Damage, Claim, Contract & Practice Issues, Policy Interpretation, Ordinary & Usual Meanings