Fixtures For Building Services Defined By Court

Commercial Property	Occupant Activity
Building Coverage	Permanently Attached Machinery

When an apple warehouse was destroyed by explosion and fire, the insurer paid the United States of America the amount of its loss (the Farmers Home Administration being named mortgagee under the policy) less the value of apple grading and processing machines.

Cross motions for summary judgment were filed by the United States and the insurer on the subject of whether or not the machines (valued at almost $50,000) were within the scope of the coverage applicable to the warehouse building.

Building coverage under the policy provided that:

"Building(s) or structure(s) shall include attached additions and extensions, fixtures, machinery and equipment and equipment constituting a permanent part of and pertaining to the service of the building(s).”

The United States contended that the apple grading and processing machines were considered "fixtures" because they were permanently and physically attached to the building. In response, the insurer argued that the way the machinery was attached did not qualify it for coverage under the policy, as it did not relate to the building's services.

It recognized a distinction between fixtures that serve the building and those included for the specific activities of the occupant. The court concluded that the apple processing machinery clearly fell into the second category, the occupant's activities.

The motion of the United States of America was denied; that of the insurer was allowed. The machinery in question was found not to be covered by the policy.

Aetna Casualty & Surety Co., Plaintiff v. Honey Bear Brand, Inc. ET AL., Defendants. US District Court, Western District of North Carolina, Asheville Division. Cir. No. A-C-87-25. April 6, 1989. 711 F. Supp. 849. CCH 1989 Fire and Casualty Cases, Paragraph 1989.