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Date: 04-02-2019
Case Style:
William A. Valls v. Allstate Insurance Company
Case Number: 17-3495-cv
Judge: Per Curiam
Court: United States Court of Appeals for the Second Circuit on appeal from the District of Connecticut (New Haven County)
Plaintiff's Attorney: Jeffrey R. Lindequist
Defendant's Attorney: Ranmond T. Demeo and Jessica A.R. Hamilton
Description:
This appeal arises from the multitude of lawsuits filed by
Connecticut homeowners whose basement walls were likely
constructed with defective concrete manufactured by the now‐defunct
J.J. Mottes Company—the so‐called “crumbling concrete cases.”
Plaintiffs‐Appellants William A. Valls and Christine C. Valls (the
“Vallses”) appeal from a September 28, 2017 judgment of the United
States District Court for the District of Connecticut (Victor A. Bolden,
Judge) granting the motion of Defendant‐Appellee Allstate Insurance
Company (“Allstate”) to dismiss the Vallses’ amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). This case
presents a single question: Whether the “collapse” provision in the
instant Allstate homeowner’s insurance policy affords coverage for
basement walls that exhibit significant cracking but remain standing.
We conclude that, unfortunate as the Vallses’ circumstances may be,
their policy terms do not afford coverage. Accordingly, we AFFIRM
the District Court’s September 28, 2017 judgment.
* * *
This appeal arises from the multitude of lawsuits filed by
Connecticut homeowners whose basement walls were likely
constructed with defective concrete manufactured by the now‐defunct
J.J. Mottes Company—the so‐called “crumbling concrete cases.”
Plaintiffs‐Appellants William A. Valls and Christine C. Valls (the
“Vallses”) appeal from a September 28, 2017 judgment of the United
States District Court for the District of Connecticut (Victor A. Bolden,
Judge) granting the motion of Defendant‐Appellee Allstate Insurance
Company (“Allstate”) to dismiss the Vallses’ amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). This case
presents a single question: Whether the “collapse” provision in the
instant Allstate homeowner’s insurance policy affords coverage for
basement walls that exhibit significant cracking but remain standing.
We conclude that, unfortunate as the Vallses’ circumstances may be,
their policy terms do not afford coverage. Accordingly, we AFFIRM
the District Court’s September 28, 2017 judgment.
I. BACKGROUND
The Vallses own a home in Coventry, Connecticut that is
insured by Allstate. In October 2015, the Vallses noticed several
horizontal and vertical cracks in their basement walls. While the
degree of damage is disputed, it is not disputed that the basement
walls remain standing. Accepting the facts plausibly alleged in the
4
complaint, the dispute is whether Allstate’s homeowner’s insurance
Policy (the “Policy”) covers the damage the Vallses have alleged.
The Vallses originally filed this action in state court, and Allstate
timely removed the case to the District Court. The amended complaint
principally asserts three causes of action against Allstate: (1) breach of
contract based on Allstate’s denial of coverage under the Policy; (2)
breach of the implied covenant of good faith and fair dealing; and (3)
unfair and deceptive practices in violation of the Connecticut Unfair
Insurance Practices Act (“CUIPA”), as enforced through the
Connecticut Unfair Trade Practices Act (“CUTPA”).
The Policy is an “all‐risk” policy that covers “sudden and
accidental direct physical loss to property . . . except as limited or
excluded in this policy.”1 The Policy generally excludes “[c]ollapse”
from its all‐risk coverage.2 In a section entitled “Additional
Protection,” however, the Policy reinstates coverage for a limited class
of collapses:
We will cover:
a) the entire collapse of a covered building
structure;
1 J.A. 27.
2 Id. at 28.
5
b) the entire collapse of part of a covered
building structure; and
c) direct physical loss to covered property
caused by (a) or (b) above.
For coverage to apply, the collapse of a building
structure specified in (a) or (b) above must be a
sudden and accidental direct physical loss
caused by one or more of the following: . . .
b) hidden decay of the building structure; . . .
f) defective methods or materials used in
construction, repair, remodeling or renovation.
Collapse does not include settling, cracking,
shrinking, bulging or expansion.3
The sole issue on appeal is whether the gradual deterioration of the
Vallses’ still‐standing basement walls constitutes a covered “collapse”
under this provision of the Policy.
II. CERTIFICATION
Because this case depends on Connecticut state law, and a large
number of Connecticut homes covered by homeowners’ policies
3 Id. at 36 (emphasis omitted).
6
appear to be similarly affected by defective concrete foundations, we
contemplated certifying the question of coverage to the Connecticut
Supreme Court. At oral argument, we asked the parties whether they
were amenable to certification. Allstate, the out‐of‐state party in this
diversity case, strenuously objected to certification. For the reasons
that follow, we decline to certify.
Under the rules of this Court and Connecticut law, we may
certify a question to the Connecticut Supreme Court “if the answer
may be determinative of an issue” in a pending case before us “and if
there is no controlling appellate decision, constitutional provision or
statute.”4 “Certification is a discretionary device, both for the
certifying court and for the court requested to answer the certified
question[s].”5
There is much to be said in favor of certification in such a case.
The issue is, of course, one of Connecticut law. Without the guidance
of the Connecticut Supreme Court, we can have no assurance that our
resolution will correspond to what the Connecticut Supreme Court
would or will eventually decide. In a diversity case, we sit in some
sense as an intermediate appellate court of the state, but our rulings on
an issue of state law are not reviewable by the highest court of the state.
As a result, we risk that “the party who lost in federal court has been
unjustly denied her state‐law rights,” without any “means of effective
4 See Conn. Gen. Stat. § 51‐199b(d); 2d Cir. Local R. 27.2.
5 Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 51 (2d Cir. 1992).
7
redress.”6 Our decision, if based on the Connecticut Supreme Court’s
answer to a certified question, might effectively resolve numerous
pending state court cases, while our decision without guidance from
the Connecticut Supreme Court will give little or no meaningful
instruction to how Connecticut’s Supreme Court will rule on the many
pending cases. Moreover, certification by federal courts may serve
principles of comity and federalism by deferring to state courts to
decide on state law issues, especially where policy concerns of
particular importance in the state are at stake.
On the other hand, as courts have recognized, certification has
significant potential detriments for the parties, many of which are
present in this case. It increases, at times enormously, the expenses
incurred by the parties, as it requires at least two additional rounds of
appellate review.7 Certification also inevitably delays the resolution of
the case, sometimes for well more than a year. In cases involving
modest amounts at stake, the expense added by certification can
exceed the amount in contention, and, depending on the
circumstances, the attendant delays may also be unjustifiably
burdensome.8 For example, in a case such as this that involves an
6 McCarthy v. Olin Corp., 119 F.3d 148, 159 (2d Cir. 1997) (Calabresi, J.,
dissenting).
7 See also Brown v. Argosy Gaming Co., 384 F.3d 413, 417 (7th Cir. 2004) (noting
the Seventh Circuit’s “hesitancy to utilize the certification process with its
incumbent costs to the litigants and the state court system”).
8 See Tunick v. Safir, 209 F.3d 67, 78‐79 (2d Cir. 2000) (noting the delay and
expense associated with certification); see also id. at 95 (Sack, J., concurring)
(objecting to certification because it would postpone the plaintiff’s speech, but
8
individual homeowner’s insurance claim, the added litigation costs of
certification may effectively nullify a significant portion of the
plaintiffs’ potential recovery, or even exceed the value of the claim.
In addition, while our Court has at times underlined the value
of certification to our federal system, in that the device helps to
realize the federalist objective of Erie Railroad Co. v. Tompkins, 304 U.S.
64 (1938), significant federalism interests can also cut against
certification. In diversity cases, certification can effectively defeat a
litigant’s constitutionally endorsed entitlement to have its case
adjudicated by a federal court rather than a state court, as
certification will often effectively empower the state court to
determine the outcome.9 Where the out‐of‐state litigant removes a
dispute against an in‐state litigant to federal court (or originates the
suit in federal court), certification nevertheless returns that litigant to
state court, potentially nullifying the right of access to the federal
court.10 That right of access to federal courts in diversity cases,
expressly authorized by Article III of the Constitution and the
Judiciary Act of 1789 enacted by the first Congress (now provided by
28 U.S.C. § 1332), is a meaningful part of our federal structure. Here,
Allstate, the out‐of‐state litigant, removed to federal court and, upon
reluctantly concurring in certification as preferable to a stalemate without a
majority).
9 See Corsair Special Situations Fund, L.P. v. Pesiri, 863 F.3d 176, 184 (2d Cir.
2017) (Leval, J., concurring).
10 See id.
9
our inquiry whether it consented to certification, objected
emphatically. Under these circumstances, Allstate as a foreign party
has a constitutionally‐recognized interest in not being put back in
state court through the process of certification, an interest which is
entitled to significant weight in a federal court’s decision whether to
certify.11
We recognize that in certain unusual circumstances, the
arguments favoring certification may be strong notwithstanding
objection by a party. For example, some “state law questions only
arise in disputes governed exclusively by federal law, such as
bankruptcy or copyright,” such that “unless there is certification, the
state courts [would be] substantially deprived of the opportunity to
define state law.”12 And some cases involve a question of state
statutory interpretation antecedent to a federal constitutional issue,
which would raise the possibility of federal court abstention under
the Pullman doctrine.13 The Supreme Court has explained that
certification is particularly appropriate in that context because,
absent certification, (1) a federal court’s application of the canon of
constitutional avoidance to a state statute is especially likely to create
“friction‐generating error” between its interpretation and that of state
11 See id. (noting that this concern on behalf of the out‐of‐state litigant was
not worrisome in that case “because, when the possibility of certification was
presented to the parties, neither side objected”).
12 Gutierrez v. Smith, 702 F.3d 103, 116 (2d Cir. 2012).
13 See R.R. Comm’n of Tex. v. Pullman Co., 312 U.S. 496 (1941).
10
courts, and (2) federal courts might unnecessarily or prematurely
decide on constitutional issues that might be avoided by a state
court’s interpretation of the statute.14 Moreover, the Court explained,
although the certification process may entail added cost and delay,
that cost and delay are typically lower than that associated with the
process of abstention, rendering certification an appealing
alterative.15
These cases, however, raise no such special circumstances.
Notwithstanding the potential benefits of certification, its inevitable
burdens on the parties relating to cost and delay and its consequence
for a party exercising its right to have a diversity case decided by a
federal court weighs against certification when the parties do not
unanimously consent. For these reasons, we have concluded that
certification to the Supreme Court of Connecticut is not appropriate
in this case.
III. DISCUSSION
There is no dispute that Connecticut law governs our
interpretation of the Policy. Connecticut courts interpret an insurance
policy “by the same general rules that govern the construction of any
written contract”—that is, by “look[ing] at the contract as a whole,
consider[ing] all relevant portions together and, if possible, giv[ing]
14 See Tunick, 209 F.3d at 75‐76 (citing Arizonans for Official English v. Arizona,
520 U.S. 43, 79 (1997)).
15 See Arizonans, 520 U.S. at 79.
11
operative effect to every provision in order to reach a reasonable
overall result.”16 If the policy’s terms are “clear and unambiguous,”
then that language “must be accorded its natural and ordinary
meaning.”17 Any ambiguities in the policy are “construed in favor of
the insured because the insurance company drafted the policy.”18
The Vallses contend that our interpretation of the Policy’s
collapse provision should be governed by Beach v. Middlesex Mutual
Assurance Co., 205 Conn. 246 (1987). But the insurance policy analyzed
in Beach is easily distinguished. Unlike the Allstate Policy, the policy
in Beach did not define or otherwise qualify the term “collapse.”
Indeed, it was the absence of such clarifying language that rendered
the term “collapse” ambiguous in the Beach policy. Based on this
ambiguity, the court in Beach concluded that the term “collapse,” left
undefined, encompasses “substantial impairment of the structural
integrity of a building.”19 Here, by contrast, Allstate has expressly
circumscribed the definition of “collapse” in its Policy with several
qualifying terms. For example, Allstate’s Policy requires that such
collapses be “entire,” “sudden,” and “accidental.”
16 Lexington Ins. Co. v. Lexington Healthcare Grp., Inc., 311 Conn. 29, 37‐38
(2014) (internal quotation marks omitted).
17 Id. at 38 (internal quotation marks omitted).
18 Id. (internal quotation marks omitted).
19 Beach, 205 Conn. at 253; see also id. at 251 (“If the defendant wished to rely
on a single facial meaning of the term ‘collapse’ as used in its policy, it had the
opportunity expressly to define the term to provide for the limited usage it now
claims to have intended.”).
12
We now turn to the limiting effect of the terms “sudden and
accidental” and “entire collapse” within the Policy. The phrase
“sudden and accidental” in the Policy20 requires that the collapse in
question occur both abruptly and unexpectedly. As the Connecticut
Supreme Court has observed:
Reading “sudden” in its context, i.e. joined
by the word “and” to the word “accident,”
the inescapable conclusion is that “sudden,”
even if including the concept of
unexpectedness, also adds an additional
element because unexpectedness is already
expressed by “accidental.” This additional
element is the temporal meaning of
“sudden,” i.e. abruptness or brevity.21
Here, the gradual erosion and cracking of the basement walls
was not sudden. Thus, the inclusion of the words “sudden and
accidental” in the collapse provision is sufficient to bar coverage under
the Policy for the damage sustained to the Vallses’ basement walls.
20 J.A. 36.
21 Buell Indus., Inc. v. Greater New York Mut. Ins. Co., 259 Conn. 527, 540‐41
(2002) (quotation marks added) (internal ellipsis and brackets omitted) (quoting
Mustang Tractor & Equip. Co. v. Liberty Mut. Ins. Co., 76 F.3d 89, 92 (5th Cir. 1996))
(interpreting the terms “sudden and accidental” in a pollution exclusion clause).
13
Because any alleged collapse here was not “sudden,” it follows
that the damage to the Vallses’ walls is not covered by the Policy. But
even if such cracking could be said to have occurred suddenly or
accidentally, the Vallses’ claim is still barred because the damage
sustained to their basement walls cannot be deemed an “entire
collapse.”22 Whatever the term “entire collapse” encompasses, it must
entail more than mere “cracking,” since cracking is expressly excluded
under the Policy’s provision that “[c]ollapse does not include settling,
cracking, shrinking, bulging or expansion.”23
* * *
The Vallses claim that it is inconsistent to interpret the term
“sudden” as imposing an abruptness requirement when several of the
Policy’s enumerated causes of collapse—including “hidden decay”—
occur gradually. But this argument is unavailing, since physical
collapse can occur abruptly even if the underlying cause proceeds
slowly. One district court has helpfully illustrated the distinction as
follows:
There’s termites in the house. No collapse.
They’re eating away; every day they’re
eating away. No collapse. They keep eating
22 J.A. 36 (emphasis added).
23 See id.
14
away. Finally, they eat enough that the beam
fails. . . . Now there’s coverage. Now you
have a collapse or falling in. The fact that it
was caused by termites and it was a slow
process doesn’t mean you didn’t have an
abrupt collapse. You did, when the beam
failed and there was literally a falling of the
beam, a failure of the beam.24
While the concrete in the Vallses’ basement walls may be gradually
deteriorating, there has been no sudden entire collapse, and there is no
coverage for gradual decay unless it has caused such a collapse.
Accordingly, the Vallses’ claim was properly excluded under the
Policy.
We conclude that the horizontal and vertical cracking in the
Vallses’ basement walls does not constitute a covered “collapse” under
the Policy. Accordingly, Allstate did not breach its contract by denying
coverage for the Vallses’ claim. And because Allstate did not breach
its contract, the Vallses’ bad faith and CUTPA/CUIPA claims
necessarily fail.25
24 Agosti v. Merrimack Mut. Fire Ins. Co., 279 F. Supp. 3d 370, 378 (D. Conn.
2017) (Underhill, J.) (internal quotation marks omitted).
25 See Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 798 (2013)
(“[B]ad faith is not actionable apart from a wrongful denial of a benefit.”); Zulick v.
Patrons Mut. Ins. Co., 287 Conn. 367, 378 (2008) (“Because we have concluded that
the [insurer’s] interpretation of the policy’s coverage limitation was correct, there
can be no genuine issue of material fact as to whether the application of that
Outcome: IV. CONCLUSION
To summarize: We hold that the “collapse” provision in the
Allstate homeowner’s insurance policy at issue here does not afford
coverage for basement walls that exhibit signs of deterioration but
that have not collapsed suddenly, accidentally, and entirely, as
required by the Policy. For the foregoing reasons, we AFFIRM the
District Court’s September 28, 2017 judgment dismissing the Vallses’
amended complaint for failure to state a claim.
interpretation as a general business practice constituted oppressive, unethical or
unscrupulous conduct in violation of [CUTPA/CUIPA].”).
Plaintiff's Experts:
Defendant's Experts:
Comments: