William A. Valls v. Allstate Insurance Company

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

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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.

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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).

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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).

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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

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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.

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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.

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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.

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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

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].”).