Queen Anne Park Homeowners Ass v. State Farm Fire and Casualty C

Filing

Filed Order for PUBLICATION (ARTHUR L. ALARCON, A. WALLACE TASHIMA and MARY H. MURGUIA) for certification to Wahsington State Supreme Court.(SEE ORDER FOR FULL TEXT) The Clerk of Court is hereby ordered to transmit to the Washington Supreme Court, under official seal of the United States Court of Appeals for the Ninth Circuit, a copy of this order and all briefs and excerpts of record in this matter, pursuant to Revised Code of Washington 2.60.010(4) and 2.60.030(2) and Washington Rule of Appellate Procedure 16.16(d). Further proceedings in this court are stayed pending the Washington Supreme Court s decision whether it will accept certification and, if so, this court s receipt of the answer to the certified question. The parties shall file a joint status report in this court no more than seven days after the Washington Supreme Court accepts or rejects certification. If the Washington Supreme Court accepts the certified question, we designate Plaintiff-Appellant HOA to file the first brief, pursuant to Washington Rule of Appellate Procedure 16.16(e)(1), and the parties shall file a joint status report in this court to inform the court when the Washington Supreme Court files its answer. The panel will resume control and jurisdiction upon receipt of an answer to the certified question or upon the Washington Supreme Court s decision to decline to answer the certified question. It is so ORDERED. [9209361]

Case: 12-36021

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ID: 9209361

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

QUEEN ANNE PARK
HOMEOWNERS ASSOCIATION, a
Washington non-profit
corporation,
Plaintiff-Appellant,
v.
STATE FARM FIRE AND
CASUALTY COMPANY, a
foreign insurance company,
Defendant-Appellee.

No. 12-36021
D.C. No.
2:11-cv-01579-TSZ
Western District of
Washington,
Seattle

ORDER
CERTIFYING A
QUESTION TO THE
WASHINGTON
SUPREME COURT

Filed August 19, 2014
Before: Arthur L. Alarcón, A. Wallace Tashima,
and Mary H. Murguia, Circuit Judges.
Order

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QUEEN ANNE PARK HOA V. STATE FARM
SUMMARY*

Certification to Washington Supreme Court
The panel certified the following question to the
Washington Supreme Court:
What does “collapse” mean under
Washington law in an insurance policy that
insures “accidental direct physical loss
involving collapse,” subject to the policy’s
terms, conditions, exclusions, and other
provisions, but does not define “collapse,”
except to state that “collapse does not include
settling, crackling, shrinking, bulging or
expansion?”

*

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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ORDER
This is an insurance coverage case filed in federal court
pursuant to our diversity jurisdiction. The policy at issue
provides coverage in certain circumstances for the “collapse”
of a building, but it does not define “collapse.” The most
recent relevant Washington Supreme Court case, Sprague v.
Safeco Insurance Co. of America, 276 P.3d 1270 (Wash.
2012), suggests that what constitutes “collapse” when the
term is otherwise undefined in the insurance policy at issue is
an open question under Washington law. The parties filed
cross motions to certify that question to the Washington
Supreme Court to resolve the issue. We granted the motions.
We respectfully request that the Washington Supreme Court
accept and decide the certified question below.
I
The Queen Anne Park is a two-building condominium
in Seattle, Washington. State Farm Fire and Casualty
Co. (“State Farm”) insured the property under a
“Condominium/Association Policy” (the “Policy”). The
Policy was in effect from October 18, 1992 to October 18,
1998. In general, the Policy covered “accidental direct
physical loss” to covered property, unless the loss was
excluded or limited. An “extension of coverage” covered
“any accidental 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: . . . (2) hidden
decay . . . .” The coverage extension further provided,
“Collapse does not include settling, cracking, shrinking,
bulging or expansion.” The Policy did not otherwise define
the term “collapse.”

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On August 20, 2010, the Queen Anne Park Homeowners
Association (the “HOA”) filed a claim with State Farm. The
HOA claimed that the Policy covered the “collapse”of a
building, which the HOA interpreted to mean “a substantial
impairment of the structural integrity of any portion or
component of the building.” The HOA claimed that an
inspection of the Queen Anne Park had “revealed several
areas of hidden decay” and that the HOA “believe[d] that
these and other areas suffered a substantial impairment of
structural integrity during [State Farm’s] policy periods.”
On August 23, 2011, after conducting its own inspections,
State Farm denied the claim. State Farm concluded that “[a]
loss involving collapse” had “not commence[d] in any policy
term” and that various exclusions to coverage applied.
In September 2011, in the federal District Court for the
Western District of Washington, the HOA filed suit against
State Farm, seeking declaratory relief and damages for breach
of contract. The HOA moved for summary judgment, arguing
that, under Washington law, the term “collapse,” when
otherwise undefined in the insurance policy at issue, means
“substantial impairment of structural integrity.” The district
court denied the motion. It explained its rationale as follows:
Given the reasoning of the majority and
concurrence in Sprague, and the decision in
Ocean Winds [Council of Co-Owners, Inc. v.
Auto-Owner Insurance Co., 565 S.E.2d 306
(S.C. 2002)], the Court concludes that, even if
Washington were to adopt a relaxed standard
[of collapse] that is somewhere short of
“rubble on the ground,” it would require an
insured seeking coverage under a collapse

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provision to show, in addition to a substantial
impairment of structural integrity, an
imminent threat of collapse.
The court concluded that the HOA could not meet this
standard.
II
As noted earlier, the most recent relevant Washington
Supreme Court case concerning what constitutes “collapse”
under Washington law is Sprague. The issue in Sprague was
whether a Safeco homeowners policy covered losses to a
residential deck system stemming from construction and rot
issues. The policy “provided coverage for all losses that were
not excluded,” and “did not define the term ‘collapse’ nor
explicitly address ‘collapse’ as a covered or excluded loss.”
Sprague, 276 P.3d at 1271.
The Washington Supreme Court concluded that the policy
excluded the losses. Id. at 1273. The five-justice majority
expressly declined to address what constitutes “collapse”
under Washington law. Id. at 1272 (“We need not decide
whether the deck had collapsed due to the loss of structural
integrity even though it had not fallen to the ground.”). Two
justices filed a concurrence, stating “it is apparent that [the]
deck did not collapse” because the “record here shows that
the Spragues’ deck did not break down. Neither did it fall
apart or crumble.” Id. at 1276. The concurring justices
defined “collapse” as “‘to break down completely: fall apart
in confused disorganization: crumble into insignificance or
nothingness . . . fall into a jumbled or flattened mass.’” Id.
(quoting Webster’s Third New International Dictionary 443
(2002)). The four dissenting justices asserted that the court

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should have addressed what constitutes “collapse.” Id. at
1273–76. They argued, “Absent a policy definition, courts
have generally rejected the fall-down notion of collapse in
favor of the more liberal standard, ‘substantial impairment of
structural integrity.’” Id. at 1274 (second internal quotation
marks omitted) (discussing cases).
III
Washington’s Federal Court Local Law Certificate
Procedure Act, Wash. Rev. Code §§ 2.60.010–900, authorizes
the Washington Supreme Court to accept certified questions
from federal courts. Wash. Rev. Code § 2.60.020. “Use of
certification rests in the sound discretion of this court.”
Churchill v. F/V Fjord (In re McLinn), 744 F.2d 677, 681
(9th Cir. 1984) (citing Lehman Bros. v. Schein, 416 U.S. 386,
391 (1974)); see also Bylsma v. Burger King Corp., 676 F.3d
779, 781 n.1 (9th Cir. 2012) (“[W]e may properly certify a
question sua sponte.” (citing Wash. Rev. Code § 2.60.030(1);
Keystone Land & Dev. Co. v. Xerox Corp., 353 F.3d 1093,
1095 n.2 (9th Cir. 2003))).
Certification is appropriate here because the dispositive
issue is the meaning of the term “collapse” in the insurance
policy at issue. There is no clear and controlling Washington
precedent on point, and a resolution of the issue by the
Washington Supreme Court would be determinative of the
outcome in this case. Additionally, the answer to the question
may have far-reaching effects on individuals and entities
insured under residential and commercial property insurance
policies subject to Washington law.

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ORDER
In light of our foregoing discussion, we respectfully
certify the following question to the Washington Supreme
Court:
What does “collapse” mean under
Washington law in an insurance policy that
insures “accidental direct physical loss
involving collapse,” subject to the policy’s
terms, conditions, exclusions, and other
provisions, but does not define “collapse,”
except to state that “collapse does not include
settling, cracking, shrinking, bulging or
expansion?”
We do not intend to restrict the Washington Supreme Court’s
consideration of this issue, and we recognize that it may
reformulate the question.
The Clerk of Court is hereby ordered to transmit to the
Washington Supreme Court, under official seal of the United
States Court of Appeals for the Ninth Circuit, a copy of this
order and all briefs and excerpts of record in this matter,
pursuant to Revised Code of Washington §§ 2.60.010(4) and
2.60.030(2) and Washington Rule of Appellate Procedure
16.16(d).
Further proceedings in this court are stayed pending the
Washington Supreme Court’s decision whether it will accept
certification and, if so, this court’s receipt of the answer to the
certified question. The parties shall file a joint status report in
this court no more than seven days after the Washington
Supreme Court accepts or rejects certification. If the

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Washington Supreme Court accepts the certified question, we
designate Plaintiff-Appellant HOA to file the first brief,
pursuant to Washington Rule of Appellate Procedure
16.16(e)(1), and the parties shall file a joint status report in
this court to inform the court when the Washington Supreme
Court files its answer. The panel will resume control and
jurisdiction upon receipt of an answer to the certified question
or upon the Washington Supreme Court’s decision to decline
to answer the certified question.
It is so ORDERED.

___________________________________
Chief Judge Alex Kozinski
U.S. Court of Appeals for the Ninth Circuit

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