MORROW et al v. ALLSTATE INDEMNITY COMPANY et al

Filing 81

ORDER denying 52 Motion to Certify Class. Ordered by US DISTRICT JUDGE HUGH LAWSON on 4/7/2020. (aks)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION

BARBARA MORROW and BENNY
MORROW, individually and on
behalf of all those similarly
situated,
Civil Action No. 5:16-CV-137 (HL)
Plaintiffs,
v.
ALLSTATE INDEMNITY COMPANY,
et al.,
Defendants.

ORDER
Before the Court is Plaintiffs Barbara and Benny Morrow’s Motion to Certify
Class. (Doc. 52). Plaintiffs filed their Complaint as a proposed class action on
behalf of themselves and other similarly situated potential class members. (Doc.
1). The proposed class includes individuals who hold homeowners insurance
policies with Defendant Allstate Insurance Company (“Allstate”) or another Allstate
insurance provider (collectively, “Defendants”). 1 Plaintiffs seek class certification
under Rule 23(b)(3) as to their breach of contract claim alleging that Defendants
breached their duty to assess for diminished value due to stigma. (Doc. 52). They

1

In Plaintiffs’ Complaint, they named Allstate Insurance Company, Allstate
Indemnity Company, Allstate Fire and Casualty Insurance Company, and Allstate
Property and Casualty Insurance Company as Defendants. (Doc. 1).

also request certification of their request for attorneys’ fees and costs. (Id.).
According to Plaintiffs, the homeowners policy created a duty to assess for
diminished value, and Defendants failed to complete such an assessment on a
class-wide basis after class members submitted general claims on their insurance
policy. The Court finds that the individual class members’ breach of contract claims
will be too factually dissimilar to adjudicate uniformly. Thus, class certification is
inappropriate. Accordingly, the Court DENIES Plaintiffs’ Motion to Certify Class.
(Doc. 52).
I.

FACTUAL BACKGROUND
Plaintiffs own a home in Calhoun, Georgia. (Doc. 59-1, ¶ 1). Plaintiffs have

insured their home under a homeowners insurance policy issued by Defendants.
(Id.). Plaintiffs’ home has “sustained two direct physical losses.” (Doc. 59, p. 10).
First, on April 15, 2010, an explosion occurred at a neighboring property. (Doc. 591 at ¶ 7). According to Plaintiffs, the explosion caused structural damage to their
home. (Id. at ¶ 8). Plaintiffs made a claim on their homeowners policy, and
Defendants paid Plaintiffs to repair the damage. (Id. at ¶ 9). Then, on July 14, 2015,
Plaintiffs’ home suffered a second direct loss, this time involving water damage
and mold. (Id. at ¶ 15). Again, Plaintiffs submitted claims on their homeowners
policy, and Defendants paid to repair and remediate the damage. (Id. at ¶ 16).
Plaintiffs now allege that despite the 2010 and 2015 repairs, the home’s fair market

2

value suffered a diminution in value due to stigma following the physical damage.
(Compl. ¶ 45).
Both parties acknowledge that Defendants never compensated Plaintiffs for
the alleged diminished value of their home. The parties’ dispute arises out of the
insurance policy’s language. Defendants deny that the policy covers diminution in
value due to stigma. Plaintiffs argue that under Georgia law the policy covers
diminution in value and imposes a duty to assess for diminished value. Plaintiffs
bring two breach of contract claims: they allege that Defendants failed (1) to assess
the diminished value of their home due to stigma and (2) to pay for such diminution
in value. (Doc. 1, ¶¶ 35–36). Plaintiffs’ Motion to Certify Class seeks only to certify
their claim for Defendants’ alleged failure to assess for diminished value and their
claim for attorneys’ fees and costs. (Doc. 52-1, p. 9). They do not seek to certify a
class for Defendants’ alleged failure to pay diminished value.
II.

ANALYSIS
Plaintiffs define the class as follows:
All persons formerly or currently insured under homeowners
insurance policies issued by Allstate Indemnity Company that provide
coverage for property located in Georgia who, from April 14, 2010,
through the Court’s order certifying a class, presented first-party
claims arising from direct physical losses to their properties as a result
of water, fire, mold, or foundational/structural damage that Allstate
Indemnity Company accepted as covered but wherein diminished
value was not assessed for or paid in connection with the adjustment
of such claims.

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(Doc. 52-1, p. 22). In support of their Motion to Certify, Plaintiffs primarily rely on
State Farm Mutual Automobile Insurance Company v. Mabry, 274 Ga. 498 (2001)
and Royal Capital Development, LLC v. Maryland Casualty Company, 291 Ga. 262
(2012) (“Royal Capital”) to establish that the policy’s language imposed a duty to
assess for diminished value, and Defendants’ failure to assess breached their
contracts with policyholders. See (Doc. 52-1, p. 8) (“This case thus presents the
classic Mabry/Royal Capital scenario . . . .”).
In Mabry, the Georgia Supreme Court found that State Farm’s automobile
insurance policy obligated it to pay and assess for diminution in value as an
element of loss along with the loss attributed to physical damage when a
policyholder makes a general claim of loss. 274 Ga. at 509. The trial court certified
a class of plaintiffs holding State Farm automobile insurance policies issued in
Georgia. Id. at 498. The trial court granted both declaratory and injunctive relief.
Id. at 509–10. The Georgia Supreme Court affirmed the trial court’s decision,
establishing that “the measure of damages in a claim under an automobile
insurance policy” is “value, not condition.” Id. at 506. Thus, State Farm’s insurance
policy obligated it “to pay for diminution in value when it occurs” because
diminished value is “an element of loss to be recovered on the same basis as other
elements of loss.” Id. at 508. Failure to pay for the diminution of value constitutes
a breach of contract just the same as if State Farm had refused to pay for physical
damage covered under its policy.
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Having concluded that diminished value is an element of loss, the Georgia
Supreme Court also found that State Farm was “obligated to assess that element
of loss along with the elements of physical damage when a policyholder makes a
general claim of loss.” Id. at 509. The trial court ordered State Farm to evaluate
class members’ physical damage claims for diminution in value. Id. at 498–99. The
Georgia Supreme Court upheld the trial court’s grant of injunctive relief to remedy
State Farm’s failure to assess. Id. at 510. “[R]equiring State Farm to perform th[e]
duty [to assess]” was “no abuse of discretion.” Id.
Royal Capital confirmed that Mabry’s holding regarding automobile
insurance policies also applies in the real property context. Royal Capital, 291 Ga.
at 267. In Royal Capital, the Eleventh Circuit asked the Georgia Supreme Court to
answer whether “an insurance contract providing coverage for ‘direct physical loss
of or damage to’ a building” requires the insurer to “compensate the insured for the
diminution in value of the property resulting from stigma due to its having been
physically damaged.” Id. at 262. The Georgia Supreme Court held that its Mabry
decision requiring an insurer to “pay for any diminution in value of the repaired
vehicle . . . is not limited by the type of property insured, but rather speaks generally
to the measure of damages an insurer is obligated to pay.” Id. at 263. Royal
Capital’s analysis focused entirely on the duty to pay for diminished value. The
Georgia Supreme Court did not discuss or mention the insurer’s duty to assess for
diminution in value and whether it too extended to real property insurance policies.
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But the duty to assess follows the duty to pay because as Mabry made clear,
diminution in value is an element of loss, and when insurers undertake to cover a
loss, they are obligated to assess for every element of the loss, including both
physical damage losses and losses to value. See Mabry, 274 Ga. at 509 (“State
Farm is obligated to assess [the diminished value] element of loss along with the
elements of physical damage when a policyholder makes a general claim of loss.”).
Mabry and Royal Capital thus provide the underlying authority relevant to the
Court’s determination of class certification for Plaintiffs’ failure to assess claim.
A. Class Certification Standard
First, “a plaintiff seeking to represent a proposed class must demonstrate
that the class is ‘adequately defined and clearly ascertainable.’” Sellers v.
Rushmore Loan Mgmt. Servs., LLC, 941 F.3d 1031, 1039 (11th Cir. 2019) (quoting
Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012)). Then, the court
begins its “rigorous analysis” under Federal Rule of Civil Procedure 23. Id. at 1039.
Rule 23 governs class action certification in federal court. To certify and maintain
a class action, the proposed class must satisfy the four prerequisites listed in Rule
23(a). Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 345–46 (2011). Specifically,
the party seeking certification must show:
(1) the class is so numerous that joinder of all members is
impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class; and
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(4) the representative parties will fairly and adequately protect the
interests of the class.
Fed. R. Civ. P. 23(a)(1)–(4).
Next, the moving party must demonstrate that the proposed class is one of
the three types of class actions identified in Rule 23(b). Wal-Mart Stores, Inc., 564
U.S. at 345. Plaintiffs seek certification under Rule 23(b)(3), which requires the
Court to find that “the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a
class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.” 2
At this stage, the Court does not determine the merits of the representative
Plaintiffs’ claim. Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466
(2013) (“Rule 23 grants courts no license to engage in free-ranging merits
inquiries . . .”). The Court will, however, consider the merits to the extent necessary
to determine whether Rule 23’s requirements are satisfied. Id.; Vega v. T-Mobile
USA, Inc., 564 F.3d 1256, 1266 (11th Cir. 2009).
B. Application of Rule 23
The Eleventh Circuit recently held, in an unpublished decision, that if a
defendant can “demonstrat[e] that the plaintiff’s property has not suffered

2

Plaintiffs alternatively request certification under Rule 23(b)(2) or Rule 23(c)(4) if
the Court finds that certification under Rule 23(b)(3) is unavailable.
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diminished value,” then “it would be futile to assess the property and the failure to
assess claim is essentially moot.” Anderson v. Am. Family Ins. Co., No. 18-14772,
2020 WL 550789, at *4 (11th Cir. Feb. 4, 2020). In Anderson, the plaintiff raised
two breach of contract claims: one for the insurer’s failure to pay diminution in value
and another for its failure to assess for diminution in value. Id. at *3–4. The Morrow
Plaintiffs have raised those same claims here. The Anderson plaintiff’s failure to
pay claim was unsuccessful because the evidence showed that his property did
not actually suffer any diminished value. Id. Thus, both the District Court and
Eleventh Circuit concluded that ordering an assessment would be futile and
dismissed the plaintiff’s failure to assess claim as moot.
Neither the Georgia Supreme Court nor the Eleventh Circuit have indicated
explicitly whether the two claims may be pursued independently, but following the
Eleventh Circuit’s guidance in Anderson, the two claims are interdependent to
some extent. 3 If Defendants succeed on their Motion for Summary Judgment as to
Plaintiffs’ failure to pay claim, that will moot Plaintiffs’ failure to assess claim
because the assessment would be futile. Similarly, other potential plaintiffs’ failure
to assess claims may be moot if Defendants show that the plaintiffs’ individual

3

Anderson specifically held that “when a plaintiff raises a failure to assess claim
and a failure to pay claim alleging diminished value on account of stigma, and a
defendant succeeds on a motion for summary judgment with respect to the failure
to pay claim by demonstrating that the plaintiff’s property has not suffered
diminished value, it would be futile to assess the property and the failure to assess
claim is essentially moot.” 2020 WL 550789, at *4.
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properties suffered no diminished value. Defendants indicate that they intend to
defend against the proposed class members’ failure to assess claims by
introducing evidence concerning each home’s lack of diminished value. (Doc. 61,
pp. 14–23).
Against this background, the Court finds that Plaintiffs cannot meet either
Rule 23(a)(2)’s commonality element or Rule 23(b)(3)’s predominance
requirement. The Court will consider commonality and predominance together
because the parties’ arguments overlap on these points. Plaintiffs contend that
commonality and predominance are satisfied because Allstate’s standard form
insurance contracts are uniform across all class members. (Doc. 52-1, pp. 25, 30).
Plaintiffs allege that Defendants had a policy of refusing to assess for diminution
in value, thus establishing that all class members have suffered the same breach
of contract. (Id. at p. 26). Further, Plaintiffs maintain that “potential” for diminished
value is all that Mabry required to trigger Defendants’ duty to assess. (Id. at p. 30).
Common proof can demonstrate “potential” for diminution in value, avoiding an
individualized inquiry into whether any class member actually suffered diminished
value. Defendants rely on Anderson and argue that the mere “potential” for
diminished value is insufficient to prevail on a duty to assess claim. According to
Defendants, an insured has no claim for breach of the duty to assess unless the
insured’s property suffered diminished value due to stigma. Defendants argue that
Plaintiffs cannot satisfy commonality or predominance because adjudication of
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class-wide failure to assess claims would require individualized inquiries into
“whether any given class member in fact suffered diminished value.” (Doc. 61, p.
17); see Fed. R. Civ. P. 23(a)(2), (b)(3).
1. Commonality
Commonality under Rule 23(a)(2) requires the plaintiff to present “questions
of law or fact” that are “common to the class.” The plaintiff must “demonstrate that
the class members have suffered the same injury.” Wal-Mart Stores, Inc., 564 U.S.
at 349 (quotation marks and citation omitted). Further, that common injury “must
be of such a nature that it is capable of classwide resolution.” Id. “What matters to
class certification . . . [is] the capacity of a class-wide proceeding to generate
common answers apt to drive the resolution of the litigation.” Id. (citation omitted).
“Dissimilarities” between members of the proposed class “have the potential to
impede the generation of common answers.” Id.
Allstate’s uniform insurance contracts present a common question at law:
whether the language of the contract created a duty to assess for diminished value.
See Sellers, 941 F.3d at 1040 (“For the commonality requirement, ‘even a single
common question will do.’” (quoting Wal-Mart Stores, Inc., 564 U.S. at 359)). But
whether that question is capable of class-wide resolution is dubious. Defendants
have admitted that they failed to assess for diminution in value. However, that fact,
alone, does not entitle Plaintiffs to relief. Anderson informs the Court that
remedying a failure to assess depends in part on whether the defendant can show
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the property did not suffer any diminution in value. See 2020 WL 550789, at *4
(“[When] a defendant succeeds on a motion for summary judgment with respect to
the failure to pay claim by demonstrating that the plaintiff’s property has not
suffered diminished value, it would be futile to assess the property.”). Defendants
here seek to defend against the alleged breach of contract by demonstrating that
the Plaintiffs’ property in fact suffered no diminution in value, which would moot
their failure to assess claim. (Doc. 61, p. 14–20). And Defendants intend to defend
other class members’ claims similarly. That course of litigation is unlikely to
produce common answers or a common resolution among all class members.
Vast dissimilarities exist between the types of physical damage sustained
by the properties in the proposed class. The proposed class encompasses
property damage ranging from toxic mold to water damage from an overflowing
toilet. Public perception of the properties’ values—and ultimately the diminution in
value attributable to each property—may vary widely between these types of
losses. Significantly, the Georgia Supreme Court has indicated that it would be
“unusual” and only “sometimes appropriate” to award diminution in value damages
after repair in the real property context. Royal Capital, 291 Ga. at 265; See
Anderson v. Am. Family Ins. Co., 350 F. Supp. 3d 1295, 1299 n.3 (M.D. Ga. Oct.
15, 2018) (“The [Georgia] supreme court’s observation that diminished value is
unusual when real property is fully repaired was clearly meant to distinguish real
property from automobiles.”). This suggests that granting relief for a failure to
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assess claim would be inappropriate in many cases where no diminished value
exists.
Adjudicating these claims would at least require an individualized inquiry into
which class members should receive an assessment. The factual differences and
uncertainties among class members make class-wide resolution implausible. See
Williams v. Mohawk Indus., Inc., 568 F.3d 1350, 1355 (11th Cir. 2009) (“Under the
Rule 23(a)(2) commonality requirement, a class action must involve issues that
are susceptible to class-wide proof.” (quoting Murray v. Auslander, 244 F.3d 807,
811 (11th Cir. 2001))). Accordingly, the Court will not certify the proposed class
because Plaintiffs have not satisfied Rule 23(a)(2)’s commonality prerequisite.
2. Predominance
Even assuming that Plaintiffs can establish Rule 23(a)’s prerequisites, the
proposed class fails on the Rule 23(b)(3) predominance requirement. The
predominance requirement is “far more demanding” than commonality. Sellers,
941 F.3d at 1039. When analyzing predominance, the court considers “whether
the issues in the class action that are subject to generalized proof and thus
applicable to the class as a whole, predominate over those issues that are subject
only to individualized proof.” Id. at 1040 (citation and quotation marks omitted); see
also Carriuolo v. Gen. Motors Co., 823 F.3d 977, 985 (11th Cir. 2016) (“Common
issues of fact and law predominate if they have a direct impact on every class
member’s effort to establish liability and on every class member’s entitlement to
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injunctive and monetary relief.” (quoting Babineau v. Fed. Express Corp., 576 F.3d
1183, 1191 (11th Cir. 2009)). Class certification is “inappropriate” where proposed
class members would still be required to “introduce a great deal of individualized
proof or argue a number of individualized legal points” to establish their claims.
Babineau, 576 F.3d at 1191.
Predominance requires courts to “identify the parties’ claims and defenses”
as well as “predict[] how the parties will prove them at trial.” Sellers, 941 F.3d at
1040. On the merits, Plaintiffs rely heavily on their expert, Georgia real-estate
appraiser, Scott Murphy’s opinion that their home sustained a 6.9% diminution in
value after Murphy performed an appraisal. (Doc. 52-1, p. 10). This is the type of
individualized proof—specific to the named plaintiffs’ property and inapplicable to
other class members—that defeats predominance. Plaintiffs argue that they seek
to rely on Murphy and other experts’ opinions to show potential for diminished
value that may be applicable to the proposed class. Regardless of Plaintiffs’
evidence, the evidence Defendants intend to introduce will distill the litigation to
individualized inquiries.
Defendants assert that they will defend the suit by demonstrating that no
diminished value exists in any one class member’s property, which according to
Anderson, moots the failure to assess claim. 4 (Doc. 61, p. 20); see Anderson, 2020

4

Defendants confirmed this litigation strategy in their Motion for Summary
Judgment. (Doc. 48-1). Defendants argue that “because Plaintiffs cannot establish
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WL 550789, at *4. As mentioned above, the Georgia Supreme Court has indicated
that it would be “unusual” but “sometimes appropriate” to award diminished value
damages after repair in the real property context. Royal Capital, 291 Ga. at 265.
Therefore, the “potential” for diminished value loss that Plaintiffs may demonstrate
by generalized proof is undercut by the Georgia Supreme Court’s contention that
diminished value would be “unusual” in any one case. Id.
Defendants may introduce evidence to show that individual properties did
not suffer diminution in value. For example, in Anderson, the record revealed that
“Anderson’s realtor touted the repairs as increasing the property’s value” and “[n]o
potential buyers expressed concern about the water damage.” 202 WL 550789, at
*2–*3. This is the type of individualized evidence Defendants may produce to
defeat individual class members’ claims. See Brown v. Electrolux Home Prods.,
Inc., 817 F.3d 1225, 1240 (11th Cir. 2016) (“What matters is the type of evidence
that the parties will submit to prove and disprove the defense.”). And to refute
Defendants’ evidence, each class member would have to “introduce a great deal
of individualized proof” to establish “their individualized claims.” Sellers, 941 F.3d
at 1040. Plaintiffs have done exactly that here by relying on Murphy’s appraisal to

that they suffered diminished value, they suffered no injury from the failure to pay
diminished value. . . . [W]here the plaintiff cannot establish a failure to pay
diminished value, a mere failure to assess for diminished value does not give rise
to an independent claim.” (Id. at p. 3).
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demonstrate that their home did in fact suffer diminished value. Likewise, other
class members may seek to introduce evidence of their home’s diminished value.
Although “affirmative defenses ordinarily do not defeat predominance,” the
mootness issue here “appl[ies] to the vast majority of class members and raise[s]
complex, individual questions.” Brown, 817 F.3d at 1241. Some class members—
like the Anderson plaintiffs—may have suffered no diminished value. In those
cases, “it would be futile to assess the property.” Anderson, 2020 WL 550789, at
*4. Other class members may fall into Royal Capital’s “unusual” category, where
the diminution in value would warrant an assessment. 291 Ga. at 265. To sort out
the class members’ claims, the parties would have to introduce individualized
evidence. Accordingly, the Court finds that Plaintiffs cannot establish
predominance under Rule 23(b)(3). 5
III.

CONCLUSION

The Court finds that Plaintiffs have not satisfied the requirements under Rule
23 to justify class certification. No uniform resolution is possible among the
proposed class because Anderson indicates that failure to assess claims depend,
in part, on whether a defendant can demonstrate that no diminished value
occurred. Likewise, the Court also denies class certification of Plaintiffs’ request

5

Plaintiffs alternatively seek certification under Rule 23(b)(2) or 23(c)(4). Having
concluded that Plaintiffs cannot satisfy the Rule 23(a) prerequisites, the Court
declines to analyze these other forms of certification further.
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for attorneys’ fees and costs because adjudication of class members’ claims
requires individualized inquiries. 6 Accordingly, Plaintiffs’ Motion to Certify Class is
DENIED. (Doc. 52).

SO ORDERED, this 7th day of April, 2020.

s/ Hugh Lawson_______________
HUGH LAWSON, SENIOR JUDGE
kac

6

“A party cannot receive attorney fees under O.C.G.A. § 13-6-11 unless it prevails
on its basic cause of action.” Dep’t of Transp. v. Ga. Television Co., 244 Ga. App.
750, 752 (2000). As discussed above, whether any one class member will prevail
on his or her failure to assess claim requires individualized inquires which preclude
class certification.
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