United States District Court, M.D. Georgia, Macon Division
BARBARA MORROW and BENNY MORROW, individually and on behalf of those similar situated, Plaintiffs,
ALLSTATE INDEMNITY COMPANY, ALLSTATE INSURANCE COMPANY, ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, and ALLSTATE PROPERTY & CASUALTY INSURANCE COMPANY, Defendants.
LAWSON, SENIOR JUDGE.
Defendants have moved to dismiss the claims of Plaintiffs
Barbara Morrow and Benny Morrow pursuant to Fed.R.Civ.P.
12(b)(6). (Doc. 13). The motion is GRANTED in part and DENIED
Barbara Morrow and Benny Morrow seek relief on behalf of
themselves and others similarly situated for Defendants'
alleged refusal to assess and pay damages for diminished
value for claims made under their homeowners' insurance
policies. As recognized by both parties, this case is part of
a series of cases seeking to certify in this district a
class-action for diminished value in the
real-property-insurance context. (See, e.g., Doc.
18, p. 15; Doc. 19, p. 8).
Complaint contains four counts: Count 1 (Doc. 1, ¶¶
85-96), breach of contract for failure to assess diminished
value; Count 2 (Doc. 1, ¶¶ 97- 106), breach of
contract for failure to pay diminished value; Count 3 (Doc.
1, ¶¶ 107-116), declaratory judgment that the
Defendants have an obligation to their insureds to assess and
pay for diminished value “when policyholders present
first-party physical damage claims arising from direct
physical losses to their insured properties” (Doc. 1,
p. 36); and Count 4 (Doc. 1, ¶¶ 117-119),
attorneys' fees and costs.
allege that they “timely reported two claims for direct
physical loss to their home-one involving water damage and
the other involving foundational and/or structural support
damage.” (Doc. 1, ¶ 2). Plaintiffs argue that
“Defendants breached their insurance contract with
Plaintiffs by (1) failing to assess [their] property for
diminution in value resulting [from] the damage giving rise
to the covered claims and (2) failing to pay Plaintiffs for
such diminution in value.” (Doc. 1, ¶ 2). The
foundational and/or structural support damage occurred on
April 15, 2010, and the water damage occurred on July 14,
2015. (Doc. 1 ¶¶ 39, 44). Following the incidents
of damage, Allstate Indemnity Company (“Allstate
Indemnity”) “adjusted Plaintiffs' claim
arising out of the . . . loss[es], authorized repairs to
[their] home, and subsequently paid certain repair costs,
” but “took no action to assess any diminution in
the fair market value of [their] property.” (Doc. 1,
¶¶ 40-41, 45-46).
Plaintiffs identify Allstate Indemnity as the issuer of the
policy, (Doc. 1, ¶ 4), Plaintiffs seek to hold
additional defendants liable by invoking theories of agency,
apparent agency, alter ego, joint venture, and the juridical
link doctrine. (Doc. 1, ¶¶ 23-26).
Indemnity's policy covers “sudden and accidental
direct physical loss to [the insured's dwelling] . . .
except as limited or excluded in this policy.” (Doc.
13-1, p. 23). Defendants argue that Plaintiffs'
diminished value claim fails because of the limiting language
of Section (5)(c) of the Section I Conditions included in the
policy, the “Building Structure Reimbursement”
provision. This provision appears immediately after and is
related to Sections (4) and (5)(b). These provisions state,
in relevant part, the following:
event of a covered loss, we have the option to:
a) repair, rebuild or replace all or any part of the damaged,
destroyed or stolen property with property of like kind and
quality within a reasonable time; or
b) pay for all or any part of the damaged, destroyed or
stolen property as described in Condition 5 "How We Pay
For a Loss." . . . .
We Pay For A Loss
. . . [P]ayment for covered loss will be by one or more of
the following methods: . . . .
b) Actual Cash Value. If you do not repair or replace the
damaged, destroyed or stolen property, payment will be on an
actual cash value basis. This means there may be a deduction
for depreciation . . . .
You may make claim for additional payment as described in
paragraph "c" and paragraph "d", if you
repair or replace the damaged, destroyed or stolen covered
property within 180 days of the actual cash value payment.
c) Building Structure Reimbursement . . . [W]e will make
additional payment to reimburse you for cost in excess of
actual cash value if you repair, rebuild or replace damaged,
destroyed or stolen covered property within 180 days of the
actual cash value payment . . . .
Structure Reimbursement will not exceed the smallest of the
1) the replacement cost of the part(s) of the building
structure(s) for equivalent construction for similar use on
the same residence premises;
2) the amount actually and necessarily spent to repair or
replace the damaged building structure(s) with equivalent
construction for similar use on the same residence premises;
3) the limit of liability applicable to the building
structure(s) as shown on the Policy Declarations for Coverage
A - Dwelling Protection or Coverage B - Other Structures
Protection, regardless of the number of building structures
and structures other than building structures involved in the
(Doc. 13-1, pp. 33-34) (emphasis in original).
Motion to Dismiss Standard
Federal Rules of Civil Procedure require that a pleading
contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). To avoid dismissal pursuant to
Fed.R.Civ.P. 12(b)(6), a complaint must allege sufficient
factual matter to “‘state a claim to relief that
is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “At
the motion to dismiss stage, all well-pleaded facts are
accepted as true, and the reasonable inferences therefrom are
construed in the light most favorable to the
plaintiff.” Garfield v. NDC Health Corp., 466
F.3d 1255, 1261 (11th Cir. 2006) (internal quotation marks
and citation omitted). However, “where the well-pleaded
facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged-but it
has not ‘show[n]'-‘that the pleader is
entitled to relief.'” Iqbal, 556 U.S. at
679 (quoting Fed.R.Civ.P. 8(a)(2)). “[C]onclusory
allegations, unwarranted deductions of facts or legal
conclusions masquerading as facts will not prevent
dismissal.” Oxford Asset Mgmt., Ltd. v.
Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). The
complaint must “give the defendant fair notice of what
the . . . claim is and the grounds upon which it
rests.” Twombly, 550 U.S. at 555 (internal
quotation marks and citation omitted). Where there are
dispositive issues of law, a court may dismiss a claim
regardless of the alleged facts. Marshall Cty. Bd. of
Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174
(11th Cir. 1993).
Counts 1 and 2: Breach of Contract for Failure to Assess and
Pay Diminished Value
contend that Plaintiffs' breach of contract claims should
be dismissed because (1) Plaintiffs have not “allege[d]
sufficient facts to show that Defendants had a contractual
obligation to assess and pay for diminution in value;”
(2) Plaintiffs “attempt to overcome the contractual
deficiencies by misstating mere legal conclusions;” (3)
Plaintiffs “fail to allege sufficient facts to show
that they suffered any damages entitling them to
recovery”; and (4) Plaintiffs' “claim based
on the 2010 loss is time barred.” (Doc. 13, pp. 3-9).
Defendants further argue that Plaintiffs' alternative
request for relief in the form of specific performance and/or
an injunction should be dismissed. (Doc. 13, pp. 8-9).
Whether the policy covers diminished value
contend that the policy between Plaintiffs and Allstate
Indemnity does not cover diminished value, and thus Allstate
Indemnity did not breach the contract when it failed to
assess or pay for diminished value to Plaintiffs' home.
(Doc. 13, p. 3). Plaintiffs argue that based on the
policy's coverage of “sudden and accidental direct
physical loss, ” Allstate Indemnity is required under
Georgia law to pay diminished value. (Doc. 18, p. 10).
Plaintiffs primarily rely on two cases: State Farm Mutual
Automobile Insurance Company v. Mabry, 556
S.E.2d 114 (Ga. 2001) and Royal Capital Development, LLC
v. Maryland Casualty Company, 728 S.E.2d 234 (Ga. 2012).
Mabry, the Georgia Supreme Court addressed
“whether Georgia law, as applied to the contract at
issue, requires insurers to assess vehicles presented with
first-party physical damages claims for diminution in value
and, if found, pay it; and, if so, whether State Farm has
sought to avoid that obligation.” 556 S.E.2d at 117.
The physical damage coverage in State Farm's policies
provided that it would “pay for loss to your car”
with a limitation of liability provision providing the
insurer will pay the “lower of the actual cash value of
the vehicle or the cost of repair or replacement.”
Id. at 118. Reviewing 75 years of Georgia case law,
the Georgia Supreme Court concluded that “Georgia . . .
has been consistent in interpreting the physical damage
coverage of automobile insurance policies to require that the
insured be made whole, basing the measure of damages on the
value of the vehicle.” Id. at 122. Thus, the
Georgia Supreme Court held that “State Farm is
obligated to pay for diminution in value when it occurs,
” noting that “what is lost when physical damage
occurs is both utility and value, ” and that
“[r]ecognition of diminution in value as an element of
loss to be recovered on the same basis as other elements of
loss merely reflects economic reality.” Id.
Further, the Georgia Supreme Court held that the trial court
correctly determined that State Farm was obligated to assess
diminution in value “along with the elements of
physical damage when a policyholder makes a general claim of
loss.” Id. at 122-23.
Royal Capital, the Georgia Supreme Court held that
Mabry is not limited to automobile insurance
policies. Specifically, the Georgia Supreme Court answered
this certified question from the Eleventh Circuit: Does
“an insurance contract providing coverage for
‘direct physical loss of or damage to' a
building” require compensation “for the
diminution in value of the property resulting from stigma due
to its having been physically damaged?” Royal
Capital, 728 S.E.2d at 235. The Georgia Supreme Court
answered the question in the affirmative, holding that
Mabry “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 235. The Georgia Supreme Court reiterated the
“long-standing contract interpretation rule in
Georgia” that it followed in Mabry:
“[W]here ‘[an] insurance policy, drafted by the
insurer, promises to pay for the insured's ...