A while back, I wrote about a Georgia Supreme Court decision, Royal Capital Development LLC v. Maryland Casualty Co., that held that diminution in value of real property is potentially covered  under a property insurance policy, in addition to the costs of repairs (see my June 6, 2012 blog post). This was an extension of a decision by the Georgia Supreme Court in the auto insurance context, which had held that diminution in value of a vehicle, after completing repairs, was covered under an auto policy. Vehicles are different than autos though. Unlike some used vehicles, real properties often gain in value when old materials are replaced with new. Nevertheless, as I predicted, the Royal Capital decision has resulted in some class action filings against homeowners’ and commercial property insurers, although not a large number of cases. As far as I know, the issue has not yet spread beyond Georgia.

In Brewton v. Liberty Mutual Holding Company, Inc.,  2016 WL 224124 (M.D. Ga. Jan. 19, 2016), a putative class action involving this issue, a Georgia federal district court recently granted the insurer’s motion to dismiss a declaratory judgment claim. The plaintiff sought a declaratory judgment that the insurer “is obligated under the homeowners insurance policies to assess insured properties for and pay diminished value when policyholders present first-party physical damage claims arising from direct physical losses to their insured properties, which are covered events.” Id. at *1. The court dismissed this claim because it was based on the possibility of a hypothetical or contingent future injury. The court reasoned that “[a]lthough it is possible that [plaintiff] may experience damage to her home and thus a dispute with First Liberty over diminished value in the future, her allegations are insufficient to establish a reasonable expectation that her alleged injury will be repeated. ‘[A] plaintiff seeking declaratory . . . relief must allege . . . a real and immediate – as opposed to a merely hypothetical or conjectural – threat of future injury.’” Id. at *3. “The mere possibility that [plaintiff’s] home may suffer damage in the future is ‘simply too remote to satisfy the case-or-controversy requirement and permit adjudication by a federal court.’” Id. (quoting O’Shea v. Littleton, 414 U.S. 488, 498 (1974)).

The argument made here is one that insurers and other defendants can often make in defending against declaratory judgment claims in putative class actions. With this type of claim dismissed, class certification will depend entirely on a breach of contract claim, on which class certification is governed by the more stringent Rule 23(b)(3) standard, which requires that common issues of law or fact predominate. With respect to diminution in value, for example, the defendant, in opposing class certification or moving to strike the class allegations, has a strong argument that the specific factual circumstances of each individual claim will predominate in determining whether there was any uncompensated diminution in value that falls within the scope of coverage as construed by the Georgia Supreme Court’s decision.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.