[PUBLISH]


                  IN THE UNITED STATES COURT OF APPEALS

                             FOR THE ELEVENTH CIRCUIT                          FILED
                                                                      U.S. COURT OF APPEALS
                               ________________________                 ELEVENTH CIRCUIT
                                                                           OCTOBER 4, 2011
                                                                             JOHN LEY
                                     No. 10-15716
                                                                              CLERK
                               ________________________

                          D. C. Docket No. 1:10-cv-01275-RLV

ROYAL CAPITAL DEVELOPMENT, LLC,

                                                                    Plaintiff-Appellant,

                                             versus

MARYLAND CASUALTY COMPANY,

                                                                    Defendant-Appellee.

                               ________________________

                      Appeal from the United States District Court
                         for the Northern District of Georgia
                            ________________________

                                      (October 4, 2011)

Before DUBINA, Chief Judge, CARNES, Circuit Judge, and SANDS,* District
Judge.

DUBINA, Chief Judge:

       *
         Honorable W. Louis Sands, United States District Judge for the Middle District of Georgia,
sitting by designation.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA

PURSUANT TO ARTICLE VI, SECTION VI, PARAGRAPH IV, OF THE

GEORGIA CONSTITUTION.

      TO THE SUPREME COURT OF GEORGIA AND THE HONORABLE

JUSTICES THEREOF:



      This case involves a dispute over the proper interpretation under Georgia

law of a real property insurance contract between Plaintiff-Appellant Royal

Capital Development, LLC (“Royal Capital”) and Defendant-Appellee Maryland

Casualty Company. The insurance policy provides coverage for “direct physical

loss of or damage to” a building Royal Capital owns in the Buckhead area of

Atlanta. The contract specifies Maryland Casualty’s obligations under a section

entitled “Loss Payment”: “In the event of loss or damage” to the property,

Maryland Casualty “will either: (a) Pay the value of lost or damaged property; [or]

(b) Pay the cost of repairing or replacing the lost or damaged property . . . .”

[Insurance Policy Coverage Form, R. 1-2 (Exh. 1) at 20.]

      Royal Capital contends that the insurance coverage extends to compensation

for the building’s diminution in value resulting from stigma due to the building’s

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physical damage, even after all repairs have been made. It cites State Farm Mutual

Automobile Insurance Company v. Mabry, 

(Ga. 2001), as stating a

long-established analogous rule for car insurance contracts and argues that the

rationale extends to insurance contracts for buildings. Maryland Casualty

acknowledges the Mabry rule, but contends that it does not apply here because the

insurance contract covers a building, not an automobile, and the language

excludes coverage for diminution-of-value damages.

      Thus, the single question presented in this appeal is whether the Georgia

courts would hold that the Mabry rule extends to standard insurance contracts for

buildings. Because this is an important unsettled question of state law, and there is

no controlling precedent from the Georgia state courts, we certify the question to

the Supreme Court of Georgia.

                                   I. BACKGROUND

      The relevant facts are not in dispute. Royal Capital owns The Capital

Building, an eight-story commercial building in the Buckhead area of Atlanta. In

2003, Royal Capital purchased the disputed insurance policy from Maryland

Casualty to insure the building.

      In late January and February of 2008, construction activity on an adjacent

property caused physical damage to The Capital Building. Royal Capital submitted

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a timely claim under the policy to Maryland Casualty, seeking both the cost of

repairs and the post-repair diminution in value resulting from the damage.

Maryland Casualty acknowledged that the damage to the building was a covered

cause of loss under the policy and paid $1,132,072.96 to compensate Royal

Capital for the estimated costs of repairing the damage. However, Maryland

Casualty refused to acknowledge any responsibility to compensate Royal Capital

for the alleged diminution in value of the property.

      Royal Capital filed a one-count Complaint in the Superior Court of Fulton

County, Georgia; Maryland Casualty removed the case to the United States

District Court for the Northern District of Georgia pursuant to diversity

jurisdiction under 28 U.S.C. § 1332. Moving on an expedited basis and deferring

discovery on the actual extent of the building’s loss of value, the parties filed

cross-motions for summary judgment on the narrow issue of whether the insurance

contract allowed recovery of diminution-of-value damages in addition to the costs

of repair under Georgia law. The district court found that diminution-of-value

damages were not available under the contract and granted Maryland Casualty’s

motion for summary judgment.




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                                    II. ANALYSIS

      The sole question in this case is whether Royal Capital’s insurance contract

with Maryland Casualty requires the insurer to pay for the alleged “diminution in

value” of the insured building in addition to the costs of repair. Under Georgia

law, an insurance contract that promises to “pay for loss to” a vehicle covers the

costs of repairing the vehicle to its pre-accident condition and the diminution in

value of the vehicle caused by the accident. 

–22. The

rationale behind this rule is that an insurer promises foremost to insure the other

party against “loss”—and “loss” includes both the actual physical damages and

any loss in value of the property. This is true even if the insurance contract gives

the insurer the option of settling a loss by paying either the cash value of the

vehicle pre-accident or the cost of repair or replacement. 

Mabry

followed 75 years of Georgia case law in its holding. See Dependable Ins. Co. v.

Gibbs, 

(Ga. 1962); State Farm Mut. Auto. Ins. Co. v. Smith, 

(Ga. Ct. App. 1969); Simmons v. State Farm Mut. Auto. Ins. Co., 

(Ga. Ct. App. 1965); U.S. Fid. & Guar. Co. v. Corbett, 

(Ga. Ct. App. 1926).

      The district court had little trouble concluding that Mabry had no effect on

this case, noting that it “dealt exclusively with a consumer automobile policy.”

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[Order Granting Defendant’s Motion for Summary Judgment, R. 37 at 7 n.3.] On

the other hand, a different federal judge in the Northern District of Georgia found

that an insurance contract insuring a commercial building, with almost identical

terms to the one here, did include coverage for both repair and diminution-of-

value damages because the rationale behind the Mabry rule did not justify a

distinction for real estate. NUCO Invs., Inc. v. Hartford Fire Ins. Co., No. 1:02-

CV-1622-CAP, 

(N.D. Ga. Dec. 5, 2005) (unpublished).1

       Maryland Casualty offers strong arguments in support of the district court’s

decision that the Mabry rule does not extend to the disputed insurance contract

here. First, Maryland Casualty contends that buildings generally do not suffer

from diminution in value as the result of damage and repairs the way that

automobiles do from accidents. See 

(describing the

“common perception that a wrecked vehicle is worth less simply because it has

been wrecked”). Second, the types of parties involved in negotiations over an

insurance policy for commercial real estate are likely to be sophisticated business

       1
          In NUCO, an insurance policy for a building insured against “all risk of direct physical loss
of or damage to property described herein except as hereinafter excluded.” 

Under a heading
entitled “Valuation” the policy stated that the “basis of adjustment” for a claim for damages to a
building would be “replacement cost at the time and place of loss, if replaced, otherwise Actual Cash
Value.” 

Upon electing to be compensated under the replacement cost option, the
insured party sought coverage for the diminution in value of the building as a result of damage. The
court held that notwithstanding the either-or language of the contract, diminution-of-value damages
were available. 

                                                  6
entities with proper representatives and counsel. Third, Maryland Casualty

correctly points out that no Georgia court has ever found that an insurance contract

like the one in question obliges the insurer to pay for the diminution in value of a

building as a result of physical damage. This is significant considering that the

rule for automobile insurance contracts has been in force for over eighty years. See

.

      Additionally, Maryland Casualty argues that this case is unlike Mabry due

to the different language in this insurance policy. In Mabry, the policy included a

section labeled “Section VII – Physical Damage Coverage.” [R. 17-8 (Exh. E) at

19.] In this section, State Farm promised to pay for “loss to [the insured’s] car.”

The policy defines “loss” in natural language: “each direct and accidental loss of

or damage to” the vehicle. [Id.] Maryland Casualty contends that this broad grant

of coverage contrasts with the much narrower language in the policy here, which

covered “direct physical loss . . . or damage.” [R. 1-2 (Exh. 1) at 1 (emphasis

added).]

      Finally, Maryland Casualty claims that the unambiguous language of the

insurance policy forecloses the relief Royal Capital seeks. The policy gives the

insurer the option of paying either “the value of lost or damaged property [or] the

cost of repairing or replacing the lost or damaged property.” On its face, the policy

                                          7
does not allow the insured to seek compensation for both the value lost and the

costs of repair.

      On the other hand, there are arguments in favor of extending the Mabry rule

to insurance policies for commercial buildings. First, as Royal Capital notes, it is a

close question whether the damages it claims are covered by the policy and thus

the presumption should be in favor of coverage. See 

(“Policies of insurance [are to] be liberally construed in favor of the object to be

accomplished, and the conditions and provisions of contracts of insurance [should]

be strictly construed against the insurer who prepares such contracts.”) (internal

quotation marks omitted).

      Second, Royal Capital claims that, just like cars, buildings can suffer

diminution in value after being damaged and repaired. During oral argument,

Royal Capital’s counsel claimed that it is prepared to present expert testimony

from certified appraisers that The Capital Building has suffered a loss of market

value due to the stigma of having been damaged in the past.

      Third, Maryland Casualty’s argument that the term “physical loss” in this

contract distinguishes it from Mabry is less compelling considering that the term

“loss” in the Mabry contract came under a section entitled “Physical Damages

Coverages.” [R. 17-8 (Exh. E) at 19.] It is not a stretch to conclude that diminution

                                           8
of value due to physical damage and subsequent repair is a type of “physical

damage” under Georgia law.

         Finally, Maryland Casualty’s claim that the plain language of the contract

bars relief weakens in light of the fact that the language used in the Mabry

insurance policy was similarly clear in restricting the insured’s damages to “the

lower of: the actual cash value; or the cost of repair or replacement.” [R. 17-8

(Exh. E) at 19.] Both the Mabry policy and the one here include parallel Limit of

Liability and Loss Payment provisions which worked in tandem to limit the

insurer’s obligations on the policy. Thus, Royal Capital argues that so long as

Mabry is the law in Georgia and Georgia’s courts have not issued a definitive

statement on whether its rationale extends to insurance policies for commercial

buildings, we should not say that Royal Capital’s policy unambiguously bars its

claim.

         Because this case involves an unsettled question of Georgia law, we would

rather certify the question of the proper interpretation of the parties’ insurance

contract in light of Mabry to the Georgia Supreme Court than speculate as to how

the Georgia courts would resolve the issue. As we have observed in the past,

“[w]here there is any doubt as to the application of state law, a federal court

should certify the question to the state supreme court to avoid making unnecessary

                                           9
Erie ‘guesses’ and to offer the state court the opportunity to interpret or change

existing law.” Colonial Props., Inc. v. Vogue Cleaners, Inc., 

, 387

(11th Cir. 1996) (footnote omitted) (quoting Mosher v. Speedstar Div. of AMCA

Int’l, Inc., 

, 916–17 (11th Cir. 1995)). We underscore, however, the

rule that certification of state law questions is a matter of discretion. See Lehman

Bros. v. Schein, 

, 390–91, 

, 1744 (1974) (“We do not

suggest that where there is doubt as to local law and where the certification

procedure is available, resort to it is obligatory. . . . Its use in a given case rests in

the sound discretion of the federal court.”) (footnote omitted).

       While this circuit traditionally has been less reluctant than others to certify

questions of state law,2 it nonetheless has been our practice to do so with restraint

and only after the consideration of a number of factors:

       [C]ertification should never be automatic or unthinking. ‘We use much
       judgment, restraint and discretion in certifying.’ . . . In determining
       whether to exercise our discretion in favor of certification, we consider
       many factors. The most important are the closeness of the question and
       the existence of sufficient sources of state law . . . to allow a principled
       rather than conjectural conclusion. But also to be considered is the
       degree to which considerations of comity are relevant. . . . And we must
       also take into account practical limitations of the certification process
       ....


       2
         See Blue Cross & Blue Shield of Ala., Inc. v. Nielsen, 

, 1413 (11th Cir. 1997)
(noting that “[w]e, more than any other circuit, use [certification]”) (citing Jona Goldschmidt,
American Judicature Society, Certification of Questions of Law: Federalism in Practice 28 (1995)).

                                                10
State of Fla. ex rel. Shevin v. Exxon Corp., 

, 274–75 (5th Cir. 1976)

(citation and footnote omitted).3 After considering these factors, we think

certification is appropriate. Georgia law is unsettled on this narrow but important

question, and an authoritative statement from its own supreme court is much better

than a conjectural statement from this one.

                                  III. QUESTION CERTIFIED

       We respectfully certify the following question of law to the Georgia

Supreme Court:

       For an insurance contract providing coverage for “direct physical
       loss of or damage to” a building that allows the insurer the option
       of paying either “the cost of repairing the building” or “the loss of
       value,” if the insurer elects to the repair of the building, must it also
       compensate the insured for the diminution in value of the property
       resulting from stigma due to its having been physically damaged?

We do not intend our statement of the question to limit the inquiry of the Georgia

Supreme Court. See Colonial 

. To assist the Supreme Court,

we hereby order that the entire record in this case, together with the briefs of the

parties, be transmitted herewith.

       QUESTION CERTIFIED.

       3
         In Bonner v. City of Prichard, 

, 1209 (11th Cir. 1981) (en banc), we adopted
as binding precedent all of the decisions of the former Fifth Circuit handed down prior to October
1, 1981.

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