## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 09-3900

___________ Council Tower Association, *
* Plaintiff - Appellant, * * Appeal from the United States v. * District Court for the * Eastern District of Missouri. Axis Specialty Insurance Company; * Jim Vavak, *
* Defendants - Appellees. *

___________ Submitted: September 21, 2010 Filed: January 6, 2011

___________ Before WOLLMAN, LOKEN, and HANSEN, Circuit Judges.

___________ LOKEN, Circuit Judge.

Council Tower Association (“Council Tower”) commenced this action in Missouri state court against Axis Speci alty Insurance Company (“Axis”), a Connecticut insurer, and Jim Vavak, an independent claims adjuster and Missouri resident. Council Tower asse rts insurance coverage and related claims for losses incurred when a portion of the brick ven eer covering the east wall of Council Tower’s apartment building in St. Louis fell to th e ground. Axis removed the case, and1 The Honorable Catherine D. Perry, Chie f Judge of the United States District Court for the Eastern District of Missouri.
-2- Council Tower moved to remand. See28 U.S.C. § 1447(c). The district court 1 denied the motion to remand and dismissed C ouncil Tower’s claims against Vavak, concluding that those claims were without merit and had been fraudulently joined to destroy diversity jurisdiction. Ruling on cross motions for summary judgment by Axis and Council Tower, the court grante d summary judgment for Axis, concluding that Council Tower’s loss was not covere d under the all-risk policy’s additional coverage for losses resulting fro m “collapse of a building orany part of a building.” Council Tower appeals both rulings. We affirm.

I. The Claims Against Axis

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The east exterior wall of Council Towe r’s twenty-seven-story building was covered with a decorative brick veneer, twenty -six stories tall, att ached to the concrete wall by steel shelf angles and anchor bolts . In October 2005, during the policy’s oneyear coverage period, every brick below th e eighth story of the east wall fell to the ground along with several of the supporting st eel shelf angles. Council Tower filed a timely claim under the policy for reimbursement of its loss.

The Axis Commercial Property polic y insured Council Tower’s building against all “RISKS OF DIRECT PHYSIC AL LOSS” except losses specifically excluded or limited. Excluded losses included wear and tear; decay, deterioration, and latent defect; settling, cracking, or expansion; faulty or defective design, construction, or maintenance; and “Collapse, except as provided below in th e Additional Coverage for Collapse.” As relevant here, the Additional Coverage for Collapse provided:

1. We will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or a ny part of a building insured under2Council Tower argues in the alternative that Axis faile d to prove that a specific policy exclusion applies to this loss, even if the east-wall failure was not a collapse. After careful review of Council Tower’s summary judgment pleadings, we agree with the district court that Council Tower’s clai m of coverage in the district court was premised solely on the Additional Coverage for Collapse. “[I]t is axiomatic that
-3- this Coverage Form, if the collapse is caused by one or more of the following . . . b. Hidden decay . . . . 4. Collapse does not include settling, cracking, shrinkage, bulging or expansion.

After an investigation by independent insurance adjuster Vavak, Axis denied the claim on the ground that the loss was caused by in adequate design or construction and therefore excluded. When an expert reporte d that a loss of lateral stability had caused the bricks to “collapse somewhat vertica lly,” Council Tower commenced this lawsuit for breach of contract and vexatious refusal to pay its claim.

After substantial discovery, the parties filed cross-motions for summary judgment. Axis argued that the loss was excluded by the wear-and-tear and faultydesign-or-construction exclusions. Counc il Tower argued that the east-wall failure was a collapse of a part of the building caused by hidden decay of the anchor bolts; therefore, the loss was covered under the Additional Coverage for Collapse. Axis countered that the east-wall failure was not a covered collaps e under Missouri law. The district court in a thorough opinion noted that collapse “is the only theory of recovery advanced by Council To wer” and concluded that th is coverage theory failed because “there was no collapse under Miss ouri law.” Council To wer Ass’n v. Axis Spec. Ins. Co. , No. 4:08-cv-1605, 2009 WL 3806994, at *4 (E.D. Mo. Nov. 12, 2009). The court granted Axis summary judgment and dismissed all claims. On appeal, Council Tower argues the court erred in concluding that the east wall’s brick-veneer failure was not a collapse of a part of the building within the meaning of the Additional Coverage for Collapse. 2issues not presented to the trial court w ill not be considered on appeal.” Am. Gen. Fin. Corp. v. Parkway Bank & Trust Co. , 520 F.2d 607, 608 (8th Cir. 1975).
-4- 1. In this diversity case, we must apply Missouri law as declared by the State’s highest court, the Supreme Court of Missouri. Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78 (1938); Cincinnati Ins. Co. v. Bluewood, Inc. , 560 F.3d 798, 801 (8th Cir. 2009). Under Missouri law, it is well-settled that the interpretation of an insurance policy is a question of law. S eeck v. Geico Gen. Ins. Co. , 212 S.W.3d 129, 132 (Mo. banc 2007). If the policy is unambiguous, it will be enforced as written. Bluewood , 560 F.3d at 802.

Among state courts, two competing interp retations of the term “collapse” have emerged. Many state courts limit the word“collapse” to its plain meaning, usually quoting or adopting a dictionary definition su ch as, “[t]o fall into a confused mass or into a flattened form by loss of rigidity or support; to break down, give way, fall in, cave in.” Eaglestein v. Pac. Nat’l Fire Ins. Co. , 377 S.W.2d 540, 545 (Mo. App. 1964), quoting The Oxford English Dictionary . The Missouri Court of Appeals has consistently followed this line of authority, holding that “collapse” is an unambiguous term in a property insurance policy, plai nly meaning “a falling or reduction to a flattened form or rubble.” Williams v. State Farm Fire & Cas. Co. , 514 S.W.2d 856, 859 (Mo. App. 1974), quoting Eaglestein , 377 S.W.2d at 545; accordHeintz v. U.S. Fid. & Guar. Co. , 730 S.W.2d 268, 269 (Mo. App. 19 87). However, other state courts have adopted a broa der definition, concluding that the term “collapse” is ambiguous in this context and holding that there need not be rubble on the ground for a loss to trigger coverage. This test ex amines “whether there was a substantial impairment of the structural integrity” of a building or part of a building. Monroe Guar. Ins. Co. v. Magwerks Corp. , 829 N.E.2d 968, 973 (Ind. 2005).

The Supreme Court of Missouri has not addressed this issue. Though only that Court’s decisions are controlling in a dive rsity case, we may not disregard decisions-5- of the Missouri Court of Appeals unless we are “convinced by other persuasive data that the highest court of the state would d ecide otherwise.” West v. Am. Tel. & Tel. Co. , 311 U.S. 223, 237 (1940). Here, both parties treated the Missouri Court of Appeals decisions as controlling in their cr oss-motions for summary judgment, as did the district court. We will do likewise. Applying this legal sta ndard, we review the district court’s denial of coverage and grant of summary judgment de novo

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2. The narrow issue before us is whether, under Missouri law, the falling of seven stories of a twenty-six-story exteriorbrick veneer was a “c ollapse of a building or any part of a building.” Without questi on, after the fall, there was some rubble on the ground, but the entire building was not “r educ[ed] to a flattened form.” Williams , 514 S.W.2d at 859. The question, then, is whether part of the building collapsed. It is clear that, under Missouri law, not every de bris-producing event is a collapse of part of a building. Eaglestein , 377 S.W.2d at 544, quoting Gagev. Union Mut. Fire Ins. Co. , 169 A.2d 29, 30 (Vt. 1961).

As the district court noted, this questi on was directly addressed by the Missouri Court of Appeals in Williams :
The language [in the policy] “or any part thereof” obviously refers to “collapse” of a part of a building, not “partial collapse” of a part or the whole of a building. The falling orreduction to a flattened form or rubble of an attached garage, s upporting foundation wall or roof would appear to be but a few examples of co llapse of a part of a building. . . . “Where the claim pertains to a collaps e of a part of a building, there must be a collapse of that part. A partia l collapse of a part is entirely outside the contemplation of the partie s to the insurance contract.”

514 S.W.2d at 859-60, quoting in part Gage , 169 A.2d at 31. Relying on this passage, which was cited favorably in Heintz , 730 S.W.2d at 269, the di strict court concluded-6- that “the collapse of the lower seven storie s of the brick veneer was not a collapse of a part of a building.” Though the issue is not free from doubt, we agree.

The issue is particularly doubtful becau se none of the three Missouri Court of Appeals decisions construing the term “c ollapse” involved losses from events that produced a significant quantity of rubble. C ouncil Tower argues that the pile of bricks on the ground is enough to prove a covered “c ollapse.” But the above-quoted passage in Williams makes clear, as the district court held, that fallen bricks alone do not establish that “part of the building” collapsed . Here, we agree withthe district court that the entire twenty-six-story brick ven eer covering the east wall, which served a decorative but not a structural purpose, c onstituted a part of the building. See Ass’n of Unit Owners of Nestani v. State Farm Fire & Cas. Co. , 670 F. Supp. 2d 1156, 1164 (D. Or. 2009) (“part” of a building is an “integral element” that is “essential to completeness”).

Whether the fall of seven stories of bric ks constituted a collapse of this twentysix-story decorative part of the building ma y be debatable, but the district court’s conclusion is consistent with the few factually similar cases from other jurisdictions. See Nw. Mut. Ins. Co. v. Bankers Union Life Ins. Co. , 485 P.2d 908, 909-10 (Colo. App. 1971) (no collapse of a part occurre d when seven veneer panels fell from the building’s exterior walls because there was no “structural change and loss of form”); Baker v. Whitley , 361 S.E.2d 766, 767 (N.C. App. 1987) (no collapse of a part of a building when a built-in kitchen cabinetbecame unhinged from the wall); Middlesex Mut. Assurance Co. v. Puer ta De La Esperanza, LLC , --- F. Supp. 2d ---, 2010 WL 2639859, at *3 (D. Mass. June 29, 2010) (collapse of a part is “the falling down or caving in of a structural component”); Gage , 169 A.2d at 30 (shingles blown from a roof are not a collapse of a part of a bu ilding). Council Tower does not argue this is a fact issue not suitable for summary judgment. Indeed, as the facts relevant to this question are undisputed, if the district c ourt had found no collapse of a part of the building after a bench trial, we would uphol d that finding as not clearly erroneous.-7- 3. Because the Supreme Court of Mi ssouri has yet to construe the term “collapse,” and because a federa l court’s task in a diversity case is to predict whether that Court would apply the legal standard in Williams to the facts of this case, the district court prudently examined how th is case would be decided if the broader standard applied in other Stat es were adopted. The districtcourt noted that the falling of seven out of twenty-six stories of d ecorative brick veneer did not impair the structural integrity of the entire part, as cases applying the broader definition of “collapse” have required. See Kay v. United Pac. Ins. Co. , 902 F. Supp. 656, 659 (D. Md. 1995); Thornewell v. Ind. Lumbermens Mut. Ins. Co. , 147 N.W.2d 317, 320 (Wis. 1967) (“[T]he basic structure or substantial integrity of the part [must be] materially impaired so that it cannot perform its structural function . . . .”); Employers Mut. Cas. Co. of Des Moines, Iowa v. Nelson , 361 S.W.2d 704, 709 (Tex. 1962) (defining “partial collapse” of walls as “materially to impair their function”). Therefore, the court concluded, even if the Supreme Court of Missouri adopted the broader definition, “there would beno collapse here.” Council Tower , 2009 WL 3806994, at *6. We agree.

For these reasons, we affirm the distri ct court’s conclusion that the falling of less than one-third of Council Tower’s deco rative brick veneer was not a collapse of a part of the building within the meani ng of the Additional Coverage for Collapse.

II. The Claims Against Vavak

Council Tower’s complaint alleged that independent insurance adjuster Jim Vavak is liable to Council To wer for the torts of injuri ous falsehood and interference with the insurance contract. The district court concluded that the joinder of Vavak was fraudulent, denied Council Tower’s mo tion to remand the entire case to state court, and granted Vavak’s motion to dismiss the claims against him for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). On appeal, Council Tower argues that the district court erred because its claims ag ainst Vavak have a “reasonable basis in law-8- and fact.” That is the standard for deci ding the issue of fraudulent joinder when ruling on a timely motion to remand. Menz v. New Holland N. Am., Inc. , 440 F.3d 1002, 1004 (8th Cir. 2006). Council Tower’s apparent assumption is that if this contention succeeds, we will remand its claims against Axis to state court.

The assumption is wrong. After denying the motion to remand, the district court dismissed all claims against Vavak. The claims between two diverse parties, Council Tower and Axis, then proceeded to final resolution on the merits. In Caterpillar Inc. v. Lewis , 519 U.S. 61, 64 (1996), the Supreme Court held “that a district court’s error in failing to remand a case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered.” The holding in Caterpillarapplies to the adjudication of Council Tower’s claims against Axis in this case. See Simpson v. Thomure , 484 F.3d 1081, 1084 (8th Cir. 2007). Therefore, as to the claims against Vavak, only the dismissal ruling is now properly before us. If that ruling is reversed, remand to state court will automatically follow because C ouncil Tower and Vavak, the only remaining defendant, are citizens of the same state. Id. We review the district court’s dismissal for failure to state a claim de novo , applying federal pleadi ng standards and Missouri substantive law. Carton v. Ge n. Motors Acceptance Corp. , 611 F.3d 451, 454 (8th Cir. 2010).

Injurious Falsehood . Council Tower’s complaint alleged that, in his initial preliminary report to Axis, Vavak fals ely attributed the east-wall failure to deterioration of mortar between the bricks, which turned out to be wrong. The district court dismissed this claim because “Vavak’s preliminary opinion played no role in the denial of coverage, and it cannot be the basis for a claim against him.” Council Tower Ass’n v. Axis Spec. Ins. Co. , 2008 WL 5423442 at *3 (E.D. Mo . Dec. 29, 2008). We agree. Vavak’s preliminary report to his client, Axis, merely stated, “My initial investigation and inspection of the debris w ould indicate that the deterioration of the mortar is the cause of the lo ss. We have hired SEA [an engineering firm] for further-9- cause of loss analysis.” See Stein v. Novus Equities Co. , 284 S.W.3d 597, 603-04 (Mo. App. 2009).

Tortious Interference . Council Tower’s complain t alleged that Vavak was guilty of tortious interference with contr act because his preliminary report to Axis included the mortar-deterioration theory “without justification.” This allegation was a bare recitation of an element of a to rtious interference claim under Missouri law. Stehno v. Sprint Spectrum, L.P. , 186 S.W.3d 247, 250 (Mo. banc 2006). The district court dismissed the claim because Council To wer “cannot show lack of justification for any of the statements” in this report b ecause “Vavak’s job was to investigate and report to Axis on the cause of loss.” Council Tower , 2008 WL 5423442 at *4. Again, we agree. SeeStehno , 186 S.W.3d at 252-53; Schott v. Beussink , 950 S.W.2d 621, 628-29 (Mo. App. 1997) .

The judgment of the district court is affirmed.

WOLLMAN, Circuit Judge, concurring and dissenting.

While I agree that the district court co rrectly dismissed the claims against Jim Vavak, I do not believe that a Missouri court would define “collapse of a . . . part of a building” as narrowly as does the majority . Because I conclude that the destruction of the veneer was more than a “partial collapse” of a part of a building, but rather was a complete collapse of a part, I respectfully dissent.

In the majority’s view, “the entire twen ty-six-story brick veneer covering the east wall, which served a decorative but not structural purpose, constituted a part of the building.” The majority, like the districtcourt, seems to view the collapse of the seven stories as merely a partial collapse of a part of a building. As I see it, even though less than the en tire twenty-six-story veneer fell from the Council Tower3 The record indicates that the veneer wa ll was built in vertical sections, each no more than a few stories tall. Each brick section sits on a steel shelf, which is attached to the load-bearing concretewall by anchor bolts. Each shelf (and its accompanying anchor bolts) can support only a limited number of bricks, so designers (and construction workers) must leave space between the top of one section and the bottom of the next-highest section to prevent the weight of the higher sections from overloading the lower shelves. Because th e twenty-six-story veneer wall is most accurately characterized as multiple sections of veneer wall, I consider each of those sections to be a “part” of the building.

4 Like the majority, I find our task comp licated by the fact that the Supreme Court of Missouri has never said what constitutes a “collapse” under Missouri law. I therefore follow the majority’s lead in treating the decisions of the Missouri Court of Appeals as controlling.
-10- building, those sections that did fall c onstitute—by themselves—a “part” of the building. 3 Furthermore, those sections “collapsed.” See Eaglestein v. Pacific Nat’l Fire Ins. Co. , 377 S.W.2d 540, 545 (Mo. Ct. App. 1964) (concluding that “collapse” should be given its plain, ordinary meaning: “To fall into a confused mass or into a flattened form by loss of rigidity or support; to break down, give way, fall in, cave in”).

Missouri courts have drawn a distincti on between a “collapse of a part” of a building and a “partial collapse of a part” of a building. See Williams v. State Farm Fire & Cas. Co. , 514 S.W.2d 856, 860 (Mo. Ct. App. 1974) (“Where the claim pertains to a collapse of a partof a building, there must be a collapse of that part. A partial collapse of a part is entirely outside the contemplation of the parties to the insurance contract.”). 4

In Williams , the Missouri Court of Appeals reaffirmed that “collapse” has an unambiguous meaning in Missouri law: “a falling or reduction to a flattened form or rubble.” 514 S.W.2d at 859. It therefore rejected an insured’s claim for damage to-11- foundation walls under a policy covering “Collapse (not settling, cracking, shrinkage, bulging or expansion).” Id. at 857. The damage consisted of “a vertical crack, approximately two inches wide, . . . a no ticeable convex bulge,” a number of other smaller cracks and hairline cracks, another “less noticeable convex bulge,” and “minor damage, consisting of some jammed doors a nd a few hairline cracks in the sheetrock . . . .” Other than that, “the dwe lling house proper and all supporting structures remained in place and intact. None of the basement walls, or any part thereof , were ever reduced to ‘rubble’ or fell down.” Id. at 857-58 (emphasis added). On these facts, the court concluded that a collapse had not occurred. It did, however, give three examples of what it might consider to be a collapse of a part of a building: “The falling or reduction to a flattened form or rubble of an attach ed garage, supporting foundation wall or roof would appear to be but a few examples of collapse of a part of a building.” Id. at 860.

Nothing in Williams suggests that an entire wall must collapse for a collapse to have occurred. Rather, Williams merely requires that a part of the building actually fall or be reduced to rubble, rather than partiallyfall, i.e. , crack or bulge. The deficiency in that plaintiff’s case was thatno part of the basement walls were reduced to rubble—they had merely cracked and bulged.

Similarly, in Heintz v. U.S. Fidelity and Guaranty Co. , the Missouri Court of Appeals rejected an insured’s claim under a policy covering “collapse of a building or any part of a building.” 730 S.W.2d 268, 268 (Mo. Ct. App. 1987). Although the insured—as part of his petition for relief—a sserted the legal conclusion that his walls had collapsed, the court concluded that his deposition testimony regarding the state of the walls was insufficient to show a co llapse. Specifically, the court noted, the insured “qualified his conclusion that the walls were collapsing, by stating that there was a rotting, deterioration or wasting aw ay of the studding, sheathing and lath and that while the walls had not collapsed , they probably would.” Id. at 269 (emphasis5 Under my reading of the Missouri case law, recovery would be permitted only for those shelves that actually collapsed. The higher shelves, which likely have been weakened but have not yet collapsed, are s till in a state of “partial collapse,” and so would not be covered.
-12- added). As the district court understood th is case, “where the insured testified that ‘some of the studding, sheathing and lath in the east and west walls of his home had collapsed,’ there was no ‘falling down or co llapsing of a part of a building’ under Missouri law.” D. Ct. Mem. & Order of Nov. 12, 2009, at 12. But the court in Heintz did not find that some of the studding, sheathi ng, or lath in the walls had fallen to the ground, i.e. , “collapsed”—it found the opposite. Its conclusion was instead that a “condition of impending collapse is insuffi cient.” 730 S.W.2d at 269. That is, “[w]ithout actual collapse there is no recovery under the insurance pol icy . . . .” Id.

These decisions reveal the difference between the words “part” and “partial” in the Missouri case law of collaps e. “Part” is used to refer to a discrete subset of the entire physical building—a garage, a wall, ora roof. “Partial,” however, is used to refer to a state-of-being—that is, be ing in the state of partial collapse.

The collapse of the seven stories of veneer in this case was just that—a complete collapse. To be sure, only a porti on, or part, of the ve neer collapsed. But seven stories of veneer is still a “part of a building”—it must be, otherwise twenty-five stories (of twenty-six) would not be. And the collapse of those seven stories was not partial—not cracking or settling or shrinking— but total, complete. The bricks and mortar and anchor bolts and shelves from those seven stories were piled in a heap on the ground below. Accordingly, summary j udgment should not have been granted to Axis on the basis that only a partial collapse had occurred. 56 The majority hypothesizes that “even if the Supreme Court of Missouri adopted the broader,” more modern de finition of collapse—as a substantial impairment of the structural integrity of the part such that it can no longer perform its function—“there would be no co llapse here.” I am not so sure. Certainly the lower seven stories of veneer have been impairedto the point that they no longer perform their decorative function. In any event, none of the Missouri Court of Appeals cases indicate a departure from the traditional view of collapse as a reduction to flattened form or rubble.
-13- As the district court is in a better pos ition than we to consider the remaining arguments for summary judgment on the issu e of coverage, I would remand the case for resolution of those issues. 6

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