Toll Bros., Inc. v. Dryvit Systems, Incorporated Imperial Stucco, Incorporated Gill Levesque, D/B/A Imperial Stucco, LLC , 432 F.3d 564 ( 2005 )

NIEMEYER, Circuit Judge, dissenting.

Because the majority opinion is based on issues that are, in my view, irrelevant to the proper disposition of this case, I cannot join it. I agree with the judgment of the district court because Toll Brothers failed to submit sufficient evidence to create a genuine issue of material fact as to whether the synthetic stucco exterior insulation finish system (“EIFS”) manufactured by Dryvit Systems and installed by Imperial Stucco caused any actual injury or threatened to cause imminent damage to the seven houses involved in this case.

Toll Brothers commenced this action to recover from Dryvit and Imperial reimbursement of the approximately $500,000 that Toll Brothers incurred to reclad seven houses in its Newtown Chase development in Connecticut. Toll Brothers reclad the houses because of a fear of potential claims. It had already been sued for its use of EIFS in other developments, and it was facing the threat of a lawsuit by the Newtown Chase homeowners for misrepresenting the EIFS as real stucco. Even if there was a defect in the design or manufacture of the EIFS installed on the seven houses, the system had not failed, nor did it cause any actual damage to the houses, nor was damage imminent. Although Toll Brothers may have had sound business■ reasons for replacing the EIFS when it did, it was under no legal obligation to do so other than to fulfill its legal obligation not to misrepresent. When Toll Brothers replaced the EIFS, therefore, it acted as a legal volunteer vis-a-vis Dryvit and Imperial and therefore may not recover its costs in this action.

The majority devotes significant attention to whether Toll Brothers would be liable for its own alleged misrepresentations, reasoning that if it was not, it would then have a legitimate claim against Dryvit and Imperial. See ante at 568-69. This conclusion, however, does not follow; indeed, the validity of the homeowners’ misrepresentation claim is irrelevant to the issues before this court. The dispositive principle in this case is limited to the fact that the EIFS did not cause any damage to the seven houses so as to create liability for Dryvit and Imperial.

Although Toll Brothers originally claimed, and the majority accepted, that damage to the houses actually resulted, this is not supported by the evidence. See ante at 569 (accepting, in the summary judgment calculus, Toll Brothers’ affidavit that recladding “was undertaken in an effort to prevent further damage to the homes” (emphasis added)). Indeed, the summary judgment record contains no evidence that any homeowner actually sustained damage, or even that any homeowner would more likely than not sustain damage in the future — facts that Toll Brothers ultimately conceded. Moreover, before recladding the houses, Toll Brothers conducted no inspection of the originally installed cladding, and it did not report finding any defects in the EIFS material or installation when performing the recladding operation.

The majority seeks to overcome this fatal fact by suggesting that Dryvit does “not deny that Toll faced potential future liability, by warranty or otherwise, for damage caused to homes by Dryvit’s system.” Ante at 570 (emphasis added). This statement either mischaracterizes Dryvit’s position or misstates Connecticut law.

If the majority means that future damage was probable, then the majority misrepresents both Dryvit’s position and the evidence. Dryvit does not concede the probability of future damage. In its brief, it argues, “Fear of future problems that might or might not even occur is not actionable or actual injury, and is insufficient to withstand summary judgment.” Appellee’s Br. at 15 (emphasis added). Moreover, Dryvit represented to the court that only a small percentage of applications of its EIFS nationwide has failed and caused damage.

If, on the other hand, the majority is resting its position on the potential or mere possibility of future injury, Dryvit is still not liable. Recovery for potential or merely possible future damage is not permitted under Connecticut law. Conn. Gen. Stat. Ann. §§ 52-572m and 572n; Milford Power Co. v. Alstom Power Inc., 263 Conn. 616, 627, 822 A.2d 196, 202 (2003); Potter v. Chicago Pneumatic Tool Co., 241 Conn. 199, 214, 694 A.2d 1319, 1330 (1997); Bell-South Telecomms., Inc. v. W.R. Grace & Co., 77 F.3d 603 (2d Cir.1996).

This is not a case where the evidence shows that injury is imminent, inevitable, or even probable. While there is evidence in the record that the EIFS was negligently designed, there is no evidence that injury has resulted in or will result in every case, or even in most cases, where the EIFS has been applied. Indeed, the evidence is that EIFS has failed in only a small percentage of cases. Toll Brothers cannot claim that it acted reasonably in expending $500,000 to avoid this small possibility of damage when none has occurred over several years and no evidence exists to indicate that damage will occur. This is fatal to all claims asserted by Toll Brothers, because the necessary element of injury is missing. Any injury is merely speculative.

The decision of the district court to dismiss Toll Brothers’ claims against Dryvit and Imperial was correct, and I would affirm its judgment.