*The HONORABLE HOWARD F. SACHS, United States District Judge for the

Western District of Missouri, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 00-2115

___________

Victor Ingrim; Nancy Ingrim, *

*

Plaintiffs - Appellants, *

* Appeal from the United States

v. * District Court for the

* Southern District of Iowa.

State Farm Fire & Casualty Company, *

*

Defendant - Appellee. *

___________

Submitted: January 10, 2001

Filed: May 3, 2001 

___________

Before LOKEN and BYE, Circuit Judges, and SACHS,* District Judge.

___________

LOKEN, Circuit Judge.

When fire destroyed the home of Victor and Nancy Ingrim in August 1997, they

filed a claim under their Homeowners Extra insurance policy with State Farm Fire and

Casualty Company. After investigating, State Farm denied the claim. The denial letter

asserted that the loss “was not accidental in nature” and cited policy conditions that

void the policy if the insured causes a loss to obtain insurance benefits or intentionally

conceals or misrepresents any material fact “relating to this insurance.” 
1The HONORABLE HAROLD D. VIETOR, United States Senior District Judge

for the Southern District of Iowa.

-2-

On August 2, 1999, the Ingrims filed this action. Count I alleged that State

Farm’s claim denial was a breach of the insurance contract “in willful and wanton

disregard” of their rights. Count II alleged bad faith denial of the policy claim. State

Farm moved for summary judgment, arguing both causes of action are time-barred

because the policy requires that any action “be started within one year after the date of

loss or damage.” In response to that motion, the Ingrims moved for leave to amend

their complaint. The proposed amended complaint pleaded six bad faith causes of

action. The district court1 denied the Ingrims’ motion for leave to amend as futile,

concluding that all six counts in the proposed amended complaint would be barred by

the one-year limitations provision in the policy. The court then granted State Farm

summary judgment dismissing the original complaint. The Ingrims appeal only the

denial of their motion for leave to amend. We affirm.

Although leave to amend a complaint “should be freely granted,” it may be

denied if the proposed amended pleading would be futile. Wald v. Southwestern Bell

Corp. Customcare Med. Plan, 83 F.3d 1002, 1005 (8th Cir. 1996); see Foman v. Davis,

371 U.S. 178, 182 (1962); FED. R. CIV. P. 15(a). The one-year limitations provision

in State Farm’s policy incorporates a provision of the Iowa statutory standard fire

insurance policy. See IOWA CODE ANN. § 515.138, Sixth, Second Page of Standard

Fire Policy (West 1998). Such a provision is enforceable and bars all actions “on the

policy.” Stahl v. Preston Mut. Ins. Ass’n, 517 N.W.2d 201, 202 (Iowa 1994). The

issue in this case is whether the six bad faith causes of action asserted in the Ingrims’

proposed amended complaint are claims “on the policy” under Iowa law. If they are,

the district court correctly concluded that granting the Ingrims leave to amend would

have been futile. We review the district court’s determination of Iowa law de novo.

Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991).
-3-

In Stahl, as in this case, a homeowner’s insurer denied a claim under the policy

for alleged fire losses, and the insured sued for breach of the insurance contract and for

bad faith denial of the claim. The Iowa Supreme Court concluded that the cause of

action for bad faith denial of insurance benefits, though sounding in tort, was a claim

“on the policy.” Therefore, both the breach of contract and the bad faith causes of

action were barred by the policy’s one-year limitations provision. The court explained

that “not all [bad faith] claims are actions on the policy,” but “[b]y its plain terms the

[one-year] limitations clause is intended to cover an action for the policy proceeds.”

517 N.W.2d at 203. To avoid a policy limitations provision, plaintiff must allege

“conduct on the part of the insurer giving rise to an independent or collateral cause of

action.” Id. “Where denial of the claim in the first instance is the alleged bad faith and

the insured seeks policy benefits, the bad faith action is on the policy and the limitations

provision applies.” Id. at 204, quoting Velasquez v. Truck Ins. Exch., 5 Cal. Rptr. 2d

1, 5 (Cal. App. 1991). See generally Jang v. State Farm Fire & Cas. Co., 95 Cal. Rptr.

2d 917 (Cal. App. 2000).

In this case, the Ingrims’ initial cause of action for bad faith denial of their claim

under the State Farm policy was clearly time-barred under Stahl. In the proposed

amended complaint, the Ingrims attempted to avoid the bar by asserting six bad faith

causes of action labeled Inadequate Investigation, False Accusation, Exploitation of

Vulnerable Position, Wrongful Cancellation, Deception, and Oppressive Demands.

The district court concluded that these claims, too, are time-barred because they “do

nothing more than simply amplify and specify how State Farm allegedly acted in bad

faith when denying their claim.”

Without question, looking at the facts alleged confirms that each of the six bad

faith causes of action arose out of State Farm’s handling of the Ingrims’ claim under

the policy. Count I alleges bad faith in inadequately investigating the claim. Count II

alleges that State Farm’s letter denying the claim falsely accused the Ingrims of

intentionally setting fire to their home. Count III alleges that in investigating and
-4-

denying the claim State Farm in bad faith exploited the Ingrims’ vulnerable emotional

and financial position. Count IV alleges bad faith retroactive cancellation of the policy

on the day State Farm denied the claim. Count V alleges bad faith deception by

sending an investigator to evaluate the Ingrims’ financial condition on the pretense of

investigating the origin of the fire. Count VI alleges that State Farm in bad faith

“imposed onerous and burdensome demands upon the [Ingrims] during its investigation

and handling of their claims.”

The Ingrims argue these bad faith causes of action are not claims “on the policy”

because the Ingrims are not seeking to recover the “policy proceeds,” that is, damages

for the fire loss allegedly covered by the policy. But that contention is factually

inaccurate. In the prayer for relief, each of the six counts in the proposed amended

complaint seeks to recover “reasonably foreseeable damages . . . such as mental pain

and suffering, loss of reputation, and other damages.” (Emphasis added.) This

language does not forego or exclude a claim for the policy proceeds. It is an exercise

in artful pleading, an attempt to avoid the rule in Stahl by emphasizing types of

damages sought in addition to the policy proceeds. But claims for additional damages

do not avoid the rule in Stahl, because the Iowa Supreme Court expressly held that a

bad faith claim that “seeks the policy benefits plus punitive damages for the alleged

wrongful denial” was time-barred by the policy limitations provision. 517 N.W.2d at

204; accord Jang, 95 Cal. Rptr. 2d at 926. Thus, the district court correctly concluded

that each of the six bad faith causes of action in the proposed amended complaint falls

within the express ambit of Stahl – a bad faith claim “where the denial of the [policy]

claim in the first instance is the alleged bad faith and the insured seeks policy benefits.”

As in Stahl, the Ingrims’ six new claims are merely “a disguised attempt to resolve a

dispute as to” State Farm’s liability under the policy. 517 N.W.2d at 204. 

If the proposed amended complaint had expressly disclaimed any intent to seek

damages based upon the denial of policy benefits, this appeal would raise different

issues, such as whether the policy limitations period still applies because the alleged
-5-

bad faith was based upon State Farm’s handling of the policy claim, and if not, whether

the independent tort of bad faith under Iowa law extends to insurer conduct not “on the

policy” absent allegations that would satisfy the elements of more traditional torts, such

as fraud, negligence, slander, or intentional infliction of emotional distress. To our

knowledge, these issues have not been explored in prior Iowa cases, and we leave them

for the future. All we decide is that, when a bad faith cause of action arises from an

insurer’s investigation and denial of a claim under the policy and seeks damages that

may fairly be construed to include policy benefits, that cause of action, like a suit for

breach of the insurance contract, is governed by a limitations provision in the policy.

The judgment of the district court is affirmed.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.