Opinion ID: 1308838
Heading Depth: 1
Heading Rank: 5

Heading: The Extrinsic Evidence Issue.

Text: The board attempts to use extrinsic evidence of events that took place in the insurance industry in Iowa in the 1970s to show an ambiguity. According to its argument, when sudden was added to the standard pollution exclusion, many parties in the insurance industry, including the Iowa Insurance Commissioner, did not believe that this term added a temporal element. While the general rule has been that the provision that is unambiguous in its terms may not be explained by extrinsic evidence, the board argues that we may nevertheless conclude that a facially unambiguous policy provision can become ambiguous because of extrinsic evidence bearing on the situation of the parties. See, e.g., Grinnell Mut. Reins. Co. v. Voeltz, 431 N.W.2d 783, 786 (Iowa 1988) (citing Wohlenhaus v. Pottawattamie Mut. Ins. Ass'n, 407 N.W.2d 572, 575-76 (Iowa 1987)). Under this theory, a court will not enforce a policy exclusion if it eliminates the dominant purpose of the transaction. Wohlenhaus, 407 N.W.2d at 576 (quoting Lepic v. Iowa Mut. Ins. Co., 402 N.W.2d 758, 761 (Iowa 1987)). We have said that: [A] party who adheres to the other party's standard terms does not assent to a term if the other party has reason to believe that the adhering party would not have accepted the agreement if he had known that the agreement contained the particular term. Such a belief or assumption may be shown by the prior negotiations or inferred from the circumstances. Grinnell Mut. Reins. Co., 431 N.W.2d at 786 (quoting C & J Fertilizer, Inc. v. Allied Mut. Ins. Co., 227 N.W.2d 169, 176 (Iowa 1975)). Here, there is no claim that Farmland and the Coop had any understanding about whether a temporal element was a part of the pollution exclusion. To hold that this was even a consideration in the purchase of the insurance policies would be pure speculation. We reject the board's argument that the court should have considered the industry understanding in 1970 in interpreting the sudden and accidental language of the policies. We have considered all remaining arguments and find them to be without merit. Accordingly, we affirm the judgment of the district court. AFFIRMED.