Court Opinion

ID: 4147350
Source: CourtListenerOpinion
Date Created: 2017-02-22 16:07:59.721087+00
Date Added: 2024-06-11T14:37:31.645732
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 16-0503
                            Filed February 22, 2017

BLUESCOPE BUILDINGS NORTH AMERICA, INC.,
    Petitioner-Appellant,

vs.

CINCINNATI INSURANCE COMPANY,
     Respondent-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Cass County, Timothy O’Grady,

Judge.

      BlueScope appeals an interest award on its judgment determining

coverage under an insurance contract, contending the district court should have

applied Minnesota law rather than Iowa law to set the statutory rate. AFFIRMED.

      Chester C. Woodburn III of Hansen, McClintock & Riley, Des Moines, for

appellant.

      Michael J. Frey of Hellige, Frey & Roe, R.L.L.P., Sioux City, for appellee.

      Considered by Vogel, P.J., and Tabor and Mullins, JJ.
                                           2

TABOR, Judge.

       This case involves litigation over insurance coverage under a commercial

general liability (CGL) policy issued to an Iowa company by Cincinnati Insurance

Company and the choice-of-law question as to which state’s statutory interest

rate should apply to the judgment entered by the Iowa district court against

Cincinnati under the insurance contract.

       Concept    Builders,   LTD—based        in   Atlantic,   Iowa—worked     as   a

subcontractor to erect a metal building at a large dairy farm in Minnesota. The

building collapsed under heavy snowfall in February 2011. The dairy’s insurer,

Travelers Indemnity Company, paid its insured $3.4 million for property loss and

business interruption. Thereafter, Travelers filed suit in Minnesota against the

building’s general contractor, BlueScope Buildings North America, Inc.1 and

subcontractor Concept. In turn, BlueScope asserted the building collapsed due

to Concept’s defective workmanship.

       The parties settled the Minnesota litigation, causally linking the collapse to

failures by both contractors. BlueScope paid Travelers $3.0 million. Concept

confessed judgment in favor of BlueScope for $1.0 million—representing the

consequential damages resulting from the building collapse, inclusive of all costs,

fees, and interest—and assigned Concept’s rights under its CGL policy with

Cincinnati to BlueScope.

1
  More precisely, Lester Buildings LLC contracted with the dairy to construct the metal
building, and Lester subcontracted with Concept. After construction was completed but
before litigation commenced, BlueScope purchased Lester. For simplicity, we will refer
to BlueScope as the general contractor.
                                           3

       Meanwhile, in May 2013, Cincinnati filed a declaratory judgment action in

Iowa. Cincinnati admitted issuing the CGL policy to Concept but asserted the

policy did not cover the claims against Concept in the Minnesota litigation. Once

the Minnesota litigation settled, BlueScope, as assignee, filed a counterclaim

against Cincinnati in the Iowa case.           BlueScope sought indemnity of the

judgment confessed by Concept, as well as interest and costs.

       Before the December 2015 hearing in Iowa district court, BlueScope and

Cincinnati agreed Iowa substantive law applied to the court’s interpretation of the

CGL insurance policy. On January 27, 2016, the district court concluded, under

Iowa law, the building’s collapse constituted an “occurrence” and $440,540.34 of

claimed damages fell outside the policy’s “your work” exclusion.2 The district

court entered judgment for that amount and applied Iowa law to the calculation of

interest on the judgment.

       On appeal, BlueScope challenges only the application of Iowa’s rate of

statutory interest, asserting the court should have instead applied Minnesota’s

higher rate of statutory interest to the Iowa judgment. We review a declaratory

judgment action tried to the district court for errors at law. See Grinnell Mut.

Reins. Co. v. Voeltz, 431 N.W.2d 783, 785 (Iowa 1988).

       Assuming BlueScope properly pleaded and offered proof of the Minnesota

statute, we are not persuaded the district court erred in applying the Iowa

statutory rate of interest. BlueScope cites no authority in support of its position,

and we will not undertake a party’s research. See Hyler v. Garner, 548 N.W.2d
2
  Based on the “your work” exclusion, the court denied BlueScope’s claims for lost
revenue related to methane energy production, for handling costs, and for rebuilding the
structure. BlueScope does not challenge the denial of those claims in this appeal.
                                        4

864, 876 (Iowa 1996). Because Cincinnati brought suit in Iowa, we apply our

own choice-of-law rules.    See Hussemann ex rel. Ritter v. Hussemann, 847
N.W.2d 219, 222 (Iowa 2014).          Our supreme court has embraced the

Restatement (Second) Conflict of Laws section 187 (Am. Law Inst. 1971), which

permits the parties to agree on the law to be applied to a contract, unless either:

(1) the chosen state has no substantial relationship to the parties or transaction

or (2) the application of the law of the chosen state would override the public

policy of a state having a materially greater interest in the transaction.    See

Hussemann, 847 N.W.2d at 223. Neither exception applies here. Because the

parties agreed Iowa law governed the court’s interpretation of the CGL policy,

Iowa law also governs the interest on the Iowa judgment. See Johnson v. Cont’l

Airlines Corp., 964 F.2d 1059, 1063 (10th Cir. 1992) (rejecting “smorgasbord

approach” by party attempting to pick and choose between the laws of two states

to its own advantage).

      AFFIRMED.