Court Opinion

ID: 4250603
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:49:34.62406+00
Date Added: 2024-06-11T14:44:19.422128
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 17-0040
                            Filed December 6, 2017

JOANN STRUEBING, J & E ENTERPRISES, and
EL-WAYNE, INC.,
     Plaintiffs-Appellants,

vs.

ADDISON INSURANCE COMPANY,
     Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Marshall County, John J. Haney,

Judge.

      Joann Struebing, J & E Enterprises, and El-Wayne, Inc. appeal a district

court declaratory ruling. AFFIRMED.

      James C. Larew of Larew Law Office, Iowa City, for appellant.

      Stephen E. Doohen of Whitfield & Eddy, P.L.C., Des Moines, for appellee.

      Considered by Vogel, P.J., and Potterfield and Mullins, JJ.
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MULLINS, Judge.

       Joann Struebing, J & E Enterprises, and El-Wayne, Inc. (collectively

referred to as Struebing) sued Addison Insurance Company claiming property

damage by fire and subsequent property damage by rain constituted two

separate losses under an insurance policy and arguing Addison wrongly applied

the policy term “Actual Cash Value” (ACV) when it paid for the loss. Struebing

appeals contending the district court erred in (1) concluding the two purportedly

separate casualty losses constituted only one covered cause of loss under her

insurance policy and therefore denying her breach-of-contract claim and (2)

defining ACV to mean market value.

       Struebing was the owner of a multi-unit apartment complex.          Addison

issued a policy insuring the property against casualty loss; the policy limit on the

structure itself was just over $320,000, and the term of the relevant policy ran

from June 1, 2012, through June 1, 2013. On April 7, 2013, a fire occurred in the

upper level of the building.    In order to extinguish the fire, firefighters were

required to cut a hole in the roof. Eight of the apartment units in the complex, all

on the upper floor, and some of the common areas were damaged by the fire.

       Struebing filed a claim with Addison. Temporary repairs were made to the

roof, and a contractor recommended replacement of the entire roof. In late April,

Struebing contracted with a roofing company to have the roof replaced.

Addison’s adjuster directed Struebing to hold off on replacing the roof pending its

full assessment of the damage.
                                        3

      On May 25 and 26, the geographic area where the property was located

experienced “torrential rains.” The temporarily-repaired roof succumbed to the

rainfall and the entire building suffered water damage.

      Addison subsequently assessed the damage resulting from the April 7 fire

as a total loss. Addison had the property appraised, and an appraiser concluded

the property’s value just before the fire to be $254,000.00. On June 4, Addison

paid Struebing the entire appraisal amount.         Addison denied Struebing’s

subsequent attempts to receive a separate payout for damage caused by the

rainstorm, maintaining both occurrences amounted to a single covered cause of

loss under the insurance policy.

      On April 7, 2014, Struebing filed suit, alleging breach of contract and bad

faith on the part of Addison. Struebing filed an amended petition in November

2015 additionally seeking a declaratory judgment that the fire and rain damage

amounted to two separate covered causes of loss, thus entitling her to a second

payout under the policy. In its answer to the amended petition, Addison counter-

claimed for a declaratory judgment that only one covered loss existed and the

property’s market value should be used to value the loss.

      In March 2016, Struebing moved for partial summary judgment on the

issue of number of covered causes of loss. Shortly thereafter, Addison also

moved for partial summary judgment on the issues of valuation and number of

covered causes of loss. In April, Struebing moved for the appointment of an

appraisal umpire to serve on an appraisal panel for the purpose of valuation of

the loss or losses.     See Iowa Code § 515.109(6)(a) (2014) (requiring fire-

insurance contracts to contain a provision regarding appointment of appraisal
                                        4

panel and umpire). In June, the district court entered a declaratory ruling and

concluded, (1) based on “the policy language and applicable law, the rain

damage must be considered as part of the original fire occurrence” and (2) the

property’s market value should be used for purposes of valuation. The court also

appointed an appraisal umpire and granted Addison summary judgment on

Struebing’s bad-faith claim. Struebing applied for an interlocutory appeal of this

ruling, but the supreme court denied her application.

      In November, the appraisal panel, which consisted of the umpire and two

appraisers, submitted its appraisal to the court. The panel concluded, “The fair

market value of the premises which is the subject of this litigation immediately

prior to the fire occurring on April 7, 2013 is $302,616.” The parties subsequently

stipulated that Addison tendered the difference between the amount previously

paid for damage to the structure and the amount of the appraisal award.          In

December, based on this course of events, the district court issued a final order

dismissing Struebing’s breach-of-contract claim. As noted, Struebing appeals.

      Because Struebing challenges rulings made by way of a declaratory

judgment in an action at law, our review is for legal error. Van Sloun v. Agan

Bros., Inc., 778 N.W.2d 174, 178–79 (Iowa 2010). We also review the district

court’s interpretation of an insurance policy for legal error. Nat’l Sur. Corp. v.

Westlake Invs., LLC, 880 N.W.2d 724, 731 (Iowa 2016).            Determination of

Struebing’s argument on appeal turns on the language contained in the

insurance policy. See Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494,

501–02 (Iowa 2013).
                                          5

       First, Struebing argues she should receive payment for two separate

causes of loss—one for the damage caused by fire and another for damage

caused by rain—and the district court erred in concluding the two separate

occurrences constituted only one covered cause of loss under her policy. The

policy documents expressly provide Addison “will not pay for loss of or damage

to . . . [t]he interior of any building or structure . . . caused by or resulting from

rain . . . unless . . . [t]he building or structure first sustains damage by a Covered

Cause of Loss to its roof or walls through which the rain . . . enters.”         It is

undisputed that the April 7, 2013 fire was a covered cause of loss. The district

court concluded the policy

       provides that rain damage is only covered if the building or
       structure first sustains damage by a covered cause of loss. In this
       instance, the fire was a covered cause of loss and the subsequent
       rain damage would therefore be considered part of the first
       occurrence for purposes of coverage under the policy. The policy
       groups these together as one covered occurrence and allows the
       water damage from the rain to be included when calculating the
       amount of loss the insurance company should cover. . . . Based
       upon the facts presented, the policy language and applicable law,
       the rain damage must be considered as part of the original fire
       occurrence.

Based upon our review of the plain and unambiguous language of the policy, we

agree with the district court that the successive fire and rain damage amounted

to component parts of one covered cause of loss and affirm on this issue without

further opinion pursuant to Iowa Court Rule 21.26(d).

       Next, Struebing contends the district court erred in defining ACV to mean

market value.    This argument, however, is based on Struebing’s premature

assumption that this court would rule in her favor on her first argument. She

generally concedes that defining ACV to mean market value under the policy is
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appropriate in “total loss” situations but argues the fire only amounted to a partial

loss and the subsequent rain damage is what made it a total loss. Due to our

conclusion that the fire and rain occurrences amount to a single covered cause of

loss under the policy, together with the fact that they amounted to a total loss, we

affirm the district court’s definition of the term ACV.1 Furthermore, Struebing

does not argue that there is no regular market for the property or that it is

impossible to determine its market value. The plain and unambiguous language

of the policy documents indicates, under such circumstances, the use of market

value is required.2

       Finding no legal error, we affirm the district court’s declaratory ruling in its

entirety.

       AFFIRMED.

1
  Struebing concedes that a market value definition makes sense if a property suffers a
total loss.
2
  The policy documents define ACV as follows:
         1.    In the event that there is a regular market for the property where
               the property can be bought and sold in the ordinary course of
               dealing, and it is possible to determine the property’s market
               value, then the market value of the property is its [ACV].
         2.    In the event that there is no regular market for the property where
               the property can be bought and sold in the ordinary course of
               dealing, or it is not possible to determine the property’s market
               value, then:
               [ACV] means the amount which it would cost to repair or replace
               covered property with material of like kind and quality, less
               allowance for physical deterioration and depreciation, including
               obsolescence.