Court Opinion

ID: 4249523
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:19:14.461357+00
Date Added: 2024-06-11T13:56:36.557209
License: Public Domain

IN THE SUPREME COURT OF IOWA
                                No. 11–0570

                            Filed February 1, 2013

DALE BOELMAN and NANCY BOELMAN,

      Appellees,

vs.

GRINNELL MUTUAL REINSURANCE COMPANY,

      Appellant.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Butler County, Stephen P.

Carroll, Judge.

      An insurance company seeks further review of a court of appeals

opinion affirming the district court decision in favor of the insureds.

COURT    OF       APPEALS    DECISION    VACATED;     DISTRICT    COURT

JUDGMENT           REVERSED       AND      CASE      REMANDED       WITH

INSTRUCTIONS.

      Douglas A. Haag of Patterson Law Firm, L.L.P., Des Moines, for

appellant.

      Bruce J. Toenjes of Nelson & Toenjes, Shell Rock, for appellees.

      Eldon L. McAfee and Erin C. Herbold of Beving, Swanson &

Forrest, P.C., Des Moines, for amicus curiae Iowa Pork Producers

Association.
                                    2

WIGGINS, Justice.

      This appeal involves the question of whether an insurance policy

provides coverage to a custom farming operation.        Both parties filed

motions for summary judgment.           The district court overruled the

insurance company’s motion for summary judgment. The district court

granted the insureds’ motion for summary judgment and entered

judgment for the insureds based on the reasonable expectations

doctrine. The court of appeals affirmed the district court’s judgment on

alternative grounds, concluding the insurance policy was ambiguous and

construing the ambiguity in favor of the insureds to find coverage. On

further review, we conclude the policy is not ambiguous, and as a matter

of law, the policy does not provide coverage. Additionally, we find there

is no genuine issue of material fact as to the application of the

reasonable expectations doctrine, and as a matter of law, the doctrine

does not apply. Therefore, we vacate the decision of the court of appeals,

reverse the judgment of the district court, and remand the case to the

district court with instructions to enter judgment in favor of the

insurance company on its motion for summary judgment.

      I. Background Facts and Proceedings.

      The facts giving rise to this action are not in dispute. Dale and

Nancy Boelman are farmers in Butler County. Their farming operation

involves contract-feeding nursery hogs for others until the hogs are

fattened and ready for market.      Under one such arrangement, the

Boelmans agreed to raise hogs owned by Budke Farms. A contractor,

Schneider’s Milling, Inc., organized the arrangement.    A “Sew Nursery

Agreement” defined the Boelman’s obligations.

      Pursuant to that agreement, the Boelmans fed, cared for, and

managed the hogs supplied to them. They also were required to furnish
                                     3

all insurance on the building and hogs, specifically for suffocation of the

animals.       Meanwhile, Schneider’s Milling provided the feeder hogs,

oversaw the farm’s management, paid for feed and medications, and

compensated Dale for his efforts at $81,600 per year.

      On October 4, 2008, the Boelmans had approximately 1254

nursery hogs on their farm. Of those, 535 hogs suffocated to death in

the Boelmans’ building. The deaths occurred when Dale was cleaning

out the manure basins.       It is undisputed that the hogs were in the

exclusive care, custody, or control of the Boelmans at that time.      The

Boelmans were required to exercise such control over the hogs pursuant

to the “Sew Nursery Agreement.”

      A. The Farm-Guard Policy. Approximately two years prior to the

hog loss, on or about August 1, 2006, the Boelmans purchased a Farm-

Guard policy from the First Maxfield Mutual Insurance Association (First

Maxfield).     Grinnell Mutual Reinsurance Company (Grinnell Mutual)

reinsured the policy. Dale and Nancy Boelman are the named insureds.

It is undisputed that the policy was in effect when the hog casualties

occurred in October 2008.

      Subsequent to the hog loss, the Boelmans filed a claim with

Grinnell Mutual to recover under their Farm-Guard policy.         Grinnell

Mutual denied the claim.          The Boelmans borrowed funds and

compensated Budke Farms for the casualty expenses totaling $24,075.

The Boelmans then sued First Maxfield and Grinnell Mutual for breach

of contract.

      The Farm-Guard policy provides protection for property damage. It

does so through five different types of coverage. This appeal concerns

the Boelmans’ liability to the public for property damage under Coverage

A and liability for damage to other’s property pursuant to Coverage A-1.
                                       4

      Both Coverage A and A-1 adopt the same definition of property

damage. The definition of property damage used throughout the policy is

as follows:

      15. “Property damage” means the physical injury to or
      destruction of tangible property. “Property damage” does not
      include loss of use unless the property has been physically
      injured or destroyed.

      Under Coverage A, which protects the insured against liability to

the public, the insurance company will pay up to the policy limits for

“any one loss which any ‘insured person’ becomes legally obligated to pay
as damages because of . . . ‘property damage’ covered by this policy.”

Grinnell Mutual covers $100,000 per loss occurrence, with a $200,000

annual aggregate.       The policy, however, precludes recovery under

Coverage A in the following circumstance:

      5. “We” do not cover “property damage” to property rented
      to, leased to, occupied by, used by, or in the care, custody or
      control of any “insured person” or any persons living in the
      household of an “insured person” . . . .

(Emphasis added.)

      Coverage A-1 protects the insured from “any one loss for ‘property

damage’ to property owned by others in the care of any ‘insured

person.’ ” Grinnell Mutual compensates the insured for a loss at $1000

per occurrence. However, the following exclusion specifically applies to

Coverage A-1:

      2. “We” will not pay for “property damage” arising out of
      “custom farming.”

(Emphasis added.) The policy defines custom farming as: “any activity

arising out of or connected with . . . [the] care or raising of ‘livestock’ . . .

by any ‘insured person’ for any other person or organization in
                                   5

accordance with a written or oral agreement.” The policy states livestock

includes hogs.

      In addition to these coverage-specific exclusions, the Farm-Guard

policy also includes general exclusions that are applicable “UNDER ANY

OF THE COVERAGES.” Among those are two relevant provisions: one

excluding recovery for property damage arising from the care, custody, or

control of another’s property and one for custom farming. The provisions

are as follows:

      5. “We” do not cover “bodily injury” or “property damage”
      arising out of any premises:

      ....

      d. in the care, custody or control of any “insured person”;
      which is not an “insured premises”. . . .

      6. “We” do not cover “bodily injury” or “property damage”
      arising out of:

      a. “custom farming” operations of any “insured person” if the
      “total gross receipts” from all “custom farming” exceed $2000
      in the twelve months of the prior calendar year. . . .

(Emphasis added.)

      B. Custom Feeding Endorsement.          The parties modified the

basic Farm-Guard policy through several endorsements.       Pertinent to

this dispute is the Custom Feeding Endorsement. It is clear the parties

intended and understood the endorsement changed the coverage under

the policy. The endorsement’s caption states in bold and capital letters,

surrounded by a box border: “PLEASE READ THIS ENDORSEMENT

CAREFULLY, AS IT MODIFIES THE POLICY.”

      The endorsement operates to modify the general exclusion under

section 6(a) regarding custom farming. The endorsement provides:
                                        6
      EXCLUSIONS

      UNDER ANY OF THE COVERAGES

      ....

      In consideration of the premium charged, exclusion 6.a.
      under this section of the policy does not apply if:

      1) the “bodily injury” or “property damage” arises from the
      activities of care or raising of “livestock” or “poultry” by any
      “insured person” for any other person or organization in
      accordance with a written or oral agreement; and

      2) your “total gross receipts” for the prior calendar year from
      the activities described in paragraph 1) do not exceed the
      amount of gross receipts as stated on “your” declaration
      page or are:

             (Please check box that applies)

             ☒ not more than $150,000

(Emphasis added.)

      C. Proceedings.        Following denial of their claim, the Boelmans

filed their petition for breach of contract against First Maxfield under the

Farm-Guard policy.      The Boelmans amended their petition to include

Grinnell Mutual as a defendant. In their petition, the Boelmans sought

damages in the amount of $24,075 plus actual interest at 7.5% and

litigation costs.
      Grinnell      Mutual   answered       and   counterclaimed,   seeking   a

declaratory judgment that the Farm-Guard policy does not cover the

Boelmans’ claim. Specifically, Grinnell Mutual alleged Coverage A, which

protects against liabilities to the public, does not apply because the

property damage occurred while the hogs were in the Boelmans’ care,

custody, or control. Grinnell Mutual refers to the specific care, custody,

or control exclusion under Coverage A. Second, they denied the claim

pursuant to Coverage A-1 (damage to property of others), citing

Exclusion 2 pertaining to custom farming.
                                       7

      The Boelmans subsequently dismissed their claim against First

Maxfield without prejudice.      Both Grinnell Mutual and the Boelmans

then filed cross motions for summary judgment.             Grinnell Mutual

asserted there was no genuine issue as to any material fact and that as a

matter of law, the hog loss was not covered under the policy.             The

Boelmans countered that the endorsement insured the loss.

      The district court granted the Boelmans’ motion for summary

judgment.       The district court employed the reasonable expectations

doctrine to conclude the Boelmans reasonably expected the endorsement

to protect all activities in their custom farming operation, not just those

specifically arising under the custom farming exception in general

exclusion 6(a). Accordingly, the district court held the Boelmans could

recover, despite the care, custody, or control exclusion. Moreover, the

district court held denying coverage would thwart the insurance

transaction’s    purpose   of   protecting   custom   farming   through   the

endorsement.

      Grinnell Mutual appealed.        The court of appeals affirmed the

district court ruling.     The court of appeals found the policy was

ambiguous based on the two interpretations proffered by the parties and

did not conduct an analysis under the reasonable expectations doctrine.

The court of appeals construed the ambiguity in favor of the Boelmans.

      Grinnell Mutual subsequently sought further review, which we

granted.

      Other facts relevant to our analysis are included below.

      II. Issues.

      The first issue raised on appeal requires us to decide if there is a

genuine issue of material fact as to whether the Farm-Guard policy with

the Custom Feeding Endorsement, as written, covers the Boelmans’ loss.
                                           8

If not, we then must decide whether a genuine issue of material fact

exists under the reasonable expectations doctrine.

         III. Standard of Review.

         We use the errors at law standard when our decision rests upon

the interpretation of an insurance policy. Jones v. State Farm Mut. Auto.

Ins. Co., 760 N.W.2d 186, 188 (Iowa 2008).               Additionally, we review a

district court’s grant of summary judgment for correction of errors at

law. 1    Iowa R. App. P. 6.907; Nationwide Mut. Ins. Co. v. Kelly, 687
N.W.2d 272, 274 (Iowa 2004).                The district court properly grants

summary judgment when the moving party demonstrates there is no

genuine issue of material fact and that he or she is entitled to judgment

as a matter of law. Iowa R. Civ. P. 1.981(3); Kelly, 687 N.W.2d at 274.

We can resolve a matter on summary judgment if the record reveals a

conflict concerning only the legal consequences of undisputed facts.

Pecenka v. Fareway Stores, Inc., 672 N.W.2d 800, 802 (Iowa 2003).

         When reviewing the district court decision, we examine the record

in the light most favorable to the nonmoving party. Minor v. State, 819
N.W.2d 383, 393 (Iowa 2012). We afford the nonmoving party “ ‘every

legitimate inference that can be reasonably deduced from the evidence,

and if reasonable minds can differ on how the issue should be resolved, a

fact question is generated,’ ” and the district court should deny summary

judgment. Bank of the W. v. Kline, 782 N.W.2d 453, 456–57 (Iowa 2010)

         1GrinnellMutual sought declaratory judgment, which would normally indicate
that our standard of review depends upon whether the parties brought the case in
equity or at law in the district court. Ferguson v. Allied Mut. Ins. Co., 512 N.W.2d 296,
297 (Iowa 1994). However, “[t]hat distinction is inconsequential on this appeal because
the matter is before us on review of the district court’s entry of summary judgment” in
favor of the Boelmans. Id. Thus, we base our review on the propriety of the district
court’s summary judgment ruling, not the declaratory judgment. Id.
                                     9

(quoting Hills Bank & Trust Co. v. Converse, 772 N.W.2d 764, 771 (Iowa

2009)).

     IV. Legal Standards       for   Interpreting   and   Construing    an
Insurance Policy.

      Before scrutinizing the Farm-Guard policy, we must observe the

differences between interpretation and construction of an insurance

policy. Interpretation requires us to give meaning to contractual words

in the policy.   Connie’s Constr. Co. v. Fireman’s Fund Ins. Co., 227
N.W.2d 207, 210 (Iowa 1975). Policy interpretation is always an issue for

the court, unless we are required to rely upon extrinsic evidence or

choose between reasonable inferences from extrinsic evidence. Id. If the

policy does not define a term, we give the word its ordinary meaning.

Interstate Power Co. v. Ins. Co. of N. Am., 603 N.W.2d 751, 754 (Iowa

1999). The plain meaning of the insurance contract generally prevails.

Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678, 682 (Iowa 2008).

      Construction is the process of giving legal effect to a contract. Id.

at 681. This is always a matter of law for the court. Id. The cardinal

rule of construing insurance policies is that except in cases of ambiguity,

the intent of the parties must control, and the court determines the

intent of the parties by looking at what the policy itself says. Id. We

consider the parties’ intent at the time the policy was sold, not in

hindsight. Ferguson v. Allied Mut. Ins. Co., 512 N.W.2d 296, 299 (Iowa

1994). We will not strain the words or phrases of the policy in order to

find liability that the policy did not intend and the insured did not

purchase. Thomas, 749 N.W.2d at 682.

      Under an objective test, a policy is ambiguous if the language is

susceptible to two reasonable interpretations. Id. at 681. We read the

policy as a whole when determining whether the contract has two equally
                                    10

plausible interpretations, not seriatim by clauses. Id. at 681–82. This

stems from the concept that “ ‘[w]ords in an insurance policy are to be

applied to subjects that seem most properly related by context and

applicability.’ ” Jones, 760 N.W.2d at 188 (quoting Talen v. Emp’rs Mut.

Cas. Co., 703 N.W.2d 395, 402 (Iowa 2005)). Accordingly, reading the

contract as a whole requires us to consider all declarations, riders, or

endorsements attached. Ferguson, 512 N.W.2d at 299; see also 2 Steven

Plitt, Daniel Maldonado & Joshua D. Rogers, Couch on Insurance 3d

§ 21:21, at 21-88 to 21-91 (rev. ed. 2010) [hereafter Couch on Insurance

3d].

       The terms in the endorsement govern if the terms in the body of

the policy conflict with the endorsement. Bobich v. Oja, 104 N.W.2d 19,

24 (Minn. 1960); Couch on Insurance 3d § 21:22, at 21-101 to 21-102

(emphasizing the terms of the endorsement control over the original

policy).   We will not interpret an insurance policy to render any part

superfluous, unless doing so is reasonable and necessary to preserve the

structure and format of the provision.     Thomas, 749 N.W.2d at 685.

Moreover, we interpret the policy language from a reasonable rather than

a hypertechnical viewpoint. Steel Prods. Co. v. Millers Nat’l Ins. Co., 209
N.W.2d 32, 36 (Iowa 1973).

       If the policy is ambiguous, we adopt the construction most

favorable to the insured. Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775,

778 (Iowa 2000).      This same rule applies when an exclusion is

ambiguous, because “ ‘[a]n insurer assumes a duty to define any

limitations or exclusionary clauses in clear and explicit terms.’ ”

Thomas, 749 N.W.2d at 682 (quoting Hornick v. Owners Ins. Co., 511
N.W.2d 370, 374 (Iowa 1993)).      Thus, we strictly construe exclusions

against the insurer. Ferguson, 512 N.W.2d at 299. We do so because
                                    11

insurance policies constitute adhesion contracts. Allied Mut. Ins. Co. v.

Costello, 557 N.W.2d 284, 286 (Iowa 1996).

      An insurance policy is not ambiguous, however, just because the

parties disagree as to the meaning of its terms.        Essex Ins. Co. v.

Fieldhouse, Inc., 506 N.W.2d 772, 776 (Iowa 1993).        If an insurance

policy and its exclusions are clear, the court “will not ‘write a new

contract of insurance’ ” for the parties.    Thomas, 749 N.W.2d at 682

(quoting Cairns v. Grinnell Mut. Reins. Co., 398 N.W.2d 821, 824 (Iowa

1987)).

      V. Analysis.

      The Boelmans assert the Custom Feeding Endorsement is

ambiguous and urge the court to construe this ambiguity in their favor.

The court of appeals agreed the Farm-Guard policy, containing the

endorsement, was ambiguous.      Grinnell Mutual contends the policy is

not ambiguous because the endorsement explicitly removes only

Exclusion 6(a), the general exclusion for custom farming, and clearly

communicates it does not alter or supersede any other exclusions. As a

result, Grinnell Mutual points out that the care, custody, or control

exclusions still apply and refuse to indemnify the Boelmans.            To

determine the existence of an ambiguity, we look to what the policy says.

Thomas, 749 N.W.2d at 683.

      A.   Coverage Under the Farm-Guard Policy, Without the

Custom Feeding Endorsement.          Coverage A, which protects against

liability to the public, appears to provide broad coverage for all property

damage the Boelmans would be legally obligated to pay. This coverage

insures the holder up to $100,000 for each occurrence, with a $200,000

annual aggregate. However, as with most policies, the exclusions narrow

the coverage.
                                    12

      Exclusion 5 limits Coverage A by barring recovery for property

damage or loss arising when another’s property is in the Boelmans’ care,

custody, or control. This exclusion makes sense in light of Coverage A-1,

which provides coverage to the insureds for damage arising while other’s

property is in the Boelmans’ care, custody, or control.

      Additionally, Exclusion 6(a), which is applicable to all the

coverages in the policy, limits Coverage A by excluding recovery for

property damage arising out of custom farming, if the insured’s total

gross receipts from all custom farming exceed $2000 in the twelve

months of the prior calendar year. This exclusion operates so that if all

income from custom farming operations is $2000 or less, and the

damage is to property not in the care, custody, or control of the

Boelmans, Coverage A would provide protection.

      The following shows an example of the property damage protected

by Coverage A. If the Boelmans’ income from custom farming did not

exceed $2000, and if their custom farming operation caused an

explosion, damaging a third person’s car parked on the Boelmans’

property, then the Boelmans would be indemnified by Grinnell Mutual.

As this example illustrates, the purpose of Exclusion 6(a) is to limit the

insurance company’s liability for property not in the Boelmans’ care,

control, or custody to the risks associated with a farmer whose operation

includes custom farming grossing $2000 or less per year.            This is

reasonable, because the custom farming operation’s size, as indicated by

income, correlates to the risks associated with that operation. The more

expansive the custom farming operation is, the greater the risks.

      Coverage A-1 protects against damage to other’s property while it

is in the care, custody, or control of the Boelmans. The limits of liability

under this coverage are $1000 for each occurrence. Coverage A-1 also
                                         13

has exclusions limiting its applicability. Exclusion 2 bars recovery for

property damage arising out of custom farming.              The custom farming

exclusion applies because the Boelmans care for another’s livestock

under a written or oral agreement. The purpose of this exclusion is to

prevent Grinnell Mutual from becoming an insurer of the Boelmans’

obligations and performance under their agreement to raise another’s

livestock. Thus, the purpose of Coverage A-1 is to provide protection if

the Boelmans’ borrowed another’s piece of equipment, the equipment

suffers damage on the Boelmans’ property, and the damage does not

arise from their custom farming.

       In summary, Coverage A indemnifies the Boelmans for liability to

third parties arising from property damage they are legally obligated to

pay. However, it excludes coverage for damage to other’s property in the

care, custody, or control of the Boelmans. It also excludes coverage for

damage to other’s property that arises out of custom farming if the gross

receipts from the Boelmans’ custom farming operation exceed $2000.

Thus, the policy will protect against all property damage the Boelmans

are legally obligated to pay, as long as the property was not in their care,

custody, or control, and the property damage did not arise out of their

custom farming operation. 2 Moreover, Coverage A-1 pays for damage to

property of others in the care, custody, or control of the Boelmans,

regardless of liability, but not when the property damage arises out of

custom farming. When we read the policy as a whole, all the coverages

and exclusions in the policy are consistent with each other. Therefore,

       2The  record establishes that the Boelmans’ income from custom farming
exceeded $2000. Thus, the general exclusion in the policy, Exclusion 6(a), applies in
the absence of the Custom Feeding Endorsement.
                                    14

we find the policy, as issued without the Custom Feeding Endorsement,

is unambiguous.

      B. Coverage Under the Farm-Guard Policy, With the Custom

Feeding Endorsement.       The Boelmans contend the Custom Feeding

Endorsement makes the policy ambiguous. Thus, the Boelmans urge us

to construe the policy in their favor and provide coverage in accordance

with the court of appeals. We disagree and refuse to do so.

      The Custom Feeding Endorsement provides in bold type that the

insured must read the endorsement carefully, because it modifies the

Farm-Guard policy. The endorsement specifically refers to Exclusion 6(a)

contained in the policy’s general exclusion section.        The endorsement

merely raises the threshold from $2000 in custom farming income to

$150,000 before Exclusion 6(a) bars indemnity by the insured. Thus, the

endorsement    operates   to   broaden   the   protection    afforded   under

Coverage A, pertaining to liability to the public, in the Farm-Guard

policy. Accordingly, if the Boelmans are liable for damage to property not

in their care, control, or custody, and their custom farming operation

grosses $150,000 or less per year, the policy will indemnify the

Boelmans. Accordingly, we do not see how this endorsement conflicts

with any other policy provision.

      Our conclusion in this regard is consistent with existing law.

Courts recognize that endorsements do not alter or supersede care,

custody, or control exclusions.     See, e.g., Kemper Nat’l Ins. Cos. v.

Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 875 (Ky. 2002) (finding a

commercial general liability policy with an endorsement removing a

pollution damage exclusion did not supersede the care, custody, or

control exclusion).   More specifically, courts have found that custom

feeding endorsements do not preempt care, custody, or control provisions
                                    15

contained in the basic policy. See Grinnell Mut. Reins. Co. v. Schwieger,

685 F.3d 697, 701 (8th Cir. 2012) (construing the exact same Farm-

Guard policy and Custom Feeding Endorsement). We have specifically

rejected the argument that “having property in your care is the ‘essence

of a custom livestock feeding operation’ ” and refused to find an

endorsement conflicts with a policy including a care, custody, or control

exclusion. Ferguson, 512 N.W.2d at 299–300.

      The care, custody, or control exclusion functions specifically to

prevent the insurance company from becoming a guarantor of the

insured’s work.   Connie’s Const. Co., 227 N.W.2d at 211.     It does not

apply “when the property damaged is merely incidental to the property

upon which the work is being performed by the insured at the time of the

accident.” Id. However, we recognize the exclusion “is applicable if the

property damaged is under the supervision of the insured and is a

necessary element of the work being performed.” Id. (emphasis added).

The “Sew Nursery Agreement” indicates the Boelmans were directly

managing the hogs and that doing so was a necessary element of their

task of feeding the hogs to market weight. A second requirement for the

exclusion to apply is that the insured be in exclusive control of the

damaged property. Id. Here, it is undisputed that the Boelmans were in

exclusive care, custody, or control of the hogs that died.

      We would be engaging in a strained analysis and would be

stretching the endorsement’s terms beyond the bounds of reasonability

to find the endorsement functions to negate all exclusions whole cloth in

the Farm-Guard policy.      Thomas, 749 N.W.2d at 682.       The court of

appeals erred by indulging in this practice.

      Any such construction contorts the endorsement to read, “In

consideration of the premium charged, none of the policy’s exclusions
                                       16

apply.”   Agreeing with this logic would be to ignore completely the

numerous other exclusions in the policy, which the endorsement

expressly leaves intact. See Ferguson, 512 N.W.2d at 300 (observing a

construction is unreasonable if it requires us to completely ignore policy

exclusions). Here, the endorsement does not expressly remove any other

exclusions from the policy, such as the care, custody, or control

provisions.   Instead, the endorsement clearly indicates that “[a]ll other

terms and provisions of the policy apply,” including exclusions.

Moreover, such construction would denigrate our established principle

that “ ‘[e]ndorsements do not limit or change the basic policy except as

specifically set out in the endorsement.’ ” Id. (emphasis added) (quoting

Swift & Co. v. Zurich Ins. Co., 511 S.W.2d 826, 832 (Mo. 1974)).

Construing the policy in this manner would also result in rejecting

jurisprudence that has recently developed on this very issue.         See

Schwieger, 685 F.3d at 699, 703 (construing the exact same Farm-Guard

policy and Custom Feeding Endorsement).

      Additionally, to adopt the Boelmans’ interpretations would be to

write a new contract for the parties. Thomas, 749 N.W.2d at 682. There

is no indication in the record that the parties intended the endorsement

to have the sweeping effect of removing other policy exclusions. The fact

that Grinnell Mutual only charged $27 annually in premiums for the

added protection under the endorsement does not correlate with the

substantially elevated risk they would have assumed if they had removed

all exclusions touching upon the Boelmans’ custom farming operation.

      Moreover, the endorsement only vests the right to recovery in a

third party, not the holder of the property, such as a contract feeder.

The recognition of an increased risk of property damage and subsequent

liability inures to the third party.
                                     17

      The endorsement required Grinnell Mutual to compensate the

Boelmans for losses if their total gross receipts from custom farming

were not more than $150,000.          This was a significant increase in

protection from the basic policy, which only required Grinnell Mutual to

pay out for custom farming losses if the insured farmer’s total gross

receipts were less than $2000 for the previous year.        Thus, the basic

policy only protected hobby farmers, not large-scale producers, for losses

to third parties from custom farming operations.

      Therefore,   we   find   the   policy   with   the   Custom    Feeding

Endorsement is not ambiguous. Thus, the policy with the endorsement

does not provide coverage for this loss.
      VI. Reasonable Expectations Doctrine.

      In their brief to the district court, the Boelmans raised the

reasonable expectations doctrine as an alternative ground for relief. The

district court construed the policy in favor of the Boelmans based upon

their reasonable expectation of coverage in the event of loss arising from

their custom farming operations.      When a party raises an alternative

ground for a motion for summary judgment in the district court, we can

consider that ground on appeal.       Bagelmann v. First Nat’l Bank, 823
N.W.2d 18, 32 (Iowa 2012).

      The reasonable expectations doctrine “is a recognition that

insurance policies are sold on the basis of the coverage they promise.”

Clark-Peterson Co. v. Indep. Ins. Assocs., Ltd., 492 N.W.2d 675, 679 (Iowa

1992). It does not expand coverage on a purely equitable basis. Id. at

677. Thus, as a preliminary matter, it was improper for the district court

to find the Boelmans reasonably expected coverage.

      Instead, the doctrine is carefully circumscribed.        Id.   This is

because “[i]nsurance coverage is a contractual matter and is ultimately
                                     18

based on policy provisions.”      Jones, 760 N.W.2d at 188 (citation and

internal quotation marks omitted).        Accordingly, we allow insurers to

limit coverage to only specific claims. Id.
      The doctrine is only invoked when an exclusion “(1) is bizarre or

oppressive, (2) eviscerates terms explicitly agreed to, or (3) eliminates the

dominant purpose of the transaction.” Clark-Peterson Co., 492 N.W.2d at

677 (citation and internal quotation marks omitted).         If the doctrine

applies, “the objectively reasonable expectations of applicants and

intended beneficiaries regarding insurance [policies] will be honored even

though painstaking study of the policy provisions would have negated

those expectations.” Id. (citation and internal quotation marks omitted).

Evidence   of   reasonable   expectations     comes   from   the   underlying

negotiations or the inferences arising from the circumstances of when

the parties entered the policy.    Id.    Only representations made by the

insurer at the time of policy negotiation and issuance are relevant. Vos

v. Farm Bureau Life Ins. Co., 667 N.W.2d 36, 50 (Iowa 2003).

      For the doctrine to apply, a prerequisite must first be satisfied.

“[T]he insured must prove circumstances attributable to the insurer that

fostered coverage expectations or show that the policy is such that an

ordinary layperson would misunderstand its coverage.” Nationwide Agri-

Bus. Ins. Co. v. Goodwin, 782 N.W.2d 465, 473 (Iowa 2010) (emphasis

added) (citations and internal quotation marks omitted). The Boelmans

must carry this burden.

      The Boelmans fail to do so.        At the district court, they did not

conduct the discovery needed to make a reasonable expectations

argument. For instance, the record lacks any indication the Boelmans

expected the endorsement’s dominant purpose was to provide coverage

for the hogs in their care, custody, or control.       Additionally, nothing
                                    19

shows the content of the negotiations between the Boelmans and agents

or representatives of Grinnell Mutual when they executed the policy. The

Boelmans did not file an affidavit covering any of these subjects. Thus,

the Boelmans have presented no evidence of (1) representations made by

Grinnell Mutual, which might have fostered expectations, or (2) reliance

by the Boelmans on any such representations. Thus, there is no genuine

issue of material fact concerning the application of the doctrine.
      Additionally, the doctrine of reasonable expectations does not

apply because the policy does not contain ambiguous language or

constitute the “extreme situation” of a policy containing a “hidden

exclusion.” Schwieger, 685 F.3d at 702 (citation and internal quotation

marks omitted).     The Boelmans could not have reasonably expected

coverage for any loss arising from their custom farming operation, based

upon the explicit language of the endorsement and exclusions in the

policy.   Despite the endorsement, the policy still expressly excludes

coverage through two separate care, custody, or control exclusions.

Thus, based on the plain language of the policy, the Boelmans could not

reasonably expect coverage under these circumstances. Moreover, they

failed to guard against such losses as suffocation, even though the “Sew

Nursery Agreement” imposed upon them a duty to obtain insurance in

the case of suffocation. Accordingly, we find no genuine issue of material

fact exists concerning the reasonable expectations doctrine and find the

doctrine is inapplicable.

      VII. Disposition.

      On further review, we find the policy is not ambiguous and does

not provide coverage as a matter of law. Additionally, we find there is no

genuine issue of material fact as to the application of the reasonable

expectations doctrine and conclude, as a matter of law, that it does not
                                   20

apply. Therefore, we vacate the decision of the court of appeals, reverse

the judgment of the district court, and remand the case to the district

court with instructions to enter judgment in favor of Grinnell Mutual on

its motion for summary judgment.

      COURT OF APPEALS DECISION VACATED; DISTRICT COURT

JUDGMENT        REVERSED        AND     CASE      REMANDED         WITH

INSTRUCTIONS.