Struebing v. Addison Insurance Co. ( 2017 )


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  •                    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.
    2
    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
    6
    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.
    

Document Info

Docket Number: 17-0040

Filed Date: 12/6/2017

Precedential Status: Precedential

Modified Date: 2/28/2018