IN THE COURT OF APPEALS OF IOWA
No. 13-1598
Filed December 24, 2014
MT. ZION MISSIONARY BAPTIST
CHURCH OF CEDAR RAPIDS, IOWA,
Plaintiff-Appellant,
vs.
CHURCH MUTUAL INSURANCE
COMPANY,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Linn County, Ian K. Thornhill,
Judge.
A church appeals from the denial of its breach of insurance contract claim.
AFFIRMED.
William H. Roemerman and Stephanie A. Legislador of Crawford, Sullivan,
Read & Roemerman, P.C., Cedar Rapids, for appellant.
Robert B. McMonagle of Lane & Waterman, L.L.P., Davenport, for
appellee.
Heard by Mullins, P.J., and Bower and McDonald, JJ.
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BOWER, J.
Mt. Zion Missionary Baptist Church (Zion) sought coverage from its
insurer, Church Mutual Insurance Company (Church Mutual), for damage
sustained during a flood. Zion claims the insurance policy language was
ambiguous and the district court erred in finding the doctrine of reasonable
expectations inapplicable. Pursuant to our holding in Lifeline Ministries Church v.
Church Mut. Ins. Co., No. 12-1181, 2013 WL 2107408 (Iowa Ct. App. May 15,
2013), we find the district court did not err in its interpretation of the insurance
policy and affirm.
I. BACKGROUND FACTS AND PROCEEDINGS
Zion had property insurance on its church building, but not flood
insurance, through its insurer, Church Mutual. In 2008, the Cedar River
overflowed its banks and inundated the City of Cedar Rapids. Several hours
before the surface waters reached the church, the sewer backed up into the
church basement.
Zion sought coverage from Church Mutual for losses resulting from the
sewer backup. When the company denied coverage, Zion sued for breach of
contract. Zion filed partial motions for summary judgment. The district court
denied Zion’s motion on the ground that “reasonable minds could draw different
inferences and reach different conclusions . . . with regard to the question of
whether [Zion’s] damages resulted from a sewer backup.” The court declined to
immediately rule on the applicability of a policy exclusion, stating:
This fact issue impacts the Court’s construction of the policy
language. Once the cause of [Zion’s] damages has been
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determined by the trier of fact, the Court can, as a matter of law,
determine whether exclusions relied on by [Church Mutual] apply
and whether the doctrine of reasonable expectations serves to
provide a basis for coverage for [Zion] in this case.
The case proceeded to a jury trial. The jury completed a special verdict
form, which was not objected to. The form stated:
Question No. 1: Did Mt. Zion prove that there was sewer
back up that invaded its property through sewers or drains?
Answer “yes” or “no.”
ANSWER: YES
[If your answer is “no,” do not answer any further questions.]
Question No. 2: Did Mt. Zion prove that the sewer back up
was caused by an event away from its property? Answer “yes” or
“no.”
ANSWER: YES
[If your answer is “no,” do not answer any further questions.]
Question No. 3: Did Church Mutual prove that the sole cause
of the damage to Mt. Zion’s property was flood? Answer “yes” or
“no”
ANSWER: YES
[If your answer is “yes,” do not answer any further questions.]
Question No. 4: State the amount of damages sustained by
Mt. Zion due to the backup of the sewer.
TOTAL $ ____
The district court accepted the verdict and directed the clerk of court to
enter it of record.
In post-trial briefs, both parties argued their respective positions on the
construction of the policy language. While relying on our ruling in Lifeline
Ministries, 2013 WL 2107408, at *3, the court concluded: (1) the facts, as
determined by the jury, show the flood was the sole cause of damage to Zion’s
property, (2) the policy terms are not ambiguous, and the clear and unambiguous
exclusion in the policy must be given effect, and (3) Zion did not establish the
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requirements of the doctrine of reasonable expectations. The court entered
judgment for Church Mutual, and dismissed Zion’s claims. This appeal followed.
II. STANDARD OF REVIEW
We use the errors at law standard when our decision rests upon the
interpretation of an insurance policy. Boelman v. Grinnell Mut. Reinsurance Co.,
826 N.W.2d 494, 500 (Iowa 2013).
III. ANALYSIS
The relevant provisions of the policy are as follows:
EXCLUSIONS
1. We will not pay for loss or damage caused directly or indirectly by
any of the following. Such loss or damage is excluded regardless of
any other cause or event that contributes concurrently or in any
sequence to the loss.
....
7. Water.
a. Flood, surface water, waves, tides, tidal waves,
overflow of any body of water, or their spray, all whether
driven by wind or not;
....
c. Water which backs up through sewers or drains
except as provided under Additional Coverage – Back
Up Through Sewers and Drains.
ADDITIONAL COVERAGE—BACK UP THROUGH SEWERS AND
DRAINS
Subject to all other terms and conditions of this policy, we will pay for
direct physical loss or damage to Covered Property caused by back up
of water or sewage through sewers or drains only if caused by an
event away from the described buildings and when the damage is not
caused by flood, surface water, waves, tides, tidal waves, overflow of
any body of water, or their spray, all whether driven by wind or not,
and which did not enter the building through foundations, walls, floors,
windows, cracks, roofs, or through other opening of the building.
Sewer or water damage occurring as a result of, either before
or after, the excluded flood, surface water, waves, tides, tidal waves,
overflow of any body of water, or their spray, all whether driven by
wind or not, and entering the building through foundations, walls,
floors, windows, cracks, roofs, or through other openings of the
building is not covered.
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In Lifeline Ministries, we had the occasion to construe identical insurance
provisions. 2013 WL 2107408, at *4. Lifeline Ministries also concerned a Cedar
Rapids church (Lifeline) that sustained damage in the flood of 2008. Id. at *2.
Church Mutual denied Lifeline’s insurance coverage request because Lifeline’s
policy did not cover damage resulting from flooding. Id. Lifeline then sued
Church Mutual for breach of contract and argued the insurance policy was
ambiguous. Id. The district court found the terms of the insurance policy were
not ambiguous. Id. at *5. On appeal, we stated:
The district court construed the policy language as follows:
[T]he policy terms are not ambiguous, and the clear and
unambiguous exclusion in the policy must be given effect. The
policy language is clear that water or sewage back up that enters
the property due to an event away from the covered property is not
covered if the water or sewage back up was caused by flood,
surface water, or the overflow of any body of water. The policy
language cannot be reasonably read in any other way. The
provision of the policy pertaining to sewer back up coverage simply
reinforces that coverage is not provided for damage resulting from
flood, surface water, or overflow of any body of water that enters
the building through foundations, walls, floors, windows, cracks,
roofs, or through other opening of the building. The policy is
consistent in its exclusion of coverage for this type of damage.
We discern no error in the court’s construction. See Postell
v. Am. Family Mut. Ins. Co., 823 N.W.2d 35, 41 (Iowa 2012)
(reviewing construction of policy for errors at law). The policy
plainly covers “damage to Covered Property caused by back up of
water or sewage through sewers or drains only . . . when the
damage is not caused by flood.” The policy reiterates “[s]ewer or
water damage occurring as a result of, either before or after, the
excluded flood . . . is not covered.” And, in its general exclusion
section, the policy separately excludes “loss or damage caused
directly or indirectly by . . . flood.”
Id. at *5–6.1
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We also reaffirm our holding concerning Zion’s reasonable expectations argument:
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We find no reason to upset our holding in Lifeline and accordingly affirm
the ruling of the district court.
AFFIRMED.
At trial, and again on appeal, Zion argues that its reasonable expectations
were frustrated by the insurer’s decision to deny coverage for the sewer
backup damages. The reasonable expectations doctrine “‘can only be
invoked [when] an exclusion (1) is bizarre or oppressive, (2) eviscerates
terms explicitly agreed to, or (3) eliminates the dominant purpose of the
transaction.’” Am. Family Mut. Ins. Co. v. Corrigan, 697 N.W.2d 108, 118
(Iowa 2005) (quoting Essex Ins. Co. v. The Fieldhouse, Inc., 506 N.W.2d
772, 777 (Iowa 1993)); accord Postell, 823 N.W.2d at 47–48. We agree
with the district court that the reasonable expectations doctrine was
inapplicable.