Ben Villarreal Jr., Cleo Martinez, and Lacasa Martinez Texmex, Inc. v. United Fire & Casualty Company D/B/A United Fire Group

MANSFIELD, Justice.

A restaurant was severely- damaged by fire. The owners made an insurance claim, but much of the claim was denied. They ultimately sued the insurer for policy benefits. They obtained a jury verdict and judgment against the insurer, which the insurer paid. Thereafter, they brought a separate action against the insurer for bad faith, alleging it had lacked a reasonable basis for its prior refusal to pay these benefits. The district court granted the insurer’s motion for summary judgment on the basis of claim' preclusion: The court of appeals reversed.

On further review, we must now decide whether a final judgment in a breach-of-contract suit, between an insured and an insurer for policy benefits bars a later tort action for bad faith alleging that the insurer lacked an objectively reasonable basis for denying the claim. . Under the circumstances presented here, we conclude that it does. Accordingly, we vacate the judgment .of the court of appeals and affirm the district court’s grant of summary judgment to the insurer.

; I. Background Facts and Proceedings. =

On March 8, 2007, a fire severely damaged the restaurant Lá Casa Martinez in Mason City. Plaintiff La Casa Martinez TexMex, Inc., an Iowa corporation, owned the restaurant,' and plaintiffs Ben Villarreal, Jr. and Cleo Martinez were officers and shareholders of the corporation. Martinez also owned the building that houséd the restaurant. -The corporation had purchased commercial property insurance from United Fire & Casualty Company (“United Fire”) with coverage limits of $386,400 for building replacement and $374,400 for personal property replacement. The policy also provided business interruption coverage. It-listed the insured as La Casa Martinez TexMex, Inc.

The record does not indicate exactly when United Fire was notified of the fire, but it was soon after March 8. At that point, United Fire sent a certified copy of the policy to the insured. Communications between the insured and United Fire continued thereafter. The insured retained local attorney Jim McGuire. On. June 12, Christine Friedrich, United Fire’s claims representative, met with Villarreal and MpGuire at McGuire’s office. Three 'days later, Villarreal provided . United Fire with a lengthy inventory of personal property lost in the fire. The total claimed value of the inventory was approximately $490,000.

There was some question initially whether the building should be repaired or replaced. Martinez had purchased.the building and land a year and a half earlier -for $150,000, and it was, currently assessed for property tax purposes at $153,000. However, there was no (dispute that Martinez had made significant improvements to the property after buying it, as the property had previously been vacant for two and a half years. Thus, before opening the res*716taurant, the plaintiffs had replaced the entire roof, the air conditioning, and the water heater; had made significant repairs to the ceiling, the electrical systems, the bathrooms, and the walls; and had repainted the interior and the exterior.

As compensation for business interruption losses, United Fire paid $23,900 at the outset while asking the insured for financial information to support this portion of the claim. Additional business interruption payments were subsequently made totaling approximately $5200.

On June 25, Villarreal faxed a letter to United Fire with a copy to McGuire demanding an immediate additional payment. On June 27, Villarreal and Martinez sent another letter to Friedrich, demanding immediate payment of $100,000. The letter threatened prompt legal action if the payment was not received and stated in part:

Throughout this process, you have been aware of our continuing downward skid as I have verbally kept you informed of our continuing deteriorating situation and pleas for relief. I will reiterate, we have become impoverished due to your flagrant disregard for our, the customer, welfare, intentional delays, erroneous disbursal of information, lack of returned phone calls to me and my wife and intentional/and/or neglectful handling/servicing of this claim.
Ms. Fried[]rich, your actions, and/or lack thereof, have displayed unprofes-sionalism as well as ethical and ethnic discrimination.

McGuire was copied on the letter.

On August 16, McGuire sent a letter to United Fire stating that his clients must be paid or “I have no alternative but to file suit for damages which you are responsible for in connection with the fire as well as damages for bad faith on the part of your-company.” Friedrich’s supervisor responded on August 27 that the insured had a responsibility to provide proof of losses and the information received by United Fire to date was “inaccurate or incomplete.”

On September 12, McGuire sent another letter to Friedrich, maintaining that United Fire “had intentionally delayed the negotiations in settlement of this claim.” The letter added, “I also feel that there has been bad faith on the part of your company for some reason or other by intentionally delaying the settlement of this loss.”

On October 11, as authorized by the policy, United Fire took statements under oath from Martinez and Villarreal in the presence of McGuire. Martinez and Villarreal testified that improvements totaling $83,500 had been made to the building after the purchase. However, no documentation had been provided at that point to the insurer for the majority of these improvements.

By then, United Fire had paid $24,000 toward the insured’s personal property losses. In November, United Fire made a building-related payment of $108,310 that covered only the mortgage balance and therefore went entirely to the mortgagee. This of course meant the insured itself still had received nothing for the loss of the building.

On December 5, McGuire wrote Fried-rich a letter seeking $35,173 for lost net profits to the business, $102,000 for payments the officers had not received from the business, an additional $193,054 for the value of the building, and $88,910 for additional, previously unreported contents of the building. The letter added, “In view of the fact that there has been such a long delay in settling, I would ask that we receive the requested drafts within seven days from the date of this letter.”

*717Friedrich responded, stating among other things that she would like to hire an appraiser to look at the property. She also complained in a separate email about needing more information from the insured concerning the business interruption claim. On December 27, McGuire sent an email to Friedrich stating,

That is bull shit, Christine. We have given them more than they need and they are intentionally delaying this and have for months!!! They have a duty to treat them insured fairly, not to find ways to deny them of the money that is long over due.

On January 9, 2008, Friedrich replied by letter that United Fire did not owe any additional amounts for business interruption, although it offered to settle this aspect of the claim for $15,000. Regarding the building, Friedrich asserted that the best indicator of its value was the 2006 assessed value of $112,000, “which is also supported by the total purchase price of $150,000 in late 2005 for the structure and the land.” Friedrich further acknowledged that her “calculations show that the amount spent on [upgrades to the building] is roughly $45,000.” However, she offered to pay only $20,000 for the building in addition to the prior mortgage payoff.

As for the personal property, Friedrich explained that United Fire had already paid $84,638.79 for these losses. She offered to pay another $20,000 in return for a release “to close this out.”

In response, McGuire provided Fried-rich with an appraisal showing the market value of the building to be $388,200 — or' approximately $280,000 more than United Fire had paid for this part of the loss. On January 28, 2008, Friedrich indicated that she would refuse to do anything further. She informed McGuire that “United Fire Group is maintaining its [actual cash value] payment at the $108,310.00. already paid to the insured and an additional $20,000.00 for the improvements made.”

On March 7, 2008, La Casa Martinez TexMex, Villarreal, and Martinez filed a breach-of-contract action against United Fire to recover under the insurance policy. During the course of the litigation, plaintiffs abandoned any claim for business interruption damages but continued to assert claims that United Fire had underpaid for the building and personal property.

Nearly three years later, trial commenced on March 1, 2011.1 During her trial testimony, Friedrich admitted she had never determined an actual cash value for the building. On March 4, 2011, a jury returned verdicts for the plaintiffs in the amount of $176,690 for the additional unpaid value of the building and $60,212 for the additional personal property loss — a total of $236,902. Later that month, United Fire paid this amount plus interest and costs, and received a satisfaction of judgment.

On June 20, approximately three months after judgment was entered in the breach-of-contraet case and more than four years after the fire, La Casa, Villarreal, and Martinez filed the present action in one count for “bad faith.” They alleged that United Fire “had no objective reasonable basis for denying or failing to make payment on the [building and personal property] insurance claims”; that United Fire “knew it had no objective reasonable basis for the denial or failure to make payment”; and that this bad faith caused them “lost profits, lost wages, [and] emotional distress.”

*718United Fire filed a motion to dismiss based on claim preclusion, which the district court denied on February 24, 2012. Discovery then proceeded. Trial was originally scheduled for January 15, 2013. On November 14, 2012, United Fire filed - a motion for summary judgment. Then on November 20, United Fire filed a motion for a continuance. The court granted- the continuance over the plaintiffs’ resistance. Its order noted that “[substantial matters need to be addressed prior to trial including ruling on Defendant’s Motion for Summary Judgment.” Upon receipt of this order, United Fire withdrew its pending motion for summary judgment without prejudice.

The plaintiffs then filed a motion for removal from application of Iowa Rule of Civil Procedure 1.944, which was granted by the court.2 The court’s order stated, “Pursuant to rule 1.944 dismissal will not occur until January 1* 2014.”' Trial was later set for January 28,-2014. However, after the trial was rescheduled,' no effort was made to move the January 1 dismissal deadline.

At Friedrich’s deposition on November 19,2013, she acknowledged that during the underwriting process United Fire had obtained a valuation report of $249,744 for the building. Although a United Fire supervisor had instructed Friedrich to schedule an appraisal of the building in December 2007, no appraisal was ever performed. Friedrich’s notes and a memo to her supervisor indicated that she thought the improvements to the building were worth $71,744.83 although she communicated to Villarreal and Martinez that United Fire estimated the improvements at' $45,000 and only increased United Fire’s offer by $20,000 for the improvements (conditioned on a settlement).

Meanwhile, on November 6, 2013, United Fire had refiled its motion for summary judgment, maintaining that the bad-faith claim was barred by claim preclusion as a matter of law, that Martinez and Villarreal were not proper parties in interest, and that the bad-faith claim failed as a matter of law. On December 3, the plaintiffs resisted United Fire’s motion for summary judgment. On December 13, the motion was heard by the court and submitted.

On January 7, 2014, having not yet decided the summary judgment, motion, the court entered an order noting that the case had been dismissed by operation of law on January 1 pursuant to rule 1.944.

Six days' later, on January 13, the plaintiffs moved to reinstate the case. United Fire opposed the motion, pointing out that nearly seven years had elapsed since the fire and that — due to the delays in the litigation — several of its witnesses had retired and were no longer within its control, one witness was now deceased, and one was having serious health problems that might make him unavailable. Nonetheless, on January 28, the court granted the plaintiffs’ motion. It pointed out that both parties had taken part at the trial setting conference which selected the new trial date to occur after January 1.

Yet, that same day, the district court granted United Fire’s motion for summary Judgment. The court found the bad-faith action was barred by claim preclusion, stating,

*719[B]oth [the breach-of-contract and bad-faith] claims arise from the March 8, 2007, fire loss, and United Fires’, refusal to pay the claim.- Both claims depend upon the proper amount United Fire should have paid under its policy, and whether United Fire had a valid basis to support its evaluation of [the restaurant].

However, the court added that

if the plaintiffs brought their bad faith claim with the breach of contract claim, it is likely that the bad faith action would have been bifurcated from the breach of contract case. It is also likely that plaintiffs would have been denied access to the adjuster’s file until the breach of contract case had' been fully tried. Even if the cases were brought together, a second trial might ultimately be necessary.

The court also “questioned]'whether both claims could be tried to the same jury.” Nonetheless, the court found that “bringing both claims at' once would allow a quicker resolution of both cases.” The court went on to reach the remaining issues, holding that Villarreal and Martinez were not proper parties, and that fact issues existed as to whether United Fire had breached its duty of good faith and fair dealing.

The plaintiffs appealed, and we transferred the case to the court of appeals. In a panel decision, the court of appeals reversed the district court’s judgment, holding the bad-faith action was not barred by claim preclusion and United Fire was barred by issue preclusion from challenging the standing of Martinez and Villarreal. One judge on the three-judge panel dissented and would have affirmed the district court’s ruling that claim preclusion barred the bad-faith action.

We granted United Fire’s application for further review.

II. Standard of Review.

We review summary judgment rulings for corrections of errors at law. Sanon v. City of Pella, 865 N.W.2d 506, 510 (Iowa 2015). Summary judgment is appropriate only if no genuine issues of.material fact exist and the moving party is entitled to judgment as»a matter-of law. Iowa R. Civ. P. 1.981(3); Nelson v. Lindaman, 867 N.W.2d 1, 6 (Iowa 2015).

III. Analysis.

A. Iowa Law of Claim Preclusion. “The Iowa law of claim preclusion closely follows the Restatement (Second) of Judgments.” Shumaker v. Iowa Dep’t of Transp., 541 N.W.2d 850, 852 (Iowa 1995). Accordingly, we have previously discussed and relied upon the Restatement (Second) of Judgments in determining whether an action is barred by claim preclusion. See, e.g., Pavone v. Kirke, 807 N.W.2d 828, 837 (Iowa 2011); West v. Wessels, 534 N.W.2d 396, 398 (Iowa 1995); Leuchtenmacher v. Farm Bureau Mut. Ins. Co., 460 N.W.2d 858, 860 (Iowa 1990); Lowery Invs. Corp. v. Stephens Indus., Inc., 395 N.W.2d 850, 853 (Iowa 1986); Noel v. Noel, 334 N.W.2d 146, 148 (Iowa 1983).3

*720For example, in Pavone, we held that claim preclusion barred a management company’s action against a casino operator for breach of contract based on the operator’s failure to negotiate in good faith for management services for a Clinton casino. 807 N.W.2d at 830-32, 839. Previously, the management company had sued the casino operator for breach of contract based on the latter’s failure to negotiate in good faith concerning management services for its Emmetsburg casino. Id. at 831. Although the license for the Clinton casino was not even aivarded until after the first action over the Emmetsburg casino had been filed, we held that once the casino repudiated its underlying contract with the management company, the management company was obligated to claim all damages past and prospective arising out of that repudiation. Id. at 831, 837-38.

In doing so, we relied in part on Restatement (Second) of Judgments section 24. Id. at 837. It provides,

(1) When a valid and final judgment rendered in an action extinguishes the plaintiffs claim pursuant to the rules of merger or bar ..., the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.
(2) What factual grouping constitutes a “transaction”, and what groupings constitute a “series”, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.

Restatement (Second) of Judgments § 24, at 196 (Am. Law Inst.1982) [hereinafter Restatement (Second) ].

The comments to section 24 elaborate on this transactional approach:

The expression “transaction, or series of connected transactions,” is not capable of a mathematically precise definition; it invokes a pragmatic standard to be applied with attention to the facts of the cases. And underlying the standard is the need to strike a delicate balance between, on the one hand, the interests of the defendant and of the courts in bringing litigation to a close and, on the other, the interest of the plaintiff in the vindication of a just claim.
[[Image here]]
In general, the expression connotes a natural grouping or common nucleus of operative facts. Among the factors relevant to a determination whether the facts are so woven together as to constitute a single claim are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes. Though no single factor is determinative, the relevance of trial convenience makes it appropriate to ask how far the witnesses or proofs in the second action would tend to overlap the witnesses or proofs relevant to the first. If there is a *721substantial overlap, the second action should ordinarily be held precluded. But the opposite does not hold true; even when there is not a substantial overlap, the second action may be precluded if it stems from the same transaction or series.

Id. cmt. b, at 198-99.

The comments also make clear that a “[transaction may be single despite different harms, substantive theories, measures or kinds of relief.” Id. cmt. c, at 199.

In Leuchtenmacher, we applied the law of claim preclusion in the context of an alleged bad-faith failure to settle by an underinsured motorist (UIM) carrier. 460 N.W.2d at 859. In that case, the insured was killed in a collision with a vehicle operated by another individual. Id. Her estate sued both the tortfeasor and her own insurer for UIM benefits. Id. The jury returned a verdict for $223,251.57. Id. The court then entered a judgment against the insurer for $97,263, representing the remaining policy limit for UIM benefits. Id.

At this point, the estate sued the decedent’s insurer, alleging “it had acted in bad faith by denying the estate’s claim for [UIM] benefits, thus forcing the estate to go to trial.” Id. The insurer moved to dismiss for failure to state a claim, “on the theory that an action for bad-faith failure to settle must be brought simultaneously with the claim to recover the policy proceeds, and a bad-faith claim not so joined is barred by claim preclusion.” Id. The district court sustained the motion-to dismiss, but we reversed. Id. at 859, 861. In our analysis, we quoted (as we have done above) from the main text of section 24 of the Restatement (Second) and from comment 6. Id. at 860. After noting that on a motion to dismiss, it would not be proper to consider the record of, the other case without an agreement of the parties, we concluded,

The question of whether the estate’s “bad-faith” case was precluded by the prior suit depends on whether the cases arose out of the same facts. We cannot conclude as a matter of law that they did. In fact, a bad-faith claim might well be based on events subsequent to the filing of the suit on a policy and therefore could not be based on the “same” facts. Accordingly, we reverse and remand for further proceedings consistent with this opinion.

Id. at 861.

Leuchtenmacher involved a motion to dismiss where we could not consider the record of the first proceeding. Thus, it is procedurally distinguishable from the present case. Although we said — correctly — in Leuchtenmacher that claim preclusion turns on whether two cases arise out of the “samé' facts,” we did not say that there must be perfect overlap between the evidence required to support the respective legal theories in the two cases.' That, of course, would be inconsistent with the Restatement passages we had just quoted at length in Leuchtenmacher. See Restatement (Second) § 24(1), at 196 (“[T]he claim extinguished includes .all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.”); id. § 24 cmt. b, at 199 (stating that the second action should ordinarily be precluded if there is “a substantial overlap” in witnesses and proof with the first proceeding, and may be precluded “even when there is not a substantial overlap”); see also Pavone, 807 N.W.2d at 838 (noting that the second action would involve “much of the same relevant evidence”). Still, Leuchten-macher does indicate that a bad-faith claim based on events subsequent to the filing of *722a- breach-of-contract claim would not .be precluded by a judgment in the breach-of-contract case. See 460 N.W.2d at 861. Yet here, the bad-faith case was based on events that occurred before March 7, 2008, when the breach-of-contract case was filed.

We • believe, therefore, that Leuchten-macher does not control the present case and that it would' be prudent to look at authorities in other states, particularly those like Iowa, that have followed the Restatement (Second).

B. The Prevailing Approach Taken by Other Jurisdictions to Claim Preclusion in First-Party Bad-Faith Insurance Lawsuits. The great majority of jurisdictions take the view that a breach-of-contract verdict in favor of the insured and against his or her insurer precludes a subsequent .action for first-party bad faith, at least where the bad-faith claim is based on events that predate the filing of the breach-of-contract lawsuit. We will review some representative cases.

In Salazar v. State Farm Mutual Automobile Insurance Co., the Colorado Court of Appeals applied the Restatements transactional approach and held that an insured’s bad-faith claim, which was filed after the insured obtained a judgment awarding her UIM policy benefits, was barred by claim preclusion. 148 P.3d 278, 279, 281-82 (Colo.App.2006). The court noted the essence of Salazar’s bad-faith claim was State Farm’s “evaluation of her UIM claim” and its refusal to offer more than $100 in settlement. Id. at 279,- 281. The court added that this outcome would serve efficiency goals.- Id. at 282. Instead of having much of the evidence repeated, one could have a bifurcated trial where the common facts were presented first, and then the jury could proceed to the bad-faith claim if it found the insurer had breached its contract to pay insurance benefits. ' See id. For these reasons, the court affirmed summary judgment for the insurer. Id.

'■ Powell v. Infinity Insurance Co. was an uninsured-motorist (UM) case.- 282 Conn. 694, 922 A.2d 1073, 1076 (2007). The insureds sued -the UM carrier for policy benefits in the original lawsuit, obtaining damage verdicts well in excess of policy limits, which were then reduced to policy limits for purposes of the final judgment. Id. Subsequently, they sued the carrier for, among other things,, bad faith. Id, They alleged that the defendant, prior to and during the course of the prior lawsuit, had acted unreasonably in refusing to settle for policy limits. Id. at 1076-77. The district court granted summary judgment based on res judicata. Id. at 1077.

On appeal, the Connecticut Supreme Court affirmed. Id, at 1084. Applying the transactional test from section 24 of the Restatement (Second), the court explained,

[T]he -bad faith and' [statutory unfair-practices] counts in action II also arise out of the defendant’s refusal to pay the policy benefits despite its contractual obligations. The , plaintiffs consistently have complained of the defendant’s wrongful failure to. honor its obligation to make payments in accordance with the terms.of the uninsured motorist insurance policy issued to Powell. Their .claims turn on. essentially one event— the defendant’s refusal to pay in accordance- with, the. terms of Powell’s policy.

Id. at 1081. Although some of the conduct on which the plaintiffs relied for their bad-faith and statutory- claims did not arise until after the first lawsuit was commenced, the court noted that this “merely constitute^] additional evidence in support of their claims.” Id. at 1082. And “even [i]f the plaintiffs did not form a belief’ the defendant had acted in bad faith before bringing the suit for policy *723benefits, they could have amended their complaint before trial. Id. (alteration in original) (internal quotation marks omitted).

In McClain ex rel. Rutledge v. James, the Missouri Court of Appeals cited Restatement (Second) section 24 and held as follows:

In [a prior case], Northern sought damages from his insurer PDA for failing to properly defend, protect, and indemnify him against McClain’s malpractice claims. His theory was breach of contract.' He won a money judgment against PDA, now final.
Here, Northern again seeks damages from his insurer PDA for failing to properly defend, protect, and indemnify, him against McClain’s malpractice claims. His new theories are “bad faith” (Count VIII), “negligent claims handling” (Count IX), and “breach of fiduciary duties” (Count X).
Northern’s new counts violate res ju-dicata’s bar on claim splitting. Summary judgment was proper as to these counts.

453 S.W.3d 255, 266 (Mo.Ct.App.2014) (citations omitted).

In Viscusi v. Progressive Universal Insurance Co., the Wisconsin Court of Appeals found that claim preclusion barred a subsequent bad-faith claim after .the insured had recovered insurance benefits in his initial breach-of-contract case. No. 2009AP942, 2010 WL 94024, at *1-2 (Wis.Ct.App. Jan. 12, 2010). The court stated, “Simply put, both the breach of contract and bad faith claims flow from the same nexus of facts: Progressive’s failure to pay policy benefits_” Id. at *2. The court added, “According to the Restatement, it is also of no consequence that Viscusi would be required to present additional facts to support his bad faith claim.” Id.

Perhaps the most cited authority in this area is the First Circuit’s decision in Porn v. National Grange Mutual Insurance Co., 93 F.3d 31 (1st Cir.1996). In that case, an insured successfully sued for breach of contract when his insurer refused to pay UIM benefits following a car accident, and then brought a separate action for bad faith in the handling of his claim six months later. Id. at 32. The First Circuit affirmed summary judgment on the ground the'bad-faith claims were subject to claim preclusion. Id. The court first cited the’ relevant principles from the Restatement (Second). Id. at 34. It then found those rules supported a determination that the second lawsuit was barred. Id. at 34-37. As the court noted,

Porn expends considerable effort characterizing the instant action as arising out of . a transaction separate from that giving rise to the first action. In particular, Porn maintains that the bad-faith action stems from National Grange’s conduct in handling his insurance claim, whereas the contract action stems from the circumstances surrounding the car accident. ; Porn’s definition of the two transactions out of which the claims arise, however, is' artificially narrow. For instance, the Contract claim arises out of more than the car accident alone. It arises out of the accident in conjunction with-National Grange’s refusal to pay under the policy. - Indeed, without the- refusal to pay, no contract' breach could exist. Similarly, the factual basis of Porn’s bad-faith claim cannot be limited to National Grange’s conduct in handling Porn’s insurance claim. In this case, the facts of the car accident are also probative of National Grange’s reasonableness in refusing to pay Porn’s claim.

Id. at 35.

Responding to Porn’s argument that the two claims did. not form a convenient trial *724unit, see Restatement (Second) § 24 cmt. b, at 199, the First Circuit explained,

Rather than addressing the degree to which the evidence supporting each claim overlaps, Porn challenges the convenience of bringing the claims together on two other grounds. First, Porn argues that evidence relevant to the bad-faith claim, specifically evidence of the amount of insurance available and the fact of settlement offers and negotiations, would prejudice the insurer’s defense of the contract claim, and therefore the two claims do not form a convenient trial unit. However, we agree with the district court that any potential prejudice could be resolved by bifurcating the trial. With bifurcation, the evidence common to both claims, which was considerable, could have been presented at once and not “in separate lawsuits commenced at a distance of months or years.”

Id. at 36 (quoting Porn v. Nat’l Grange Mut. Ins. Co., No. 95-140-P-H, 1995 WL 626374, at *3 (D.Me. Sept. 27, 1995)). The court reiterated this point later in its opinion, emphasizing that the trial court likely would have tried the contract phase first and then the bad-faith phase before the same jury, thereby permitting Porn to argue “to the jury that National Grange’s refusal to settle the contract action despite insufficient evidence of a meritorious defense was more evidence of its bad faith.” Id. at 38. “[I]n a bifurcated trial such as the district court envisioned, ... the jury would first be asked to determine the breach of contract claim. Only if the insured prevailed on that claim would the second (bad-faith) phase of the trial transpire.” Id. at 37 n. 6.

Additionally, the court observed that when Porn brought his contract suit, he “knew the facts necessary for bringing a bad-faith claim,” even if he did not know of National Grange’s “litigation conduct,” an additional indicator of its bad faith. Id. at 37-38.

Even courts applying other claim preclusion principles have usually concluded that the subsequent bad-faith action is barred when it is based on conduct that preceded the first action. See Reid v. Transp. Ins. Co., 502 Fed.Appx. 157, 159-60 (3d Cir. 2012) (holding New Jersey’s entire controversy doctrine (ECD) barred bad-faith claim that was brought after successful litigation for breach of contract and explaining, “Because Reid should have been aware of his bad faith claim, and the claim could have been asserted in his initial litigation, the District Court was correct to apply the ECD and bar Reid’s claim”); Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 528-30 (6th Cir.2006) (holding that res judicata barred bad-faith claims based upon conduct that occurred before plaintiff filed her complaint in the first lawsuit but not events that occurred afterward); Zweber v. State Farm Mut. Auto. Ins. Co., 39 F.Supp.3d 1161, 1164, 1169 (W.D.Wash.2014) (holding Washington res judicata law precluded a bad-faith lawsuit following a successful lawsuit for recovery of UIM benefits); Chandler v. Commercial Union Ins. Co., 467 So.2d 244, 245, 251 (Ala.1985) (upholding summary judgment based on res judicata when the plaintiff filed a bad-faith suit after prevailing in an earlier action for recovery of insurance benefits for the loss of his truck in a fire); Lincoln Prop. Co., N.C. v. Travelers Indem. Co., 137 Cal.App.4th 905, 41 Cal.Rptr.3d 39, 45, 48 (2006) (holding that “the claim for breach of the covenant of good faith and fair dealing is part of the same primary right asserted in Lincoln’s prior action for breach of the duty to defend” and is barred by res judicata); Stone v. Beneficial Standard Life Ins. Co., 273 Or. 594, 542 P.2d 892, 893-94 (1975) (en banc) (finding that a bad-faith action alleging *725that the insurer had refused to pay life insurance proceeds after falsely claiming it had performed a “thorough investigation” into the death when it in fact had performed no investigation was barred under Oregon res judicata principles because it could have been brought with the original breach-of-contract action).

C. Two Exceptions to This Approach: (1) When the Bad-Faith Case Is Based on Conduct that Occurred During the Prior Lawsuit; (2) Jurisdictions Where the Bad-Faith Claim Accrues Only After the Insured Prevails on the Underlying Claim for Policy Benefits. Neither the court of appeals nor the plaintiffs have cited any cases where a first-party bad-faith case proceeded beyond summary judgment when it was based on the lack of an objective basis for claim denial and was filed after the insured had obtained a judgment for policy benefits. Based on our research, when the later bad-faith case has been allowed to go forward, this has occurred because of special facts in the case — or a special legal rule in the jurisdiction governing bad-faith claims. An example of the former is McCarty v. First of Georgia Insurance Co., 713 F.2d 609 (10th Cir.1983). There, the plaintiffs’ home was destroyed by fire, and they sought benefits from their homeowners insurer. Id. at 611."' The insurer denied the plaintiffs’ insurance claim, asserting it had never issued a policy. Id. After a lengthy investigation, the Oklahoma Insurance Commission decided it had no jurisdiction. Id. At this point, the plaintiffs sued for benefits on the policy, but the insurer obtained dismissal of this suit based on the statute of limitations. Id. Ultimately, after the insurer produced an actual copy of the insurance policy and records indicating it had issued and approved the policy, the plaintiffs sued the insurer for bad faith. Id.

The Tenth Circuit held the bad-faith claim was not barred by claim preclusion because the plaintiffs had “pleaded sufficient facts to support their theory that the company’s wrongful concealment prevented them from asserting their tort claim in the first action.” Id. at 613. “The tort claim ... arose only after conclusion of the first action” when the plaintiffs obtained a copy of a policy and realized the insurer had been deceiving them. Id. The court noted that under Oklahoma law, “where plaintiffs omission of an item of his cause of action was brought about by defendant’s fraud, deception, or wrongful conduct, the former judgment has been held not to be a bar to suit.” Id., at 612-13 (quoting Christian v. Am. Home Assurance Co., 577 P.2d 899, 905 (Okla.1977)).

Likewise, in Robinson v. MFA Mutual Insurance Co., the Eighth Circuit reversed the dismissal' of a bad-faith action for failure to state a claim where the claim was based on deceit that was not uncovered until the trial of the prior action. 629 F.2d 497, 501-02 (8th Cir.1980). Nevertheless, the court also noted, “Our holding on the res judicata issue does not foreclose [the insurer] from raising the issue at a later stage in these proceedings.” Id. at 502 n. 6.

Another example of a case where the insured was not precluded from bringing a later first-party bad-faith lawsuit based on the insurer’s fraudulent conduct in the.earlier proceeding is Corral v. State Farm Mutual Automobile Insurance Co., 92 Cal.App.3d 1004, 155 Cal.Rptr. 342, 344-47 (1979). In this case — decided prior to publication of the Restatement (Second) — the court found that claim preclusion was inapplicable to a bad-faith action derived from the insurer’s misrepresentations in the pri- or proceeding that the tortfeasor was not uninsured. Id.

*726We now turn to the second category of exceptions to the general rule. The Florida, Supreme Court has long held that a cause of action for first-party bad faith (which is statutory in. Florida) does not accrue until the conclusion of the underlying breaeh-of-contract case for policy bene-, fits. Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, 1291 (Fla.1991). This means, of course, that there can be no claim preclusion bar based on the prior adjudication. As explained by the Florida Supreme Court, bringing a first-party bad-faith claim'in Florida is

premature until there is a determination of liability and extent of damages owed on the first-party insurance contract. This avoids the problem Blanchard dealt with, which was the splitting of causes of action. However, a claim brought prematurely is not subject to a summary judgment. Such a claim should be dismissed as premature.

Vest v. Travelers Ins. Co., 753 So.2d 1270, 1276 (Fla.2000); see Porn, 93 F.3d at 36 (distinguishing Florida law); see also Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 945 So.2d 1216, 1235 (Fla.2006) (fWe hold that the arbitration panel’s award does not bar Dadeland’s bad faith claim against St. Paul and actually it was a condition precedent to this statutory cause of action.”). So in Florida, dismissal of a bad-faith claim is routine when the claim is brought before the predicate claim for policy benefits has been resolved. See, e.g., Bele v. 21st Century Centennial Ins. Co., 126 F.Supp.3d 1293, -, No. 6:15-cv-526-Orl-40GJK, 2015 WL 5155214, at *2 (M.D.Fla. Sept. 1, 2015).4

Iowa does not follow the Florida rule that entry of a Judgment for policy benefits is; a condition precedent to bringing a first-party bad-faith action. See Handley v. Farm Bureau Mut. Ins. Co., 467 N.W.2d 247, 249 (Iowa 1991) (indicating the plaintiff’s bad-faith claim was “not premature”). Nonetheless, we need to address the argument that the approach used in other jurisdictions like Alabama, Colorado, Connecticut, Missouri, New Jersey, Oregon, Washington, and Wisconsin would be inefficient. As seen above, all of those jurisdictions — and others — require the bad-faith claim to be joined with the breach-of-contract claim whenever it could have been brought at that time.5

*727D. Simultaneous Discovery and Bifurcated Trials. We previously, held in a UIM case, where the insured was seeking both policy benefits and damages for bad faith, that it was an abuse of discretion to stay discovery of the insurer’s files to the extent relevant to the insured’s bad-faith case “until .plaintiffs have established a prima facie case of bad faith.” Id. at 250, Among other things, we noted .that “plaintiffs ha[d] a present right to prepare , all aspects of their case for trial.” Id. We have never previously held that it is necessary to stay discovery on a first-party bad-faith claim until the breach-of-contract claim is resolved.

Like other jurisdictions, we have also held in the past that claim files are discoverable in first-party bad-faith insurance litigation. See Miller v. Continental Ins. Co., 392 N.W.2d 500, 506 (Iowa 1986); Amsden v. Grinnell Mut. Reins. Co., 203 N.W.2d 252, 256 (Iowa 1972).

In Squealer Feeds v. Pickering, we qualified our prior caselaw somewhat and indicated that the insured could not obtain the contents of claim files prepared after the insured’s claim was denied, absent a showing of substantial need and undue hardship. 530 N.W.2d 678, 688 (Iowa 1995), abrogated by Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 690 N.W.2d 38, 48 (Iowa 2004). The insured in that case conceded that any materials in the claim file postdating the denial of coverage were prepared in anticipation of litigation and thus constituted work product. Id. at 687.

However, in Wells Dairy, we then overruled prior cases, including Squealer Feeds, to the extent they adopted something other than the following test for work product — “whether,, in . light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” 690 N.W.2d at 48 (quoting 8 Charles Alan Wright et ah, Federal Practice and Procedure § 2024, at -198-99 (2d ed.1994)). This means that claim files are not covered by the work product doctrine except insofar as they contain documents that would not have been prepared but for anticipated litigation, See Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 12:5 (3rd ed. 2011) ('Where the insured’s complaint states a cause of action for first-party bad faith, the claims adjuster’s files can generally be discovered. Work product objections will lie in particular cases.”).

Also, we have repeatedly held that one essential element of á first-party- bad-faith claim is that the'insurer lacked an objectively reasonable basis for denying the claim. See, e.g., Wilson v. Farm Bureau Mut. Ins. Co., 714 N.W.2d 250, 262-63 (Iowa 2006) (discussing and applying this element); Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005) (explaining the “[ojbjective element: lack of reasonable basis”); Sampson v. Am. Standard Ins. Co., 582 N.W.2d 146, 149 (Iowa 1998) (“To be successful in a first-party bad-faith claim, a plaintiff must prove-by substantial evidence (1) the absence of a reasonable basis for denying the claim, and (2) that the defendant knew or had reason to know that its denial was without reasonable basis.”); Morgan v. Am. Family Mut. Ins. Co., 534 N.W.2d 92, 96 (Iowa 1995) (“The absence of a reason*728able basis for denying the claim is an objective element.... Where an objectively reasonable basis for denial of a claim actually exists, the insurer cannot be held liable for bad faith as a matter of law.”), overruled on other grounds by Hamm v. Allied Mut Ins. Co., 612 N.W.2d 775, 784 (Iowa 2000). As we put it in Morgan, “Iowa law is clear that an imperfect investigation, standing alone, ⅛ not sufficient cause for recovery if the insurer in fact has an objectively reasonable basis for denying the claim.’” 534 N.W.2d at 98 (quoting Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d at 250, 254-55 (Iowa 1991)).

Based on the foregoing, during the pretrial stages of a first-party case like this one, we see no difficulty in combining the breach-of-contract and bad-faith claims. The plaintiffs can conduct discovery on both claims, but the defendant can move for summary judgment if it had an objective basis for denying the claim, regardless of what its internal files may show on its subjective intent.

The question then becomes whether problems would arise at trial. See Restatement (Second) § 24 cmt. b, at 199 (noting that one consideration is whether the claims “form a convenient unit for trial purposes”). It is true that much of the evidence in an insurer’s files might be irrelevant to the breach-of-contract case, as well as unfairly prejudicial to the insurer. However, as the Pom court observed, this can be solved by bifurcating the trial into two phases. See 93 F.3d at 36-38, 37 n. 6; see also Tannenbaum v. Fed. Ins. Co., 608 Fed.Appx. 316, 318 (6th Cir.2015) (pointing out that the district court divided the trial into “a breach-of-contract phase and a bad-faith phase”); First United Pentecostal Church v. Guideone Specialty Mut. Ins. Co., 189 Fed.Appx. 852, 854 (11th Cir.2006) (“The trial was bifurcated into a liability phase for breach of contract and a bad faith phase.”); Agrawal v. Paul Revere Life Ins. Co., 182 F.Supp.2d 788, 791 (N.D.Iowa 2001) (ordering bifurcation of trials and stating that “[i]f possible ... the same jury will try the bad faith claim in the event that it resolves the coverage issue in the plaintiffs favor”); Powell, 922 A.2d at 1083 n. 5 (“[A]ny potential prejudice resulting from facts that are not related could be resolved by bifurcating the trial.”).

A bifurcated trial actually offers efficiency gains, as contrasted with a procedure under which the bad-faith claim would not even be filed until the breach-of-contract claim has been adjudicated. As the Colorado Court of Appeals observed in Salazar, “trial courts may choose to bifurcate the trials, allowing the evidence, common to both claims, to be presented at once and not in separate lawsuits commenced months or years later.” 148 P.3d at 282.

Our rules of civil procedure authorize bifurcated trials. See Iowa R. Civ. P. 1.914 (“In any action the court may, for convenience or to avoid prejudice, order a separate trial of any claim, counterclaim, cross-claim, cross-petition, or of any separate issue, or any number of any of them.”). In Johnson v. State Farm Automobile Insurance Co., the court of appeals approved the use of this rule to bifurcate the trial of an insured’s claim for UIM benefits against her insurer from the tidal of her bad-faith claim against the same insurer. 504 N.W.2d 135, 137 (Iowa Ct.App.1993). Notably, rule 1.914’s wording is similar to that of Federal Rule of Civil Procedure 42(b), under which a number of the foregoing federal cases were decided.

E. Final Observations. For all these reasons, we join the other jurisdictions that follow the Restatement (Second) and hold a first-party bad-faith claim based on denial of insurance benefits without a reasonable basis ordinarily arises out *729of the same transaction as a breach-of-contract claim for denial of those same benefits. This means a final judgment in the breach-of-contract case would bar the bringing of a subsequent, separate bad-faith lawsuit. As in other jurisdictions, the potential prejudice from introducing evidence relevant only to the insurer’s bad faith can be resolved by bifurcating the trial into a breach-of-contract phase and a bad-faith phase.'

While a first-party bad-faith claim will always require some additional proof, such a claim nonetheless challenges the same basic conduct as the underlying breach-of-contract claim — namely, the insurer’s refusal to pay benefits that were rightly owed. Perfect identity of evidence is not the standard in Iowa for whether claim preclusion applies. To the contrary, the Restatement makes clear that “a substantial overlap” of proofs and witnesses “ordinarily” leads to claim preclusion, and even the absence of such overlap is not fatal to claim preclusion. See Restatement (Second) § 24 emt. b, at 199; see also id. § 25, at 209 (“The rule of § 24 applies to extinguish a claim by the plaintiff against the defendant even though the plaintiff is prepared in the second action' ... [t]o present evidence or grounds or theories of the case not presented in the first action -”).

Obviously, in Pavone, the claim relating to the second casino involved different evidence to some extent. See 807 N.W.2d at 838. Similarly, in Arnevik v. University of Minnesota Board of Regents, we- found that a second lawsuit for indemnification was barred by claim preclusion even though the basis for indemnification in the second suit was entirely different — that is, a breach of the employment contract rather than respondeat superior. 642 N.W.2d 315, 318-21 (Iowa 2002). We specifically rejected the plaintiffs assertion that claim preclusion did not apply because “different facts were necessary to prove the respon-deat superior claim than were necessary to prove [the] theory in contract.” Id. at 321.6

Of course, there are limits to our holding. As we observed. in Leuehten-maeher, when the bad-faith claim- is based on conduct that occurred after the breach-of-contract case was filed, that is a different kettle of fish. 460 N.W.2d at 861. That is not the case here. Here the plaintiffs “could have raised” the bad-faith claim in the contract action. See Amevik, 642 N.W.2d at 319; see also Pavone, 807 N.W.2d at 838 (noting the Clinton action “could have been fully and fairly adjudicated in the original Emmetsburg action”). At oral argument before our court, plaintiffs’ counsel conceded a bad-faith claim could have been filed in March 2008 as part of the action seeking recovery for policy benefits. At that point, plaintiffs were well aware their insurance claim had been pending for nearly a year, but United *730Fire had only paid $108,310 toward the building despite the appraisal commissioned by plaintiffs showing its value to .be $388,200. The plaintiffs also knew that even United Fire conceded Martinez had purchased the long-vacant building and land for $150,000 and then put substantial improvements costing at least $45,000 into it before opening their Mexican* restaurant. The plaintiffs also knew United Fire had paid nothing for various costly items of personal property including three stove hoods (ranging from eighteen feet to twenty-four feet, long) and three walk-in coolers.

The plaintiffs also believed at that time that United Fire had ignored their “continuing deteriorating situation and pleas for relief’; that they had “become impoverished” while the insurer engaged in “intentional delays” and “flagrant disregard” for the customer; that United Fire had “intentionally delayed the' negotiations in settlement of [their] claim”; 'and that United Fire was not treating “their insured fairly,” and trying to find ways to deny money “long overdue.” Indeed, plaintiffs’ attorney had twice specifically accused United Fire of “bad faith.”

Undoubtedly, further evidence relevant to the plaintiffs’ bad-faith claim surfaced during discovery in the second action. That, of course, is the point of discovery. For the reasons already stated, we generally believe this evidence would have come to light earlier if the two claims had been combined in the original action. It would be difficult to argue that the splitting of the two claims here advanced the purposes of “judicial economy and efficiency.” See Penn v. Iowa State Bd. of Regents, 577 N.W.2d 393, 398 (Iowa 1998) (characterizing these purposes as goals of claim preclusion). More than seven years after the first action was filed by insured against insurer, the parties’ disputes are still not resolved. Bringing the first-party bad-faith claim in the original action would be far more efficient — and we believe principles of claim preclusion require this. If necessary, the trial can be bifurcated into two phases.

Again, a different case might well be .presented if the bad-faith claim could not have been asserted in the original case, but that is not the situation here. The plaintiffs had a basis for alleging bad faith in March 2008, when they filed their original suit, as well as ample time thereafter to amend that suit to add a'bad-faith claim.

Lastly, we address the plaintiffs’ contention that application of the customary rules of claim preclusion here will lead to the routine inclusion of bad-faith counts in suits for insurance recoveries. We think not. For one thing, all counsel are bound by Iowa Rule of Civil Procedure 1,413(1). By sighing a petition alleging bad-faith refusal to pay insurance benefits or an answer denying that insurance benefits are owed, counsel certifies that “to the best of counsel’s knowledge, information, and belief, formed after reasonable inquiry, it is well groqnded in fact ...” Iowa R. Civ. P. 1.413(1). Moreover, as we discussed earlier, one element of first-party 'bad faith is that the denial of the claim lacked an objectively reasonable basis. Counsel should be able to make a preliminary assessment on this point before an action is filed against the insurer or if need be, soon thereafter. Finally, as we have pointed out, our decision today is not a lone ranger: Many other jurisdictions treat the breach-of-contract claim and the bad-faith claim as flowing from one transaction for claim preclusion purposes. We see no indication that this approach has led to practical difficulties in those other jurisdictions, such as an unwarranted proliferation of bad-faith claims.

*731IV. Conclusion. .

For the foregoing reasons, we vacate the decision of the court of appeals and affirm the district court’s grant of summary judgment to United Fire.7

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.

CADY, C.J., and WATERMAN and. ZAGER, JJ., join this opinion. WIGGINS, J., files a dissenting opinion in which HECHT, J., joins. APPEL, J., files a separate dissenting opinion in which WIGGINS and HECHT, JJ., join.

. The case was dismissed once by operation of Iowa Rule of Civil Procedure 1.944 but later reinstated.

. Rule 1.944(1) provides, "[E]very civil and special action ... shall be brought to issue and tried within one year from the date it is filed and docketed and in most instances within a shorter time.” Iowa R. Civ. P. 1.944(1). Accordingly, a "case will be subject to dismissal if not tried prior to January 1 of the next succeeding year pursuant to this rule.” Id. r. 1.944(2).

. The Restatement (Second) of Judgments— with its emphasis on a transactional approach to claim preclusion — was published in 1982. Prior to that time, we used a "same-evidence’' approach to claim preclusion, although this did not mean we would decline to find claim preclusion just because some evidence in the second lawsuit was different. For example, in B & B Asphalt Co. v. T.S. McShane Co., we •• held that the plaintiff, who had sued thé defendants unsuccessfully for fraud over an allegedly defective asphalt plant) could not bring a new action for express warranty, implied warranty, and negligence.' 242 N.W.2d 279, 287 (Iowa 1976). Obviously, proving a breach of warranty or negligence would have *720entailed some different evidence from proving a fraud, but we said that "[c]laim preclusion is plainly applicable” because "the same evidence would be probative in both actions. They arise from the same transaction and depend on evidence of the same events.” Id.

Since we began citing the Restatement (Second) of Judgments, we have also continued to discuss and apply the older "same-evidence” test in tandem with the more recent transactional approach of the Restatement. See, e.g., Pavone, 807 N.W.2d at 836-39 (applying both approaches). What we have not done in the past is use the same-evidence test to reach a different result from that under the Restatement.

. Naturally, federal cases applying Florida res judicata law followr the Florida approach. See Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 483 F.3d 1265, 1271-72 (11th Cir.2007) (applying Florida law and • holding, that a bad-faith claim was not barred because the plaintiff "could not have possibly asserted” it in the prior proceeding since it did not accrue until the plaintiff established an entitlement to payment on its contract claim).

Similarly, in West Virginia, "in order for a policyholder to bring a common law bad faith claim against his insurer ... the policyholder must first substantially prevail against his insurer on the underlying contract action.” Jordache Enters., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 204 W.Va. 465, 513 S.E.2d 692, 711 (1998). In addition, West Virginia does not follow the Restatement’s transactional approach to claim preclusion. Slider v. State Farm Mut. Auto. Ins. Co., 210 W.Va. 476, 557 S.E.2d 883, 888 (2001).

. Although they may have been mentioned in treatises, we do not think it is necessary to discuss claim preclusion cases that involve very different circumstances, such as the question whether a declaratory judgment bars a bad-faith action against- a bank- (not an insurer) for failure to pay under letter of credit. See Schmueser v. Burkburnett Bank, 937 F.2d 1025, 1031 (5th Cir.1991) (applying Texas law).

Likewise, we do not think it is necessary to discuss old Louisiana law that has been superseded by statute. In Cantrelle Fence & Supply Co. v. Allstate Insurance Co., 515 So.2d 1074, 1078-79 (La.1987), the Louisiana Supreme Court applied the Code Napoleon to find that common law res judicata principles were inapplicable and therefore a separate *727statutory bad-faith claim could be pursued after a judgment had been obtained for insurance benefits. However, this aspect of the Code Napoleon subsequently met its Waterloo in the Louisiana legislature, and now it appears statutory bad-faith claims generally must be brought in the original action. See, e.g., Wood v. May, 658 So.2d 8, 9 (La.Ct.App.1995), reversed on other grounds, 663 So.2d 739 (La.1995).

. The court of appeals analogized the separate lawsuits here to the separate lawsuits that were involved in Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418 (Iowa 1996). We think the analogy is off the mark. Iowa Coal was a mining company that wanted to use certain strip mining sites as sanitary landfills. Id. at 424-25. In the first action, it challenged a county ordinance as having been improperly enacted and effecting a regulatory taking of its property. Id. at 425. In the second action, it alleged that the county had tortiously interfered, with a proposed contract with a private waste Company and’that it had a prior nonconforming use for. landfill purposes. Id. at 434-36, 438-40. The thrust of the two lawsuits was entirely different. The tortious-interference claim in the second lawsuit was based on the county’s overt campaign to block the deal with the waste.company; the nonconforming-use claim assumed the ordinance was valid and focused on whether Iowa Coal had a prior landfilling use that it had not discontinued. Id. at 443-45.

. As alternative grounds for affirmance of the district court (in whole or in part), United Fire urges that Villarreal and Martinez were not proper parties to the bad-faith action and that plaintiffs were not entitled to relief from the January 1, 2014 rule 1.944 dismissal. Because of our disposition of this appeal, we need not reach either argument.