DANNY L. CORNELL, Plaintiff-Appellan t/Cross-Appellee, vs. GRINNELL MUTUAL REINSURANCE COMPANY, Defendant-Appellee/Cross-Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 6-431 / 05-1632
Filed August 23, 2006
DANNY L. CORNELL,
Plaintiff-Appellant/Cross-Appellee,
vs.
GRINNELL MUTUAL REINSURANCE COMPANY,
Defendant-Appellee/Cross-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Des Moines County, John G. Linn
and R. David Fahey, Judges.
Danny L. Cornell appeals challenging certain rulings made in his claim for
payment of damages to his vehicle that he claims were covered under an auto
policy he carried with Grinnell Mutual Reinsurance Company. Grinnell Mutual
cross-appeals contending defendant’s claim should have been dismissed in its
entirety. AFFIRMED.
David L. Phipps and Stephen D. Marso of Whitfield & Eddy, P.L.C., Des
Moines, for appellant.
Douglas A. Haag of Patterson, Lorentzen, Duffield, Timmons, Irish, Becker
& Ordway, L.L.P., Des Moines, for appellee.
Considered by Sackett, C.J., and Huitink and Miller, JJ.
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SACKETT, C.J.
Danny L. Cornell sued Grinnell Mutual Reinsurance Company, his auto
insurance carrier, contending Grinnell Mutual should, among other things, pay for
damage to the transmission of his insured vehicle. Both parties filed a number of
motions and the question of whether Grinnell Mutual should pay for the
transmission was ultimately submitted to the jury, which returned a verdict in
Cornell’s favor.
Cornell appeals contending the district court made certain
erroneous rulings in precluding the admission of certain evidence and in
dismissing certain of his claims. Cornell also contends the district court should
have awarded him attorney’s fees.
Grinnell Mutual has cross-appealed
contending Cornell’s claim should have been dismissed as a matter of law. We
affirm.
I.
BACKGROUND FACTS AND PROCEEDINGS.
Cornell had in a single-vehicle accident while driving his 1996 Toyota
Landcruiser. On December 17, 2000, Cornell was driving on a rural road during
poor weather conditions and slid off an icy road into a ditch. The front-end of the
Toyota hit the opposite side of the ditch and left the Toyota settled at a steep
angle, with the front-end lower than the back-end.
Cornell attempted to drive the Toyota from the ditch by rocking it out,
driving forward and then backward. After Cornell was unable to drive the Toyota
out, he walked to a nearby farmhouse and called a tow truck. Cornell returned to
the Toyota and he again unsuccessfully tried to rock out the Toyota.
Russ
Wagner subsequently arrived with a tow truck. Wagner had difficulty pulling the
Toyota from the ditch due to the icy road conditions so he instructed Cornell to
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put the Toyota in reverse and “go as hard as he could” while Wagner attempted
to pull it out. The Toyota was successfully removed from the ditch.
Cornell drove home, but immediately noticed mechanical problems.
Cornell called Wagner, who is a mechanic. Wagner suggested snow may have
jammed into the mechanics of the Toyota and Wagner offered to let Cornell bring
the Toyota to his shop to let the snow melt overnight.
Still the mechanical
problems persisted and Wagner suggested Cornell take the Toyota to a Toyota
dealer, which Cornell did. At the dealership the problem was diagnosed as a
burned transmission that needed to be replaced. The mechanic at the dealership
suspected the transmission was “starved of fluid due to the angle the vehicle was
at,” which caused the damage. The transmission was replaced for $5,206.62
and some paint damage allegedly caused by the accident was repaired for
$156.81.
Cornell filed a claim for coverage of the loss with Grinnell Mutual.
The
claim was assigned to claims adjuster Bob Wysong. Wysong denied the claim.
Grinnell Mutual supported Wysong’s denial.
On December 13, 2002, Cornell filed a three-count petition in district court
(1) against Grinnell Mutual for breach of contract, (2) against Grinnell Mutual for
first-party bad faith in denying his claim, and (3) against claims adjuster Wysong
for intentional interference with contractual relations.
On January 15, 2004, Cornell filed a partial motion for summary judgment
on the breach of contract claim. The motion was denied. The district court found
there existed “genuine issues of material fact underlying the coverage question.”
On April 20, 2004, Grinnell Mutual filed a motion in limine to preclude plaintiff
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from
presenting
evidence
at
trial
that
defendants
“conducted
an
inadequate/improper investigation, processing and/or evaluation of his claim for
coverage.” 1 The district court held that, because it previously found there to be
genuine issues of material fact as to the coverage issue, the issue of coverage
was “fairly debatable.” Where a claim is “fairly debatable” an insurance company
can debate that claim without being subject to a first-party bad faith claim.
Sampson v. American Standard Ins. Co., 582 N.W.2d 146, 149 (Iowa 1998).
Further, the district court held that where a claim is fairly debatable, a claims
representative such as Wysong cannot be found liable for intentional interference
with contractual relations. Therefore, the court granted defendants’ motion to
preclude evidence regarding whether “the investigation/processing/consideration
of plaintiff’s claim for coverage was inadequate, improper, deficient and/or the
product of improper motives.” Essentially, the court held such evidence was
irrelevant pursuant to Iowa Rule of Evidence 5.402 because plaintiff did not have
valid claims on counts II and III of his petition.
Subsequent to the district court’s ruling on the admissibility of evidence,
defendants filed a motion for partial summary judgment on the first-party bad
faith claim and the intentional interference with contractual relations claim. The
district court granted summary judgment on those claims.
A jury trial commenced on June 7, 2005 on the breach of contract claim.
At the close of Cornell’s case Grinnell Mutual filed a motion for directed verdict
contending there was no coverage as a matter of law under the “other than
1
The district court stated the motion was actually a “request for advance ruling on the
admissibility of evidence” and so construed the motion. For purposes of brevity and
consistency we will refer to the motion as a motion in limine.
5
collision” provision of the insurance policy. 2 The district court held that the list of
perils included in the “other than collision” provision was exclusive. The type of
loss incurred by Cornell was not on that list; therefore, the district court held the
loss was not covered by the “other than collision” provision as a matter of law
and granted Grinnell Mutual’s motion for directed verdict on that issue. At the
close of Grinnell Mutual’s evidence Cornell filed a motion for directed verdict that
was denied by the district court.
Cornell’s remaining claim, that the loss was covered by the “collision”
coverage provision of the policy, was submitted to the jury. The jury returned a
verdict in favor of Cornell and awarded him $5,206.62 for the transmission and
$120 for temporary transportation. The district court entered judgment in favor of
Cornell and against Grinnell Mutual in the amount of $5,076.62 (reducing the
award by the amount of the $250 insurance deductible) plus interest and court
costs. Cornell filed a post-trial motion requesting the district court order Grinnell
Mutual to pay his attorney fees and costs, which was denied.
Cornell on appeal contends (1) the district court erred in not granting his
pretrial motion for summary judgment because he was entitled to judgment as a
2
Relevantly, this provision provides:
(A) We will pay for direct and accidental loss to “your covered auto” or
any “non-owned auto,” including their equipment. . . . We will pay for your
loss to “your covered auto” caused by (1) Other than “collision” . . .
(B) Loss caused by the following is considered other than “collision”:
1. Missiles or falling objects;
2. Fire;
3. Theft or larceny;
4. Explosion or earthquake;
5. Windstorm;
6. Hail, water or flood;
7. Malicious mischief or vandalism;
8. Riot or civil commotion;
9. Contact with bird or animal; or
10. Breakage of glass.
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matter of law under both the “collision” and “other than collision” provisions of his
insurance policy, (2) the district court erred in granting defendants’ motion in
limine, (3) the district court erred in granting the defendants’ motion for partial
summary judgment on the first-party bad faith and intentional interference with
contractual relations claims, (4) the district court erred in granting Grinnell
Mutual’s motion for directed verdict on the “other than collision” coverage claim,
(5) the district court erred in denying Cornell’s motion for directed verdict, and (6)
the district court erred in denying Cornell’s request for attorney fees and costs.
Grinnell Mutual on cross-appeal contends (1) the district erred as a matter of law
when it failed to direct a verdict in its favor finding the “collision” provision of the
policy did not cover Cornell’s loss as a matter of law, and (2) the district court
erred when it failed to direct a verdict in its favor as a matter of law finding the
“mechanical breakdown” exclusion applied to preclude coverage. We affirm.
II.
CORNELL’S APPEAL.
A.
Cornell’s Motion for Partial Summary Judgment.
We first address Cornell’s contention that the district court erred in not
ruling that his loss was covered by the insurance policy as a matter of law under
either the “collision” or “other than collision” provisions of the policy. If there was
any error in not granting the motion based on the “collision” provision, the error
was cured by the verdict in Cornell’s favor based upon that provision. Brant v.
Bockholt, 532 N.W.2d 801, 803 (Iowa 1995). Furthermore, even if the failure of
the district court to submit “other than collision” theory to the jury was in error,
which we do not reach a conclusion on here, it was also cured by the verdict in
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Cornell’s favor.
See Mills v. Guthrie County Rural Elec. Co-op. Ass'n, 454
N.W.2d 846, 849 (Iowa 1990).
B.
Defendants’ Motion in Limine.
We review rulings on the admission of evidence for an abuse of discretion.
See Clinton Physical Therapy Services, P.C. v. John Deere Health Care, Inc.,
714 N.W.2d 603, 609-10 (Iowa 2006). “[W]e give much leeway [to] trial judges
who must fairly weigh probative value against probable dangers.”
State v.
Taylor, 689 N.W.2d 116, 124 (Iowa 2004).
Through defendants’ motion in limine, the district court was asked to
determine whether the insurance claim was “fairly debatable” because “when an
objective reasonable basis for denying the claim exists, the insurer as a matter of
law cannot be held liable for bad faith.
The debate may involve a dispute
concerning an issue of fact or law.” Sampson v. American Standard Ins. Co.,
582 N.W.2d 146, 150 (Iowa 1998). Defendants’ argued that if the claim was
fairly debatable, then the claims of first-party bad faith and intentional
interference with contractual relations should be dismissed as a matter of law.
As a result of the claims being fairly debatable, defendants argued evidence to
support plaintiff’s case on those two claims was irrelevant and should not be
allowed at trial.
The district court granted defendant’s motion, finding the insurance claim
was fairly debatable because there were factual disputes as to “when, where,
and how the transmission damage occurred.” We agree.
Additionally, in order for the transmission damage to be covered due to
Cornell’s accident, the accident had to be the proximate cause of the
8
transmission damage. Bettis v. Wayne County Mut. Ins. Ass'n, 447 N.W.2d 569,
571 (Iowa Ct. App. 1989).
Even assuming the facts alleged by Cornell to be
true, that the transmission was damaged due to him trying to rock the Toyota out
of the ditch or driving in reverse to assist the tow truck in pulling the Toyota out of
the ditch, the issue of the proximate cause of the transmission damage remained
fairly debatable. Reasonable minds could differ as to whether hitting the ditch
was “the predominant cause which set in motion the chain of events causing the
loss” or whether defendant’s actions trying to free the car was an intervening
event that was the predominant cause of the loss.
See 11 Lee R. Russ &
Thomas F. Segalla, Couch on Insurance 3d § 156.86, at 107 (2005) (“Where the
circumstances are such that a reasonable person would not continue to operate
the vehicle, the insurer will not be liable for harm which is sustained as the result
of such operation after the collision.”)
We cannot say the district court abused its discretion in granting the
motion; therefore, we affirm on this issue.
C.
Defendant’s Motion for Partial Summary Judgment.
We review summary judgment rulings for correction of errors of law. Iowa
R. App. P. 6.4; Mason v. Vision Iowa Bd., 700 N.W.2d 349, 353 (Iowa 2005).
Where the record shows no genuine dispute of a material fact, summary
judgment is appropriate. Mason, 700 N.W.2d at 353. In determining whether
summary judgment is appropriate, we view the entire record in a light most
favorable to the nonmoving party.
Id.
We also indulge in every legitimate
inference that the evidence will bear in an effort to ascertain the existence of a
fact question. Id.
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The motion in limine sustained by the district court precluded Cornell from
presenting evidence to support his claims of first-party bad faith and intentional
interference with contractual relations; however, it did not go so far as to dismiss
those counts because defendants had not filed a motion for summary judgment.
Defendants subsequently filed a motion for partial summary judgment asking for
dismissal of those claims; the district court granted the motion.
We agree with the district court’s position. Upon granting of the motion in
limine preventing the admission of evidence to support the first-party bad faith
and intentional interference with contractual relations claims, summary judgment
was appropriate.
There existed no genuine issues of material fact on those
claims and defendants were entitled to judgment as a matter of law. See Mason,
700 N.W.2d at 353. We affirm on this issue.
D.
District Court’s Grant of Grinnell Mutual’s Motion for Directed
Verdict.
Cornell appeals the district court’s directing a verdict that, as a matter of
law, the loss sustained by Cornell was not covered by the “other than collision”
provision in his insurance policy. We do not decide whether the district court’s
ruling was in error. We once again note if any error was committed in failing to
submit an additional theory of liability, that error was cured by the verdict in
Cornell’s favor. Mills, 454 N.W.2d at 849.
E.
District Court’s Denial of Cornell’s Motion for a Directed
Verdict.
10
Once more, we do not decide whether the district court’s ruling was in
error. If any error was committed in failing to grant Cornell’s motion, that error
was cured by the verdict in Cornell’s favor. Id.
F.
Cornell’s Motion for Attorney’s Fees and Costs.
Cornell filed a post-trial motion pursuant to Iowa Rule of Civil Procedure
1.517(3) requesting that Grinnell Mutual be required to pay his attorney’s fees
and costs due to Grinnell Mutual’s alleged failure admit to certain discovery
requests.
The district court denied the motion.
We review for an abuse of
discretion. Koegel v. R Motors, Inc., 448 N.W.2d 452, 456 (Iowa 1989).
In ruling on the motion the district court made appropriate findings and
ultimately held that “a reasonable person in the defendant’s position with the
information available at the time the requests for admission were made, could
believe there was a basis to deny the plaintiff’s requests.” We agree with the
district court’s findings and the result reached. We affirm on this issue.
III.
GRINNELL MUTUAL’S CROSS-APPEAL.
Grinnell Mutual argues the district court erred when it refused to rule in its
favor on its motion for directed verdict that Cornell’s loss was not a “direct and
accidental loss” caused by a “collision” as a matter of law. We review the denial
of a motion for directed verdict for errors at law. Rife v. D.T. Corner, Inc., 641
N.W.2d 761, 766 (Iowa 2002) (citing McClure v. Walgreen Co., 613 N.W.2d 225,
230 (Iowa 2000)). We must consider the evidence in a light most favorable to the
nonmoving party. Id. If each element of the claim is supported by substantial
evidence in the record, the court must overrule the motion. Lamb v. Manitowoc
Co., 570 N.W.2d 65, 68 (Iowa 1997).
However, if reasonable minds could
11
deduce different inferences from the evidence presented, the court must submit
the issue to the jury. Rife, 641 N.W.2d at 767.
We first must determine if there was a “collision” within the meaning of the
insurance policy. In viewing the facts in the light most favorable to Cornell, on
the evening of the accident Cornell lost control of his Toyota while driving it and
slid into a ditch at a steep angle with the front-end of the Toyota resting against
the opposite side of the ditch causing the Toyota to become stuck. It took a tow
truck to pull it out. The policy defines collision as “the upset of ‘your covered
auto’ or a ‘non-owned auto’ or their impact with another vehicle or object.” We
conclude the evidence viewed in the light most favorable to Cornell constitutes
sufficient evidence of a collision. Reasonable minds could find that Cornell’s
vehicle impacted an object, that being the side of the ditch. Therefore, it was
appropriate for the district court to submit the case to the jury on the collision
element. Id.
We must next determine whether the transmission damage was a “direct
or accidental loss” caused by the collision. Viewing the evidence in the light most
favorable to Cornell, the transmission was damaged by the Toyota’s position in
the ditch, Cornell trying to rock the Toyota out of the ditch, and/or by Cornell
driving in reverse while being towed out of the ditch. The factual circumstances
are such that reasonable minds could deduce different inferences as to whether
it was reasonable for Cornell to continue to operate the vehicle in the situation
with which he was presented. See Bettis, 447 N.W.2d at 571. Therefore, the
district court appropriately submitted the issue to the jury. Rife, 641 N.W.2d at
767.
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Finally, Grinnell Mutual argues the district court erred when it failed to
direct a verdict in its favor based on the mechanical breakdown exclusion of the
insurance policy.
“‘Mechanical breakdown’ means a functional defect in the
moving parts of machinery which causes it to operate improperly or cease
operating.”
Connie's Const. Co., Inc. v. Continental Western Ins. Co., 227
N.W.2d 204, 207 (Iowa 1975). Similar to the Connie’s Construction case, if there
was a mechanical breakdown in the present case it was not caused by a
“functional defect,” but instead the breakdown was caused by the actions of
Cornell trying the drive the vehicle out of the ditch. Id. Thus, the district court
appropriately denied Grinnell Mutual’s motion for directed verdict on this issue.
AFFIRMED.
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