Bradley v. Allstate Insurance Company

IN THE COURT OF APPEALS OF IOWA

No. 23-1397
Filed January 23, 2025

DONNIE PAUL BRADLEY and MELANIE YVONNE BRADLEY,
Plaintiffs-Appellants,

vs.

ALLSTATE INSURANCE COMPANY,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Linn County, Justin Lightfoot

(summary judgment) and Kevin McKeever (final judgment), Judges.

Homeowners appeal from the district court’s denial of their

breach-of-contract, consequential-damages, and bad-faith claims. AFFIRMED.

James C. Larew and Claire M. Diallo of Larew Law Office, Iowa City, for

appellants.

Edmund E. Talbot III of Talbot Law Office, Blair, Nebraska, and Ellen J.

Brooke of Rynearson Suess Schnurbusch & Champion, LLC, St. Louis, Missouri,

for appellee.

Considered by Schumacher, P.J., and Buller and Langholz, JJ.
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BULLER, Judge.

Donnie and Melanie Bradley appeal from the district court’s summary

judgment ruling and final judgment following contractual disputes against Allstate

Insurance Company (Allstate). On appeal, the Bradleys allege the district court

erred in its interpretation of the insurance policy for the breach-of-contract claim

and by granting summary judgment to Allstate on the Bradleys’

consequential-damages and bad-faith claims. We affirm.

I. Background Facts and Proceedings

The Bradleys purchased an Allstate insurance policy in 2014 to cover their

Cedar Rapids home. Coverage included the actual cash value (ACV) of repairs,

which is the replacement cost value (RCV) with a deduction for depreciation.

Additional RCV coverage for the full replacement cost was available above the

ACV if the Bradleys made timely repairs following a covered loss. In the aftermath

of the August 2020 derecho windstorm, the Bradleys were left with significant

interior and exterior damage to their home from trees falling onto the home, water

damage from rainwater seeping in through new holes in the roof, and damage to

the siding, deck, fencing, and power lines around the home. The Bradleys

immediately reported the damage to Allstate, and there was no debate the losses

were covered under the policy. Allstate’s internal notes described the damage as

a “potential large loss” given that a “tree started to go through [the] roof into [the]

kitchen” and that the tree would need to be removed before the initial damage

inspection.

Adjusters were assigned to the claim and performed the initial inspection.

An appraiser prepared an itemized estimate for ACV and RCV repairs
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approximately one week after the damage occurred. Partial payment was issued

after the Bradleys expressed no concerns about the estimate. An additional

payment was made for food replacement as the Bradleys had no electricity for two

weeks.

The Bradleys remained in contact with various Allstate representatives

regarding further water damage from subsequent storms, air conditioning

problems, and receipts for other damaged property. They experienced

communication delays with the various adjusters in part due to the repeated

turnover of personnel working on their claims. And they submitted various

competing estimates to Allstate for interior and exterior repair costs and

tree-removal expenses. Another Allstate adjuster performed a supplemental

inspection of the property after receipt of the Bradleys’ final estimate. Allstate then

paid the remaining ACV to the Bradleys, but there was still a difference between

the Bradleys’ and Allstate’s estimates. These discrepancies generally stemmed

from differences in replacing or repairing certain aspects of the home, like the wet

carpets, drywall, and built-in bookshelves.

The Bradleys demanded appraisal in November 2020 as the parties could

not agree on the value or scope of repairs. And the Bradleys filed this lawsuit in

August 2021, before the one-year limitation outlined in the insurance policy. The

Bradleys claimed breach of contract for Allstate denying RCV coverage, alleged

bad faith, and demanded consequential and punitive damages. They also sought

declaratory judgment and injunctive relief to appoint an umpire for appraisal.

The parties signed an appraisal for the ACV in September 2021, and

Allstate paid the Bradleys in accordance with the insurance policy. But the
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Bradleys spent more on repairs than Allstate paid out and they continued with

litigation. The Bradleys ultimately paid for the repairs by refinancing their home to

establish a home equity line of credit and taking out a loan against a retirement

account. Allstate was to reimburse the Bradleys for repair costs in excess of

ACV—the equivalent of the RCV—if repairs were completed within 180 days of the

ACV payment.

The Bradleys filed a motion for partial summary judgment, which the district

court denied “without prejudice to refiling after further discovery, if necessary.”

Allstate then filed a motion for summary judgment on all claims. The court

granted the motion with regard to the consequential damages and bad-faith claims

but denied summary judgment for the breach-of-contract claim, finding a material

dispute as to whether the Bradleys timely completed repairs under the policy. The

Bradleys withdrew their request for a jury trial because the only dispute was

approximately $13,000 in RCV payments. And Allstate eventually paid the RCV

from the appraisal to the Bradleys. The Bradleys moved for final judgment and to

cancel the bench trial, but the district court dismissed the case as moot and was

not persuaded any new evidence or summary judgment motion was necessary to

properly dispose of the case because both parties agreed the only remaining issue

held over for trial was resolved. The Bradleys appeal.

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. Reins., 826

N.W.2d 494, 500 (Iowa 2013). And we review a summary judgment ruling for

correction of errors at law. Susie v. Fam. Health Care of Siouxland, P.L.C., 942
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N.W.2d 333, 336 (Iowa 2020). Summary judgment is appropriate when there is

no disputed issue of material fact and the moving party is entitled to judgment as

a matter of law. Id.

III. Discussion

On appeal, the Bradleys argue the district court erred by denying their

motion for judgment that the full appraisal award was due within sixty days of

issuance, denying consequential damages, and granting summary judgment on

the bad-faith claim. We address each in turn.

A. Appraisal-Award Due Date

The Bradleys’ first claim is that Allstate breached the insurance contract by

violating the plain meaning of the policy’s appraisal language—consistent with the

standard policy established in Iowa Code section 515.109(6) (2021)—by not

paying the appraisal award within sixty days and distinguishing between ACV and

RCV. And they allege the district court erred in denying their motion for partial

summary judgment on this basis by finding the appraisal-award RCV payment

obligation was ambiguous and granting more time for discovery rather than

deciding the claim then. Allstate argues the issue is not properly preserved and

moot.

Mootness is a “threshold question.” Vasquez v. Iowa Dep’t of Hum. Servs.,

990 N.W.2d 661, 667 (Iowa 2023). “The key in assessing whether an appeal is

moot is determining whether the opinion would be of force or effect in the

underlying controversy.” State v. Avalos Valdez, 934 N.W.2d 585, 589 (Iowa 2019)

(citation omitted).
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After examining the record and recognizing both parties on appeal agree

the claim is moot because Allstate paid the remaining RCV payments, we decline

to address the merits. We recognize there are a few fleeting remarks in the

Bradleys’ briefing that assert they can avoid mootness, suggesting we “focus on

the initial error of the district court” in not ruling on the breach-of-contract claim

“when it was ripe.” And they point to the public-importance exception, which allows

us to sometimes reach moot issues when they are “of broad public importance

likely to recur.” In re B.B., 826 N.W.2d 425, 428–29 (Iowa 2013). While we

understand it was important to the Bradleys they be timely paid, and we agree

there is a generalized public interest in timely insurance payments, the Bradleys’

assertions—unaccompanied by well-pleaded or proven facts suggesting systemic

problems—are insufficient to bypass the general barrier to review of moot claims.

See Vasquez, 990 N.W.2d at 668 (declining to apply mootness exceptions in part

due to “inadequate” record).

The Bradleys do not clearly assert any separate damages for this claim

beyond generally seeking “several smaller receipts” the district court did not see in

its RCV analysis and costs “to hire experts and pay additional amounts to obtain

loss estimates.” The timeliness of payment is not “a real live controversy” for our

review because the Bradleys received payment from Allstate—though admittedly

not when they wanted. The receipt of full payment “deprives the court of the ability

to provide the parties with a remedy.” Irving v. Emp. Appeal Bd., 883 N.W.2d 179,

187 (Iowa 2016). With no live controversy to decide on this issue, we decline to

rule on the appraisal-award due date.
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B. Consequential Damages

The Bradleys next allege the district court erred when it concluded the “Iowa

Supreme Court has indicated its belief that consequential damages are not

available for willful failure to pay claims.” They allege error in four ways, asserting

the district court ignored the Bradleys “were seeking consequential damages

pursuant to the breach-of-contract claim”; Brown Township Mutual Insurance

Ass’n v. Kress, 330 N.W.2d 291 (Iowa 1983), is no longer good law; Brown

recognizes consequential damages; and that the Iowa Supreme Court recognizes

consequential damages could be available in a breach of an insurance contract.

While acknowledging consequential damages for willful failure to pay claims

is available in some jurisdictions, our supreme court in Brown quoted with approval

that:

general . . . damages, in an action for breach of a contract to pay a
sum of money, and in the absence of special circumstances in the
contemplation of the parties at the time of the making of the contract,
is the principal sum agreed to be paid by the terms of the contract,
with legal interest thereon, it has been held that consequential
damages, resulting from the failure or delay of an insurer in making
payments due under an insurance contract are, as a general
proposition, and without regard to any special circumstances
indicating that such damages were within the contemplation of the
parties, not recoverable, limiting recovery for such breach of contract
to the amount due under the policy, with interest.

330 N.W.2d at 298 (citation omitted). And Brown remains good law, even though

it was decided five years before our supreme court recognized a first-party

bad-faith claim in Dolan v. Aid Insurance Co., 431 N.W.2d 790, 794 (Iowa 1988).

The Eighth Circuit recently interpreted a similar issue and opined: “[W]e do not

think the Iowa Supreme Court’s later recognition of a cause of action for bad faith

expanded the available damages for ordinary breach of an insurance contract.”
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Henderson v. State Farm Fire & Cas. Co., 113 F.4th 1042, 1055 (8th Cir. 2024).

We agree with the Eighth Circuit’s assessment.

Under Iowa law, consequential damages are unavailable for any of the

Bradleys’ claims. They cannot demonstrate any “special circumstances in the

contemplation of the parties” when the insurance contract was entered into in

2014. Brown, 330 N.W.2d at 298. And the district court did not err in denying

consequential damages.

C. Bad Faith

The Bradleys last argue the district court incorrectly granted Allstate’s

motion for summary judgment because Allstate is liable for bad faith because of

the delays and denials of loss indemnification after the appraisal award was issued

and the RCV payment became due.

A prima facie case for bad-faith denial of insurance claims has two

elements: “(1) absence of a reasonable basis for denying the claim (an objective

standard), and (2) the insurer knew or had reason to know its denial was without

a reasonable basis (a subjective standard).” Luigi’s, Inc. v. United Fire & Cas. Co.,

959 N.W.2d 401, 408 (Iowa 2021). For the first element, a “reasonable basis”

means that “the insured’s claim is fairly debatable either on a matter of fact or law.”

Bellville v. Farm Bureau Mut. Ins., 702 N.W.2d 468, 473 (Iowa 2005). The second

element may include a sub-par or negligent investigation of the claim from the

insurer. Id. at 474. And the party claiming bad faith must negate any plausible

reasonable basis for the denial or delay. Luigi’s, Inc., 959 N.W.2d at 409.
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We agree with the district court there was no genuine issue of material fact

that precluded summary judgment regarding the bad-faith claim. The district court

ruled:

The question of whether [the Bradleys] are entitled to RCV payments
is fairly debatable as a matter of law. The Court has already
concluded that the undisputed facts establish that there was no
unreasonable delay in the ACV payment. Regarding the RCV
payments, [Allstate] has disputed coverage on the basis that the
explicit terms of the policy require repair to be completed for an RCV
payment to be made, and the question of whether repairs were timely
completed is a claim that is open to dispute on a logical basis.
Indeed, even when viewing the evidence in the light most favorable
to [the Bradleys], the record is, at best, unclear whether repairs were
completed in a timely manner. Reasonable minds could differ on this
issue. For example, the estimates provided by [Allstate] were
supported by detailed costs of repairing specific square footage of
damaged areas. . . . On the other side, [the Bradleys] did not provide
such specific itemizations of their estimates. Reasonable minds
could draw different inferences and reach different conclusions with
regard to the RCV payments, and [the Bradleys] have not negated
any reasonable basis for [Allstate’s] denial or delay. The claim is
fairly debatable and [the Bradleys] cannot succeed on their bad faith
claim.

We adopt this reasoning as our own. We also note that while delays in receiving

funds, working with multiple adjustors, and the financial burden to pay for repairs

before reimbursement were understandably frustrating for the Bradleys, a

bad-faith claim requires more. The Bradleys did not set forth a facially valid

bad-faith claim, and the district court properly granted summary judgment.

IV. Disposition

We affirm, finding the district court did not err in its summary judgment

rulings or in dismissing the case.

AFFIRMED.