Postell v. Am. Family Mut. Ins. Co.

• Decision Date: 16 November 2012
• Docket Number: No. 12–0098.,12–0098.
• Citation: 823 N.W.2d 35
• Parties: Michelle POSTELL, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE CO., Appellee.
• Court: Iowa Supreme Court

823 N.W.2d 35

Michelle POSTELL, Appellant,

v.AMERICAN FAMILY MUTUAL INSURANCE CO., Appellee.

No. 12–0098.

Supreme Court of Iowa.

Nov. 16, 2012.

Joseph C. Creen of Bush, Motto, Creen, Koury & Halligan, P.L.C., Davenport, for appellant.

Ted J. Wallace, Davenport, for appellee.

WIGGINS, Justice.

This case involves the denial of coverage under a fire insurance policy. The policy included an intentional loss exclusion, voiding coverage when any insured intentionally causes a loss or damage. The district court denied coverage. In this appeal, we find substantial evidence supports the district court's finding that the coinsured who set fire to the insured dwelling in order to commit suicide had the requisite intent to “cause a loss” under the policy. We further find that under the language of the policy, the innocent coinsured spouse, who did not participate in the intentional acts of the other coinsured, cannot recover due to the intentional loss exclusion. Finally, we hold that the innocent coinsured cannot recover under the recently amended Iowa standard fire policy in Iowa Code section 515.109 (2009). Accordingly, we affirm the judgment of the district court.

I. Background Facts and Proceedings.

A. The Fire. Michelle and David Postell were married for thirty-one years. Since 1989, they resided at a home in Dixon. The couple owned the house as joint tenants.

Throughout their marriage, David and Michelle struggled with marital problems. Michelle had left David numerous times because he was verbally, physically, and emotionally abusive, but the couple always reconciled. She permanently separated from him in January 2009 and was in the process of seeking a divorce. During that time, Michelle still considered the house to be her residence and planned to return there after David moved out.

Accordingly, Michelle informed David that she was filing for divorce. He responded “the marriage wasn't going to be over until he said it was over.” Michelle testified that he then “offered to shoot me and kill himself.”

Thereafter, David became depressed and suicidal. On Super Bowl Sunday in 2009, approximately one week before the fire, he attempted suicide with a gun. David called the police and told them “they needed to come and clean up the mess.” A sheriff's deputy arrived in time to stop the attempt. The family subsequently removed all firearms from the house.

On Saturday, February 14, David left a voicemail for Michelle, telling her “this is a Valentine's Day you will remember for the rest of your life.” He detailed how he had poured gasoline throughout the house, turned on the stove, and lit candles. He said that if Michelle did not want him, “he would take care of the problem and he was going to blow himself up.”

Later that day, the couple's son, Jared, called his father who was asleep at the house. Jared testified that David sounded very jovial and indicated surprise at talking to his son. David told Jared that he had gotten five-gallon gasoline cans, spread gasoline throughout the house, lit candles, turned on the stove, and laid down, not planning to wake up. David asked his son to call Michelle to tell her about “all of this” so she would feel pain. While on the phone with his father, Jared heard his brother's fiancée, Amanda, arrive at the house. Jared overheard David tell her, “[G]et out of here because ... the house is going to blow.”

Amanda reported to police that she smelled a strong odor of gasoline when she entered the house. When she went further inside, she saw numerous large gasoline cans tipped over and observed the carpet was so soaked with gasoline that it was “as if someone had dumped water all over it.” In addition, she said the smell of gasoline was so strong her eyes were tearing up and her throat felt like it was closing. She then saw David with a lighter clenched in his right hand and heard him yell that she should get out of the house because he was going to “blow it!”

Another son, Justin, then arrived at the scene. He spoke with his father on the phone. David told him that if he or anyone else came near the house he would light it on fire.

David's friend, Michael Rowe, arrived at the house after Justin called. Michael said David was planning to blow up the house with him inside. He kicked down the door to the residence and entered. He also indicated the odor of gasoline was so strong his eyes watered. Michael reported to police that he saw smoke coming from the living room where he also observed a five-gallon, red plastic gasoline can on the floor. David continuously told him to get out. Specifically, David told him to “get the f____ out,” and “it's fixing to go.”

David subsequently set fire to the residence. Justin was still talking to his father on the phone at the time he reportedly lit the curtains on fire. David sustained burns on sixty to seventy percent of his body. Nonetheless, medical records indicate David was alert and walked into the emergency room. Both en route to and initially at the emergency room, David refused treatment. He gave medical personnel a full rendition of his story and his concerns about wanting to die.

Medical records show that David said he had “[lit] his house on fire in an attempt to kill himself with what he reports was going to be much better for all of them.” Elsewhere, the medical staff recorded how David attempted suicide by pouring gasoline on himself and his home and lit himself on fire.

Medical treatment only commenced after personnel informed David that he was mentally ill and they would restrain him if he did not cooperate. David died due to his injuries three days after the fire.

The same day as the fire, an agent from the Iowa State Fire Marshal's office conducted an investigation at the house. He smelled gasoline throughout the residence. He determined that two separate fires were set—one in the bedroom and one in the living room. In the bedroom, he observed ignitable liquid pour patterns. In the living room, he found a red plastic receptacle which, when tested at the laboratory, contained the presence of gasoline. The agent also noticed the stovetop and oven were on. He concluded that David had poured gasoline throughout the house and the cause of the fire was arson.

It is uncontested Michelle had no role in setting or contributing to the fire.

B. American Family Policy. Michelle and David purchased a residential fire insurance policy from American Family Mutual Insurance Company at the time they moved into the residence. Michelle paid all the premiums. The parties stipulated the policy was effective on the day of the fire. It is undisputed that David and Michelle Postell are the “named insureds” of the policy.

Section I of the American Family policy provides replacement coverage for fire damage caused to the insured dwelling and personal property contained therein, as well as loss of use. However, it only covers damage from “accidental direct physical loss,” subject to exclusions. The exclusions section, which applies to coverage of the dwelling, personal property, and loss of use, indicates:

We¹ [American Family] do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.

....

2. Intentional Loss, meaning any loss or damage arising out of any act committed:

a. by or at the direction of any insured; and

b. with the intent to cause a loss.

(Emphasis added.)

Michelle testified she was aware the policy included an intentional loss exclusion. However, she thought each person under the policy was a separate insured.

The policy includes two other provisions, pertaining to actions by the insured parties, which result in denial of coverage:

Part A

....

2. Neglect of any insured to use all reasonable means to protect covered property at and after the time of loss.

....

Part B

....

1. Fraud. We will not provide coverage for all or any part of a loss if, before or after the loss, any insured has committed fraud. Fraud means any concealment, misrepresentation or attempt to defraud by any insured either in causing any loss or in presenting any claim under this policy.

(Emphasis added.)

Section II of the policy contains the conditions to coverage. Those conditions only apply to “Section II of this policy.” The severability clause in section II states: “This insurance applies separately to each insured. This condition will not increase our limit for any one occurrence.”

After the fire, on August 11, Michelle submitted a proof of loss claim to American Family for recovery under the fire insurance policy. Michelle reported losses in the amount of $195,902.28 for buildings, $44,140.96 for personal property, and $3786 for loss of use.

C. Proceedings. On February 20, LaSalle Bank, the mortgage holder on the property, filed a petition for foreclosure on the destroyed residence. On December 11, Michelle filed a cross petition against third-party defendant, American Family, for denying her proof of loss claim and refusing to pay under the fire insurance policy. LaSalle Bank dismissed its petition with prejudice on June 3, 2010, because American Family paid off the mortgage under the fire insurance policy.

American Family filed a motion for summary judgment. American Family argued that since David intentionally set fire to the residence, Michelle could not recover under the policy's intentional loss exclusion. Michelle filed a cross motion for partial summary judgment.

The district court denied both American Family's motion for summary judgment and Michelle's motion for partial summary judgment. First, the court found there was no genuine issue of material fact that David intentionally lit the fire or caused a loss to the residence.

Second, the district court considered whether an innocent coinsured could recover under the policy that included an intentional loss exclusion. The district court could not find the...