An appellate court in Iowa, affirming a trial court's decision, has ruled that a commercial general liability ("CGL") insurance policy did not cover claims based on allegedly intentional acts by the insured.
The Case
Green Bay Levee Drainage District contracted with MEP Co. to reshape the district's levee. As part of the bid process before the contract was awarded, board members apparently took MEP's owner, Mike Pieper, to "the various locations" from which dirt could be moved to complete the project.
After MEP's bid was accepted, the company allegedly moved dirt from individual landowners' private property, rather than the authorized sites. Federal litigation ensued.
Addison Insurance Company, which had issued a CGL insurance policy to MEP, went to court for a judgment declaring that its policy did not provide coverage for MEP's expenses in the federal litigation.
The trial court found in favor of Addison, and MEP appealed.
The Appellate Court's Decision
The appellate court affirmed.
In its decision, the appellate court explained that the Addison policy provided coverage for "those sums that the insured becomes legally obligated to pay as damages because of . . . 'property damage'" caused by an "occurrence," defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
The appellate court then upheld the trial court's findings that Mr. Pieper "knew exactly what he was doing; that the removal of the dirt from sites other than those explicitly authorized was wrongful; and that [Mr.] Pieper intended and expected the resulting harm."
The appellate court also upheld the trial court's conclusion that MEP's "intentional acts of removing dirt from unauthorized" sites did not constitute an accident and did not qualify as an occurrence covered by Addison's CGL policy.
Accordingly, the appellate court concluded, Addison did not have a duty to defend MEP and did not have to indemnify MEP for any losses it sustained based on the contract dispute between MEP and the district.
The case is Addison Ins. Co. v. MEP Co., No. 17-2091 (Iowa Ct. App. Nov. 6, 2019). Attorneys involved include: Jeffrey A. Stone and Robert S. Hatala of Simmons Perrine Moyer Bergman, PLC, Cedar Rapids, for appellant. Matthew G. Novak and Stephanie L. Hinz of Pickens, Barnes & Abernathy, Cedar Rapids, for appellee.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].