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3140 L.L.C v. State Central Financial Services

February 13, 2013

3140 L.L.C., PLAINTIFF-APPELLANT,
v.
STATE CENTRAL FINANCIAL SERVICES, INC., D/B/A STATE CENTRAL INSURANCE, DEFENDANT-APPELLEE.



Appeal from the Iowa District Court for Lee County (South), John Linn, Judge.

The opinion of the court was delivered by: Bower, J.

The plaintiff appeals from the district court order vacating the verdict, setting aside the judgment, and granting the defendant's motion for a new trial. AFFIRMED ON CONDITION AND CASE REMANDED.

Heard by Eisenhauer, C.J., and Danilson and Bower, JJ.

3140 L.L.C. brought an action against its insurance company following water damage from a fire sprinkler in a building it owned. 3140 L.L.C. argued the insurance company was negligent or negligently represented that it needed to maintain a working sprinkler system. A jury awarded 3140 L.L.C. $351,784.58 in damages on its claims. The district court vacated the verdict, set aside judgment, and ordered a new trial.

On appeal, 3140 L.L.C. contends the insurance company waived any right to challenge the jury instructions by failing to object to them prior to trial or in its motion in arrest of judgment. 3140 L.L.C. also contends the jury's verdict was supported by substantial evidence. We find any alleged error in the jury instructions was not a proper basis to grant a new trial. We agree with the district court that the jury's verdict was excessive. We find a remittitur is appropriate. Accordingly, we conditionally affirm the trial court's grant of a new trial due to the award of excessive damages.

I. Background Facts and Proceedings.

In December 2004, 3140 L.L.C. purchased property in Keokuk that had been used as a nursing home. They paid $286,000.00 for the property.

In 2007, 3140 L.L.C. purchased an insurance policy on the property through State Central Insurance (State Central). The policy, issued by Mount Vernon Insurance Company (Mount Vernon), did not provide coverage for fire sprinkler leakage.

In November 2007, 3140 L.L.C. was advised as to the necessity of maintaining a fire sprinkler in its vacant property. In a letter dated November 26, 2007, State Central insurance agent Frank O'Connor wrote:

In reviewing my letter of November 19th to you, I failed to indicate that the recommendations made by the Life Safety Inspector excused you from having fire extinguishers because the property was vacant, but they still want to have the sprinkler system main drain tested regularly to comply with federal regulations. The last test was in 2004, which would indicate that it has not been tested in recent times. This is an engineering requirement that is mandatory.

The Mount Vernon insurance policy was renewed on September 20, 2008. A letter issued on October 9, 2008, by O'Connor states:

The basic form only provides coverage for fire, lightening, explosion, wind or hail, smoke, aircraft or vehicle, riot, vandalism, sprinkler leakage, sinkhole collapse and volcanic action all as defined and limited within the policy. In addition the policy contains several exclusions including earthquake and flood. Please read Form CP1010 carefully to understand the limitations and exclusions on the property side of the policy.

On December 23, 2008, the building owned by 3140 L.L.C. incurred damage after water pipes and fire sprinklers froze and broke. 3140 L.L.C. made a claim for damages with Mount Vernon but was denied because the policy did not provide coverage for damage due to sprinkler leakage

O'Connor sent 3140 L.L.C. a letter dated February 17, 2009, which informed the company that the insurance policy it had purchased on its property did not require the property to have an ...


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