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Devolder v. State Farm Mutual Automobile Insurance Co.

Court of Appeals of Iowa

October 24, 2018

STEVEN DEVOLDER and STEPHANIE DEVOLDER, Plaintiffs-Appellants,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM FIRE & CASUALTY COMPANY, Defendants-Appellees.

          Appeal from the Iowa District Court for Polk County, David M. Porter, Judge.

         Steven and Stephanie DeVolder appeal the grant of summary judgment in favor of the appellee insurers.

          S.P. DeVolder of The DeVolder Law Firm, PLLC, Norwalk, and William L. Kutmus of Kutmus, Pennington & Hook, PC, West Des Moines, for appellants.

          Guy R. Cook and Adam D. Zenor of Grefe & Sidney, PLC, Des Moines, for appellees.

          Considered by Danilson, C.J., McDonald, J., and Carr, S.J. [*]

          CARR, SENIOR JUDGE.

         Steven and Stephanie DeVolder appeal the grant of summary judgment in favor of State Farm Mutual Automobile Insurance Company and State Farm Fire & Casualty Company (collectively, State Farm[1]). The DeVolders claim State Farm committed breach of contract, first-party bad faith, and fraud in processing their insurance claim. We agree with the district court that summary judgment is appropriate on the fraud and first-party bad faith claims. However, we find a genuine issue of material fact regarding the breach-of-contract claim. Therefore, we reverse on the breach claim and remand for further proceedings.

         I. Background Facts and Proceedings

         On or about April 23, 2004, the DeVolders purchased a ring from Josephs Jewelers (Josephs) in West Des Moines for $28, 514. On April 26, Josephs prepared a "jewelry appraisal report" describing the ring as a "lady's 18K yellow and white gold engagement ring mounting, center set with one round brilliant cut diamond weighing 3.35 cts, Color K, Clarity VS1, GM (GIA Grading Report #12607644), and also prong set with 15 full cut diamonds weighing .75 cts." The report stated the replacement value of the ring was $39, 200.

         The DeVolders insured the ring and their other jewelry through State Farm in a personal articles policy with inflation coverage. Premiums were based on the replacement value of the jewelry. On or about June 15, 2016, the DeVolders lost the ring. At the time, the coverage limit on the ring was $46, 081 with a $500 deductible.

         Prior to filing a claim with State Farm, the DeVolders contacted Josephs for an updated appraisal for the ring. On June 20, 2016, Josephs emailed State Farm for assistance finding a replacement diamond to calculate the replacement cost for a possible claim, but they did not mention the DeVolders at the time. State Farm responded with information about two diamonds with lot numbers ZB12-280[2] and G16103.[3] Josephs used information about diamond ZB12-280 to calculate an updated replacement cost of $52, 827.23. In his deposition, Steven acknowledged diamond ZB12-280 is higher quality than their lost diamond. The DeVolders also submitted a signed "Report" from Neal Prati, a retired appraiser for Josephs who originally sold the ring to the DeVolders. According to the Report, diamond G16103 is lower quality than the DeVolders' diamond because the two diamonds are at opposite ends of the VS1 clarity grade and the DeVolders' diamond has two inclusions-or imperfections-compared to thirteen inclusions for diamond G16103.

         On or around June 21, 2016, the DeVolders filed a claim with State Farm for their lost ring. The insurance policy contains the following conditions:

We [State Farm] have the option of repairing or replacing the lost or damaged property. Unless otherwise stated in this policy, covered property values will be determined at the time of loss or damage. We will pay the cost of repair or replacement, but not more than the smallest of the following amounts:
a. the full amount of our cost to repair the property to its condition immediately prior to the loss or damage;
b. the full amount of our cost to replace the item with one substantially identical to the ...

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