review from the Iowa Court of Appeals.
from the Iowa District Court for Muscatine County, Paul L.
municipality seeks further review of a court of appeals
decision affirming summary judgment in favor of an insurer.
A. Ruksakiati and Thomas A. Vickers of Vanek, Vickers &
Masini, P.C., Chicago, Illinois, and Daniel P. Kresowik,
Jamie A. Bosten, and Amber J. Hardin (until withdrawal) of
Stanley, Lande & Hunter, Muscatine, for appellant.
M. O'Brien and Catherine M. Lucas of Bradshaw, Fowler,
Proctor & Fairgrave, P.C., Des Moines, for appellee.
story that probably would not have been written by Beatrix
Potter, a squirrel found its way onto an electrical
transformer owned by a municipality, triggering an electrical
arc that killed the squirrel and caused substantial damage to
the municipality's property. The municipality sought
coverage under its "all-risks" insurance policy.
The insurer denied coverage based on the policy's
electrical-currents exclusion, which excludes "loss
caused by arcing or by electrical currents other than
lightning." Disagreeing with this reading of the
insurance policy, the municipality filed suit. The district
court granted summary judgment to the insurer and the court
of appeals affirmed.
further review, we too affirm the district court. We find
that the loss was indeed "caused by arcing."
Therefore, it is excluded even though something else (i.e.,
the squirrel) triggered the arcing. This is not a situation
where two independent causes, one covered and one excluded,
may have contributed to the loss.
Background Facts and Proceedings.
City of West Liberty owns and operates an electrical power
plant. Employer's Mutual Casualty Company (EMC) insured
West Liberty's power plant with coverage effective from
April 1, 2014, through April 1, 2015.
November 7, 2014, a squirrel climbed onto an outdoor
electrical transformer at West Liberty's power plant.
While still touching a grounded steel frame that supported an
electrical cable, the squirrel came into contact with a bare
cable clamp that was energized with 7200 volts of
electricity. This contact created a conductive path between
the high voltage clamp and the grounded frame. Once this path
was established, the air between the energized and grounded
surfaces became ionized and arcing resulted. The squirrel was
killed, but more significantly the arcing caused $213, 524.76
worth of damage to West Liberty's transformer and other
Liberty provided timely notice of a claim to EMC for the
loss. EMC, however, denied coverage based on an
"Electrical Currents" exclusion in the policy. The
policy at issue was an all-risks insurance policy, which in
relevant part stated as follows:
"We" cover the following property unless the
property is excluded or subject to limitations.
"We" cover direct physical loss to covered property
at a "covered location" caused by a covered peril.
"We" cover risks of direct physical loss unless the
loss is limited or caused by a peril that is excluded.
1. "We" do not pay for loss or damage caused
directly or indirectly by one or more of the following
excluded causes or events. Such loss or damage is excluded
regardless of other causes or events that contribute to or
aggravate the loss, whether such causes or events act to
produce the loss before, at the same time as, or after the
excluded causes or events.
2. "We" do not pay for loss or damage that is
caused by or results from one or more of the following
excluded causes or events:
g. Electrical Currents - "We" do
not pay for loss caused by arcing or by electrical currents
other than lightning. But if arcing or electrical currents
other than lightning result in fire, "we" cover the
loss or damage caused by that fire.
January 21, 2016, West Liberty filed a petition in the Iowa
District Court for Muscatine County against EMC, seeking a
declaratory judgment of coverage and damages. EMC answered on
February 11, denying liability and asserting affirmative
defenses. On July 20, West Liberty moved for partial summary
judgment. On August 31, EMC resisted West Liberty's
motion for partial summary judgment and filed a cross-motion
seeking summary judgment.
Liberty's theory of recovery under the policy evolved
over time. Prior to litigation, West Liberty's city
attorney invoked the fire exception to the
electrical-currents exclusion. However, West Liberty later
appeared to concede that no part of the $213, 524.76 loss was
due to fire. Instead, in its July 20 summary judgment
memorandum, West Liberty argued a theory of concurrent
causation based on Amish Connection, Inc. v. State Farm
Fire & Casualty Co. See Amish Connection, 861 N.W.2d
230 (Iowa 2015). Thereafter, in its September 14 summary
judgment reply, West Liberty landed on efficient proximate
cause as its theory of choice, following principally
Qualls v. Farm Bureau Mutual Insurance Co. See
Qualls, 184 N.W.2d 710 (Iowa 1971).
motions were heard on September 22. The court granted
EMC's motion for summary judgment and denied West
Liberty's motion. The district court found that the only
event that caused damages was the electrical arc, noting the
squirrel did no damage to West Liberty's property
"such as ...