Lawrence v. State Farm Fire and Casualty Company
5:24-cv-04008
| N.D. Iowa | Jun 25, 2025Background
- Terri Lawrence purchased a home in Sioux City, Iowa, and insured it with State Farm.
- In January 2023, a burst water pipe released over 200,000 gallons of water into the home's basement, subsequently rendering the home unfit for habitation due to major foundation and structural damage.
- Lawrence submitted a claim under her homeowner's insurance policy; State Farm denied the claim, citing the policy's earth movement and water-related exclusions.
- Competing expert opinions were provided on causation: Lawrence's experts opined the water caused foundation settlement, while State Farm's expert attributed the damage to long-term foundation movement exacerbated by water but not caused solely by the pipe burst.
- Lawrence sued State Farm, asserting claims for breach of contract and bad faith denial of coverage. State Farm moved for summary judgment, arguing the policy exclusions applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Earth Movement Exclusion | Policy does not unambiguously exclude foundation damage from burst pipe; State Farm could have drafted clearer language. | Exclusion plainly bars coverage for earth movement, even if caused by water from a burst pipe, and contains an anti-concurrent causation clause. | Exclusion unambiguously applies; coverage is barred. |
| Breach of Contract | State Farm breached by denying coverage for damage caused by the burst pipe. | Properly denied based on policy language; no breach occurred. | No breach; summary judgment for State Farm. |
| Ambiguity of Policy Language | Policy language is ambiguous and should be construed in her favor. | Language regarding earth movement and water is clear and not ambiguous. | Policy language is not ambiguous; enforceable as written. |
| Bad Faith Denial | State Farm's denial was unreasonable and lacked any basis. | Had a reasonable basis for denial under the policy; no bad faith. | Claim was fairly debatable; no bad faith as a matter of law. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (Summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Material fact standard for summary judgment)
- Talen v. Employers Mut. Cas. Co., 703 N.W.2d 395 (Iowa contract law for insurance policies)
- Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222 (Breach of contract elements under Iowa law)
- Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468 (Bad faith insurance claim elements and standards in Iowa)