Metropolitan Property and Casualty Insurance Company d/b/a Metlife Auto & Home and Economy Premier Assurance Company v. Auto-Owners Mutual Insurance Company
924 N.W.2d 833
Iowa2019Background
- Jay and Lorrie Lala owned Parker House Properties, LLC (Parker House), which held a vacant but furnished farmhouse used for occasional business events and recreational activities; the farmhouse was insured under Parker House’s Auto‑Owners CGL policy.
- Jay and family members (including son Nick) were also covered by a separate Metropolitan homeowners policy; Metropolitan paid $900,000 to settle wrongful‑death claims after Nick accidentally discharged Jay’s rifle at the farmhouse, killing Hunter True.
- Metropolitan (subrogated to Parker House’s rights) sued Auto‑Owners seeking contribution/indemnity for half the settlement; Auto‑Owners denied coverage, arguing the CGL policy only covered conduct “in the conduct of [the business]” and Parker House lacked premises liability exposure.
- The district court found (after bench trial) Parker House was an insured entity for premises liability, Nick could be an insured (agent/employee/volunteer) while securing the property, the settlement was reasonable, and entered judgment against Auto‑Owners for $450,000.
- Auto‑Owners appealed; the Iowa Supreme Court reviewed the contract interpretation de novo and factual premises‑liability findings for substantial‑evidence support and affirmed.
Issues
| Issue | Plaintiff's Argument (Metropolitan) | Defendant's Argument (Auto‑Owners) | Held |
|---|---|---|---|
| Whether the CGL policy covers claims arising from the shooting (i.e., whether Parker House as named insured had potential liability) | Parker House is the named insured; its ownership of the farmhouse is a business/investment purpose and the entity is covered for premises liability regardless of whether the incident occurred during “business” activity | Policy limits coverage for members/employees to acts in conduct of business; the shooting arose from personal/recreational activity and Parker House had no premises exposure | Parker House (the entity) is covered under the policy and substantial evidence supports potential premises liability; coverage applies |
| Whether Nick was an insured under the CGL policy at the time (agent/employee/volunteer acting in scope) | Nick was asked by manager Jay to secure the house (a business‑related task to protect the investment), so he was acting for Parker House and is an insured | Nick was engaged in personal recreation; securing the house did not include handling/storing guns, so he was not acting for Parker House | Court found substantial evidence Nick acted for Parker House when securing the property and could be an insured (agency/volunteer/employee theory) |
| Whether the settlement ($900,000; Parker House’s confession of $450,000) was reasonable and prudently avoided greater risk at trial | Given disputed apportionment of fault and plausible jury exposure to Parker House on premises theory, settling was a reasonable, prudent course | Settlement was excessive because a jury would largely fault Nick (and Jay personally), leaving Parker House little or no liability; reasonable settlement should be nominal or only defense costs | Trial court’s finding that the settlement was reasonable is supported by expert testimony and substantial evidence; Auto‑Owners must contribute half |
| Admissibility of experts (testimony bearing on potential liability and settlement reasonableness) | Expert opinion on likely jury allocation and reasonableness assists the trier of fact in evaluating settlement prudence | Some expert testimony improperly opined on legal issues or was unnecessary for the trier of fact | District court did not abuse discretion admitting expert testimony at bench trial; opinions were helpful to evaluate settlement and liability exposure |
Key Cases Cited
- Walnut Creek Townhome Ass’n v. Depositors Ins., 913 N.W.2d 80 (Iowa 2018) (insurance‑policy interpretation standard and review of factual findings)
- Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524 (Iowa 1995) (standard for reasonableness of settlement to bind non‑settling insurer)
- Ludman v. Davenport Assumption High Sch., 895 N.W.2d 902 (Iowa 2017) (premises‑liability duty and multifactor test for land possessors)
- Am. Family Mut. Ins. v. Corrigan, 697 N.W.2d 108 (Iowa 2005) (principles for insurance policy construction and ambiguity)
- Nat’l Sur. Corp. v. Westlake Invs., LLC, 880 N.W.2d 724 (Iowa 2016) (limitations on rewriting clear policy language; insurer’s duty to define exclusions)
- Peak v. Adams, 799 N.W.2d 535 (Iowa 2011) (agency is generally a question of fact)