Michigan Millers Mutual Insurance v. Asoyia, Inc.
793 F.3d 872
8th Cir.2015Background
- Asoyia (soybean oil producer) purchased general commercial liability and umbrella policies from Michigan Millers covering occurrences; a June 18, 2007 fire destroyed Sunnyside Country Club.
- United Fire (Sunnyside’s insurer/subrogee) investigated, paid the claim, and sent a June 28, 2007 subrogation notice to Asoyia; Asoyia did not forward that notice to Michigan Millers and did not participate in the on-scene investigation.
- United Fire sued Asoyia in May 2009 alleging spontaneous combustion of oil-soaked rags; Asoyia notified Michigan Millers promptly upon being sued; Jennings (former CEO) was added as a defendant in 2012 and also gave prompt notice when sued.
- Michigan Millers sought a declaratory judgment that it had no duty to defend or indemnify due to Asoyia’s delayed notice and claimed prejudice from lost/deteriorated evidence and missed participation in investigation/settlement.
- At trial, United Fire and the Waterloo Fire Marshal presented extensive contemporaneous photographs, witness interviews, and preserved artifacts; Michigan Millers’ expert criticized the earlier investigations as inadequate but largely waited 2½ years before hiring an expert.
- The district court found Asoyia’s notice delay gave rise to a presumption of prejudice but submitted prejudice to the jury; the jury found Michigan Millers was not prejudiced and the court entered judgment against Michigan Millers; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer was prejudiced by insured’s delayed notice | United Fire: contemporaneous investigations and preserved evidence rebut presumption of prejudice; no actual prejudice shown | Michigan Millers: delay (2007–2009) prevented meaningful on-scene investigation, witness statements faded, artifacts lost, and opportunity to influence settlement was gone | Jury found no prejudice; court affirmed because substantial evidence supported that finding and Iowa law allows rebuttal of presumption of prejudice (no JMOL/new trial) |
| Whether former CEO Jennings is an insured under Asoyia’s policies | United Fire/Jennings: policy language does not temporally limit “employees”; coverage applies for acts within scope of employment even if employment ended before occurrence | Michigan Millers: coverage is determined at time of occurrence; former employee not covered at time of loss | Court held policy ambiguous on temporal scope of “employees” and construed ambiguity for insureds; Jennings is covered |
Key Cases Cited
- Erie R. Co. v. Tompkins, 304 U.S. 64 (federal courts apply state substantive law in diversity actions)
- Met-Coil Sys. Corp. v. Columbia Cas. Co., 524 N.W.2d 650 (Iowa 1994) (notice delay gives rise to presumption of prejudice; presumption rebuttable)
- Fireman’s Fund Ins. Co. v. ACC Chem. Co., 538 N.W.2d 259 (Iowa 1995) (factors relevant to insurer prejudice; mere speculation of prejudice insufficient)
- Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494 (Iowa 2013) (ambiguities in insurance policy construed in favor of insured)