Salem United Methodist Church of Cedar Rapids, Iowa v. Church Mutual Insurance Company, 16-0170

Background

Salem United Methodist Church sued Church Mutual after the 2008 Cedar Rapids flood damaged the church basement; jury initially awarded Salem roughly $705,000 and on retrial $717,000.
This court previously vacated the first judgment and remanded, holding the policy excluded damages concurrently caused by a covered peril (sewer backup) and an excluded peril (flood).
The policy expressly excluded flood-related water damage and stated exclusion applies regardless of any concurrent contributing cause; it contained a limited additional coverage for sewer backup that excluded losses caused by flood.
Evidence at retrial established the Cedar River flood entered the sanitary system, causing surcharge/backflow that led to basement sewage/water damage; Salem’s own expert agreed the flood caused the backup.
Church Mutual moved for judgment notwithstanding the verdict (JNOV) arguing the undisputed evidence showed the flood — an excluded peril — was the direct or indirect cause of all claimed damage.
The district court granted JNOV; Salem appealed, arguing causation is a jury question and a jury’s negative finding on causation is conclusive.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether there was sufficient evidence to submit causation to the jury (i.e., whether JNOV was proper)	Salem: causation is typically a jury question; jury verdict adverse to the party with burden on causation is conclusive	Church Mutual: evidence undisputedly showed flood (an excluded peril) directly or indirectly caused all damage, so no reasonable jury could find otherwise	Court: Affirmed JNOV — no substantial evidence to generate a jury question because the flood was the direct/indirect cause
Whether the sewer-backup additional coverage applied despite flood involvement	Salem: relied on sewer-backup coverage and jury verdict finding coverage	Church Mutual: policy excludes sewer-backup coverage when caused by excluded flood; exclusion controls	Court: Sewer-backup coverage was inapplicable because the backup was caused by the excluded flood
Whether insurer must prove applicability of policy exclusion after insured shows prima facie coverage	Salem: argued jury could have found insured met burden and insurer failed to prove exclusion	Church Mutual: insurer may assert exclusion; when evidence shows excluded peril caused loss, exclusion applies as matter of law	Court: Restated law — insured bears initial burden; insurer bears burden to prove exclusion once prima facie case made; here evidence proved exclusion applied as a matter of law
Whether a per se rule should bar JNOV when causation is contested and jury found for plaintiff	Salem: urged rule that JNOV never appropriate where causation at issue and jury ruled for plaintiff	Church Mutual: no such categorical exemption; court must assess whether substantial evidence existed	Court: Rejected per se rule; JNOV is proper where no substantial evidence supports plaintiff’s causation theory

Key Cases Cited

Wieseler v. Sisters of Mercy Health Corp., 540 N.W.2d 445 (Iowa 1995) (standard of review for JNOV)
Iowa Mut. Ins. Co. v. McCarthy, 572 N.W.2d 537 (Iowa 1997) (view evidence in light most favorable to nonmovant on JNOV)
Johnson v. Dodgen, 451 N.W.2d 168 (Iowa 1990) (substantial-evidence standard explained)
W. Bend Mut. Ins. Co. v. Iowa Iron Works, Inc., 503 N.W.2d 596 (Iowa 1993) (insurer bears burden to prove applicability of policy exclusion)
Long v. Glidden Mut. Ins. Ass’n, 215 N.W.2d 271 (Iowa 1974) (insurer must prove exclusion)
Amish Connection, Inc. v. State Farm Fire & Cas. Co., 861 N.W.2d 230 (Iowa 2015) (insurance contract interpretation principles)
United Fire & Cas. Co. v. Iowa Dist. Ct. for Sioux Cty., 612 N.W.2d 101 (Iowa 2000) (law-of-the-case doctrine referenced)
Johnson v. Junkmann, 395 N.W.2d 862 (Iowa 1986) (substantial-evidence inquiry on factual issues)
Pedersen v. Kuhr, 201 N.W.2d 711 (Iowa 1972) (causation and sufficiency of evidence)
Ackerman v. James, 200 N.W.2d 818 (Iowa 1972) (when undisputed facts permit only one inference, directed verdict appropriate)
Easton v. Howard, 751 N.W.2d 1 (Iowa 2008) (purpose of JNOV to correct failure to direct verdict)
Konicek v. Loomis Bros., Inc., 457 N.W.2d 614 (Iowa 1990) (JNOV standard — whether fact question was generated)
Royal Indem. Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839 (Iowa 2010) (review of JNOV asks whether fact question was generated)
Graves v. O’Hara, 576 N.W.2d 625 (Iowa Ct. App. 1998) (directed verdict appropriate where plaintiff lacks substantial evidence)