The Weitz Company (“Weitz”), an Iowa limited liability company, filed this diversity action for breach of contract and bad-faith denial of an insurance claim against Lloyd’s of London, Lexington Insurance Company, Continental Casualty Company, and United States Fire Insurance Company (the “Insurers”). The district court granted summary judgment for the Insurers and dismissed Weitz’s claims, holding that Weitz failed to provide timely notice of loss and the Insurers had an objectively reasonable basis for denying Weitz’s claim. For the reasons set forth below, we reverse and remand.
I.
In January 2001, CC-Aventura, Inc., an affiliate of H. Group Holdings, Inc. (“Hyatt”), hired Weitz as the general contractor to build a luxury retirement community in Aventura, Florida (the “Project”). Hyatt agreed to purchase and maintain “All Risks” property insurance that protected Weitz’s interests in its work at the Projeсt site. As part of its coverage portfolio, Hyatt obtained commercial property policies (the “Policies”) from the Insurers to cover all of the corporation’s real and personal property, including the Project. Weitz was not a named insured in the Policies.
1
To establish that it had obtained the required insurance, Hyatt gave Weitz an “Evidence of Property Insurance” certifiсate from Hyatt’s broker, Marsh USA, Inc. The certificate listed “BUILDERS RISK COVERAGE 19333 WEST COUNTRY CLUB DRIVE
Severe rains caused water damage to the Project site in June 2002. Hyatt representatives Tim Reidy and Juan Rodriguez, who visited the Project regularly, discovered the damage soon aftеr water entered the construction site. However, Reidy and Rodriguez did not inform Hyatt’s Risk Management Department of the damage. Meanwhile, Weitz took immediate steps to repair the water damage. In November 2002, Weitz informed Hyatt that Weitz was compiling costs associated with repairing the damage and that Weitz planned to submit a claim against the Policies. On December 10, 2002, Weitz sent a claim letter to Reidy that stated:
We hereby request that the attached Insurance claim for water damage be submitted to your Builders Risk Carrier. The attached package contains all costs associated with the rainwater damage that occurred at the Classic Residence by Hyatt project located at 19333 West Country Club Drive, Aventura, FL. The water damage was a result of extremely high volume, windy rains during the month оf June 2002. The submission of this package has been delayed to allow [t]he Weitz Company and the subcontractors the necessary time to compile all costs related to this claim. Please submit at your earliest convenience.
{Id. at 467.) On December 23, 2002, Reidy forwarded Weitz’s notice of the water damage claim to Dan Corrigan at GAB Robins North America, Inc. (“GAB”), the claims adjuster named in the Policies. Hyatt’s Risk Manager, David Mikulina, was copied on the letter to GAB. Consequently, both the Insurers and Hyatt’s Risk Management Department first received notice of the loss on the same day.
Reidy, Mikulina, and Corrigan conversed via telephone regarding the water damage claim and the state of construction at the Project when the loss occurred. Reidy told Corrigan that the structure was not enclosed, watertight, оr on schedule, and that problems existed with materials and workmanship. GAB did not visit the Project site, view photographs of the damaged property, or discuss the claim with Weitz. Instead, GAB only discussed the claim with Reidy and Mikulina. On February 28, 2003, Corrigan informed Hyatt, in writing, that the Policies did not cover the water damage to the Project for reasons including improper construction and failure to protect the property. Corrigan’s letter did not claim that Weitz failed to provide timely notice of loss. However, the letter contained language reserving any rights or defenses the Insurers may have had under the Policies or the law. The Policies’ Notice of Loss provision reads, in relevant part:
Any loss or damage insured hereunder in excess of $10,000 shall be reported in writing with full particulars to Marsh USA Inc., 500 West Monroe, Chicago, Illinois 60661 fоr transmittal to this Company for adjustment as soon as practicable after it becomes known to the Insured’s [Hyatt’s] Risk Management Department. The Insured may immediately make all necessary repairs or replacement.... GAB Robins North America[,] Inc. will be assigned for loss adjustments under this policy.
{Id. at 43.)
Reidy and Mikulina discussed GAB’s findings with Corrigan and concurred with its decision to deny coverage. In March 2003, Hyatt notified GAB that Hyatt no lоnger wished to pursue the water damage claim. Hyatt did not inform Weitz of this development. Because the Insurers denied the claim, Weitz suffered the entire
On July 7, 2004, Weitz sued the Insurers for breach of contract and for bad-faith denial of an insurance claim. The Insurers moved for summary judgment on both of Weitz’s claims. The Insurers argued that Illinois had the most significant relationship to the Policies and, therefore, Illinois law should apply in this case. Weitz argued that Iowa or Florida law applied to its breach-of-contract claim and Iowa law applied to its bad-faith denial claim. The Insurers asserted that Weitz’s claim for brеach of contract failed because Weitz did not give timely notice of loss to the Insurers. They also argued that Weitz’s claim for bad-faith denial failed because Illinois law does not recognize a bad-faith denial cause of action. They further asserted that, even if Iowa law applied, Weitz could not satisfy the elements of a bad-faith denial claim because the issue of coverаge was “fairly debatable.” Weitz responded by arguing that it had complied with the Policies’ notice-of-loss provision and established a prima facie case of bad-faith denial under Iowa law.
The district court granted summary judgment for the Insurers. On Weitz’s breach-of-contract claim, the district court found that Illinois law applied because Illinois had the most significant relationship to the transaction and thе parties. The court noted that Hyatt did not procure the Policies specifically for the Project in Florida; instead, the Policies covered all of Hyatt’s property in the United States and Puerto Rico. The court further noted that the Insurers issued the Policies to Hyatt in Illinois, negotiations between Hyatt and the Insurers took place in Illinois, endorsements were entitled “Illinois Changes,” complaints were to be lodged with the Illinois Department of Insurance, Marsh USA and GAB were both located in Illinois, and notice of loss was to be sent to Marsh USA in Illinois. The court determined that the Policies’ notice-of-loss provision required Weitz to give the Insurers “notice of loss ‘as soon as practicable’ after the loss or damage became known.” Weitz Co. v. Lloyd’s of London, et al., No. 4:04-cv-90353, slip op. at 15 (S.D.Iowa Mar. 31, 2008) (еmphasis added). The district court ruled that Weitz’s claim for breach-of-contract claim failed because there was no genuine issue of material fact that “Weitz failed to give the Insurers notice of its claim for water damage within a reasonable time or ‘as soon as practicable’ as required by the [Pjolicies.” Id. at 18.
Though the district court believed its conclusion on the notice-of-loss issue rеndered moot Weitz’s claim for bad-faith denial, the court briefly addressed the claim. The court decided that, even “when evaluated under Iowa law as urged by Weitz,” its claim failed because “the Insurers had an objectively reasonable basis for not paying the claim and the record is absent of specific facts showing the Insurers knew or had reason to know that the denial was without basis.” Id. at 25. In so holding, the court emphasized that “Hyatt representatives agreed with Corrigan’s assessment and advised Corrigan that the claim would not be pursued.” Id. at 26.
II.
Weitz contends the district court erred in applying Illinois law to Weitz’s breach-of-contract claim. We review de novo the district court’s choice-of-law determination.
St. Paul Fire & Marine Ins. Co. v. Bldg. Constr. Enters., Inc.,
On the merits of its breach-of-contract claim, Weitz argues that the district court erred in holding that Weitz’s insurance claim was barred under the Policies’ notice-of-lоss provision. Specifically, Weitz believes it complied with the plain language of the provision, which required providing notice of loss “as soon as practicable after it becomes known to the Insured’s [Hyatt’s] Risk Management Department.” (J.A. 43.) The Insurers argue that Weitz did not advance this plain-language argument in the district court; therefore, the issue is waived on appeal. Further, the Insurers assert that аdopting Weitz’s in~ terpretation would produce an absurd result in which a third-party beneficiary could delay giving notice for years as long as Hyatt’s Risk Management Department remained unaware. 3
Weitz has not waived its ability to argue that it complied with the plain language of the notice-of-loss provision. “Although, as a general rule, we do not consider issues not presented to the district court, a blanket statement condemning new arguments is far too broad.”
Universal Title Ins. Co. v. United States,
‘We review de novo the district court’s interpretation of provisions in an insurance contract, as well as its ultimate decision to grant summary judgment.”
Transcon. Ins. Co. v. W.G. Samuels Co.,
In sum, under the Policies’ plain language, timeliness of notice of loss is measured from when Hyatt’s Risk Management Department became aware of the loss, not when Weitz or other Hyatt personnel discovered the damage. 4 The undisputed facts demonstrate that the Insurers and Hyatt’s Risk Management Department received notice of loss оn the same day. Therefore, there can be no genuine issue of material fact that Weitz complied with the Policies’ notice-of-loss provision. We reverse the district court’s order granting summary judgment for the Insurers on Weitz’s breach-of-contract claim.
III.
On its bad-faith denial claim, Weitz argues that the district court erred in granting summary judgment because genuine issues of material fact remain as to whether the Insurers’ denial was reasonable under the circumstances. “We review a district court’s grant of summary judgment de novo. Summary judgment is proper if there is no genuine issue as to
Weitz urged the district court to apply Iowa law to this tort claim, but the Insurers advocated the application of Illinois law. Iowa recognizes an independent cause of action for bad-faith denial.
See United Fire & Cas. Co. v. Shelly Funeral Home, Inc.,
Under Iowa law, “to establish a claim for [ ] bad faith, the insured must prove two facts: (1) [ ] the insurer had no reasonable basis for denying benefits under the policy and, (2) the insurer knew, or had reason to know, that its denial was without basis. The first element is objective, the second subjective.”
Shelly Funeral Home,
Viewing the evidence in the light most favorable to Weitz and drawing all reasonable inferences therefrom, see
Carraher,
Though the alleged deficiencies in Weitz’s work may turn out, after trial, to have been a reasonable basis for denying the claim, GAB’s exclusive reliance on Hyatt’s representations is quite troubling in light of Hyatt’s financial incentives in this case. When it found no genuine issue of material fact concerning Weitz’s bad-faith denial claim, the district court failed to view the evidence, and the inferences that may be reasonably drawn from it, in the light most favorable to Weitz—the nonmoving party.
See Carraher,
IV.
Accordingly, we reverse the district court’s decisions granting summary judgment for the Insurers on Weitz’s claims for breach of contract and bad-faith denial, and we remand for further proceedings consistent with this opinion.
Notes
. In a previous ruling in this case, the district court concluded that Weitz is a third-party beneficiary under the "New Construction, Alteration and Repairs” clause in Section I of the Policies, which reads in part: "This policy also covers new buildings and structures at any location while in the course of cоnstruction and when completed ... including ... [t]he interests of contractors and subcontractors in such property to the extent the Insured has assumed liability therefore.” (J.A. 31.) The Insurers do not dispute this decision. Thus, Weitz has the right to sue under the Policies.
See Weitz Co. v. Lloyd’s of London, et al.,
No. 4:04-cv-90353,
.
See Swire Pac. Holdings, Inc. v. Zurich Ins. Co.,
. We decline the Insurers' invitation to ignore the Policies’ plain language in order to avoid what they perceive to be an "absurd result.” If the Insurers believed their own policy language was absurd, then they should have drafted different language.
See, e.g., Montgomery Ward & Co. v. Home Ins. Co.,
. Even under Illinois law, which the Insurers advocated and the district court applied, state and federal courts have enforced language similar to the Policies' notice-of-loss provision.
See Keystone Consol. Indus., Inc. v. Employers Ins. Co. of Wausau,
. 215 111. Comp. Stat. 5/155(1) reads:
In аny action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 60% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs;
(b) $60,000;
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.