                   IN THE COURT OF APPEALS OF IOWA

                                  No. 18-2022
                              Filed August 7, 2019


DARREN SLEISTER,
    Plaintiff-Appellant,

vs.

STATE FARM FIRE AND CASUALTY COMPANY,
     Defendant-Appellee.
________________________________________________________________


       Appeal from the Iowa District Court for Polk County, David May, Judge.



       Darren Sleister appeals from the district court’s orders granting the

defendant’s motion for judgment notwithstanding the verdict on his breach-of-

contract claim and dismissing his bad-faith claim. AFFIRMED.



       Kenneth R. Munro of Munro Law Office, P.C., Des Moines, for appellant.

       Guy Cook and Adam Zenor of Grefe & Sidney, P.L.C., Des Moines, for

appellee.



       Considered by Potterfield, P.J., and Bower and Greer, JJ. May, J., takes

no part.
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GREER, Judge.

       In 2016, Darren Sleister entered into a “house flipping” venture with

Georgios Symeonidis after seeing Symeonidis’s property listing.         Under their

agreement, Symeonidis would own the property and act as general contractor

during the rehab, Sleister would pay for labor and materials, and Sleister would

retain the net proceeds from the sale of the fully-remodeled property. On July 19,

Symeonidis purchased homeowner’s insurance for the property with $100,800 in

dwelling coverage from State Farm Fire and Casualty Company (State Farm).

Symeonidis was the named insured as the property owner, and Sleister was

named as an additional insured.1 A State Farm underwriting representative took

photographs of the property on July 29, showing the condition of the home to be

extremely poor. A municipal sign posted on the door declared the property a public

nuisance unsafe or unfit for human occupancy.

       Symeonidis hired a subcontractor to work on the roof, and Sleister expected

the subcontractor would only remove and replace the shingles and sheathing. On

August 10, the subcontractor removed the entire roof, including the trusses,

leaving the exposed home without a tarp or other protection from the elements. A

rainstorm began later that day, dumping water into the now-roofless structure and

destroying the interior of the home.

       On August 11, State Farm was notified of the property damage. A claims

specialist did not inspect the property until August 25. By that time, most of the

internal walls and flooring of the home had been removed. The claims specialist


1
 Neither Sleister nor Symeonidis ever lived in the home. At the time of trial, it was
unknown where Symeonidis lived.
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took photographs of the property, but he was unable to confirm what damage was

attributable to the rainstorm. Sleister maintains that because State Farm waited

weeks from the date of the damage to inspect the property, the walls and floors of

the home deteriorated to the extent that they had to be removed before the

inspection; however, the materials remained piled around the property or in the

dumpster on site.

       On September 13, State Farm sent Symeonidis a letter denying coverage

under the policy, stating, “We are denying coverage for this claim based [on] your

failure to comply with the conditions of the policy. You have a duty under the policy

to allow us to inspect the damage prior to the demolition or commencement of

repairs.”

       The policy requires the following duties of the insured after a loss:

            a. give immediate notice to us or our agent. . . . ; Also notify the
               police if the loss is caused by theft. Also notify the credit card
               company or bank if the loss involves a credit card or bank fund
               transfer card;
            b. protect the property from further damage or loss, make
               reasonable and necessary temporary repairs required to
               protect the property, keep an accurate record of repair
               expenditures;
            c. prepare an inventory of damaged or stolen personal property.
               Show in detail the quantity, description, age, replacement cost
               and amount of loss. Attach to the inventory all bills, receipts
               and related documents that substantiate the figures in the
               inventory;
            d. as often as we reasonably require:
               (1) exhibit the damaged property;
               (2) provide us with records and documents we request and
                   permit us to make copies;
               (3) submit to and subscribe, while not in the presence of any
                   other insured:
                   (a) statements; and
                   (b) examinations under oath; and
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             (4) produce employees, members of the insured’s household
                 or others for examination under oath to the extent it is within
                 the insured’s power to do so; and
          e. submit to us, within 60 days after the loss, your signed, sworn
             proof of loss which sets forth, to the best of your knowledge
             and belief:
             (1) the time and cause of loss;
             (2) interest of the insured and all others in the property involved
                 and all encumbrances on the property;
             (3) other insurance which may cover the loss;
             (4) changes in title or occupancy of the property during the term
                 of this policy;
             (5) specifications of any damaged building and detailed
                 estimates for repair of the damage;
             (6) an inventory of damaged or stolen personal property
                 described in 2.c;
             (7) receipts for additional living expenses incurred and records
                 supporting the fair rental value loss; and
             (8) evidence or affidavit supporting a claim under the Credit
                 Card, Bank Fund Transfer Card, Forgery and Counterfeit
                 Money coverage, stating the amount and cause of loss.

       Sleister sued State Farm for breach of contract, negligence, breach of

fiduciary duty, and bad faith. The district court granted summary judgment on the

counts relating to negligence, breach of fiduciary duty, and bad faith. The case

was tried to a jury on the breach-of-contract claim.

       At the trial, Sleister submitted documentation that he spent $95,000 on the

remodeling project before he abandoned it when this dispute could not be

resolved. He believed the property was worth more than $95,000 on the day

before the storm. State Farm calculated the actual cash value of the property was

$9553.65 prior to the loss. The assessed value of the structure pre-remodel was

$4100.

       Kim Brown, a claims team manager with State Farm, testified that the initial

reason for the denial of the claim was the insureds’ failure to “exhibit” the damage.

She defined “exhibiting the property” as allowing State Farm “to inspect the
                                          5


damage.” The policy language requires the insureds to “exhibit the damaged

property” to State Farm “as often as we reasonably require.”             Brown also

addressed other conditions precedent the insureds did not meet, including (1) not

protecting the structure from further damage or loss; (2) failing to provide an

inventory of damaged personal property; and (3) failing to submit a sworn proof of

loss within sixty days of the loss.

       On August 29, 2018, the jury found State Farm had breached the contract

and awarded Sleister $85,800 in damages. State Farm then filed post-trial motions

and specifically requested judgment notwithstanding the verdict (JNOV). The

district court granted State Farm’s motion for JNOV, entered judgment for State

Farm, and dismissed the case.         On appeal, Sleister asserts the evidence is

sufficient to prove he was entitled to coverage and the damages awarded. He also

appeals the ruling granting summary judgment on his bad-faith claim.

       “We review the [district] court’s grant of a motion for directed verdict for

correction of errors of law.” Tomka v. Hoechst Celanese Corp., 528 N.W.2d 103,

106 (Iowa 1995). Our review “is limited to those grounds raised in the directed

verdict motion.” Lala v. Peoples Bank & Tr. Co., 420 N.W.2d 804, 806 (Iowa 1988).

We will “view the evidence in the light most favorable to the nonmoving party” to

“decide whether the trial court correctly determined that there was insufficient

evidence to submit the case to the jury.” Id. We will also “tak[e] into consideration

every legitimate inference that may fairly and reasonably be made.” Wiesler v.

Sisters of Mercy Health Corp., 540 N.W.2d 445, 448–49 (Iowa 1995). “A motion

for judgment notwithstanding the verdict should be denied if there is substantial

evidence to support each element of the plaintiff[’s] claim[].” Id. at 449.
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       Under Iowa law, a party claiming entitlement to coverage under an

insurance policy must prove compliance with the policy’s terms. Am. Guar. & Liab.

Ins. Co. v. Chandler Mfg. Co., 467 N.W.2d 226, 228 (Iowa 1991); Bruns v. Hartford

Accident & Indem. Co., 407 N.W.2d 576, 579 (Iowa 1987); Henschel v. Hawkeye-

Sec. Ins. Co., 178 N.W.2d 409, 415 (Iowa 1970); Henderson v. Hawkeye-Sec. Ins.

Co., 106 N.W.2d 86, 91 (Iowa 1960). The insured may meet this burden of proof

by showing either: (1) substantial compliance with the condition precedent; (2) the

failure to comply was excused or waived; or (3) the failure to comply was not

prejudicial to the insurer. Am. Guar., 467 N.W.2d at 228; Henderson, 106 N.W.2d

at 92. When conditions are not met, prejudice to the insurer is presumed unless

the insured can show substantial compliance. Am. Guar., 467 N.W.2d at 228.

       Upon review, we agree with the district court’s detailed and well-reasoned

opinion that Sleister failed to comply with the requirements of the insurance policy.

Accordingly, we affirm the order granting JNOV to State Farm and dismissing the

action under Iowa Court Rule 21.26(1)(d) (“The record of the proceeding includes

an opinion of the court or agency whose decision is being reviewed, the opinion

identifies and considers all the issues presented, and the appellate court approves

of the reasons and conclusions in the opinion.”).

       Sleister also argues that the district court erred when it dismissed his bad-

faith claim. In Iowa, a plaintiff may bring a common law bad-faith action when an

insurer “intentionally denies or fails to process a claim without a reasonable basis

for such action.” Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d 250, 253

(Iowa 1991).    Based on our conclusion that Sleister and Symeonidis did not
                                        7


substantially comply with the conditions precedent to coverage, we also affirm the

grant of summary judgment on Sleister’s bad-faith claim.

      AFFIRMED.
