                   IN THE COURT OF APPEALS OF IOWA

                                    No. 17-2091
                              Filed November 6, 2019


ADDISON INSURANCE COMPANY,
     Plaintiff-Appellee,

vs.

MEP CO.,
     Defendant-Appellant.
________________________________________________________________


      Appeal from the Iowa District Court for Lee (North) County, John G. Linn,

Judge.



      A defendant appeals the district court’s declaratory judgment in favor of the

plaintiff. AFFIRMED.




      Jeffrey A. Stone and Robert S. Hatala of Simmons Perrine Moyer Bergman,

PLC, Cedar Rapids, for appellant.

      Matthew G. Novak and Stephanie L. Hinz of Pickens, Barnes & Abernathy,

Cedar Rapids, for appellee.



      Considered by Vaitheswaran, P.J., Doyle, J., and Vogel, S.J.

      *Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2019).
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VAITHESWARAN, Presiding Judge.

       Green Bay Levee Drainage District contracted with MEP Co. to reshape the

levee. As part of the bid process before the contract was awarded, board members

took MEP Co.’s owner Mike Pieper to “the various locations” from which dirt could

be moved to complete the project.           After MEP Co.’s bid was accepted, the

company moved dirt from individual landowners’ private property, rather than the

authorized sites. Federal litigation ensued.

       MEP Co. had a commercial general liability (CGL) policy with Addison

Insurance Company. Addison sued MEP Co. for a judgment declaring that its

policy provided no coverage for MEP Co.’s expenses in the federal litigation.

Following trial, the district court found in favor of Addison, concluding, “[t]he

commercial general liability insurance policy . . . affords no coverage.”

       On appeal, MEP Co. raises several arguments in support of reversal. First

among them is a contention that “the insuring agreement provides coverage for

occurrences resulting in property damage.” This issue is the only one we find it

necessary to address.

       We begin with the policy language.            The insuring agreement provides

coverage for “those sums that the insured becomes legally obligated to pay as

damages because of . . . ‘property damage.’” The agreement further obligates the

insurer “to defend the insured against any ‘suit’ seeking those damages.”

However, the insurer “will have no duty to defend the insured against any ‘suit’

seeking damages for . . . ‘property damage’ to which this insurance does not

apply.” The insurance “applies to . . . ‘property damage’ only if . . . [t]he . . . ‘property

damage’ is caused by an ‘occurrence.’”               The insuring agreement defines
                                        3


“occurrence” as “an accident, including continuous or repeated exposure to

substantially the same general harmful conditions.”

      The supreme court interpreted the identical definition of “occurrence” in

National Surety Corp. v. Westlake Investments, LLC, 880 N.W.2d 724, 735 (Iowa

2016). The court held, “An intentional act resulting in property damage the insured

did not expect or intend qualifies as an accident amounting to an occurrence as

defined in a modern standard-form CGL policy so long as the insured did not

expect and intend both the act itself and the resulting property damage.” Westlake,

880 N.W.2d at 736; cf. Pursell Constr., Inc. v. Hawkeye-Security Ins. Co., 596

N.W.2d 67, 71 (Iowa 1999) (holding “defective workmanship standing alone . . . is

not an occurrence under a CGL policy”); Yegge v. Integrity Mut. Ins. Co., 534

N.W.2d 100, 103 n.3 (Iowa 1995) (noting policy defined “occurrence” as “an

accident including continuous or repeated exposure to substantially the same

general harmful conditions”); Hudson Hardware Plumbing & Heating, Inc. v. AMCO

Ins. Co., No. 15-1677, 2016 WL 5930779, at *6 (Iowa Ct. App. Oct. 12, 2016)

(characterizing Westlake as “a bit of a game changer”).

      Applying Westlake, the district court made the following pertinent findings:

               Analyzing whether MEP Co.’s actions in intentionally
      removing dirt from unauthorized sites qualifies as an accident under
      the CGL policy boils down to a determination by the Court of whether
      [MEP Co.] did not expect and intend both the act of removing the dirt
      and the resulting property damage. Pieper claims he intentionally
      removed dirt from the [individual property owners’] sites but he did
      not expect or intend resulting property damage because he believed
      it was permissible to remove dirt within the 150-foot easement the
      [d]istrict had over the levee. MEP Co. claims Pieper did not intend
      to harm the property owned by [private landholders]; therefore, the
      removal of the dirt was an accident.
               The Court rejects Pieper’s assertion. First and foremost,
      Pieper’s testimony on this issue lacks credibility. Pieper knew the
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location of the explicitly authorized borrow sites. He attended the
meeting at which [a board member and engineer] were also present.
The location of the authorized borrow sites was carefully described,
and Pieper even marked the locations on a map. [A board member,
engineer, and Pieper] physically visited these sites. Pieper cannot
dispute the fact that he had specific knowledge of the location of the
explicitly authorized borrow sites. Nonetheless, when it came time
to perform the contract, Pieper chose to remove dirt from the
[individual landowners’] properties.
          Initially, when the board heard that MEP Co. was removing
dirt from unauthorized sites, Pieper was confronted with this
allegation. He denied removing dirt from unauthorized sites. Later,
when Addison became involved and [Addison’s claims adjuster]
began his investigation, he interviewed Pieper. At that point, Pieper
claimed that the sites from which MEP Co. removed dirt had actually
been approved, retroactively, by the board. Pieper claimed this
approval could be found in the board minutes. This claim proved to
be blatantly false. Finally, and as part of this insurance litigation,
Pieper now claims he had implicit authorization to remove dirt from
sites, other than the explicitly authorized sites, based on the board’s
right of easement over the land 150 feet from the centerline of the
levee. This is really nothing more than an after-the-fact
rationalization thought up as a way to justify Pieper’s wrongful acts.
          When Pieper directed MEP Co. to remove tens of thousands
of yards of dirt from unauthorized sites, what he really intended was
simply not to be caught. Photographs of the area in question show
undeveloped property that seems remote and uninhabited. Pieper
assumed he could get away with removing dirt at these locations only
one-half mile from the levee reshaping and restoration. This would
save Pieper significant out-of-pocket expenses in performance of the
contract. Had Pieper actually used the explicitly authorized borrow
sites, he would have been trucking dirt five or six miles for each haul.
This would have greatly increased his costs. Instead, Pieper chose
to fulfill the contract in a “quick and dirty fashion.” The cost to Pieper
of hauling dirt from the unauthorized sites greatly reduced his
expenses and increased his profit. He did not intend to be caught
hauling dirt from unauthorized sites, but once he was caught, he is
claiming he did not intend to harm the property. The Court rejects
this claim and makes a finding that Pieper knew and intended to
harm the [individual landowners’] propert[ies], but at the same time,
he intended to simply not be caught.
          The Court must also gauge the credibility of Pieper’s claim
that he did not intend to harm the [individual landowners’] propert[ies]
based on his background. Pieper claims he reasonably believed he
had implicit authority to remove dirt from the unauthorized sites
because the land was within the 150-foot easement of the levee.
However, Iowa Code section 468.380 prohibits any person or
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       corporation from removing earth within 300 feet of the centerline of
       any levee without first securing permission to do so from the
       governing body of the levee district. Is it conceivable that Pieper was
       unaware of this Code section? Pieper has for years lived and farmed
       in the levee district. He owns and operates a construction company
       which specializes in earth moving. This company is located in the
       levee district. Finally, Pieper served on the levee district board for
       20 years and for a period of time, he was the chairman of the board.
       Given that background, it is inconceivable that Pieper did not know
       and understand he could not remove dirt from any location within 300
       feet of the levee centerline without first securing permission from the
       district board.

       MEP Co. concedes the district court’s findings “are binding if supported by

substantial evidence.” See Grinnell Mut. Reinsurance Co. v. Voeltz, 431 N.W.2d

783, 785 (Iowa 1988) (“[T]he district court’s findings of fact have the effect of a jury

verdict and are binding on us if supported by substantial evidence.”). The company

simply argues, “The Court’s holding is unsupported by the evidence.” To the

contrary, the record is replete with evidence supporting the district court’s findings.

We find it unnecessary to recount that evidence. Suffice it to say that, together

with the weight we afford the district court’s credibility findings against Pieper, the

substantial evidence standard is more than satisfied.

       We turn to the district court’s conclusions of law:

       [T]he facts of this case lead to the inescapable conclusion that Pieper
       knew exactly what he was doing; that the removal of the dirt from
       sites other than those explicitly authorized was wrongful; and that
       Pieper intended and expected the resulting harm, although [the
       owner] intended not to be caught. The Court concludes MEP Co.’s
       intentional acts of removing dirt from unauthorized borrow sites do
       not constitute an accident and does not qualify as an occurrence
       covered by Addison’s CGL policy. Addison did not have a duty to
       defend MEP Co. concerning any claims asserted against it by the
       district or third parties, nor must Addison indemnify MEP Co. for any
       losses sustained based on the contract dispute between MEP Co.
       and the district. The Court, having reached the conclusion that MEP
       Co. does not have coverage under the insurance contract, [finds]
       there is no need to analyze exclusions. Moreover, because there is
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       no coverage, MEP Co.’s claim for damages and attorney fees must
       be denied.

We discern no error in the court’s conclusions. See Pursell, 596 N.W.2d at 69

(reviewing declaratory judgment action tried at law for errors at law). We affirm the

district court’s declaratory judgment in favor of Addison.

       AFFIRMED.
