Submitted: December 11, 2018
from United States District Court for the Southern District
of Iowa - Des Moines
LOKEN, MELLOY, and ERICKSON, Circuit Judges.
Company, Limited ("Clarke") commenced this lawsuit
against its insurer, American Family Mutual Insurance Company
("American Family"), alleging American Family
wrongfully denied coverage for defense and indemnity of a
lawsuit brought against Clarke in state court. The district
court granted summary judgment in favor of
American Family. The claims as pled in the underlying state
court action did not give rise to a duty to defend. It
follows that no duty to indemnify can exist. We affirm.
parties submitted a stipulated record to the district court.
From approximately 1996 to 2006, Clarke was the developer and
general contractor for condominium units known as the Druid
Hill Townhome Condominiums located in Des Moines, Iowa. From
1997 until September 1, 2006, American Family insured Clarke
through a "Businessowners Policy." Between October
2006 and October 7, 2010, Acuity Insurance Company
("Acuity") insured Clarke.
the condominium development was underway, Clarke formed the
Druid Hill Townhome Condominium Association
("HOA"). The HOA was responsible for the exteriors
and structures of the buildings Clarke developed. The
individual unit owners owned portions of the HOA and
controlled the interior space in their respective units.
Clarke first received complaints of water intrusion from unit
owners in the summer of 2008. Minor repairs, such as
caulking, were undertaken. These repairs did not stop the
water intrusion complaints.
and more major repairs began in the spring of 2010. Repairs
were made to the roofs, Exterior Insulation Flashing System,
decks and columns, drainage tile, and around the windows. In
June 2010, the HOA commenced an action in Iowa state court
against Clarke for damages resulting from defective
construction. The HOA alleged Clarke's defective
construction was latent until the 2009-2010 winter when
defects allowed ice dams to develop and water to infiltrate
the units. Specifically, the petition alleged:
15. Between 1999 and 2007, Clarke constructed and sold a
number of Units at the Druid Hill Development.
* * *
17. During the Winter of 2009-2010, ice dams developed and
formed on the Units. Due to Clarke Company's defective
construction, this allowed large amounts of water to enter,
infiltrate and accumulate in the Units.
18. The water that infiltrated the Units caused damage to the
Units and also caused mold to grow inside the walls of a
number of Units.
19. Clarke Company's defective construction was hidden
and was not something that could be previously ...