February 2016

Insurance Company Wins Dismissal of Class Action Claims

United States - Iowa

Our firm served as lead counsel for American Family Mutual Insurance Company in a matter that began as a claim by the plaintiff for insurance coverage regarding a water loss. Plaintiff sought the right to an appraisal regarding the amount of the loss, and claimed entitlement to that right under an Iowa statute pertaining to fire losses. After some discovery, plaintiff sought and obtained permission from the Iowa District Court to amend their petition to include similar allegations on behalf of a class of insureds in Iowa who submitted claims under homeowners and farm/ranch policies during the preceding 10 years.

Our firm was brought into the case after the Iowa District Court certified a class. We then removed the case to federal court under the Class Action Fairness Act (CAFA). The plaintiffs challenged the removal, but, in November 2013, the court denied the plaintiffs’ motion to remand. 

Our firm prepared and filed a comprehensive motion to dismiss, arguing that the class claims failed because there was no private right of action under the applicable insurance statute and that the bad faith claims failed because there was no bad faith cause of action for failing to include a provision in an insurance contract. The team also began discovery on the class allegations but ended up negotiating a stay of discovery pending the court’s resolution of the motion to dismiss. 

A hearing on the motion to dismiss was held in Des Moines in April 2014 and on July 15, the judge granted the insurance company's motion to dismiss in its entirety. Plaintiffs moved to amend their complaint to reassert their individual claims, and the district court denied the motion to amend.

The U.S. Court of Appeals for the 8th Circuit affirmed the district court’s orders denying plaintiffs’ motion to amend and granting the motion to dismiss the case with prejudice.

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