Gerdts v. Donan Eng'g Co.

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RICHARD GERDTS, Plaintiff-Appellant, v. DONAN ENGINEERING CO., INC., and LANCE L. LETELLIER, P.E., Defendants-Appellees.

No. 22-1861

Court of Appeals of Iowa

January 24, 2024

Appeal from the Iowa District Court for Scott County, John Telleen (partial dismissal) and Stuart P. Werling (summary judgment) Judges.

The plaintiff appeals the grant of motions to dismiss and for summary judgment. AFFIRMED.

James C. Larew and Claire M. Diallo of Larew Law Office, Iowa City for appellant.

Eric G. Hoch and Kevin J. Driscoll of Finley Law Firm, PC, Des Moines, for appellees.

Heard by Tabor, P.J., Badding, J., and Blane, S.J. ^[*] BLANE Senior Judge.

Homeowner Richard Gerdts appeals the grant of Donan Engineering Co Inc. and Lance LeTellier's^[1] motions to dismiss and for summary judgment related to denial by his insurance company of his claim for hail damage to the roof of his duplex. Gerdts appeals three of those rulings.^[2] We affirm for the reasons discussed below.

I. Facts and prior proceedings

Gerdts owns half of a duplex in Bettendorf. In April 2020, Gerdts's neighborhood experienced a hailstorm. As a result, many of Gerdts's neighbors had their roofs replaced, including the owner of the other half of Gerdts's duplex, who had a homeowner's policy with a different insurance carrier.

Gerdts made a claim to the Property and Casualty Insurance Company of Hartford (Hartford), his insurer, for the hail damage to his portion of the roof. Hartford claims representative, Daryl Holmes, hired an adjusting company, Ladder Now, to inspect the roof. Ladder Now reported to Hartford that there was hail damage to roof vents and the furnace cap, all made of plastic or soft metal, but not to the roof shingles. Holmes determined that the damage cost to the roof vents and furnace cap was below Gerdts's deductible. So he denied the claim for roof shingle replacement. In response, Gerdts hired an independent adjuster and a roofing contractor^[3] and had them inspect the roof. Both opined that there was hail damage and the roof shingles should be replaced. Gerdts communicated this to Hartford in support of his claim, so Holmes then retained Donan to perform another inspection. Hartford issued the following "scope of work" to Donan: "Inspect roof for cause of damage. Include test squares on each slope and advice on reparability vs replacement." Donan assigned the case to its employee, Lance LeTellier, a licensed civil engineer in Cedar Rapids.

LeTellier did a site visit, took pictures of what he observed on the roof, and reported the following summary of his conclusions: "The roof is not damaged by hail impact. Man-made damage, balding, age-related deterioration, and nail pops are on the roof." He submitted his report and photographs to Hartford. He also submitted various literature about hail damage and the types and sizes of hail expected to cause significant damage to roof shingles. He testified in deposition that hail of the size that could cause roof damage did not appear in Gerdts's area at the time of the storm.^[4] He further testified that to find hail damage, he would look for a fracture of the shingle that "affects the water-shedding ability of that shingle" or a "bruise" to the shingle. A "bruise" is "an indentation that extends through the entire premise of the shingle." He stated, "Those are the two primary determinations of hail damage situations." Donan and LeTellier were not provided a copy of Gerdts's insurance policy with Hartford. Based on Donan's report, Holmes determined again to deny Gerdts's claim.^[5]

Gerdts filed suit against Hartford, Donan, and LeTellier. Donan filed a preanswer motion to dismiss. The court dismissed Gerdts's negligence claim but declined to dismiss the tortious-interference, third-party-beneficiary and conspiracy claims. After discovery, Donan moved for summary judgment. The court granted Donan's summary judgment motion and dismissed the remaining claims. Gerdts appeals the dismissal of the negligence claim and the summary judgment and dismissal of the tortious-interference and third-party-beneficiary claims.

II. Standards of review

"We review a district court's ruling on a motion to dismiss for the correction of legal error." White v. Harkrider, 990 N.W.2d 647, 650 (Iowa 2023). "A motion to dismiss challenges a petition's legal sufficiency." Id. (quoting Meade v. Christie, 974 N.W.2d 770, 774-75 (Iowa 2022)). On our review, we accept the facts alleged in the petition as true and take the allegations in the light most favorable to Gerdts as the plaintiff. Id. In general, appellate courts disfavor motions to dismiss versus summary judgment proceedings or trial. See Benskin, Inc. v. W. Bank, 952 N.W.2d 292, 296 (Iowa 2020). To get dismissal, the petition must show the claim is legally deficient and the plaintiff has no right of recovery as a matter of law. White, 990 N.W.2d at 650.

We review summary judgment rulings for correction of legal error. Morris v. Legends Fieldhouse Bar and Grill, LLC, 958 N.W.2d 817 (Iowa 2021). "Summary judgment is appropriate only when the record shows no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Hedlund v. State, 930 N.W.2d 707, 715 (Iowa 2019); accord Iowa R. Civ. P. 1.981(3) (requiring court to consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any" when deciding motion for summary judgment). "A genuine issue of fact exists if reasonable minds can differ on how an issue should be resolved." Banwart v. 50th St. Sports, L.L.C., 910 N.W.2d 540, 544 (Iowa 2018) (citation omitted). And "[a] fact is material when it might affect the outcome of a lawsuit." Id. Gerdts, as the opponent of summary judgment, may not rest on the allegations in his pleading but must lift up specific facts showing the existence of a genuine issue for trial. See Hlubek v. Pelecky, 701 N.W.2d 93, 95 (Iowa 2005). We view the evidence in the light most favorable to Gerdts. See Banwart, 910 N.W.2d at 545. And we accept every legitimate inference we can reasonably draw from the record. Hedlund, 930 N.W.2d at 715. But "speculation is insufficient to generate a genuine issue of fact." Hlubek, 701 N.W.2d at 98.

III. Analysis

Gerdts appeals the dismissal of his claim for negligence and the grant of summary judgment on his tortious-interference and breach-of-contract claims. We start with negligence.

A. Negligence

We first address whether the claim in question is negligence or "professional negligence," as Gerdts captions it in his appeal brief. Donan responds that Gerdts did not plead "professional negligence," so any claim derived from that pleading is not preserved for appeal. Looking at the petition and amended petitions, Gerdts captioned the claim as "negligence" against Hartford, Donan, and LeTellier. The substance of the claim includes that the defendants, including Hartford, breached a duty to handle the insurance claim process with "reasonably competent professional claims adjustors and, if retained by the insurer, professional engineers." We read this claim to mean a breach of a general duty, not a professional duty. Thus the claim is for general negligence.

Here, as in any negligence claim, Gerdts must show the applicable duty of care, a breach of that duty, proximate cause, and damages. See Thompson v. Kaczinski, 774 N.W.2d 829, 834 (Iowa 2009). Whether a duty arises is "a matter of law for the court's determination." Id.

The district court found Gerdts had no right of recovery for negligence, whether or not he could show those grounds, under the economic loss rule. That rule says "a plaintiff who has suffered only economic loss due to another's negligence has not been injured in a manner which is legally cognizable or compensable." Annett Holdings, Inc. v. Kum &Go, L.C., 801 N.W.2d 499, 503 (Iowa 2011) (citation omitted). In other words, "there is no recovery in negligence for pure economic loss, that is, for economic loss unrelated to injury to the person or the property of the plaintiff." Id. (citation omitted). The rule is meant to prevent parties litigating in tort what should be litigated in contract where, presumably, the parties "have allocated [expectations of the contractual relationship] between themselves in their contract." Id.

Where, as here, the parties do not have "direct contractual privity," we apply the "stranger economic loss rule" based on similar principles. Id. at 504. The supreme court has recognized exceptions to the rule for professional negligence claims against attorneys and accountants. Id. Responding to the dismissal motion, Gerdts argued that engineers should be recognized as a further exception. The district court said:

In the current case, Plaintiff alleges purely economic losses against the Donan Defendants but urges the Court to adopt an exception to the economic loss rule for engineers. The Court finds the unpublished Iowa Court of Appeals case Ziel v. Energy Panel Structures, Inc., cited by the Donan Defendants, persuasive on the issue. [No. 19-0508,] 2020 WL 4498064 (Iowa Ct. App. Aug. 5, 2020). In Ziel, the appellant in a negligence suit against an engineering firm argued that the professional negligence exception permitted suit against the firm for purely economic loss. The Iowa Court of Appeals rejected that argument, noting that "no case has exempted engineering negligence from the economic loss rule." The Court likewise finds that there is no authority to support an exemption from the economic loss rule for engineers, and declines to extend the doctrine on its own recognizance. Plaintiff argues that the loss alleged against the Donan Defendants is not purely economic because the Report caused a delay

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