In this case, restaurant owners claimed insurance benefits for a restaurant fire. The insurer made payments for personal property losses, building loss, and business interruption. Unsatisfied with the payment amounts, the restaurant owners sued for breach of contract. They obtained a jury verdict for the additional unpaid value of the building and additional personal property loss. The insured paid the amount plus interest and costs. Three months after the judgment, the insureds brought a separate bad faith action alleging the insurer lacked a reasonable basis for denying the claim. The district court granted the insurer’s motion for summary judgment on the basis of claim preclusion. The court of appeals reversed. The Iowa Supreme Court took the case and concluded that a final judgment on a breach of contract claim between an insured and insurer barred a later tort action alleging bad faith that was based on the same transaction or occurrence.
Villarreal et al v. United Fire & Casualty Company, No. 14-0298 (Iowa Jan. 8, 2016)