Royal Indemnity Company v. Factory Mutual Insurance Company

786 N.W.2d 839 (2010)

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Nature of the Case

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Facts

D is a commercial insurance provider, and from the 1950s through 1997, was Deere's sole property insurance provider. Beginning in 1997, Deere purchased its primary insurance coverage from P and the Chubb Group of Insurance Companies. Deere requested that D continue to provide loss prevention services even though it was only the excess coverage carrier. D agreed to do so under a separate payment-for-services contract and fee unrelated to Deere's insurance policy premiums. Deere looked at leasing a facility owned by Petersen Properties, LC (Petersen). Deere required a first-inspection-site-risk evaluation to determine whether the fire protection system was appropriate for Deere's storage needs. D agreed to do the evaluation. D's report contained the specifics of the sprinkler system currently installed in the facility, as well as recommendations for altering the system to better protect Deere's product. D did not test the sprinkler system nor look at any of the facility's maintenance records. D recommended that the fire alarm system be upgraded, the sprinkler water alarms tested every month, and the high-intensity discharge lights relamped. Deere used this list of recommendations in negotiating with Petersen. Deere entered into a lease for a portion of the warehouse and moved its products into the facility. The punch list items had not yet been remedied, and Deere still moved in. When Deere moved into the warehouse, the sprinkler system still had not been tested. A few months late, a fire broke out in the warehouse. The Fire Department found the water pressure insufficient to put out the fire. The fire burned for several days, and all of Deere's products were destroyed. The Davenport fire chief testified he believed they could have extinguished the fire if there had been sufficient water pressure. P paid off the insurance and then sued D. The court granted D's motion for a directed verdict on P's negligence claim. P alleges the district court erred in holding the evidence was insufficient to establish a jury question on proximate cause in its negligence action. P appealed.