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Last Reviewed / Modified On 14 Mar 2019.

IOWA CONSTRUCTION CLAIMS RESOURCES

CONSTRUCTION CLAIMS

Limitations & Repose Periods

Statutes of Limitations

  1. Personal Injury actions must be commenced within two (2) years. I.C.A. §614.1 (2).
  2. The statute of limitations for unwritten contracts, including implied contracts and torts causing property damage is five years. I.C.A §614.1 (4).
  3. For written contracts and express warranty, the statute of limitations is ten years. I.C.A §614.1 (5).
  4. The statute of limitations for a claim brought pursuant to Iowa’s Consumer Fraud Act is two years. I.C.A §714.16, et seq.
  5. A claim brought for breach of workmanlike construction must be brought within five years. I.C.A §614.1 (4).
  6. The statute of limitation for a claim based on fraud is five years. I.C.A §614.1 (4).
  7. The statute of limitations for professional malpractice by a design professional is five years. I.C.A §614.1 (4).
  8. Discovery Rule: Generally, a cause of action does not accrue until the wrongful act causes injury or loss to the claimant. Bob McKiness Excavating and Grading, Inc. v. Morion Buildings, Inc., 507 N.W.2d 405 (Iowa 1993).

Statute of Repose:

Iowa has statute of repose for actions arising out of the unsafe or defective condition of an improvement to real property, whether based on tort or implied warranty, the statute for residential property is ten years and the statute for all other property is eight years. I.C.A §614.1 (11).

An action arising out of the unsafe or defective condition of an improvement to real property based on tort and implied warranty and for contribution and indemnity, and founded on injury to property, real or personal, or injury to the person or wrongful death, shall not be brought more than ten years for an action arising from or related to residential construction, as defined in I.C.A §572.1, or eight years for an action arising from or related to any other kind of improvement to real property. An action arising from or related to the intentional misconduct or fraudulent concealment of an unsafe or defective condition of an improvement to real property shall not be brought more than fifteen years after the date on which occurred the act or omission of the defendant alleged in the action to have been the cause of the injury or death. However, this subsection does not bar an action against a person solely in the person’s capacity as an owner, occupant, or operator of an improvement to real property. I.C.A. §614.1(11).

Right to Repair Laws and/or Pre-Suit Statutory Procedures

None.

Indemnity and Contribution

Indemnity

  1. Iowa courts generally recognize indemnification agreements as enforceable. Herter v. Ringland-Johnson-Crowley Co., 492 NW2d 672 (Iowa 1992).
  2. Express Indemnity
    An agreement whereby one party agrees or promises to indemnify another party for liabilities to third parties or losses associated with liability to third parties. McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 NW2d 564 (Iowa 2002). So long as the agreement clearly and unambiguously shows the requisite intent, a contract can expressly relieve an indemnitee from his or her own negligence. Id at 571.
  3. Implied Indemnity
    If the contract entered into between the parties includes an “independent duty that implies a mutual intent to indemnify for liability or loss resulting from a breach of the duty” an implied indemnity agreement arises. Id at 573. Indemnity is only implied for liability or loss by one contracting party resulting from the other contracting party’s breach of a duty under the contract. Id.

Contribution

In Iowa, joint and several liability applies only to defendants who are fifty percent or more at fault and only with respect to the plaintiff’s economic damages. I.C.A. §668.4.Where liability is joint and several, a defendant paying more than its proportionate share is entitled to contribution from the other defendants. I.C.A. §668.5. Wilson v. Farm Bureau Mut. Ins., 770 NW2d 324 (Iowa 2009).

Certificate of Merit – Experts

There is no requirement for filing a certificate or affidavit of merit for claims against design or construction professionals.

Economic Loss Doctrine

Losses that are purely economic usually arise from the breach of a contract, and as such, should be compensated in contract, not tort actions. When plaintiffs have suffered only economic harm, they are unable to recover in tort. Richards v. Midland Brick Sales Co., Inc., 551 NW2d 649 (Iowa App. 1996).

Iowa courts have held that the economic loss doctrine does not necessarily apply to cases of professional negligence. Kemin Indus. V. KPMG Peat Marwick, LLP, 578 NW2d 212 (Iowa 1998).

Contractor Licensing Requirement.

Iowa requires the following professions to be licensed to practice: architects, landscape architects, engineers, land surveyors and interior designers. Contractors and construction managers are not required to be licensed.

Common Law and Statutory Claims

Common law has been used to uphold claims for breach of express warranty in contracts for the sale of real estate. Flom v. Stahly, 569 NW 2d 135 (Iowa 1997).

Construction Damages

Cost of Repair

The cost to repair is generally recoverable as a measure of damages in Iowa.

Diminution in Value

Diminution in value damages are permitted in construction defect cases. Service Unlimited, Inc. v. Elder, 542 NW2d 855 (Iowa App. 1995). The diminution in value is the difference between the value of the building if the contract had been fully performed and the value of the performance actually received. Id,citing F.E. March & Co. v. Light & Power Co. of St. Ansgar, 196 Iowa 926, 195 NW 754 (1923).

Punitive Damages

Punitive damages are available for claims of fraudulent misrepresentation. Palmer v. Glasbrenner, 2004 WL 1159736 (Iowa App. 2004); Bradley v. West Bend Mutual Ins. Co., 2003 WL 22900373 (Iowa App. 2003)

Attorney’s Fees

In Iowa, there is no recovery of attorney fees permitted as damages unless authorized by contract or statute. Capital Fund 85 Ltd. Partnership v. Priority Sys. LLC, 670 NW2d 154 (Iowa 2003). There is a rare exception to this general rule when the defendant has acted “in bad faith, vexatiously, wantonly, or for oppressive reasons.” Miller v. Rohling, 720 NW 2d 562 (Iowa 2006).

Joint and Several Liability (Specific to Construction)

In Iowa, joint and several liability applies only to defendants who are fifty percent or more at fault and only with respect to the plaintiff’s economic damages. I.C.A. §668.4.Where liability is joint and several, a defendant paying more than its proportionate share is entitled to contribution from the other defendants. I.C.A. §668.5. Wilson v. Farm Bureau Mut. Ins., 770 NW2d 324 (Iowa 2009).

Cost Incurred to Access Repair Areas

Consequential Damages

Delay damages are generally recoverable in Iowa by contractors and owners, unless a contract contains a no damages for delay clause. Cunningham Bros., Inc. v. City of Waterloo, 117 NW2d 46 (Iowa 1962).

Up to one hundred fifty dollars per day in expert witness fees plus mileage may be taxed as a cost against the losing party. I.C.A §622.72.

Trigger of Coverage

Definition of an Occurrence

In Pursell Constr., Inc. v. Hawkeye-Security Ins. Co., the Supreme Court of Iowa held that defective workmanship standing alone, that is, resulting in damages only to the work product itself, does not constitute an “occurrence” under a CGL policy, and, therefore, coverage for such defective workmanship will not be afforded. Pursell Constr., Inc. v. Hawkeye-Security Ins. Co., 596 N.W.2d 67 (1999).

In 2015, the Court of Appeals of Iowa stated that faulty workmanship can lead to an occurrence under a CGL policy, if occurrence constitutes an “accident” and causes property damage beyond the work product itself. National Surety Corp. v. Westlake Investment, LLC, 872 N.W.2d 409 (Iowa Ct. App. 2015).

Iowa law defines accident as: “An undersigned, sudden and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force…Giving to the word the meaning which a man of average understanding would, we think accident clearly implies a misfortune with concomitant damage to a victim and not the negligence which eventually results in that misfortune.” Central Bearings Co. v. Wolverine Ins. Co., 179 NW 2d 443 (Iowa 1970).

a.       Duty to Defend

Additional Insureds

Courts generally recognize that a contractor’s indemnification obligation created by a construction contract is covered by the contractor’s insurance policy as an insured contract. John Deere Co. v. Dee Smet Ins. Co., 650 NW2d 601 (Iowa 2002).

Insureds Right to Independent Counsel and Consequences of Rejecting a Defense

None.

Coverage Defenses

Late Notice

There is a rebuttable presumption of prejudice to the insurer from late notice. The insured may still recover if it can prove that the insurer suffered no actual prejudice. Where notice is a condition precedent, the insured bears the burden of proof that it has complied with the notice provision or that failure to comply has been excused, waived or not prejudiced the insurer. Grinnell Mut. Reinsurance Co. v. Jungling, 654 NW 2d 530 (Iowa 2002).

Lack of an Occurrence

Choice of Law (Forum Selection Clauses)

Iowa law must apply to every in-state construction contract and any litigation, mediation, arbitration or other dispute resolution proceeding arising from or relating to an in-state construction contract must be conducted in Iowa. I.C.A §537A.6(3), (4).

Targeted Tenders

None.

Consent Judgments

None.

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