The Rasmusson Company, Plaintiff–Appellant/Cross-Appellee, v. United Fire & Casualty Company, Defendant–Appellee/Cross-Appellant. (2026)

Following a two-day bench trial on The Rasmusson Company's (Rasmusson) breach-of-contract action, the district court granted United Fire & Casualty Company's (United Fire) motion for directed verdict. Rasmusson appeals the ruling, arguing the evidence—when taken in the light most favorable to them—supports a finding that United Fire agreed to pay the limit of insurance in the event of a total loss and that any ambiguity in the insurance contract needed to be interpreted against United Fire. United Fire cross appeals, arguing that if our court reverses the directed verdict, we should also reverse the district court's denial of United Fire's motion for summary judgment. Since the insurance contract unambiguously states that United Fire is only obligated to pay the actual cash value of the property at the time of loss, we affirm the district court's directed verdict and need not address United Fire's cross appeal.

BACKGROUND FACTS AND PROCEEDINGS

A fire at Rasmusson's commercial property in Cedar Falls resulted in the total loss of the building and its contents. Rasmusson's owner, Don Rasmusson, testified he believed the $525,000 limit of insurance stated on the policy's declaration page was the agreed upon value for the building which would be paid out in the event of loss. He based this belief on his conversation with Untied Fire's underwriter when he purchased the policy and the declaration page's inclusion of the phrase “Agreed Value Expiration Date: 08/01/2022.”

However, Rasmusson's insurance policy with United Fire provided coverage for the building based upon the “actual cash value as of the time of loss or damage,” with a limit of insurance of $525,000. The policy also contained the following notice regarding the term “actual cash value” as used in the valuation provision:

Certain losses on your policy may be settled on an actual cash value basis. The Iowa Insurance Division has asked that we provide you with a notice defining actual cash value.

1. In the event that there is a regular market for the property where the property can be bought and sold in the ordinary course of dealing, and it is possible to determine the property's market value, then the market value of the property is its Actual Cash Value.

2. In the event that there is no regular market for the property where the property can be bought and sold in the ordinary course of dealing, or it is not possible to determine the property's market value, then:

Actual Cash Value means the amount which it would cost to repair or replace covered property with material of like kind and quality, less allowance for physical deterioration and depreciation, including obsolescence.

Utilizing the first method for determining the property's actual cash value, United Fire hired an appraiser who valued the building at $210,000 using the sale of similar properties to determine the market value of the property. Based on the appraisal, United Fire wrote Rasmusson a check for $210,000 and offered debris removal to settle the claim. Rasmusson contested the amount, claiming the policy entitled it to the full $525,000 limit as a pre-agreed value for the property. Rasmusson then hired a construction company for a quote on the cost to rebuild the building, a project with an estimated cost of $584,615. When United Fire refused to pay the $525,000 limit of the policy, Rasmusson sued.

The dispute made its way to trial, and at the close of evidence United Fire moved for directed verdict. The court took the matter under advisement and issued a written ruling granting the motion.

Now Rasmusson appeals, arguing the directed verdict was improper because the evidence showed the parties reached an agreement on the actual cash value of the property and because any ambiguity in the policy regarding the limit of insurance and the amount due on loss should have been construed against United Fire as the policy's drafter.

STANDARD OF REVIEW

We review the district court's ruling on a motion for directed verdict for correction of errors at law. Hunter v. City of Des Moines, 34 N.W.3d 484, 495 (Iowa 2026); see Iowa R. App. P. 6.907. When reviewing a motion for directed verdict, “[w]e, like the district court, view the evidence in the light most favorable to the party against whom the motion is intended, the nonmoving party.” Royal Indem. Co. v. Factory Mut. Ins., 786 N.W.2d 839, 846 (Iowa 2010).

DISCUSSION

“To overcome a motion for directed verdict, substantial evidence must exist to support each element of the claim or defense.” Rumsey v. Woodgrain Millwork, Inc., 962 N.W.2d 9, 20 (Iowa 2021) (citation omitted). To prevail on its breach of contract claim, Rasmusson was required to prove:

(1) the existence of a contract, (2) the terms and conditions of the contract, (3) that [the] plaintiff has performed all the terms and conditions required under the contract, (4) the defendant's breach of the contract in some particular way, and (5) that [the] plaintiff has suffered damages as a result of defendant's breach.

Royal Indem. Co., 786 N.W.2d at 846 (cleaned up). While the parties agree that a contract existed, the parties disagree on the terms of the contract. Specifically, Rasmusson argues the “Agreed Value” language on the declaration page indicates that the parties agreed to the value of the property in the event of loss and that any ambiguity surrounding the term “Agreed Value” needed to be construed against United Fire as the drafter of the policy.

I. Did the agreement guarantee an amount in case of loss?

Rasmusson argues “[t]he language of the policy shows the parties’ intentions were to designate an agreed upon Actual Cash Value of $525,000 for the property ․ No appraisal was required, and none was needed because the parties agreed on the value of the property beforehand.” If Rasmusson was right and the contract called for United Fire to pay a pre-agreed $525,000 in the event of loss, then United Fire would have breached the contract when it offered to pay only $210,000.

But Rasmusson's understanding of the contract is not reflected in the actual words of the policy. See Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 436 (Iowa 2008) (noting that when interpreting contracts “the words of the agreement are still the most important evidence of the party's intentions”). Nowhere in the contract does it state that the parties agreed that the limit of insurance would be the amount paid in the event of a loss, nor is there anything in the contract indicating the parties agreed to stray from the valuation provision United Fire followed when it obtained its appraisal. Reading the insurance policy as a whole, United Fire was only obligated to pay “the value of lost or damaged property,” which is defined as “the actual cash value as of the time of loss or damage.” United Fire determined the actual cash value of the property based on its appraisal using market comparators and issued Rasmusson a check for the appraised amount. This is exactly what the contract called for, so Rasmusson failed to prove their breach of contract claim.

The Iowa Supreme Court rejected this same argument in a case interpreting a nearly identical policy:

At the heart of Luigi's argument lies a claimed right to payment in full of the $550,000 building policy limits.

But the policy declarations page unambiguously describes the $550,000 as a “limit of insurance.” The word “limit” denotes a maximum possible amount, not a guaranteed fixed amount. Limit, Black's Law Dictionary 1114 (11th ed. 2019) (“1. A restriction or restraint. 2. A boundary or defining line. 3. The extent of power, right, or authority.”). What's more, the policy states the valuation would be determined based on the property's “actual cash value” immediately before the fire. It stated two alternative methods (the market approach and the cost approach) for how the actual cash value would be determined. If the policy really did mandate a payout of $550,000 for a loss, there arguably would have been no need to specify any method—let alone two alternative methods—dictating how to determine the building's value.

Luigi's, Inc. v. United Fire & Cas. Co., 959 N.W.2d 401, 407 (Iowa 2021).

Like the court in Luigi's, we cannot find that Rasmusson was entitled to an amount listed as the limit of insurance when the contract includes multiple methods of valuation. Rasmusson may have believed the agreement provided for a fixed value in the event of a total loss and did not require an appraisal, but we agree with United Fire that “Don Rasmusson's individual, subjective belief that there was an agreement does not alter the legal effect of the Policy's terms.” Based on the express terms of the contract, the district court correctly granted United Fire's motion for directed verdict.

II. Was the policy language ambiguous?

Rasmusson attempts to distinguish its policy from the one at issue in Luigi's by claiming the words “Agreed Value” create an ambiguity in the contract which needs to be interpreted against United Fire. See Iowa Fuel & Mins., Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 862–63 (Iowa 1991) (“When a contract is not ambiguous, it will be enforced as written, but when there are ambiguities in a contract, they are strictly construed against the drafter.” (internal citations omitted)). When determining whether a term is ambiguous, we begin by “considering the contract as a whole—and pertinent extrinsic evidence—before determining whether the contract is ambiguous and what it means.” McNeal v. Wapello County, 985 N.W.2d 484, 490 (Iowa 2023). But “if the meaning of a contract term is unambiguous, parol evidence may not be presented to the fact finder to contradict that term under the facade of interpreting it.” U.S. Bank, Nat'l Ass'n v. Bittner, 986 N.W.2d 840, 848 (Iowa 2023).

Critically, the “Agreed Value” on which Rasmusson bases their ambiguity argument is defined in the policy as an “optional coverage” which eliminates the coinsurance condition which would limit the amount of payment when the coinsurance percentage is greater than the limit of insurance for the property. As noted by the district court: “The term Agreed Value is defined in the policy and is an optional coverage which eliminated Rasmusson of co-insurance. In the context of the policy read as a whole, Agreed Value is not defined as the value of the property in case of loss.” United Fire echoes this sentiment in their brief, claiming “[n]o language in the Agreed Value Optional Coverage provision suggests or even supports a strained interpretation that the Agreed Value language on the declarations page somehow usurps the ACV loss valuation, or requires that United Fire pay the $525,000 limit of insurance in the event of total loss, regardless of the market value.” We agree with both the district court and United Fire that there is no ambiguity regarding the term “Agreed Value,” so the district court correctly granted United Fire's motion for directed verdict.

Finally, because we affirm the district court, we need not address United Fire's cross appeal, which alternatively argues the district court should have granted United Fire's motion for summary judgment.

AFFIRMED.

Opinion by Sandy, J.