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IDE v. FARM BUREAU MUT. INS. CO.3/20/1996
expectations.
Id. (citation omitted). We must keep in mind one other important principle appropriate to the underlying negotiations between Perry and Griffith and Elgin and Griffith: "We review applications of the reasonable expectations doctrine with a view to the liability for which insurance coverage was sought." Id.
In Griffith's underlying negotiations with Perry and Elgin, several matters discussed and not discussed bear on the question of Griffith's reasonable expectations. First, Griffith answered "no" to the questions on the applications about whether he was custom feeding. Griffith kept his options open as to whether he would do so in the future. One could reasonably conclude Griffith was not at this time seeking coverage for any liability arising out of custom feeding.
Second, Griffith told Perry he wanted coverage for "any possible eventuality that might generate a catastrophic loss." Griffith explained what he meant by catastrophic loss:
Q. And did you use the words catastrophic loss? A. Yeah, because in our initial conversations he had indicated that there simply wasn't insurance available that . . . would cover a lamb dying.
I told him I don't care if a lamb dies or two lambs die, that's routine and we expect it. What I'm specifically after is catastrophic coverage, something major and unexpected happening.
To us, Griffith's explanation means he was looking for coverage involving direct physical loss to property, not liability coverage.
Last, neither Griffith nor Perry mentioned whether the policies would cover Griffith's potential liability under a custom feeding contract. This is consistent with Griffith's explanation of what he meant by catastrophic loss: He was looking for coverage involving direct physical loss to property, for example, in this case loss of the lambs.
The negotiations continued with Elgin. As we mentioned, Elgin and Griffith disagreed as to what was said. Elgin testified Farm Bureau would not cover custom feeding. Griffith testified nothing was said about custom feeding. We think, however, that Elgin's version is more credible. Several facts support our belief.
Elgin met with Griffith on October 16 or 17 to get additional information in an effort to "salvage [Griffith's] application ." When Elgin went to see Griffith, he had notes on what the underwriting department wanted Elgin to question Griffith about. One of the [545 NW2d Page 860]
questions listed in the notes was whether Griffith was custom feeding sheep. This information was important to the department because — as Elgin explained to Griffith — the information was necessary to establish a rate for custom feeding.
Considering these underlying negotiations, we conclude Griffith was not expecting any coverage for economic damage liability arising out of a custom feeding operation. Neither Perry nor Elgin did or said anything to foster such an expectation. To the contrary, Elgin expressly disavowed any intention on Farm Bureau's part to cover such a liability.
VI. Disposition.
Because we conclude there was (1) no coverage under either policy, and (2) no reasonable expectation for coverage on the part of Griffith, we reverse the district court's judgment to the contrary. We remand for entry of judgment in favor of Farm Bureau.
REVERSED AND REMANDED WITH DIRECTIONS.
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