Jay and Lorrie Lala owned a farmhouse that was purchased as an investment. The Lalas owned a variety of properties besides the farmhouse and all were bought under the name of Parker House Properties, L.L.C. (Parker House). The farmhouse, which was furnished, was not used as a residence.

The Lalas often used the farmhouse and land for various recreational purposes including hunting. Jay Lala, Nick Lala (one of his sons), Nick's girlfriend and another friend, Hunter True, had used the location to ride dirt bikes and ATVs. Jay left ahead of the teens, asking his son, Nick, to lock up the farmhouse when they left. Nick noticed that a rifle, owned by his father, had been left on a bed after a previous use of the farmhouse. When Nick picked up the rifle, it went off. A bullet struck his friend Hunter in the abdomen and he later died at a hospital where had had been taken for treatment.

At the time of the fatal accident, the Lalas had a homeowners policy provided by Metropolitan Property and Casualty Insurance Company (Metropolitan) and a Commercial General Liability (CGL) Policy from Auto-Owners Mutual Insurance Company (Auto-Owners). The latter policy was written under the name of Parker House. The Lalas filed claims with both insurance companies, but Auto-Owners denied their claim. The Lalas and Metropolitan reached a settlement of $900,000 with Hunter's parents and, after securing subrogation rights from the Lalas, Metropolitan sued to recover $450,000 from Auto-Owners. The latter filed for summary judgment and then filed an appeal after a lower court denied the motion.

The higher court re-examined Auto-Owners two primary arguments. One, that the loss circumstances were not covered since they did not involve Parker House's business activities or interests and two, that there was no exposure for Parker House based on premises liability.

After consideration of the applicable policy language, relevant cases and testimony of expert witnesses that were part of the lower court hearing, the higher court shared its decision. It agreed with the lower court decision, ruling that Nick, in locking and securing the farmhouse, was acting in the business interest of Parker House. The LLC would derive a benefit from the farmhouse being locked and freed from dangerous conditions. An attempt to secure a firearm before locking the premises qualified Nick as a form of worker, acting on behalf of Parker House. The higher court also decided that, given an opportunity, a jury would conclude that a loss under a premises liability theory occurred. The lower court decision, in favor of Metropolitan was affirmed.

Metropolitan Property and Casualty Ins. Co. d/b/a MetLife Auto & Home and Economy Premier Assurance Co., Appellees, vs. Auto-Owners Mutual Ins. Co, Appellant. Iowa Supreme Court. No. 18-0129. Filed March 8, 2019. Affirmed.

https://cases[dot]justia[dot]com/iowa/supreme-court/2019-16-1972[dot]pdf?ts=1549032127 [downloaded 1/8/21]