No. 20-1339 ___________________________

Hallmark Specialty Insurance Company

Plaintiff - Appellee

v.

Phoenix C & D Recycling, Inc.

Defendant - Appellant

R & A Properties, Inc.

Defendant ____________

Appeal from United States District Court for the Southern District of Iowa - Des Moines ____________

Submitted: January 14, 2021 Filed: June 1, 2021 ______________ Before COLLOTON, WOLLMAN, and SHEPHERD, Circuit Judges. SHEPHERD, Circuit Judge.

Phoenix C & D Recycling, Inc. and its property owner, R & A Properties, Inc., (collectively, Phoenix) operate a trash recycling plant in Des Moines, Iowa. In July 2017, a fire began from a pile of biofuel material located on Phoenix’s property. Hallmark Specialty Insurance Co. (Hallmark), Phoenix’s insurer, made several payments to Phoenix for Phoenix’s losses, but after disagreements as to those payments arose, Hallmark filed an action with the district court 1 seeking declaratory judgment that it did not breach the insurance policy or act in bad faith when adjusting Phoenix’s claims. Phoenix asserted three counterclaims, and after the parties filed cross-motions for summary judgment, the district court granted Hallmark’s motion in its entirety and granted Phoenix’s motion in part. Phoenix now appeals the district court’s grant of summary judgment in favor of Hallmark. 2 Having jurisdiction pursuant to 28 U.S.C. § 1291, we affirm. 3

I.

Phoenix operated a recycling plant in Des Moines, Iowa, recycling construction debris and producing biofuel from wood materials. On July 6, 2017, a fire began at Phoenix’s plant. At the time of the fire, Phoenix had nearly 18,000 tons of biofuel on its property, and the fire originated from a pile of this biofuel located at the southeast corner of the plant. Pursuant to a policy effective April 16, 2017, Hallmark insured Phoenix with coverage for property damage and business interruption of up to approximately $6.5 million. Phoenix provided Hallmark with notice of its fire loss on or about July 10, 2017. This loss included damage to buildings, wiring, equipment, and other materials located on Phoenix’s property.

1 The Honorable John A. Jarvey, Chief Judge, United States District Court for the Southern District of Iowa. 2 Phoenix does not appeal the district court’s summary judgment ruling insofar as it granted summary judgment in favor of Hallmark on Phoenix’s breach of contract counterclaim. 3 Hallmark also filed two motions to strike, seeking to strike portions of affidavits that Phoenix relied on in its motion for summary judgment and in its resistance to Hallmark’s motion for summary judgment. However, because the district court granted Hallmark’s motion for summary judgment in full, it denied Hallmark’s motions to strike as moot. These motions to strike are not before us on appeal. -2- Hallmark assigned Bryan Jones, a “Property Claims Supervisor,” to Phoenix’s claimed loss and subsequently hired 11 different experts and consultants to also evaluate the loss. There are two experts and consultants pertinent to this appeal: Larry Baxter and HSNO. Hallmark hired Baxter, a mechanical engineer, to assess Phoenix’s wiring and equipment damage. Baxter created a report, dated July 31, 2017, that included three different estimates for equipment loss: (1) actual cash value of $368,520; (2) replacement cost value of $1,226,400; and (3) repair cost