author: CARTER, Justice.

text:
    William C. TALEN and Farmer's Savings Bank and Trust-Vinton, Appellees, v. EMPLOYERS MUTUAL CASUALTY COMPANY and Minnesota Fire and Casualty Company, Appellants.
    No. 02-1536.
    Supreme Court of Iowa.
    Sept. 2, 2005.

      Lorraine J. May of Hopkins & Huebner, P.C., Des Moines, for appellant Employers Mutual Casualty Company.

      Michael J. Coyle and Norman J. Wang-berg of Fuerste, Carew, Coyle, Juergens & Sudmeier, P.C., Dubuque, for appellant Minnesota Fire and Casualty Company.
    Andrew M. Reidy, Murray D. Sacks, and Cass W. Christenson of McKenna Long & Aldridge LLP, Washington, D.C., and Eugene J. Kopecky of Ackley, Kopecky & Kingery, Cedar Rapids, for appellees.
   CARTER, Justice.

Employers Mutual Casualty Company (Employers) and Minnesota Fire and Casualty Company (Minnesota Fire), defendants in the district court, each appeal from a judgment following a bench trial in which the court found that both of these insurers insured plaintiff, William Talen, and that Employers also insured Farmers Savings Bank and Trust of Vinton (Vinton bank) against the costs of defense and resulting settlement of legal liability growing out of litigation commenced by a former employee of the Vinton bank, Duane Pearson. The district court further found that both insurers were guilty of bad faith in not defending against the Pearson claims. As a result of these findings, the district court awarded Talen and the Vin-ton bank damages for costs of defense not assumed by other insurers, amounts expended to settle the legal liability in the Pearson litigation, and costs and attorney fees in the present action.

After reviewing the record and considering the arguments presented, we conclude that Employers did not act in bad faith in refusing to defend these claims. As a result of policy exclusions, it did not insure either Talen or the Vinton bank against liability or costs of defense in the Pearson litigation and was not liable for the sums awarded against it by the district court. We conclude that the Minnesota Fire policy did insure Talen against at least one of the claims in the Pearson litigation. The attorney fees incurred in defending the Pearson litigation that were not paid by other insurers were paid by the Vinton bank, a party not insured by Minnesota Fire. Consequently, those fees are not recoverable in the present litigation. We conclude that Minnesota Fire, although obligated to defend Talen, did not act in bad faith in declining coverage. However, under Minnesota law, which is determinative of the issue, Talen is entitled to recover from Minnesota Fire the amount of the actual attorney fees he has incurred in the present litigation. The judgment of the district court is affirmed in part, reversed in part, and remanded to the district court for further proceedings consistent with this opinion.

Talen, a resident of Minnesota, controls the holding company that owns the Vinton bank and a bank in Traer. He is the chairman of the board, president, and CEO of the Vinton bank. On April 10, 1996, Pearson commenced an action against Talen and the Vinton bank. The petition alleged that Pearson had resigned his employment at the Vinton bank pursuant to a written termination agreement that provided as follows:

Pearson shall fully cooperate with the Bank with regard to any information or actions concerning the Bank’s operations of which he has knowledge. Neither party shall disclose the contents of this Agreement nor any circumstances surrounding the resignation, except with the express written consent of the other party. The parties will cooperate in the public disclosures of the resignation and each will present the resignation and subsequent events as positively as possible.

Pearson’s petition alleged that the bank and Talen had breached that agreement “by contacting prospective employers of the Plaintiff and by disclosing information made confidential by the agreement.” The petition further alleged that, “[a]s a result of the breaches of contract by Defendants, Plaintiff has lost and has been deprived of opportunities for employment and has suffered monetary damages and loss.” The petition prayed for judgment as a result of that alleged loss.

In May 1997 Pearson filed a request for permission to amend his petition to add claims based on slander, tortious interference with a prospective business relationship, and violation of Iowa Code section 730.1 (1995) (prohibiting employers from preventing discharged employees from obtaining other employment by other than an accurate written description of job performance). The district court refused to allow the proposed amendment to Pearson’s petition. That ruling proved to be without legal significance, however, because Pearson later filed an independent action raising his additional legal theories, and that action was ultimately consolidated with his original breach-of-contract action.

Talen and the Vinton bank tendered the defense of the Pearson actions to Employers and two other liability insurers, Fidelity and Deposit and Farm Bureau Mutual. In addition, Talen tendered the defense of those actions to Minnesota Fire. Employers’ policy insured the Vinton bank against liability for personal injury, as defined in its policy, and insured Talen, as an executive officer of the bank, with respect to his activities as such. Employers declined coverage of Pearson’s claims from the outset based on policy exclusions that it deemed applicable. Minnesota Fire, which had issued a business protector policy to Talen, initially indicated that it would defend him under reservation of right, but ultimately elected not to do so. Fidelity and Deposit and Farm Bureau Mutual did share the defense under reservation of right and each contributed to the cost of settling the Pearson actions.

Pearson’s claims against Talen and the Vinton bank were ultimately settled for $600,000. Farm Bureau Mutual contributed $125,000 toward the settlement, Fidelity and Deposit contributed $100,000, and Talen personally paid the remaining $375,000. Although Fidelity and Deposit and Farm Bureau Mutual paid a portion of the attorney fees expended in defending the Pearson claims, the Vinton bank was required to contribute $55,628 toward the attorney fees that it and Talen incurred in defending the litigation.

Talen and the Vinton bank commenced the present action against Employers and Minnesota Fire, seeking a declaration that those insurers breached a duty to defend Talen and the bank against Pearson’s claims and to satisfy that portion of the settlement that was not paid by Fidelity and Deposit and Farm Bureau Mutual. The petition further asserted that both insurers had acted in bad faith in handling the Pearson claims and sought recovery of attorney fees incurred by the Vinton bank in the Pearson litigation and attorney fees incurred by Vinton bank and Talen in pursuing the present litigation.

The claims of Talen and the Vinton bank against Employers and Minnesota Fire were tried to the court. Because Pearson’s claims against Talen and the Vinton bank had been settled, there had been no prior judicial determination of the extent of their liability under any particular legal theory that had been alleged against them. The settlement agreement did not allocate the sum paid to settle these claims to any particular count of the multifaceted claim. Evidence was presented in the present litigation, however, concerning the facts on which Pearson relied. The gist of this evidence was that, after Pearson ceased to be employed at the Vinton bank, another bank was considering hiring him. That bank, located in Oelwein, inquired of the Vinton bank concerning Pearson’s prior employment there. This inquiry was referred to Talen who telephoned both the owner of the Oelwein bank and an executive officer thereof and gave a negative account of Pearson’s performance as a loan officer at the Vinton bank. After these conversations, the Oelwein bank’s offer of employment to Pearson was withdrawn. These circumstances formed the basis of the claims against Talen and the Vinton bank in the Pearson litigation.

The district court found that both insurers had a duty to defend the Pearson claims and were liable for defense costs not paid by Fidelity and Deposit and Farm Bureau Mutual. The court further concluded that both insurers must indemnify Talen for the amounts that he personally contributed to the settlement. The court also found that both Employers and Minnesota Fire acted in bad faith in their handling of these claims and held them liable for the attorney fees and certain costs incurred by Talen and the Vinton bank in the present litigation. Other facts material to the appeal will be considered in our discussion of the legal issues presented.

I. Scope of Review.

The action was tried in equity in the district court. Consequently, our review of both the law and the facts on appeal is de novo. In re Custer’s Estate, 229 Iowa 1061, 1064, 295 N.W. 848, 851 (1941); Iowa Const. art. V, § 4; Iowa R.App. P. 6.4.

II. The Claim Against Employers.

The claim of Talen and the Vinton bank against Employers is predicated on a general-liability policy issued by Employers insuring the Vinton bank as named insured and executive officers of the bank, such as Talen, to the extent that the claim arises from their performance of duties as a bank officer or director. The Employers policy obligates it to pay those sums the insureds become legally obligated to pay because of “personal injury.” “Personal injury” is defined so as to include:

[IJnjury, other than “bodily injury”, arising out of :
d. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; or
e. Oral or written publication of material that violates a person’s right of privacy.

The contract states that the insurance does not apply to:

“Personal injury”
arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured; or for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement.

An endorsement to the Employers policy provides:

This insurance does not apply to:
“Personal injury” to:
(1) A person arising out of any:
(a) Refusal to employ that person;
(b) Termination of that person’s employment; or
(c) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination directed at that person....
This exclusion applies:
Whether the insured may be liable as an employer or in any other capacity.

A. The initial breaeh-of-contract claim. When Employers was presented with Pearson’s initial action, it denied coverage on the ground that the claim was for liability assumed in a contract or agreement. Employers continues to urge that the allegations of that petition in no way presented any claim other than a breach-of-contract action. We agree with this contention.

The gravamen of the claim in Pearson’s original petition was an alleged breach of an express written agreement. The alleged injury sustained was described as follows: “As a result of the breaches of contract by Defendants, Plaintiff has lost and has been deprived of opportunities for employment and has suffered monetary damages and loss.” The petition prayed for judgment as a result of that loss and for no other reason. Because the liability insurance afforded under Employers’ policy did not extend to obligations assumed in a contract or agreement, it had no obligation to defend Talen or the Vinton bank against the original petition filed by Pearson.

Talen and the Vinton bank, relying on Employers Mutual Casualty Co. v. Cedar Rapids Television Co., 552 N.W.2d 639 (Iowa 1996), urge that under Iowa law a liability insurer’s duty to defend depends on the facts alleged and not the legal theory espoused. This is not entirely correct. Insurance coverage is a contractual matter and is ultimately based on policy provisions. State Farm Auto. Ins. Co. v. Malcolm, 259 N.W.2d 833, 835 (Iowa 1977). Insurers may and frequently do extend liability coverage to only specific torts. We described this practice in Kibbee v. State Farm Fire & Casualty Co., 525 N.W.2d 866 (Iowa 1994), in which we observed:

The policy defines the term “personal injury” in two ways. It lists specific types of damages that are personal injury such as “bodily harm” and “mental anguish.” It also lists specific torts— such as “false arrest,” “slander” and “assault and battery” — that qualify as personal injury.

Kibbee, 525 N.W.2d at 868 (footnote omitted). Employers’ policy, at issue here, limits personal-injury coverage to:

a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entrance into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services; or
e. Oral or written publication of material that violates a person’s right of privacy.

The issue in the Cedar Rapids Television case was whether the facts alleging a tortious interference with a contract could implicate liability insurance coverage afforded against a malicious-prosecution claim. A divided court concluded that they could, based, in part, on the following analysis by a leading commentator:

The bulk of the cases involving interference ... also involved the commission of some independent tort.... Thus in many cases interference with contract is not so much a theory of liability in itself as it is an element of damages resulting from the commission of some other tort....

W. Page Keeton, Prosser & Keeton on the Law of Torts ch. 24, § 129, at 992 (5th ed.1984). We choose not to extend the holding of Cedar Rapids Television beyond the facts of that case. It is clear in the present case that nothing alleged in Pearson’s initial petition implicated any tort claim. It was based entirely on an alleged breach of contract, a type of claim that Employers’ policy specifically excluded.

B. The tort claims.

1. The employment-related-practices exclusion. Employers concedes that the defamation claim added to the litigation subsequent to the original breach-of-contract action falls within the general coverage provisions for personal injury. However, Employers has contended from the inception of the Pearson litigation that policy exclusions apply that negate any liability coverage for either the bank or Talen with respect to Pearson’s defamation claim. One such exclusion is referred to as an “employment related practices” exclusion and has been set forth in full earlier in this opinion. It purports to exclude liability coverage for personal injury to a person arising out of any:

Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination directed at that person....

The district court determined that this exclusion did not apply to Pearson’s claims because the acts on which those claims were based occurred after his employment with the bank had ended and were not shown to have involved an employment-related policy of the bank. Employers contends that in so ruling the court interpreted the employment-related-practices exclusion much too narrowly and contrary to the manner that it has been applied by other courts. Although Talen and the Vin-ton bank urge that we adopt the district court’s view of this exclusion, we are convinced that Employers presents the more persuasive argument concerning its application.

An example of the application of an employment-related-practices exclusion to a claim for postemployment defamation is found in Frank & Freedus v. Allstate Insurance Co., 45 Cal.App.4th 461, 52 Cal.Rptr.2d 678 (1996). In this case, an insurer had refused to defend its insured in an action by a former employee for wrongful termination and also for defamation occurring after his employment had been terminated. The defamation claim was based on statements relating to the former employee’s job performance. The insurer relied on an employment-related-practices exclusion that was in all material respects identical to the exclusion contained in Employers’ policy. The trial court determined that the exclusion precluded coverage for the posttermination defamation claim. In affirming, the California appellate court stated:

We are unpersuaded by Frank and Freedus’s argument the exclusionary language is ambiguous. The fact the policy’s general definition of the term “personal injury” encompasses defamation does not set up a fatal inconsistency or ambiguity because in another section of the policy [the employment-related-practices exclusion] coverage is excluded for certain personal injuries, including defamation, in a particular context. An insurance policy may exclude coverage for particular injuries or damages in certain specified circumstances while providing coverage in other circumstances.
Nor is the term “employment-related” ambiguous because it is not specifically defined in the policy. The term is not technical in nature. It is used in its ordinary sense, i.e., related to employment. As a term, it modifies the specified acts (including defamation) as well as the terms “practices, policies, acts or omissions.” The clear meaning of ... the exclusion is coverage for practices, policies, acts or omissions which are related to employment, including employment-related defamation.
The defamation here was clearly employment-related. The statement was made in the context of [the former employee’s] employment and its content is directed to [his] performance during employment.

Frank & Freedus, 45 Cal.App.4th at 471-72, 52 Cal.Rptr.2d at 684.

A similar application of an employment-related-practices exclusion is found in Berman v. General Accident Insurance Co. of America, 176 Misc.2d 13, 671 N.Y.S.2d 619 (N.Y.Sup.Ct.1998). In that case, an insurer had denied coverage when its insured, a veterinarian, was sued by a former employee for alleged postemployment defamation concerning her job performance. The policy contained an exclusion for specified employment-related practices, including defamation. In upholding the insurer’s denial of coverage, the court stated:

The plaintiffs’ argument that the exclusionary language in the policy must be read as limited to injuries sustained while the employee is still employed is “semantical!y unreasonable and unacceptable.”

Berman, 176 Misc.2d at 18, 671 N.Y.S.2d at 623 (citation omitted). The court further concluded that coverage was also precluded because it involved the specified-employment practice of “evaluation,” stating:

[The] statements constituted an assessment of Dr. Attas’s performance as an employee of the clinic and an explanation of why she was discharged. As such, these statements fall squarely within the policy exclusion for specified employment-related practices such as evaluation and defamation.

Id. (citation omitted). The employment-related-practices exclusion contained in Employers’ policy included both evaluation and defamation so as to implicate both prongs of the Berman holding. Another case in which an identical employment-related-practices exclusion was held to exclude coverage for posttermination defamation is Capitol Indemnity Corp. v. 1405 Associates, Inc., 340 F.3d 547, 550 (8th Cir.2003) (such exclusions bar coverage for virtually any claim arising out of the employment relationship). We find these decisions to be persuasive, and in applying similar principles of interpretation, we are convinced that the defamation claim was excluded from the personal-injury coverage provided in Employers’ policy.

Although several legal theories were advanced in Pearson’s petition, the district court focused exclusively on the defamation claim in determining that Employers’ policy provided liability coverage against Pearson’s claims. Talen and the Vinton bank now suggest that coverage exists because Pearson’s claims also included the torts of invasion of privacy and disparagement. We disagree for several reasons. Neither of those legal theories was identified as such in Pearson’s action against Talen and the Vinton bank. The district court did not rely on those theories in its finding that Talen and the Vinton bank were insured under the personal-injury coverage of Employer’s policy. Finally, in alleging the personal-injury coverage of Employer’s policy in the present action, Talen and the Vinton bank, in paragraph 25 of their petition, only allege:

“Personal injury” means injury, other than “bodily injury,” arising out of one or more of the following offenses:
(d) oral or written publication of material that slanders or libels a person.

(Emphasis added.) Because Talen and the Vinton bank have not shown that they relied on the torts of invasion of privacy and disparagement in seeking to establish insurance coverage in the district court, they may not successfully urge these theories on appeal.

Talen and the Vinton bank urge that Iowa law provides a narrower interpretation of the phrase “arising out of,” when contained in an insurance policy exclusion, than the interpretation that was employed in the cases upon which we rely. They suggest that, under this court’s restrictive interpretation of the words “arising out of’ in insurance policy exclusions, the exclusion relied on by Employers does not preclude coverage for Pearson’s defamation claim. They base this argument on principles espoused by us in Tacker v. American Family Mutual Insurance Co., 530 N.W.2d 674 (Iowa 1995). In that case, we determined:

When used in the context of a coverage clause, words like “arising out of’ must be given a broad, comprehensive meaning. Exclusionary clauses, however, call for a narrow or restrictive construction. Where ... a claim may be said to derive from two independent causes, {e.g., negligent operation of a motor vehicle and negligent supervision of school children), a policy’s exclusion for injuries “arising out of’ motor vehicle accidents must be read narrowly to exclude coverage for only those injuries proximately caused by the motor vehicle, not lax supervision.

Tacker, 530 N.W.2d at 677 (citations omitted).

Unlike the situation in Tacker, Pearson’s claims did not potentially arise from two independent causes; they were based entirely on comments that Talen made to officials of the Oelwein bank concerning Pearson’s abilities as a loan officer. That conduct was the sole actus reus of the alleged torts. This is conduct that is embraced by the policy exclusion on which Employers relies. The necessary causal relationship between the excluded conduct and the claimed injury is self-evident.

Talen and the Vinton bank contend that Employers may not avail itself of the employment-related-practices exclusion in the present case because the allegations of Pearson’s petition setting forth his defamation claim did not identify what was said in Talen’s conversations with the owner and executive officer of the Oelwein bank. The petition only alleged that what was said was disparaging towards Pearson. Thus, Talen and the bank argue, it may not be assumed that the alleged disparagement related to Pearson’s performance as an employee of the bank. We have recognized that it is permissible for a liability insurer, in determining whether to accept a tendered defense to consider facts beyond the allegations of the petition. McAndrews v. Farm Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984).

In McAndrews we stated this principle as follows: “The scope of inquiry, however, must sometimes be expanded beyond the petition, especially under ‘notice pleading’ petitions which often give few facts upon which to assess an insurer’s duty to defend.” Id. Quoting from an earlier case, we stated that an insurer has no duty to defend “if after construing both the policy in question, the pleadings of the injured party and any other admissible and relevant facts in the record, it appears the claim made is not covered by the indemnity insurance contract.” Id. (quoting Cent. Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970)). We find this principle to be especially relevant when the basis for withholding coverage is a policy exclusion the application of which is not readily ascertainable from the allegations of the petition and will not necessarily be determined in the tort litigation. See Inghram v. Dairyland Mut. Ins. Co., 178 N.W.2d 299, 301 (Iowa 1970) (coverage denied based on failure to notify insurer of replacement vehicle).

In the present case, Employers inquired of its insured, the Vinton bank, concerning the relationship between the parties when it was apprised of Pearson’s breaeh-of-contract action. As previously noted, defense of that action was declined due to an exclusion of coverage for liability assumed under a contractual agreement. When Employers was apprised of the later action asserting the tort claims, its knowledge that Pearson had been an employee of the Vinton bank caused the insurer to suspect that the statements constituting the alleged defamation might pertain to Pearson’s employment at the bank. It sought to confirm this belief by inquiring of counsel who was defending the Pearson claims on behalf of the Vinton bank and Talen (and who was also the person urging Employers to accept the defense) concerning the nature of the statements that had been made by Talen. No information was provided that suggested the injurious communications involved anything other than comments on Pearson’s abilities as a loan officer.

Subsequent inquiries by Employers confirmed that its conclusions as to the nature of Talen’s conversations with the Oelwein bank were correct. In considering all of the evidence produced in the present litigation, we are satisfied that Talen’s comments to Pearson’s prospective employers at the Oelwein bank were entirely related to his performance as a bank loan officer. The fact that Employers may have denied coverage based on assumptions involving the contents of Talen’s conversations prior to obtaining more accurate information •with respect thereto is without significance in light of the fact that its assumptions proved to be correct.

2. The “Refusal to employ” exclusion. Employers’ policy also included an exclusion that provided:

This insurance does not apply to “personal injury” to
A person arising out of any:
Refusal to employ that person.

Insurance policies are contracts between the insurer and the insured and must be interpreted like other contracts, the object being to ascertain the intent of the parties. Ferguson v. Allied Mut Ins. Co., 512 N.W.2d 296, 299 (Iowa 1994). The words used should, unless otherwise defined, be given their ordinary meaning to achieve a fair interpretation. N. Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 454 (Iowa 1987). Words in an insurance policy are to be applied to subjects that seem most properly related by context and applicability. Cairns v. Grinnell Mut. Reins. Co., 398 N.W.2d 821, 824 (Iowa 1987).

In applying these principles, we are convinced that, although the employment-related-practice exclusion is based on a type of conduct that caused the alleged personal injury, the “Refusal to employ” exclusion is based on a particular consequence befalling the third-party claimant, i.e., a loss of employment. All of Pearson’s legal theories sought recovery for damages suffered as a result of the Oel-wein bank failing to employ him. That injury is clearly excluded by the “Refusal to employ” exclusion contained in Employers’ policy. Although Pearson’s pleaded claims appear to have also included an effort to recover damages for a residual loss of reputation apart from his loss of the Oelwein bank job, this does not aid him. Within the context of the transactions that have been presented in the present litigation, it is impossible to envision any economic damage to reputation that would not be based on a “Refusal to employ.”

III. The Claim Against Minnesota Fire.

A. Claims that may be disposed of without extended discussion. In considering Minnesota Fire’s challenge to the district court’s determination that its policy afforded liability coverage to Talen for Pearson’s claims, there are several matters that may be disposed of without extended elaboration. We consider these matters briefly.

1. The breach-of-contract claim. The district court determined that Minnesota Fire had a duty to defend against Pearson’s original breach-of-contract action. Minnesota Fire’s policy contained an exclusion for damages assumed by a contract or agreement that was in legal effect the same as the exclusion in Employers’ policy. Consequently, as was the case with Employers, the breach-of-contract claim was excluded from liability coverage. Minnesota Fire had no duty to defend Talen against that claim.

2. Alleged failure to give Minnesota Fire notice of the tort claims. Minnesota Fire has contended throughout this action that it was not given notice of the tort claims contained in Pearson’s second action. The evidence presented concerning this issue was conflicting. We are satisfied that a preponderance of the credible evidence supports the district court’s finding that Minnesota Fire received adequate notice of the second action and made a considered election to decline coverage with respect thereto.

3. The consent-to-settle clause. Minnesota Fire argues that it need not indemnify Talen with respect to the amount he contributed toward the Pearson settlement because its policy provides that any voluntary settlement of a claim without the consent of Minnesota Fire shall be the sole responsibility of the insured. We reject the insurer’s effort to invoke that clause in the present case. Our cases are clear that, if an insurer provides liability coverage for a third-party tort claim and declines to defend its insured, it is liable to indemnify the insured for any reasonable settlement of the third-party claim, notwithstanding a consent-to-settle requirement in its policy. Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d 637, 641 (Iowa 2000) (insurer’s unjustified refusal to defend relieves the insured from his or her contract obligations not to settle, and insured is at liberty to make reasonable settlement or compromise without losing rights under the policy); Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 531 (Iowa 1995) (same).

4. Alleged absence of injury. Minnesota Fire has contended throughout the litigation that it is not required to indemnify Talen for the amount he contributed to the settlement because he has been reimbursed for that payment by the bank holding company of which he is a majority stockholder. We find no merit in this contention. Pearson’s action sought to collect damages from Talen and the Vinton bank, jointly and severally; Talen and the Vinton bank were the settling-parties. Talen wrote a check on his personal account in satisfaction of that portion of the settlement not paid by Fidelity and Deposit and Farm Bureau Mutual. The settlement extinguished Talen’s personal liability in the matter. If he was insured for that liability under the Minnesota Fire policy, he is entitled to seek indemnification for the amounts he expended to settle the claim against him.

B. District court’s findings of waiver and estoppel. The district court’s decision purported to disallow Minnesota Fire’s policy defenses based on a finding of waiver and estoppel. This conclusion was based on the insurer’s initial response to Talen stating that Minnesota Fire would defend the Pearson claims under reservation of right, a decision that it later reversed. On this point, the district court stated:

Minnesota Fire agreed to handle the defense in May 1996. The court rejects as implausible Minnesota Fire’s attempt to characterize its agreement to “handle” the defense as a denial of coverage. Indeed, the very reason for giving an insured notice of claim is to provide the insurer “the opportunity to handle the defense.” Minnesota Fire did not fulfill its agreement to defend. Therefore as a result of this breach, Minnesota Fire has waived its right, or is estopped from asserting, coverage defenses.

(Citations omitted.)

The district court, accepting Ta-len’s argument that this issue is governed by Minnesota law, relied on a decision of the Minnesota Court of Appeals in support of its finding of waiver and estoppel. Although we accept the argument that Minnesota law is the most appropriate choice for a dispute between a Minnesota insurance company and a Minnesota resident over a policy sold in Minnesota, our inquiry does not end here. We must ascertain whether in advocating Minnesota law Talen sufficiently pled or proved the foreign law in question. If he did not, our conñicts-of-law rules require us to assume the foreign law is the same as Iowa law. Pa. Life Ins. Co. v. Simoni, 641 N.W.2d 807, 811 (Iowa 2002); EFCO Corp. v. Norman Highway Constructors, Inc., 606 N.W.2d 297, 300 (Iowa 2000). We are unable to discern from the present record that Talen has sufficiently pled and proved the law of Minnesota on this issue or on any other issue in the case, except one that is discussed later. Consequently, we will apply Iowa law in reviewing the district court’s finding of waiver and estoppel.

In Scheetz v. IMT Insurance Co., 324 N.W.2d 302 (Iowa 1982), we observed:

“[W]e may well keep in mind the somewhat elusive distinction between waiver and estoppel ..., a distinction which appears to be that a ‘waiver’ is a voluntary relinquishment of a known right, while an ‘estoppel’ consists of a preclusion which in law prevents a party from alleging or denying a fact in consequence of his own previous act, averment, or denial. Hence, if a party relinquishes a known right, awarded him by contract, he cannot without the consent of his adversary, reclaim it. But the ban of an estoppel may be lifted by the party against whom it is invoked, by the giving of proper notice.”

Scheetz, 324 N.W.2d at 305 (quoting Gilbert v. Globe & Rutgers Fire Ins. Co. of New York, 91 Or. 59, 67, 178 P. 358, 358 (1919)) (citation omitted). In considering Minnesota Fire’s initial response to Talen indicating that it would defend the Pearson claims under reservation of right, we can discern nothing in that communication that suggests a waiver of policy defenses. The purpose of declaring an intention to defend under reservation of rights is to preserve those defenses and not waive them by the action that the insurer thereafter takes. Inghram, 178 N.W.2d at 304 (as a result of nonwaiver agreement, it is obvious insurer did not covenant to defend or indemnify). Minnesota Fire did not voluntarily relinquish a known right with respect to its policy defenses and those defenses may not be denied on the basis of waiver.

With regard to estoppel, we have recognized that, when an insurer gives prompt notice to the party claiming to be insured that it is not waiving the benefit of any policy defenses, no estoppel arises. Id.; N.W. Nat’l Ins. Co. v. Kinney, 444 N.W.2d 107, 110 (Iowa Ct.App.1989). The tentative nature of Minnesota Fire’s response to the request that it assume the defense did not give rise to any obligation on its part to do so.

C. Limitations as to who is insured. The insured under the Minnesota Fire policy, as stated on the declaration page, is:

TALEN INVESTMENTS
WILLIAM TALEN DBA
PO BOX 535
NORTHFIELD MN 55057

In describing who is insured, the policy states:

If you are designated in the Declarations as:
An individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner.

In describing the business being carried on, the policy states “INVESTMENT/FINANCIAL ADVISOR.” This corresponds to the manner in which the type of business was described in William Talen’s application for the business protector insurance policy. The application also disclosed the following information:

1. a recital that gross sales for the previous year were $130,000.
2. a statement that the business would be carried out in Talen’s personal residence.
3. an assurance that no customers would be coming on the insured premises (a requirement for insuring a personal dwelling against extended perils in a business policy in lieu of homeowner’s insurance).
4. a recital that the insured had been in business for forty-five years.

The application sought a “business liability” limit of $1,000,000, and the policy was issued with that limit in place.

Minnesota Fire does not dispute that the defamation claim asserted against Talen in the Pearson litigation fell within the personal-injury coverage of its policy, which was in all material respects the same as that contained in the Employers’ policy

that we have previously discussed. Minnesota Fire, however, asserts that Talen’s liability, if any, in the Pearson litigation was unrelated to any solely owned business in which he was engaged and therefore not within the coverage afforded. In this regard, Minnesota Fire points out that the Vinton bank was not owned by Talen. It was owned by a holding company in which Talen owned a controlling interest but less than all of the stock that had been issued.

The district court found that the Minnesota Fire policy insures Mr. Talen, individually, for specified injuries or damage (ie., personal injury) arising out of his business activities. Mr. Talen uses the term “Talen Investments” to describe his investing activities.

The court went on to state in its decision that

Minnesota Fire’s denial rests primarily on its contention that Mr. Pearson did not sue Mr. Talen in his individual insured capacity.... Mr. Casey, Minnesota Fire’s claim supervisor, admitted that he does not know what activities constitute “Talen Investments.” Mr. Valen [a Minnesota Fire claims representative] agreed that the description of “Talen Investments” on the declarations page as “Investment/Financial Advisor” is inconclusive and does not specify or limit the scope of the insurance coverage provided. Further, Mr. Valen did not ascertain precisely in what capacity Mr. Talen acted regarding his telephone calls.

The purpose of naming the insured on the declarations page “is to designate the person intended to be insured, any designation which fulfills that purpose is sufficient.” 3 Lee R. Russ & Thomas F. Segal-Ia, Couch on Insurance Sd § 40:3, at 45 (2000) (footnote omitted). As a leading text suggests:

[W]hen the intent to cover a particular risk is clear, the name of the insured is not always important. Where a designation is not clear on its face, it will be interpreted in such manner as makes the most sense given the context in which it is used, and ambiguities will be resolved against the insurer.

Id. (footnotes omitted). The issue before us does not present a question concerning the identity of the insured. Clearly, it is William Talen, individually. The issue over the insuring clause involves the insurer’s attempt to use the definition of who is insured to limit the source of the liability that the policy covers.

Pearson’s claims against Talen were, in each instance, based on conduct alleged to have been taken both individually and as an agent of the Vinton bank. Minnesota Fire does not insure the Vinton bank or its officers and employees acting in the conduct of banking business. It argues that Talen’s communications to the Oelwein bank were taken in his capacity as an agent of the Vinton bank responding to a specific request for information that had been directed to the Vinton bank. Although it is true that the Oelwein bank’s request for information was directed to the Vinton bank, Talen’s communication was not made to the party at the Oelwein bank that requested the information. Instead, he undertook to contact Carl Pohlad, an acquaintance and business associate, who owned the Oelwein bank. He was communicating information that the Vinton bank was contractually bound not to discuss. His action in that regard did not benefit the Vinton bank, and served to place it at substantial risk of a costly lawsuit. We may and do infer from these circumstances that Talen’s communications to officials at the Oelwein bank concerning Pearson’s job performance were intended to satisfy his own business objectives separate from those of the Vinton bank.

We must resolve two questions. Was Talen acting, at least in part, for business reasons in communicating with Pohlad and the Oelwein bank concerning Pearson’s abilities or lack thereof; and, if so, was Talen’s business pursuit undertaken in connection with a business solely owned by him? We are convinced that the answer to the first question is yes. It is apparent from the evidence presented that Talen was motivated by a wish to remain in the good graces of Mr. Pohlad, the owner of the Oelwein bank, who had been a confidante and advisor with respect to Talen’s actions in the buying and selling of banks. This relationship had led to a strong friendship and social interaction between Talen and Pohlad and their respective families that was punctuated, at least once a year, by the delivery of a jar of Mrs. Talen’s finest bread-and-butter pickles to their fellow Minnesotans, the Pohlads. But, the cultivation of Pohlad also served a substantial business purpose for Talen.

With respect to the second question, as the district court found, Minnesota Fire’s own claim representative conceded that the designation of the character of Talen’s business as “INVESTMENT/FINANCIAL ADVISOR” is inconclusive and does not specify or limit the scope of the insurance provided. We agree with that conclusion. It appears from the record that one of Talen’s principal business activities was the buying and selling of banks. Although the ownership of some of those banks was eventually placed in a bank holding company, this does not negate the possibility that his actions in acquiring the banks were undertaken in his individual capacity as an investor. The evidence revealed that Mr. Pohlad was a valued advisor with respect to Talen’s activities in the buying and selling of banks. Viewing the evidence in its entirety, we find on our de novo review that Talen’s conversations with Pohlad and other personnel at the Oelwein bank were undertaken pursuant to the conduct of a business of which he was the sole owner and thus were afforded protection against liability under Minnesota Fire’s policy. The fact that he paid the additional money required to settle Pearson’s claims, rather than directing the Vinton bank to do so, serves to reinforce that conclusion.

Because we have concluded that Edwin Carlson is the named insured under the policy, it is irrelevant that he did not
advise [the insurer] of his purchase of [an additional business] named Harrington Ranch.... Absent a specific exclusion limiting coverage, all of Carlson’s business enterprises operated as sole proprietorships were covered by the ... policy.

Carlson v. Doekson Gross, Inc., 372 N.W.2d 902, 907 (N.D.1985). We reach a similar conclusion concerning Talen’s activities in the present case.

In reaching this conclusion, we have not overlooked two decisions relied on by Minnesota Fire. In Rayburn v. MSI Insurance Co., 240 Wis.2d 745, 624 N.W.2d 878 (Ct.App.2000), had a policy that, like the Minnesota Fire policy, purported to only make him an insured with respect to the conduct of a business of which you are the sole owner. The insured, who operated a residential carpentry business as a sole proprietorship, helped his father build a shed in his spare time. The court held that conduct was a personal pursuit in which he was not carrying on his carpentry business. The facts of the Rayburn case are easily distinguishable from the present case. Rayburn was not an instance in which the personal nature of the services performed overshadowed a business purpose; there simply was no business purpose in the insured’s activities in that case.

Another case relied on by Minnesota Fire is Dome Corp. v. Kennard, 172 F.3d 1278 (10th Cir.1999). The insured in Ken-nard also had a policy in which he was only named as an insured with respect to the conduct of a business of which he was the sole owner. The court held that no coverage existed because the liability of the insured arose out of his activities in an oil and gas venture of which he was not the sole owner. Kennard, 172 F.3d at 1283. That case did not determine that, if the insured had been acting for his own for business purposes separate and apart from those of his oil-and-gas-venture interests, his actions would not have been covered by the policy.

Minnesota Fire urges that, if this was a personal business activity of Talen, it did not fall within the activities described in the policy application and, consequently, is not covered by its policy. It seeks to portray the covered business activities as the giving of financial advice and nothing more. We do not view the extent of the covered business activities this narrowly. The words “INVESTMENT/FINANCIAL ADVISOR” are just as easily interpreted to mean that the business relates to both investing and the giving of financial advice. The meaning of the word “investment” is sufficiently broad as to include nearly any activity in which money is invested for financial gain. Single-owner proprietorships may engage in many activities with which their liability insurers are not familiar, but if a particular activity is not excluded by the policy, it may be within the coverage that is afforded the insured. This situation was described by the North Dakota Supreme Court:

D. The other insurance clause. Minnesota Fire contends that it is not liable to indemnify Talen with respect to the settlement of the Pearson action because its policy provides:

If there is other insurance covering the same loss or damage, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not.

Minnesota Fire asserts that, because the Fidelity and Deposit and Farm Bureau Mutual policies each had liability limits of $1,000,000, and the insurance afforded by Minnesota Fire was excess over those amounts, it is entitled to a credit of $2,000,000 with respect to its obligation to indemnify Talen. The district court rejected this contention.

The premise on which Minnesota Fire’s argument is based is stated as follows in a leading insurance text:

[I]f an insured settles with a primary insurer for less than that insurer’s policy limits, an excess insurer will, assuming the primary insurer did, in fact, provide coverage, be entitled to a credit for the full amount of the primary insurance. The insured, therefore, may not recover the difference between the settlement amount and the primary coverage limit from the excess insurer.

1 Allan D. Windt, Insurance Claims & Disputes § 6.32 (4th ed.2005) (emphasis added) (citations omitted). The principle thus announced has been recognized and applied by several courts. E.g., Great W. Cas. Co. v. Canal Ins. Co., 901 F.2d 1525, 1527 (10th Cir.1990); Siligato v. Welch, 607 F.Supp. 743, 747 (D.Conn.1985); Smit v. State Farm Mut. Auto. Ins. Co., 207 Mich.App. 674, 525 N.W.2d 528, 533 (1994); Pub. Serv. Mut. Ins. Co. v. Fireman’s Fund Am. Ins. Co., 82 A.D.2d 403, 404, 441 N.Y.S.2d 677, 678 (1981).

For our present purposes, the key words of the black-letter principle that we have quoted from the insurance text are “assuming the primary insurer did, in fact, provide coverage.” We may not assume that either the Fidelity and Deposit policy or the Farm Bureau Mutual policy actually insured Talen against the liability embraced by the Minnesota Fire policy. The coverage of the other policies was a matter that Minnesota Fire was required to establish to the court’s satisfaction in order to attain its alleged status as an excess insurer. It has done little to meet that burden. Although it raised the excess-insurance issue in a motion for summary judgment, placed the Fidelity and Deposit policy and the Farm Bureau Mutual policy in evidence at trial, and submitted proposed findings that would have established its status as an excess insurer, Minnesota Fire has made no argument either here or in its brief in the district court asserting a legal theory on which the court might find that these policies, or either of them, insured Talen against the claims that Pearson lodged against him, individually.

Although Fidelity and Deposit and Farm Bureau Mutual each defended Talen against the Pearson claims under reservation of right, both of those insurers denied coverage throughout that litigation. The fact that they each contributed a sum of money to the settlement does not establish that their respective policies in fact covered the liability claims so as to make the policy limits available to Talen. There is good reason to conclude that these policies did not cover his liability.

The insured under the Fidelity and Deposit policy was a bank in Traer, Iowa, owned by the same holding company that owned the Vinton bank. That policy insured the Traer bank and its officers and directors while acting for that bank. Minnesota Fire has not suggested how the Traer bank was in any manner involved in the Pearson litigation. Farm Bureau Mutual insured the holding company that owned the Vinton bank. It, too, would appear to insure a nonparty to the Pearson litigation.

It is not necessary, however, to base our determination of the inapplicability of the Fidelity and Deposit and Farm Bureau Mutual policies on whom they insured. Both of these policies contained the same employment-related-practices exclusion that we have held excluded coverage on the part of Employers. In the face of that circumstance and without any argument by Minnesota Fire revealing the theory by which it contends these policies provided coverage to Talen, we must reject the argument that it has the status of an excess insurer.

IV. The Cross-Appeal.

Talen and the Vinton bank cross-appeal from the district court’s judgment seeking to recover punitive damages from both insurers. Our decision relieving Employers from any liability forecloses an award of punitive damages against it. With respect to Minnesota Fire, we have reviewed its conduct and conclude that the district court correctly determined that this conduct did not warrant an award of punitive damages. The district court’s judgment is affirmed on this issue.

V. The Attorney Fees Awarded.

The district court ordered an award of attorney fees against Minnesota Fire for the amounts paid by the Vinton bank in defending against Pearson’s claims. Because Minnesota Fire does not insure the Vinton bank, this was error. There has been no showing that Talen personally paid any portion of the fees incurred in defending Pearson’s claims. Consequently, no fee award with respect to that litigation may be forthcoming from Minnesota Fire.

Because the role in which Ta-len was acting was an issue of disputed fact, we are satisfied that Minnesota Fire may not be found guilty of bad faith in refusing to defend against the Pearson claims. Bellville v. Farm Bureau Ins. Co., 702 N.W.2d 468, 474 (Iowa 2005); Wetherbee v. Econ. Fire & Cas. Co., 508 N.W.2d 657, 661-62 (Iowa 1993). However, under Minnesota law, which was adequately pleaded and proved in this action, Minnesota Fire is liable for the attorney fees incurred by Talen in pursuing the present action irrespective of the absence of bad faith. Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411, 420 (Minn.1997); Am. Standard Ins. Co. v. Le, 551 N.W.2d 923, 926 (Minn.1996); Morrison v. Swenson, 274 Minn. 127, 142 N.W.2d 640, 647 (1966). It is clear, however, that the Minnesota Supreme Court, in so holding, has limited the amount of attorney fees that may be recovered to “whatever expense he [the insured] has been compelled to incur in asserting his rights.” Morrison, 142 N.W.2d at 647; accord Le, 551 N.W.2d at 926. This means that Talen may only seek reimbursement of the actual amount of attorney fees and reasonable and necessary litigation expenses paid or incurred in pursuing the present litigation.

The district court computed Talen’s attorney-fee award on an hourly basis for all of the hours expended in the litigation. In fact, Talen and his attorneys in the present litigation had entered into a contractual arrangement in which Talen was billed and paid fees at an hourly rate up to a certain point and thereafter a contingent-fee arrangement was in effect. The district court’s attorney-fee award is vacated and the case remanded for a computation of the attorney fees and reasonable and necessary litigation expenses for which Talen is made responsible under the existing attorney-fee agreement with his counsel. The recovery of fees from Minnesota Fire shall be limited to those amounts.

VI. The Bills of Costs.

The district court approved and entered judgment for two bills of costs that contained items not recoverable as costs or witness fees under Iowa law. We vacate these cost awards. On remand, the taxation of costs shall be limited to those costs taxed by the clerk, witness fees as provided in Iowa Code section 622.69 (2003), expert-witness fees as provided in Iowa Code section 625.14, and the costs of depositions entered into evidence at the trial of the case. This disposition is not intended to preclude the recovery of some of the items contained in the bills of costs as necessary litigation expenses under Ta-len’s fee agreement with his attorneys. The extent to which any item contained in the bills of costs may fall within that category of litigation expenses must be determined by the district court on remand.

We have considered all issues presented and conclude that the judgment of the district court should be reversed with respect to defendant Employers and the case remanded for entry of judgment dismissing plaintiffs’ petition against that defendant. The judgment in favor of Talen against defendant Minnesota Fire for indemnification in the sum of $375,000 is affirmed. The attorney-fee and cost judgments entered by the district court are vacated and those matters are remanded for further proceedings in conformance with this opinion. Costs of appeal are taxed sixty-five percent to plaintiffs and thirty-five percent to defendant Minnesota Fire.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

      . The lawyer who represented Talen and the Vinton bank in defending against Pearson’s claims testified that his discovery proceedings in that action disclosed that a Vinton bank employee named Darlys Hulme had also spoken to someone at the Oelwein bank concerning Pearson. It does not appear that this conversation constituted a basis for Pearson’s claim against the Vinton bank, but to the extent that it may have, Darlys Hulme's communication would have constituted an employment-related practice for the same reasons that Talen's communications did.

      . We conclude that the reference to "relevant facts in the record” merely means any facts that would be relevant in determining the insurer's duty to defend in later coverage litigation. We expressed this point as follows in New Hampshire Insurance Co. v. Christy, 200 N.W.2d 834 (Iowa 1972):
      The allegations in a pleading are not, in all circumstances and situations, the decisive factor in determining whether there exists a duty on the part of the insurance company to defend. This is especially true when the duty to defend depends upon a factual issue which will not be resolved at the trial of the third party's suit against the insured, [in such a situation] the duly to defend may depend upon the actual facts and not upon the allegations in the pleading.

        Christy, 200 N.W.2d at 838.

      . Evidence was presented that, in his conversations with the owner and chief executive officer of the Oelwein bank, Talen also stated that he had been told by a bank examiner that Pearson had made a number of bad loans at another bank at which he had been employed. From the context of the conversation, we conclude that this information was given to corroborate Talen's evaluation of Pearson's capabilities as a loan officer. As such, it also falls within the employment-related-practices exclusion.

      . Talen and the Vinton bank urge that this exclusion would only apply to Pearson’s loss of employment at the Vinton bank. That interpretation is negated by the language of the exclusion indicating that it applies ''[w]hether the insured may be liable as an employer or in any other capacity.”

      . The district court relied on Home Insurance Co. v. National Union Fire Insurance of Pittsburgh, 643 N.W.2d 307 (Minn.Ct.App.2002), rev'd on other grounds, 658 N.W.2d 522 (Minn.2003), to support its conclusion that, by indicating an intention to defend under reservation of right, Minnesota Fire bound itself to do so. The cited case does not support that conclusion. The duty to defend that was established by the Minnesota appellate court was based on an interpretation of the insurance policy and not on a theory of waiver or estoppel.

      . Iowa law provides that estoppel may not operate to create a new insurance contract, although it may deny legal effect to certain requirements imposed against the insured as a condition of obtaining the benefits that the policy confers. Midwest Office Tech., Inc. v. Am. Alliance Ins. Co., 437 N.W.2d 555, 558 (Iowa 1989); Richardson v. Iowa State Traveling Men’s Ass’n, 228 Iowa 319, 328, 291 N.W. 408, 412 (1940).

      . Although Talen’s wife is also an insured, she is not involved in the present dispute.

      . Talen presented expert testimony that attempted to link the amount he paid in settlement to the defamation claim. The district court did allocate the amount paid to that claim, and Minnesota Fire has not challenged that determination in its argument.

      . A leading dictionary defines ‘'investment” as "An expenditure to acquire property or assets to produce revenue.” Black's Law Dictionary 831 (7th ed.2001).


source: Caselaw Access Project

author: CADY, Justice. STREIT, Justice

license: Public Domain

text:
    CHRYSLER FINANCIAL COMPANY, Appellee, v. Jon BERGSTROM, Appellant.
    No. 04-0582.
    Supreme Court of Iowa.
    Sept. 9, 2005.

      Ray Johnson of Johnson Law Firm, West Des Moines, for appellant.
    Becky J. Petersen and Phil Watson of Phil Watson, P.C., Des Moines, for appel-lee.
   CADY, Justice.

The Iowa Consumer Credit Code provides remedies for Iowa consumers against creditors who violate certain provisions of the Code. See Iowa Code §§ 537.5201-.5203 (2003). This appeal concerns a violation involving filing a lawsuit against a consumer in the wrong venue and the statutory defense that relieves the creditor of liability for the violation if the creditor shows the violation was unintentional and was the result of a bona fide error that occurred even though the creditor had a procedure in place “reasonably adapted to avoid the error.” Id. § 537.5201(7). We vacate the decision of the court of appeals and affirm the decision of the district court.

I. Background Facts and Proceedings

Jon Bergstrom leased a vehicle from Chrysler Financial Company in 1997. He subsequently fell behind on his lease payments, and Chrysler gave him notice of his right to cure the default. See id. § 537.5110 (providing for consumer’s right to cure default and stating that giving notice of the right to cure default is a prerequisite to suit); id. § 537.5111 (requiring creditor to give consumer notice of right to cure default). Bergstrom did not cure the default within the time he was allowed to cure. See id. (stating consumer has twenty days from receiving notice of the right to cure to pay the delinquency). Thus, Chrysler accelerated the debt, sold the vehicle following repossession, and filed an action against Bergstrom for a deficiency judgment of $7690.46.

Under the consumer credit code, Chrysler was required to bring the action in the county of Bergstrom’s residence. Id. § 537.5113. Bergstrom resided just outside Riceville, Iowa, but Riceville was his designated city of residence.

Riceville is located on the border of Howard and Mitchell Counties in northeast Iowa. The western portion of Riceville is in Mitchell County, and the eastern portion of Riceville is in Howard County. Bergstrom lives near the portion of Rice-ville that lies in Mitchell County. However, Chrysler filed the action in Howard County.

Bergstrom filed a motion for a change of venue to Mitchell County and requested attorney fees and costs for the motion. Chrysler consented to transferring the case to Mitchell County. However, it contested Bergstrom’s claim for attorney fees and costs on the basis that it “exercised due diligence in attempting to ascertain the proper venue, the error was harmless and the Defendant was not unduly prejudiced” by the mistake. The district court in Howard County transferred the case to Mitchell County, ordered Chrysler to pay Bergstrom’s court costs, and held the issue of attorney fees in abeyance.

After the transfer to Mitchell County, Bergstrom filed an answer to Chrysler’s petition, along with a counterclaim. The counterclaim alleged Chrysler violated the consumer credit code by bringing the action in the wrong county. It sought, among other items, statutory damages under Iowa Code section 537.5201. Chrysler replied to Bergstrom’s counterclaim, asserting that its violation of the consumer credit code was not intentional and resulted from a bona fide error. On that basis, it claimed it could not be held liable for statutory damages. The case proceeded to a bench trial.

The district court ultimately entered a deficiency judgment for $7690.46 for Chrysler against Bergstrom. However, the focus in this appeal is solely on Berg-strom’s counterclaim against Chrysler. In response to the counterclaim, Chrysler presented evidence at trial of the filing practices and procedures of the Des Moines law firm it retained to initiate the action. Karen Brewer, a legal secretary at the firm, testified that she was responsible for preparing cases, including consumer credit cases, for filing. She was instructed that consumer credit cases were required to be filed in the county of the defendant’s residence. The firm’s procedure for ascertaining the defendant’s county of residence was to consult the United States Postal Service (USPS) city-county directory. The directory provided a list of cities in Iowa and, next to each city, listed the county in which the city was located. Brewer had previously compared the listings in the USPS directory with those in a city-county directory she obtained from the Iowa Department of Transportation and found them to be identical. Brewer testified she had used the USPS directory “hundreds” of times to find the defendant’s county and had never encountered a problem until this case. In this case, Brewer obtained Bergstrom’s address from the Chrysler file, which showed Riceville as the city of his address. She then used the directory to ascertain his county of residence. The directory indicated Riceville was in Howard County.

The district court entered a deficiency judgment for Chrysler in the amount of $7690.46. It also found that the error of filing the lawsuit in the wrong county was unintentional and “eonstitute[d] a bona fide error pursuant to section 537.5201(7).” The court denied Bergstrom’s counterclaim against Chrysler. It did, however, award Bergstrom attorney fees of $525 as costs incurred in changing venue. See Iowa R. Civ. P. 1.806.

Bergstrom filed a timely notice of appeal from the court’s judgment denying his counterclaim. He did not appeal from the $7690.46 judgment entered against him by the district court. We transferred the case to the court of appeals. The court of appeals reversed the district court’s judgment. It held that Chrysler’s “bona fide error defense to the counterclaim should have failed as a matter of law” and remanded the ease to the district court to determine the amount of statutory damages and attorney fees. We granted further review.

II. Principles of Review

We review the judgment of a district court following a bench trial in a law action for correction of errors at law. Wolf v. Wolf, 690 N.W.2d 887, 892 (Iowa 2005). The district court’s findings of fact have the force of a special verdict and are binding on us if supported by substantial evidence. Nathan Lane Assocs., L.L.P. v. Merchants Wholesale of Iowa, Inc., 698 N.W.2d 136, 138 (Iowa 2005). Evidence is substantial if a reasonable person would accept it as adequate to reach a conclusion. Hansen v. Seabee Corp., 688 N.W.2d 234, 238 (Iowa 2004) (citing Amevik v. Univ. of Minn. Bd. of Regents, 642 N.W.2d 315, 318 (Iowa 2002)). “ ‘Evidence is not insubstantial merely because we may draw different conclusions from it; the ultimate question is whether it supports the finding actually made, not whether the evidence would support a different finding.’ ” Fischer v. City of Sioux City, 695 N.W.2d 31, 33-34 (Iowa 2005) (quoting Raper v. State, 688 N.W.2d 29, 36 (Iowa 2004)); accord 5 Am.Jur.2d Appellate Review § 666, at 340 (1995). In determining whether substantial evidence exists, we view the evidence in the light most favorable to the district court’s judgment. Gacke v. Pork Xtra, L.L.C., 684 N.W.2d 168, 179 (Iowa 2004). If the district court’s “findings are ambiguous, they will be construed to uphold, not defeat, the judgment.” Johnson v. Raster, 6B7 N.W.2d 174, 177 (Iowa 2001) (citing Byers v. Contemporary Indus. Midwest, Inc., 419 N.W.2d 396, 397 (Iowa 1988)). Finally, if a district court fails to make a specific fact finding on an issue, and a party files a rule 1.904(2) motion requesting a finding on the issue, and the district court summarily denies the motion, we will assume the court found against the party on that issue. See Kennedy v. State, 688 N.W.2d 473, 478 (Iowa 2004).

III. Merits

It is a violation of the consumer credit code to institute an action against a consumer in the wrong county. Iowa Code § 537.5113. Yet, when a violation of the consumer credit code was not intentional and resulted from a bona fide error, a violator may avoid liability to a consumer under a standard established in section 537.5201(7), which is often referred to as the “bona fide error” defense. The section provides:

A person may not be held liable in any action brought under this section for a violation of this chapter if the person shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error.

Id. § 537.5201(7).

The application of this standard requires that three questions be answered. See id. First, was the violation unintentional and the result of a bona fide error? Id. Second, if the violation was unintentional and resulted from a bona fide error, did the violator maintain a procedure to avoid the error? Id. Third, if the procedure was in place, was it reasonably adapted to avoid the error? Id.

The first question is fairly straightforward. The inquiry is simply whether the violator intended to do the act that constituted a violation of the act, not whether the violator intended to violate the law. Cf 47 C.J.S. Interest & Usury § 499, at 598 (2005) (construing the bona fide error defense in Truth in Lending Act, 15 U.S.C. § 1640(c), which contains language identical to Iowa Code section 537.5201(7)). Thus, in this case, the inquiry is whether Karen Brewer intended to file the lawsuit in the wrong county. “The determination of whether a violation was not intentional and resulted from a bona fide error is one of fact.” Id. § 499, at 599. The district court found that she did not intend to file a lawsuit in the wrong county, and there is substantial evidence to support that finding. See Nathan Lane Assocs., L.L.P., 698 N.W.2d at 138 (stating district court’s findings are binding on appeal if supported by substantial evidence). Brewer testified at trial that she intended to file the action in the county of Berg-strom’s residence. Thus, her intent was to follow the venue requirement of the consumer credit code. See Iowa Code § 537.5113.

In addressing the second question, it is important to understand that the error the procedure must be aimed at avoiding is the statutory violation at issue in the given case. In this case, the error at issue was the institution of the lawsuit against a consumer in the wrong county. See id. Thus, the question is whether Chrysler had a procedure in place to avoid suing a consumer in the wrong county. It is not whether the violator had a procedure in place to avoid suing, specifically, a consumer who lives in a community that extends into two or more counties in the wrong county. The existence of a procedure only pertains to the code violation — suing a consumer in the wrong county. The district court found Chrysler had such a procedure in place, and there was substantial evidence to support this finding. The evidence was that a legal secretary verified the consumer’s county of residence with the USPS city-county directory.

The third question, the fighting issue in this appeal, is whether the procedure maintained was reasonably adapted to avoid the error. Again, the focus is on whether the procedure was reasonably adapted to avoid the error that constituted a violation of the statute — in this ease, institution of an action in the wrong county, not specifically avoiding this error in the context of a consumer who lives in a city straddling two counties. Thus, we must decide whether substantial evidence supports the district court finding that the USPS directory procedure was reasonably adapted to avoid suing a consumer in the wrong county. See id. § 537.5201(7).

The court of appeals held the procedure of using the USPS directory was not reasonably adapted to avoid suing a consumer in the wrong county as a matter of law because the directory only designated one county for each city and did not include information to show those cities that extended into multiple counties. In other words, the procedure did not eliminate all chances of avoiding the error.

The statute does not define “reasonably adapted.” See generally id. eh. 537. Moreover, we have never interpreted the phrase. In Monahan Loan Service Inc. v. Janssen, 349 N.W.2d 752, 754 (Iowa 1984), we held that statutory damages were available for violating the consumer credit code for filing an action in the wrong county, but we did not have the opportunity to address the elements of the bona fide error defense. Yet, in other contexts, we have said that questions of reasonableness are best resolved by the fact finder. See St. Ansgar Mills, Inc. v. Streit, 613 N.W.2d 289, 295 (Iowa 2000) (“Generally, the determination of the reasonableness of particular conduct is a jury question.” (citing Pirelli-Armstrong Tire Co. v. Reynolds, 562 N.W.2d 433, 436 (Iowa 1997); Harvey v. Great Atl. & Pac. Tea Co., 388 F.2d 123, 125 (5th Cir.1968)); Hepp v. Zinnel, 199 N.W.2d 68, 69 (Iowa 1972) (“[W]hat is ‘reasonable’ is not black or white. Such an issue is peculiarly for the fact finder.” (citing Appling v. Stuck, 164 N.W.2d 810, 814 (Iowa 1969)); cf. Mcllra-vy v. N. River Ins. Co., 653 N.W.2d 323, 333 (Iowa 2002) (opining “reasonableness of the denial of a workers’ compensation claim by an insurer” is ordinarily a question of fact); State v. Arnold, 543 N.W.2d 600, 604 (Iowa 1996) (stating “reasonableness or excessiveness of the punishment was a question for the jury” (citation omitted)); Hoekstra v. Farm Bureau Mut. Ins. Co., 382 N.W.2d 100, 106 (Iowa 1986) (holding the question of whether insurance company’s requests were “reasonable” under policy language was a fact question); Zohn v. Menard, Inc., 598 N.W.2d 323, 326 (Iowa Ct.App.1999) (“The issue of the existence of reasonable grounds for detention by a shopkeeper is generally a question of fact for the jury.” (Citation omitted.)); 1 Dan B. Dobbs, The Laiv of Torts § 148, at 354 (2001) (stating determining whether a risk was unreasonable is a jury function). There is no reason to approach the bona fide error defense in any other manner. See Narwick v. Wexler, 901 F.Supp. 1275, 1282 (N.D.Ill.1995) (addressing the bona fide error defense under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692k(c), which contains the same “reasonably adapted” language as section 537.5201(7), and observing, “[t]he inquiry into whether given procedures are reasonable is, by its nature, fact-intensive, and should therefore typically be left to the” fact finder). Thus, we must decide if there was substantial evidence of reasonableness. Our law has never considered reasonableness to be perfect or foolproof.

One common way to analyze whether a party’s conduct is reasonable is to balance the utility of the party’s act against the magnitude of the risk of harm to others. Restatement (Second) of Torts § 291, at 54 (1965). Thus, even if Chrysler should have foreseen that its procedure could result in a consumer being sued in the wrong county in those instances when a consumer resides in a city that spans two counties, the magnitude of the risk of harm must be considered to fully determine the reasonableness of the procedure. As the magnitude of the risk increases, so too should the degree of care required to avoid the risk. Factors to consider in determining the magnitude of the risk include:

(a) the social value which the law attaches to the interests which are imperiled; (b) the extent of the chance that the actor’s conduct will cause an invasion of any interest of the other ...; (c) the extent of the harm likely to be caused to the interests imperiled; (d) the number of persons whose interests are likely to be invaded if the risk takes effect in harm.

Id. § 293, at 58.

As to the factor (a), it is clear the law views an individual’s interest in not being sued in the wrong county as an important social value. See Panhandle E. Pipe Line Co. v. Fed. Power Comm’n, 324 U.S. 635, 639, 65 S.Ct. 821, 823-24, 89 L.Ed. 1241, 1246 (1945) (“Venue relates to the convenience of litigants.” (citing Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167 (1939)); State ex rel. Klabacka v. Charles, 36 Wis.2d 122, 152 N.W.2d 857, 861 (1967) (stating the purpose of venue statutes “is to prevent the hardship and inconvenience to which a defendant may be subjected by having to defend himself in the county in which he is not a resident”). Yet, it is reasonable to believe that this value is greater when the incorrect venue is at a great distance from the debtor’s residence. See Dutton v. Wolhar, 809 F.Supp. 1130, 1139. (D.Del.1992) (one purpose of venue provision under FDCPA was to prevent collection actions in forums “located at great distances from debtors’ residences”).

As to factors (b) and (d), there was no evidence presented at trial as to either the chance of someone being sued in the wrong county using the USPS city-county directory procedure, or the number of persons at risk of being sued in the wrong county using this procedure — i.e., how many people live in Iowa cities that span the border between two counties. Notwithstanding, we must base our inquiry into whether substantial evidence supports the district court’s finding that Chrysler’s procedure was reasonably adapted to avoid suing consumers in the wrong county on the evidence that was actually presented at trial, and we cannot speculate about the number of consumers that could be adversely affected or the chances of a consumer’s interest would be invaded simply because we may conceive that some consumers could be adversely affected by the procedure. Our role is not to search for evidence to defeat the district court’s judgment, but rather, to broadly construe the court’s findings and view the evidence in the light most favorable to upholding the judgment. Johnson, 637 N.W.2d at 177. However, what we do know from the evidence is that the procedure has been used “hundreds” of times by Chrysler in the past without knowledge that it adversely affected the venue rights of litigants. This evidence would support a finding that the chance of invading the protected interest and the number of people likely to be adversely affected is minimal.

The final factor in considering reasonableness is the extent of the potential harm. Restatement (Second) of Torts § 293, at 58; Vaughn v. Ag Processing, Inc., 459 N.W.2d 627, 634 (Iowa 1990) (holding factor to consider in determining whether employer took “reasonable steps to remedy” discrimination in the workplace was the gravity of the harm). In considering this factor, it is important to recognize that the potential error at issue in this case, if it occurs, only means the consumer is required to defend the lawsuit in a neighboring county. See Dutton, 809 F.Supp. at 1139 (purpose of venue provision under FDCPA was to prevent collection suits in forum “located at great distances from debtors’ residences” and to “prevent forum abuse”). Furthermore, the potential error mostly affects consumers who live relatively close to the neighboring county. Thus, any additional distance from a consumer’s residence imposed on a consumer by the error will not be significant, and in some cases, the neighboring county may even be a more convenient forum for the consumer. See Iowa R. Civ. P. 1.808(1) (“An action brought in the wrong county may be prosecuted there until termination, unless a defendant, before answer, moves for change to the proper county.”); see also Dove v. Gold Kist, Inc., 314 S.C. 235, 442 S.E.2d 598, 600 (1994) (“A court sitting where venue is improper may nevertheless render judgment provided the party who possesses the venue right consents, either expressly or impliedly.” (Citation omitted.)). Additionally, once the error is discovered, a prompt and fair procedure exists under our rules of practice to correct the error and provide compensation to the consumer for any trouble and expense imposed. See Iowa R. Civ. P. 1.808(1) (upon motion, court is required to change venue when a petition is filed in the wrong county and may award compensation for the defendant’s trouble and expense).- In fact, it is fair to say that a simple phone call from one attorney to the other attorney would normally be enough to correct the problem. Thus, from a practical standpoint, the potential harm of being sued in an adjoining county is minimal, if it exists at all. This means the procedure designed to avoid this particular error need not be highly stringent in order to be deemed “reasonably adapted to avoid the error.”

Moreover, reasonableness must be evaluated. based on the circumstances as the actor knew them at the time, not with the benefit of hindsight. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 31, at 170 (5th ed. 1984) (“The actor’s conduct must be judged in the light of the possibilities apparent to him at the time, and not by looking backward ‘with the wisdom born of the event.’ ”). At trial, there was nothing to suggest that the USPS directory was not a reliable document at the time it was used. The past success of the procedure used by Chrysler is evidence that the district court could rely upon to conclude that it was reasonably adapted to avoid suing a consumer in the wrong county.

IV. Conclusion

We conclude substantial evidence exists to support the district court’s findings that the petition in this case was filed in the wrong county unintentionally, as the result of a bona fide error. Substantial evidence also exists that the action was filed in the wrong county notwithstanding the maintenance of a procedure reasonably adapted to avoid this error. All the elements of the bona fide error defense under Iowa Code section 537.5201(7) are satisfied. Therefore, Chrysler cannot be held liable for a violation of the consumer credit code. See Iowa Code § 537.5201(7). Accordingly, the district court’s denial of Berg-strom’s counterclaim against Chrysler was correct, and we affirm the district court’s judgment and vacate the decision of the court of appeals.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.

All justices concur except STREIT, TERNUS, and WIGGINS, JJ., who dissent.

STREIT, Justice

(dissenting).

I respectfully dissent. Chrysler’s procedures were not “reasonably adapted” to avoid suing defendants in the wrong county. They were doomed to fail.. For this reason, I would affirm the court of appeals and reverse the district court.

It is not disputed that Chrysler violated the Iowa Consumer Credit Code when it sued Bergstrom in the wrong venue. The only question is whether Chrysler is liable for its mistake. Ordinarily a creditor is vicariously liable for the unlawful debt collection practices of its agents, including collection attorneys. Cf. Martinez v. Albuquerque Collection Servs., Inc., 867 F.Supp. 1495, 1502 (D.N.M.1994) (interpreting identically worded federal statute). The bona fide error defense, Iowa Code section 537.5201(7), creates an exception to the general rule of liability. To prove its bona fide error defense, Chrysler bore the burden to show it had maintained proee-dures “reasonably adapted” to avoid suing defendants in -wrong venues.

Chrysler’s procedures were not “reasonably adapted” to avoid suing defendants in wrong venues. Merely looking at the USPS directory, looking up what county a city is located in, will inevitably fail too often to be “reasonably adapted.” Chrysler’s attorney’s secretary (hereinafter “Chrysler’s secretary”) testified the directory contained only one county entry for each city listed. This will too often result in the plaintiff filing in the wrong venue, because no small number of Iowa cities are located in two counties. For example, West Des Moines, one of Iowa’s most populous cities, is located in both Polk and Dallas Counties. Moreover, the USPS directory alone cannot account for residents of rural areas who, although they are given a mailing address of a nearby town, may, like Bergstrom, live miles away from the city limits and in another county. This is not inconsequential in Iowa, which has ninety-nine counties. Chrysler’s procedures were not reasonably adapted to avoid suing debtors in the wrong county; the only result of the directory’s use was that suits were filed in the county where city hall happened to be located.

The majority makes much of the fact that Chrysler’s secretary testified she had never heard of any problems with using the USPS directory before this case. The majority leaps to the conclusion that Chrysler’s procedure “has been used ‘hundreds’ of times ... without adversely affecting the venue rights of litigants.” The majority implicitly assumes Chrysler’s debtors (1) all know their venue rights and (2) would always tell Chrysler’s secretary when those rights were violated. Given the nature of collection actions, it is equally if not more likely that problems were not recognized or not reported to Chrysler’s secretary. The statute, after all, is a remedial consumer protection act designed to protect those who do not or cannot complain.

The mere fact a mistake occurs does not automatically render the creditor’s procedures not reasonably adapted to avoid the error. That the legislature saw fit to create the defense means it must cover some mistakes. Chrysler’s procedures, however, are not “reasonably adapted” because far too many lawsuits will fall through the cracks; to mix metaphors, Chrysler left the floodgates open when its attorney handed his secretary a USPS directory that was too rudimentary to account for two-county cities or rural residents. Cfi Martinez, 867 F.Supp. at 1503 (holding defendant’s bona fide error defense “conclusively fail[ed]”; defendant could not have maintained procedures reasonably adapted to avoid the venue violation which occurred because it “routinely applied the wrong standard in determining where to file suit”). It is not the purpose of the bona fide error defense to shield creditors from liability for systemic errors. Cf id.

The majority’s interpretation of “reasonably adapted” procedures will often leave Iowans without recourse under the consumer credit code — and not just when the creditor violates the venue provision of the act. But see Iowa Code § 537.1102(1) (“This chapter shall be liberally construed and applied to promote its underlying purposes and policies.”). This is particularly unfortunate given that Iowa remains the only state that denies consumers a private right of action under its consumer fraud act. Procedures that are designed to fail on a widespread basis will be “reasonably adapted,” so long as this Court — employing a five-factor balancing test — makes its own policy determination that the violation was really not that bad. In doing so, the majority sweeps away — without discussion — a long line of authority that holds some sort of double-checking mechanism is required for a procedure to be “reasonably adapted.” See, e.g., Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246, 251 (3d Cir. 1980) (“reasonably adapted” procedures require creditors to set up “a special system ... to assure that no initial errors occur, and that a checking mechanism be maintained to catch any errors that slip through the system”); Gallegos v. Stokes, 593 F.2d 372, 376 (10th Cir.1979) (similar); Mirabal v. Gen. Motors Acceptance Corp., 537 F.2d 871, 879 (7th Cir.1976) (“Their procedures, although probably designed to provide correct disclosures, did not contain any type of preventative mechanism for catching disclosure errors.”), cert. denied, 439 U.S. 1039, 99 S.Ct. 642, 58 L.Ed.2d 699 (1978), overruled on other grounds by Brown v. Marquette Sav. & Loan Ass’n, 686 F.2d 608 (7th Cir.1982); In re Webster, 300 B.R. 787, 798 (W.D.Okla.2003) (similar); In re Ralls, 230 B.R. 508, 520 (Bkrtcy.E.D.Pa.1999); In re Wright, 11 B.R. 590, 594 (Bkrtcy.S.D.Miss.1981) (similar); see also Hutchings v. Beneficial Fin. Co., 646 F.2d 389, 391 (9th Cir.1981) (following Thomka, but finding procedures “reasonably adapted” because creditor hired second employee to double-check first employee’s calculations). It therefore runs afoul of the manner in which the legislature has expressly directed us to interpret the statute. See Iowa Code § 537.1102(2)⅛') (directing courts . to “[m]ake the law ... more uniform among the various jurisdictions”).

One last point is worth mentioning, in light of the majority’s repeated insistence that it is merely engaging in substantial-evidence review. In the district court, the fighting issue was not whether Chrysler’s procedures were “reasonably adapted” to avoid mistaken filings, but rather whether Chrysler could escape liability if it simply proved its error was unintentional. Chrysler quoted from dicta in Monahan Loan Service, Inc. v. Janssen, which opined that a creditor would not be liable if it showed its mistake was “inadvertently drafted, unintentional, or resulted from a bona fide error.” 349 N.W.2d 752, 755 (Iowa 1984). The district court agreed, found Chrysler’s error was unintentional, and dismissed Bergstrom’s counterclaim. This is why the court of appeals spent the bulk of its opinion distinguishing our dicta in Monahan to rightly conclude that “proof of the maintenance of procedures reasonably adapted to avoid the error in addition to proof that the error was unintentional ...” was necessary.

This history of the case is important because it shows why the district court focused on whether Chrysler’s actions were intentional and did not make any specific legal conclusions or factual findings about what sorts of procedures are reasonably adapted to avoid mistaken venue filings. Indeed, the district court’s entire ruling on Bergstrom’s counterclaim was:

[T]he Court finds that plaintiff has established that the filing of the petition in Howard County was not intentional. The evidence solicited by ... a secretary/receptionist at [Chrysler’s law firm], clearly established that it was her direction and intent that this action be filed in the defendant’s county of residence. According to reliance upon U.S. Postal records, as well as Department of Transportation records, she incorrectly assumed that the county of residence was Howard.
It should also be noted that Riceville is a unique community in North Central Iowa wherein half of the town is located in Mitchell County and half is located in Howard County. The Court can appreciate some measure of confusion for a Des Moines law firm filing such an action in the wrong county.

When the record is viewed in its entirety, it appears the district court did not analyze the “reasonably adapted” procedures element.

Even if we construe the foregoing as an implicit ruling on the “reasonably adapted” element of the bona fide error defense, however, the district court’s conclusion was based upon a faulty premise. Although certainly special, there is nothing “unique” about Riceville; as previously indicated, many Iowa towns straddle a county line, and many rural Iowans have mailing addresses of a town in another county. The majority repeats this error when it opines without support — in the record or otherwise — that “the number of people likely to be adversely affected is minimal.” There simply is not substantial evidence to support the casual observations of the district court and now the majority.

The district court’s findings also lack evidentiary support in the record insofar as they imply Bergstrom lived in the “half of the town in Mitchell County.” At trial, Bergstrom testified he lived approximately five miles outside the Riceville city limits. He indicated his mailing address was “3199 390th Street, Riceville, Iowa,” which clearly shows that he lived in a rural area. Thus when the majority writes that “Berg-strom resided just outside Riceville” and “Bergstrom lives in the portion of Riceville that lies in Mitchell County,” it falls into the trap first laid by the trial court.

In sum, it is plain that Chrysler’s procedures are not “reasonably adapted” to avoid the sorts of venue mistakes that occurred here. In the absence of the bona fide error defense, Bergstrom was entitled to judgment on his counterclaim. See Monahan, 349 N.W.2d at 754.

TERNUS and WIGGINS, JJ., join this dissent.

      . Bergstrom asserted that Chrysler's filing the action in the wrong county was a prohibited debt collection practice under Iowa Code section 537.7103(1)00. Section 537.7103(1)00 prohibits any "action prohibited by this chapter or any other law.” Because filing an action against a consumer in the wrong county is prohibited under section 537.5113, which is in chapter 537, Bergstrom claimed Chrysler's action constituted a prohibited debt collection practice. See id. § 537.7103(1)00. Bergstrom needed to weave this extra layer into his argument in order to claim statutory damages from Chrysler. Section 537.5201 provides that a consumer may recover damages between one hundred and one thousand dollars from a creditor who has committed certain violations of the consumer credit code. Id. § 537.5201(1). The section provides a list of twenty-seven violations for which statutory damages are recoverable. Id. § 537.5201(l)(a )-{aa). Bringing an action in the wrong county, in violation of section 537.5113, is not a violation enumerated on the list. Id. However, "unfair debt collection practices under section 537.7103” are on the list. Id. § 537.5201(l)(y). Pursuant to this analysis, we have held that statutory damages are available for filing a consumer credit action in the wrong county, if such filing constitutes a violation of the consumer credit code. See Monahan Loan Serv., Inc. v. Janssen, 349 N.W.2d 752, 754 (Iowa 1984).

      . After discussing the evidence in its written ruling in this case, the district court specifically found the error in filing the lawsuit in the wrong county constituted "a bona fide error pursuant to section 537.5201(7).” Bergstrom filed a motion under Iowa Rule of Civil Procedure 1.904(2) following the district court decision. He argued there was no evidence to support a finding that Chrysler had a procedure in place that was reasonably adapted to avoid the error. The district court denied the motion, stating that "the issues raised by the motion were identical to the issues raised at trial, which led to the court's findings and conclusion.” On appeal, Berg-strom argued that the district court did not make any finding under the "bona fide error” defense that the procedures used by Chrysler were reasonably adapted to avoid the error. Clearly, this background reveals the district court made the requisite finding when it concluded that the "bona fide error” defense pursuant to section 537.5201(7) was established. Consequently, the question on appeal is whether there was substantial evidence to support the finding.

      . Bergstrom argues that Chrysler must prove the additional element that the procedure was "maintained” over a period of time and was "followed time in and time out.” He cites Mirabal v. Gen. Motors Acceptance Corp., 537 F.2d 871, 879 (7th Cir.1976), overruled on other grounds by Brown v. Marquette Sav. & Loan Ass'n, 686 F.2d 608, 615 (7th Cir.1982), for this proposition. We decline to adopt the Seventh Circuit's definition of “maintenance” under the Truth in Lending Act. The consumer credit code does not define the word "maintenance.” See generally Iowa Code ch. 537. Thus, we give the word its plain and ordinary meaning. Nash Finch Co. v. City Council of City of Cedar Rapids, 672 N.W.2d 822, 826 (Iowa 2003). We do not think the ordinary meaning of "maintenance” is “following] time in and time out.” Mirabal, 537 F.2d at 879. Rather, we think it means, in the context of section 537.5201(7), "to have in place.”
      Moreover, even if we assume, arguendo, that a procedure must be followed time in and time out to satisfy the alleged "maintenance” element of the bona fide error defense, we find there is substantial evidence that the USPS directory was used time in and time out. Karen Brewer testified at trial that she "always” used the USPS directory procedure to determine a consumer’s county of residence, that she had used it "hundreds” of times, and that she never used any other method — she "just used that list.”

      . We emphasize that we are not ruling on what may or may not be a procedure reasonably adapted to avoid any error other than the error specifically at issue in this case.

      . It is important to point out that the directory upon which the majority relies in its substantial-evidence review is not in the record. Our only indication of what the directory might contain comes from the secretary’s testimony.

      . Indeed, as many as three of the seven members of this court have mailing addresses containing a city or town that could fall within two counties.

      . See Tom Miller, Give Iowans a Key Consumer Protection Tool, available at http:// www.state.ia.us/governmen1/ag /lat-est_news/releases/jan_2002/Pri-vate_Right_rel.htm (last visited Aug. 24, 2005).

      . Chrysler strategically reframed the issue on further review. At oral argument, Chrysler suggested that because the district court set forth the text of the statute in its ruling it therefore impliedly determined Chrysler had proved it had maintained the "reasonably adapted” procedures. Although in some cases we may assume the district court impliedly ruled on an issue without discussing it, cf. Meier v. Senecaut, 641 N.W.2d 532, 539-40 (Iowa 2002), we ought not presume findings of fact when it is apparent the district court did not make them. See, e.g., Sager v. Farm Bureau Mut. Ins. Co., 680 N.W.2d 8, 15 (Iowa 2004).
      A close reading of the majority's decision reveals it implicitly accepts Chrysler’s refram-ing of the issues. The silent shift the majority now makes is important — especially given its repeated insistence that we ought to defer to the district court's factual findings. Yet what are these factual findings? The majority does not say what they are because they do not exist.
      When one recognizes the procedural posture of the case, it also becomes apparent that the majority asks the impossible of Berg-strom. For example, the majority faults Bergstrom for not presenting evidence at trial regarding the probability a debtor might be sued in the wrong county when the creditor uses the USPS directory, even though what constituted "reasonably adapted” procedure was not the fighting issue in the district court. (It is also wrong for two other reasons: (1) Chrysler, not Bergstrom, bore the burden of proof to establish its affirmative defense and (2) it would be wrong to expect Bergstrom to engage in a statistical analysis that finds no textual basis in the statute.)