Opinion
No. 5-668 / 05-0103
Filed November 9, 2005
Appeal from the Iowa District Court for Winnebago County, John S. Mackey, Judge.
The plaintiffappeals from the district court's order granting the defendant's motion for summary judgment on her petition for declaratory judgment. AFFIRMED.
James P. McGuire of McGuire Law Firm, PC, Mason City, for appellant.
Douglas A. Haag of Patterson, Lorentzen, Duffield, Timmons, Irish, Becker Ordway, L.L.P., Des Moines, attorney for appellee.
Heard by Sackett, C.J., and Vaitheswaran and Eisenhauer, JJ.
Plaintiff Rebecca Bartleson appeals from the district court's order granting defendant Grinnell Mutual Reinsurance Co.'s motion for summary judgment on her petition for declaratory judgment. She contends the court erred in concluding she did not have underinsured motorist coverage of $100,000 per person on December 31, 2002. We affirm.
I. Background Facts and Proceedings.
On March 22, 2001, Gary Bartleson obtained car insurance coverage through Grinnell Mutual Reinsurance Co. (Grinnell Mutual) for his 1993 Pontiac Grand Am. Gary's daughter, Rebecca Bartleson, was a named driver on the policy, which provided uninsured and underinsured motorist coverage with limits of $100,000 per person and $300,000 per accident.
Gary Bartleson decided to change insurance agents and contacted Jordahl Insurance Agency on April 13, 2001. He spoke with Linda Jordahl about changing insurance agencies but retaining the same insurance coverage. Because Rebecca was the primary driver of the Grand Am, Gary was advised to transfer title of the vehicle to Rebecca and to obtain a separate insurance policy in her name. Gary transferred title of the vehicle the same day.
On April 16, 2001, Gary Bartleson went to the Jordahl Agency and inquired about reducing the cost of his insurance. He was informed that he could save money by discontinuing the uninsured and underinsured motorist coverage. Gary then signed a written request to cancel the policy he obtained on March 22, 2001. He signed an application for issuance of an insurance policy to Rebecca, listing her as the named insured. Gary also signed a written rejection of uninsured and underinsured motorist coverage for Rebecca's policy. Finally, Gary signed a written rejection of uninsured and underinsured motorist coverage on his new policy with Grinnell Mutual. Policy number 205558 was issued covering the Grand Am with Rebecca as the named insured effective April 16, 2002 and was renewed on October 16, 2002. The policy contained no uninsured or underinsured coverage.
On December 31, 2002, Rebecca was seriously injured in an automobile collision while a passenger in an underinsured vehicle. Rebecca's damages exceeded the liability limits of the driver's policy by over $100,000. Rebecca sought to collect the $100,000 underinsured motorist limit from Grinnell Mutual. Grinnell Mutual offered to pay only $20,000, the minimum limits required by law.
On August 6, 2004, Rebecca filed a petition for declaratory judgment, requesting the court rule Grinnell Mutual is obligated to pay Rebecca $100,000. Grinnell Mutual counterclaimed for declaratory judgment, claiming the proper amount of coverage was $20,000. On October 21, 2004, Grinnell Mutual filed a motion for summary judgment. On November 8, 2004, Rebecca resisted the motion and cross-motioned for summary judgment. Following a hearing the district court granted Grinnell Mutual's motion and dismissed Rebecca's petition for declaratory judgment.
II. Standard of Review.
Although equity cases are generally reviewed de novo, review of a case in equity resulting in summary judgment is for correction of errors at law. Iowa R. App. P. 6.4; Keokuk Junction Ry. Co. v. IES Indus., Inc., 618 N.W.2d 352, 355 (Iowa 2000).
III. Summary Judgment.
Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3). A factual issue is material only if the dispute is over facts that might affect the outcome of the suit, given the applicable law. Lewis v. State ex rel. Miler, 646 N.W.2d 121, 124 (Iowa Ct.App. 2002). The party moving for summary judgment has the burden of proving the facts are undisputed. Id.
In ruling on a motion for summary judgment, the court must view the facts in the light most favorable to the resisting party. Id. Furthermore, every legitimate inference that can be reasonably deduced from the evidence should be afforded the resisting party. Id. An inference is legitimate if it is "rational, reasonable, and otherwise permissible under the governing substantive law." Id. ( citing Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct.App. 1994)). An inference is not legitimate if it is based upon speculation or conjecture. Id. If reasonable minds may differ on the resolution of an issue, a genuine issue of material fact exists. Id.
Rebecca contends the district court erred in granting summary judgment because her father's cancellation of the uninsured and underinsured motorist protection was invalid. Iowa Code section 516A.1 (2001) requires that uninsured and underinsured motorist coverage of $20,000 be carried on all automobile insurance policies. However, the named insured may reject such coverage by written rejection signed by the named insured. Iowa Code § 516A.1. In other words, the rejection of the uninsured and underinsured motorist coverage was only valid if signed by Rebecca herself. Because Gary, not Rebecca, signed the rejection of coverage, Grinnell Mutual concedes Rebecca is entitled to underinsured motorist coverage, but argues the extent of the coverage is fixed at the statutory amount of $20,000.
Rebecca asserts an oral binder was created on April 13, 2001, when Gary Bartleson asked Rebecca to be separately insured in the same manner as the previous policy. Because the waiver of coverage signed on April 16, 2001 was invalid, Rebecca claims the $100,000 uninsured and underinsured motorist liability contained in the previous policy continued. The district court rejected this argument, concluding that any oral binder created on April 13, 2001 was extinguished once the permanent policy was approved and issued by Grinnell Mutual. The court concluded:
There is no question section 516A.1 mandates that the defendant must provide uninsured/underinsured motorist benefits in the statutory amount absent a valid waiver by the named insured. Notwithstanding the fact that Mr. Bartleson's waiver was ineffective, the policy issued on behalf of Rebecca Bartleson contained zero liability limits for uninsured and underinsured coverage. Because Iowa Code section 516A.1 mandates coverage, the amount owed to the plaintiff is the statutory minimum of $20,000.
Rebecca argues the court's ruling was in error and cites to the case of Preferred Risk Mutual Insurance Co. v. Cooper, 638 N.W.2d 717 (Iowa 2002). In Cooper, a husband later declined uninsured and underinsured motorist coverage on an automobile insurance policy that was already in existence. Cooper, 638 N.W.2d at 718. However, the wife, who was also insured under the policy, never signed a form declining coverage. Id. at 719. Our supreme court held that the wife's failure to personally sign the form declining coverage made the declination invalid as to her. Id. The court found the wife was therefore entitled to the uninsured and underinsured motorist benefits previously provided for in the original policy, not the mere $20,000 amount required by law. Id. at 720. The district court distinguished Cooper from the case at bar, noting that whereas in Cooper the pre-existing insurance policy was simply modified, Rebecca's coverage under the previous policy was cancelled by her father on April 13, 2001 and a new policy was issued.
We conclude the district court did not err in granting summary judgment to Grinnell Mutual. Assuming arguendo that Gary Bartleson's discussions on April 13, 2001 led to an oral binder with the same terms as the policy he canceled, the binder was extinguished when Grinnell Mutual issued the formal insurance policy. See 1 Lee R. Russ Thomas F. Segalla, Couch on Insurance 3d § 13:1, at 13-4 (2000) ("A binder is not an insurance policy, but is generally taken to be a contract providing for interim insurance effective as of the date of the application and terminating at either completion or rejection of the principal policy."). A binder does not constitute part of an insurance policy, nor does it create any rights for the insured other than during its effective period. 12A John Alan Appleman Jean Appleman, Insurance Law and Practice § 7227, at 154 (1981). Therefore, if an oral binder was created with a $100,000 underinsured motorist benefit, this benefit ceased to exist when the new policy which contained no provision for underinsured motorist coverage was issued. In the absence of Rebecca's signature on the written refusal of the underinsured motorist coverage, Rebecca is entitled to $20,000 in underinsured motorist benefits. Accordingly, we affirm.