KALE SWAINSTO N and STEPHANIE SWAINSTO N , Plaintiffs - Appellants, vs. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant - Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 8-686 / 08-0391
Filed November 26, 2008
KALE SWAINSTON and
STEPHANIE SWAINSTON,
Plaintiffs-Appellants,
vs.
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Eliza J. Ovrom,
Judge.
Insureds appeal from summary judgment granted in favor of insurer.
AFFIRMED.
Steven Lawyer of Law Firm of Steven V. Lawyer & Associates, Des
Moines, for appellants.
Coreen K. Sweeney and Anna W. Mundy of Nyemaster, Goode, West,
Hansell & O’Brien, P.C., Des Moines, for appellee.
Considered by Huitink, P.J., and Vaitheswaran and Potterfield, JJ.
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HUITINK, P.J.
Kale and Stephanie Swainston appeal from the district court’s ruling
granting summary judgment in favor of the insurer, American Family Mutual
Insurance Company. They contend the district court erred in determining Iowa
Code section 516A.2(3) (2007) applies to their claim for uninsured motorist (UM)
coverage under their insurance policy with American Family. They also argue
that even if that section is applicable, the “other insurance” language of the policy
shows that the policy allows stacking. Finally, they contend that in any event
Stephanie is entitled to additional benefits under the uninsured limits of the
American Family policy. We affirm.
I. Background Facts and Proceedings. On November 27, 2004, the
Swainstons were injured in a collision while riding as passengers in a vehicle
they did not own and which was insured by State Farm Insurance. As a result of
the collision, State Farm paid its per-accident limit ($500,000) for uninsured
motorist coverage. The proceeds were distributed among five individuals: Kale
received $195,000 and Stephanie received $54,000.
At the time of the collision, the Swainstons were covered under an
automobile insurance policy with American Family. The UM coverage of this
policy provides the following “Limits of Liability”:
The limits of liability of this coverage as shown in the declarations
apply, subject to the following:
1. The limit for “each person” [$100,000] is the maximum for all
damages sustained by all persons as the result of bodily injury to
one person in any one accident.
2. Subject to the limit for “each person,” the limit for “each
accident” [$300,000] is the maximum for bodily injury sustained by
two or more persons in any one accident.
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We will pay no more that these maximums no matter how many
vehicles are described in the declarations, or insured persons,
claims, claimants, policies or vehicles are involved.
The Limits of liability of this coverage will be reduced by:
1. A payment made by the owner or operator of the uninsured
motor vehicle or organization which may be legally liable.
2. A payment under the Liability coverage of this policy.
3.
A payment made or amount payable [under workers’
compensation].
OTHER INSURANCE
If there is other similar insurance on a loss covered by this Part, we
will pay our share according to this policy’s proportion of the total
limits of all similar insurance. But, any insurance provided under
this Part for an insured person while occupying a vehicle you do not
own is excess over any other similar insurance.
The State Farm policy issued to the driver of the vehicle in which the
Swainstons were riding when they were injured carried higher policy limits for
uninsured motorist benefits than the American Family policy issued to the
Swainstons.
The Swainstons sued American Family, alleging it wrongfully refused to
pay them under the UM provisions of the policy (Count I) and for bad faith
(Count II). American Family moved for summary judgment on Count I, asserting
the Swainstons had been reimbursed by the driver’s insurance policy and that
American Family was not required to pay under the antistacking provisions of
Iowa Code section 516A.2.
The district court granted summary judgment to
American Family on Count I. The Swainstons voluntarily dismissed Count II and
appealed the summary judgment ruling.
II. Standard of Review. This court reviews a summary judgment ruling
on error. Iowa R. App. P. 6.4.; Lee v. Grinnell Mut. Reins. Co., 646 N.W.2d 403,
406 (Iowa 2002). “A summary judgment will be affirmed when the moving party
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has shown no genuine issues of material fact exist and the party is entitled to
judgment as a matter of law.” Whicker v. Goodman, 576 N.W.2d 108, 110 (Iowa
1998); accord Iowa R. Civ. P. 1.981(3). In a case such as the one before us,
where the facts are undisputed, this court simply determines “whether the district
court correctly applied the law.” Krause v. Krause, 589 N.W.2d 721, 724 (Iowa
1999).
III. Discussion. The interpretation of an insurance policy is a question of
law for the court. Greenfield v. Cincinnati Ins. Co., 737 N.W.2d 112, 117 (Iowa
2007). We view the provisions of an insurance policy “in a light favorable to the
insured.” A.Y. McDonald Indus. v. Insurance Co. of N. Am., 475 N.W.2d 607,
619 (Iowa 1991). “[T]he cardinal principle is that the intent of the parties must
control; and except in cases of ambiguity this is determined by what the policy
itself says.” Id. at 618.
Notwithstanding the principle that the meaning of an insurance contract is
generally determined from the language of the policy, statutory law may also
affect our interpretation of policy provisions. In discussing the application and
effect of Iowa’s uninsured/underinsured motorist statute, chapter 516A, the
supreme court has stated:
A statute that authorizes a contract of insurance has application
beyond merely permitting or requiring such a policy. The statute
itself forms a basic part of the policy and is treated as if it had
actually been written into the policy. The terms of the policy are to
be construed in light of the purposes and intent of the applicable
statute.
Lee, 646 N.W.2d at 406 (internal quotations and citations omitted).
Thus, a
determination of the coverage provided by the policy also requires an
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interpretation of the pertinent statutes. With these general principles in mind, we
turn to the issues at hand.
Chapter 516A controls uninsured, underinsured and hit-and-run motorist
coverage in insurance policies.
At issue here is section 516A.2, entitled
“CONSTRUCTION -- MINIMUM COVERAGE --STACKING.”1
1.
Except with respect to a policy containing both
underinsured motor vehicle coverage and uninsured or hit-and- run
motor vehicle coverage, nothing contained in this chapter shall be
construed as requiring forms of coverage provided pursuant hereto,
whether alone or in combination with similar coverage afforded
under other automobile liability or motor vehicle liability policies, to
afford limits in excess of those that would be afforded had the
insured thereunder been involved in an accident with a motorist
who was insured under a policy of liability insurance with the
minimum limits for bodily injury or death prescribed in subsection
11 of section 321A.1. Such forms of coverage may include terms,
exclusions, limitations, conditions, and offsets which are designed
to avoid duplication of insurance or other benefits.
To the extent that Hernandez v. Farmers Insurance
Company, 460 N.W.2d 842 (Iowa 1990), provided for interpolicy
stacking of uninsured or underinsured coverages in contravention
of specific contract or policy language, the general assembly
declares such decision abrogated and declares that the
enforcement of the antistacking provisions contained in a motor
vehicle insurance policy does not frustrate the protection given to
an insured under section 516A.1.
2. Pursuant to chapter 17A, the commissioner of insurance
shall, by January 1, 1992, adopt rules to assure the availability,
within the state, of motor vehicle insurance policies, riders,
endorsements, or other similar forms of coverage, the terms of
which shall provide for the stacking of uninsured and underinsured
coverages with any similar coverage which may be available to an
insured.
3. It is the intent of the general assembly that when more
than one motor vehicle insurance policy is purchased by or on
1
We keep in mind that this case involves a “narrow coverage view.” Greenfield v.
Cincinnati Ins. Co., 737 N.W.2d 112, 118 (Iowa 2007) (noting the policy distinction
between uninsured motorist coverage—to make certain that an injured party receives
minimum compensation for his or her injuries—and underinsured motorist coverage—to
enhance the ability of claimant in an automobile accident to be made whole for his or her
losses).
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behalf of an injured insured and which provides uninsured,
underinsured, or hit-and-run motor vehicle coverage to an insured
injured in an accident, the injured insured is entitled to recover up to
an amount equal to the highest single limit for uninsured,
underinsured, or hit-and-run motor vehicle coverage under any one
of the above described motor vehicle insurance policies insuring
the injured person which amount shall be paid by the insurers
according to any priority of coverage provisions contained in the
policies insuring the injured person.
The Swainstons contend that the language of the American Family policy
allows stacking and section 516A.2 is inapplicable.
Stacking is just another word to denote the availability of
more than one policy, or one policy with multiple vehicles, providing
reimbursement of the losses of the insured. Interpolicy stacking
occurs when the insured recovers underinsured or uninsured
benefits under more than one policy.
Farm Bureau Mut. Ins. Co. v. Ries, 551 N.W.2d 316, 318 (Iowa 1996).
Our law governing stacking of insurance coverage is found
in Iowa Code section 516A.2. . . . It first declares antistacking
provisions contained in a motor vehicle insurance policy are
enforceable. Iowa Code § 516A.2(1). . . . Thus, the first subsection
of section 516A.2 clearly reflects legislative intent to permit insurers
to include provisions in insurance policies which prohibit the
stacking of uninsured and underinsured motorist benefits. . . .
Secondly, the section establishes that the insured and
insurer may contract to include stacking of uninsured and
underinsured coverage in a policy. Iowa Code § 516A.2(2). Thus,
even though antistacking provisions may be included in an
insurance policy, the parties may contract for provisions that
provide for stacking, and, presumably, pay an additional premium
for the coverage.
Finally, Iowa Code section 516A.2(3) provides if more than
one policy is purchased containing uninsured or underinsured
motorist coverage, an insured injured by an uninsured or
underinsured motorist is entitled to recover up to an amount equal
to the highest limit for such coverage “under any one” of the
policies. It also provides the amount shall be paid by the insurers
according to any priority of coverage provisions in the policies.
Mortensen v. Heritage Mut. Ins. Co., 590 N.W.2d 35, 38-39 (Iowa 1999) (internal
citations and footnote omitted).
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Relying upon Mortensen, the district court noted that where an insurance
policy is silent as to interpolicy stacking, section 516A.2(3) is applicable and does
not permit stacking of insurance coverage. The district court found that because
there was no language in the American Family policy concerning stacking,
section 516A.2(3) was to be read into the policy and the Swainstons were
entitled to recover on the policy that had the highest policy limit (the State Farm
policy) with no stacking of coverage.
The Mortensen court held that section 516A.2 prohibits stacking of
uninsured motorist coverage unless specifically provided in the insurance policy.
Id. at 40. The American Family policy does not address interpolicy stacking and
therefore, if Mortensen applies, the district court properly concluded the
Swainstons had already recovered on the policy with the highest limit.
The Swainstons contend there is nothing in their policy with American
Family that prohibits interpolicy stacking. They argue that the district court erred
in concluding that section 516A.2 was applicable. They assert that Mortensen is
not controlling because the Mortensen case involved an interstacking question
where the two policies at issue were both purchased by Mortensen.
The
Swainstons assert that section 516A.2(3) is not applicable in this instance
because the State Farm policy was not “purchased by or on behalf of” the
Swainstons.
American Family contends our supreme court has already addressed and
rejected the argument in Mewes v. State Farm Auto Insurance Co., 530 N.W.2d
718 (Iowa 1995). In Mewes, the passengers in a car owned and insured by a
third party sought to recover UM coverage. Id. at 720. The court wrote:
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The [Mewes] rely on the following language from the
amendment to support their second argument:
3. It is the intent of the general assembly that when
more than one motor vehicle insurance policy is
purchased by or on behalf of an injured insured and
which provides uninsured, underinsured or hit-and-run
motor vehicle coverage to an insured injured in an
accident, the injured insured [may not stack the
coverages from the policies].
Iowa Code § 516A.2(3). The Mewes point out that in Hernandez
the injured insured had purchased one policy and his mother, with
whom he lived, had purchased the other two policies. Her policies
included as an insured a relative residing in her household, i.e. her
son. In contrast, only three of the policies involved here were
purchased by the Mewes. The other policy was purchased by
Kraft, the owner of the vehicle in which Jane Mewes was riding at
the time of the accident. Kraft, they contend, is a third party
unrelated to the Mewes. Based on this factual distinction, the
Mewes argue that this case falls outside the holding of Hernandez
and therefore, outside the abrogation of Hernandez by the
legislature [found in section 516A.2(1)].
We are unable to accept this limited view of the legislature’s
intent in abrogating our Hernandez decision. First, we think that a
policy such as the one purchased by Kraft, which insured
passengers in her vehicle, was purchased “on behalf” of any injured
passenger within the meaning of section 516A.2(3). Additionally, in
the statute abrogating Hernandez, the legislature declared “that the
enforcement of the antistacking provisions contained in a motor
vehicle insurance policy does not frustrate the protection given an
insured under section 516A.1.” Id. § 516A.2(1). This statement
does not support an interpretation of section 516A.2(3) that would
allow enforcement of antistacking provisions only part of the time.
The Mewes have offered no reason why the antistacking provisions
involved in Hernandez would not frustrate the protection given by
section 516A.1 but the antistacking provisions involved here would.
We conclude section 516A.2 applies here. Therefore, the
district court properly gave effect to the antistacking provisions in
the applicable policies.
Mewes, 530 N.W.2d at 724-25 (emphasis added).
Like the district court, we believe the supreme court has indeed found that
the language “purchased by or on behalf of” is to be broadly construed to include
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injured passengers like the Swainstons.
The district court did not err in
concluding section 516A.2(3) is applicable and that the Swainstons are not
entitled to recover under the American Family policy.
The Swainstons argue, nonetheless, that the language of the American
Family policy expressly allows for stacking. The district court found, and we
agree, that the supreme court looked at nearly identical contract language in the
Mortensen case and rejected this argument. The Mortensen court stated, “The
other insurance clauses . . . address how much each company must contribute to
an insured’s loss when other insurance coverage for the same loss exists. They
do not entitle an insured to stack policies.” Mortensen, 590 N.W.2d at 40.
IV. Conclusion. The district court did not err in determining Iowa Code
section 516A.2(3) applied to the Swainstons’ claim for uninsured motorist
coverage under their insurance policy with American Family.
The “other
insurance” language of the policy did not expressly allow stacking. Pursuant to
section 516A.2(3), the Swainstons were entitled to recover up to an amount
equal to the highest single limit for uninsured coverage “under any one” policy.
They have recovered under the State Farm policy and therefore cannot recover
further.
AFFIRMED.
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