Appeal from the Iowa District Court for Black Hawk County, David F. Staudt, Judge.
The opinion of the court was delivered by: Cady, Chief Justice.
On review from the Iowa Court of Appeals.
Interlocutory review from denial by the district court of motion to dismiss. DECISION OF COURT OF APPEALS AND JUDGMENT OF DISTRICT COURT AFFIRMED; CASE REMANDED.
In this interlocutory review, we must decide if good cause existed to excuse untimely service of process when the plaintiff, who failed to negotiate an enforceable agreement with the defendant's insurance representative to delay service, took no action to institute service of process of a lawsuit on the defendant within the time period required by Iowa Rule of Civil Procedure 1.302(5). The district court held good cause existed and denied defendant's motion to dismiss. We transferred the case to the court of appeals, and they affirmed. On further review, we affirm the decision of the court of appeals and the judgment of the district court. We remand for further proceedings.
I. Background Facts and Proceedings.
Sharece Rucker was involved in an automobile accident with Mike and Sherie Taylor on January 15, 2009. Rucker sought legal assistance from attorney Hugh Field to pursue a claim against the Taylors to recover compensation for injuries she suffered from the accident. Field corresponded with a claims representative for the Taylors' insurance company for the purpose of settling the claim. The correspondence was primarily directed at updating the claims representative on Rucker's injuries and treatment status and was exchanged between April 3, 2009, and December 8, 2010.
On December 8, 2010, Field sent a formal settlement demand letter to the insurance company. On December 20, claims representative Brent Kneip responded to the letter with a counteroffer for settlement. On December 22, Field mailed a letter to Kneip stating in part:
We are filing the enclosed Petition at Law for [Sharece Rucker], but will wait to serve it until our negotiations break down. I will give you 21 days thereafter to seek counsel and defend.
I don't see any reason why we shouldn't be able to work out a settlement.
Kneip did not respond to the December 22 letter.
On December 29, Rucker commenced an action against the Taylors by filing a petition in district court as forecasted in the December 22 letter. See Iowa R. Civ. P. 1.301(1). Pursuant to court rules, she was obligated to serve the Taylors with notice of the lawsuit within ninety days. See id. r. 1.302(5). Rucker took no action to satisfy this requirement, also as forecasted in the letter.
Instead, on January 13, 2011, Field sent another letter to Kneip, enclosing some employment and medical records concerning Rucker. Kneip responded to this letter on January 31. He thanked Field for the January 13 letter and requested additional medical records. Nothing was said about the December 22 proposal.
Nevertheless, Field and Kneip continued to negotiate during February and March, periodically exchanging offers of settlement. Kneip sent a settlement offer to Field on March 4, and Field made a counteroffer in a letter dated March 16.
The next communication between the parties was a letter from Field to Kneip on April 19. It requested an update on his March 16 settlement offer.
On March 29, the ninety-day period for service elapsed. On April 4, a district court administrator notified Field that no proof of service had been filed. The notice scheduled a conference to determine the status of the action for April 26. Rucker then promptly served the Taylors with original notice and a copy of the petition on April 13 and April 15.
The Taylors subsequently filed a motion in district court to dismiss the petition for failure to accomplish timely service of process. Following a hearing on the motion, the district court denied the motion, stating:
The court finds that good cause exists for Plaintiff's failure to serve Defendants with notice of the lawsuit. The court finds that good cause, in this case, as the claims representative took advantage of the Plaintiff's straight forward offer to hold off serving the notice of the lawsuit in return for the exchange of additional information and continued settlement negotiations. From the affidavits and the argument of counsel, it appears to the court Plaintiff's attorney clearly was operating under the assumption that by continuing to correspond, negotiate, and exchange documentation, Plaintiff's counsel believed the allied claims representative had accepted and/or acquiesced in Plaintiff's offer to hold off service pending negotiations.
The Taylors sought interlocutory review, and we transferred the case to the court of appeals. The court of appeals affirmed the decision of the district court. It rejected the Taylors' argument that good cause did not exist for failure to accomplish timely service of process because no express agreement existed between the parties to suspend service.
The Taylors sought and were granted further review. They argued that no agreement, either express or implied, was formed to justify the failure to accomplish timely service. They asserted Rucker made no offer that could create a contract to delay service of process because the December 22 letter from Field never explicitly mentioned the ninety-day service deadline, and Kneip was not a lawyer trained in the particulars of court rules to understand the legal requirements of service of process. Additionally, they argued Kneip never accepted any offer, and to hold otherwise would impose an unfair affirmative duty on claims representatives of insurance companies to respond to claimants' attorneys making proposals to delay timely service. They argued this duty would bind insurance companies to agreements they did not want and did not expressly accept.
In response, Rucker asserted the parties formed an implied agreement by continuing to negotiate after the proposal was made. She also argued good cause existed to extend time for service because the conduct of the insurance claims representative in continuing to negotiate after the December 22 letter misled her attorney into believing the Taylors would not seek a dismissal for failing to accomplish timely service.
We review decisions by the district court to grant a motion to dismiss for correction of errors at law. Crall v. Davis, 714 N.W.2d 616, 619 (Iowa 2006); see also Iowa R. App. P. 6.907. Ordinarily, the pleadings in the case form the outer boundaries of the material subject to evaluation in a motion to dismiss. Wilson v. Ribbens, 678 N.W.2d 417, 418 (Iowa 2004). As a consequence, district courts generally do not consider facts outside the pleadings in evaluating a motion to dismiss. Id. An exception to this rule exists when the grounds for the motion are based on an alleged failure to provide timely service within the required time frame. Carroll v. Martir, 610 N.W.2d 850, 856 (Iowa 2000). In such a case, like this case, a court is permitted to consider facts outside the pleadings. See id.
When the district court makes findings of fact, those findings "are binding on appeal unless not supported by substantial evidence." McCormick v. Meyer, 582 N.W.2d 141, 144 (Iowa 1998). We are not bound, however, by either the legal conclusions or application of legal principles reached by ...