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Hagenow v. American Family Mutual Insurance Co.

Supreme Court of Iowa

May 2, 2014

DENNIS H. HAGENOW and ROSALEE A. HAGENOW, Appellees,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellant

Appeal from the Iowa District Court for Black Hawk County, George L. Stigler, Judge. An insurer seeks interlocutory review of a district court's denial of the insurer's motion for summary judgment.

REVERSED AND REMANDED.

Scott K. Green, West Des Moines, for appellant.

James W. Carney and George W. Appleby of Carney & Appleby, P.L.C., Des Moines, for appellee.

OPINION

Page 374

ZAGER, Justice.

Dennis and Rosalee Hagenow (Hagenows) brought this action to recover uninsured motorist benefits from their insurer, American Family Mutual Insurance Company (American Family). American Family moved for summary judgment arguing

Page 375

the Hagenows were not entitled to uninsured motorist benefits under their policy. The district court denied American Family's motion for summary judgment, and American Family filed an application for interlocutory appeal, which we granted. For the reasons set forth below, we reverse and remand.

I. Background Facts and Proceedings.

On November 10, 2008, Dennis Hagenow was stopped at a red light at the intersection of University Avenue and Cedar Heights Drive in Cedar Falls, Iowa, when his vehicle was rear-ended by a vehicle driven by Betty Schmidt. Dennis suffered personal injuries, and his vehicle was totaled. Schmidt was taken to the hospital and cited for failure to stop in an assured clear distance.

In November 2010, the Hagenows filed an action alleging negligence against Schmidt. Schmidt filed an answer denying the Hagenows' allegations and asserting the defense of sudden emergency. Schmidt claimed to have suffered a transient ischemic attack or stroke immediately before the accident with Dennis. The matter proceeded to a jury trial. According to the judgment entered by the district court after the trial, " [t]he jury returned a verdict that the defendant was not negligent under any theories." [1]

At the time of the collision, American Family was the automobile insurer of both the Hagenows and Schmidt. Schmidt's automobile insurance policy had a personal injury liability limit of $300,000 per person and a property damage liability limit of $100,000. The Hagenows' policy included uninsured motorist coverage that provided American Family would " pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle."

The Hagenows filed an uninsured motorist claim under their insurance policy. The Hagenows' policy defined " an uninsured motor vehicle" as a motor vehicle that was:

a. Not insured by a bodily injury liability bond or policy at the time of the accident.
b. Insured at the time of the accident by a liability bond or policy with bodily injury liability limits below the minimum required by the financial responsibility law of the state in which your insured car is principally garaged.
c. A hit-and-run vehicle whose operator or owner is unknown and which causes bodily injury to you or a relative. Physical contact with a hit-and-run vehicle is required.
d. Insured by a bodily injury liability bond or policy at the time of the accident but the company denies coverage or is or becomes insolvent within one year after the accident.

American Family determined Schmidt's vehicle was not an uninsured motor vehicle under the Hagenows' policy, so American Family denied the claim.

In November 2010, the Hagenows filed this breach of contract action against American Family. The Hagenows alleged American Family breached the automobile insurance policy between the two by not paying uninsured motorist benefits. American Family answered, denying the Hagenows' allegations and raising affirmative defenses, including that Schmidt was

Page 376

not an " uninsured motorist" under the terms of their policy.

In June 2012, American Family filed a motion for summary judgment. First, American Family contended that Schmidt was not an uninsured motorist under the definitions of the policy. Additionally, American Family argued that to recover damages under the uninsured motorist provision, the Hagenows must prove that they were " legally entitled to recover from the owner or operator of an uninsured motor vehicle." American Family acknowledged Schmidt was covered and defended Schmidt at the underlying civil jury trial which determined that Schmidt was not liable for the Hagenows' damages. Therefore, American Family maintained, the Hagenows were not legally entitled to recover.

The Hagenows filed a resistance and cross-motion for summary judgment. First, they argued they were legally entitled to recover because the jury found Schmidt not liable on the basis of a legal excuse. Next, while the Hagenows conceded Schmidt had automobile insurance coverage at the time of the collision, they nevertheless insisted Schmidt's vehicle was uninsured under the terms of the Hagenows' insurance policy because American Family denied that the Hagenows' uninsured motorist coverage applied to sudden emergency defenses, like the one raised by Schmidt.

In October, the district court conducted a hearing on American Family's motion for summary judgment. After the hearing, the district court issued its ruling denying American Family's motion for summary judgment. The district court found that the " legally entitled to recover" language in the policy was to be broadly construed. The district court also found that " [t]he sole methodology of recovery for the Hagenows is litigation to recover for their injuries." The district court concluded that under the facts of this case, the uninsured motorist provision found in the Hagenows' insurance policy did not bar their action against American Family.

American Family timely filed an application for interlocutory ...


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