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Preferred Marketing, Inc. v. Le Mars Insurance Co.

Court of Appeals of Iowa

August 2, 2017

PREFERRED MARKETING, INC., d/b/a BROKEN ARROW WEAR, Plaintiff-Appellant,
v.
LE MARS INSURANCE COMPANY, Defendant-Appellee.

         Appeal from the Iowa District Court for Polk County, David Porter, Judge.

         An insured appeals the district court's grant of summary judgment in favor of the insurer, wherein the court found the insured's business owners insurance policy's two-year limitations period barred the insured's suit.

          David E. Brick of Brick Gentry, P.C., West Des Moines, for appellant.

          Rene Charles Lapierre and Ryland Deinert of Klass Law Firm, L.L.P., Sioux City, for appellee.

          Considered by Vogel, P.J., and Doyle and McDonald, JJ.

          DOYLE, Judge.

         Preferred Marketing, Inc. (Preferred) appeals the district court's grant of summary judgment in favor of Le Mars Insurance Company (Le Mars). Preferred contends the district court erred in finding its suit against Le Mars was barred by the two-year limitations period contained in the insurance policy issued to Preferred by Le Mars. We affirm.

         I. Background Facts and Proceedings.

         In June 2013, a lightning strike damaged computer equipment owned by Preferred. Preferred filed a claim with its insurer, Le Mars. Le Mars paid a portion of the claim. A dispute arose, and Le Mars declined to make any additional payments on the claim. On February 10, 2016, Preferred filed suit against Le Mars seeking, among other things, compensation for damages related to Preferred's business interruption, restoration costs, and loss of profits resulting from the lightning strike.

         Le Mars answered and subsequently filed a motion for summary judgment. Le Mars asserted it was entitled to summary judgment in its favor because Preferred failed to file its lawsuit within the policy's two-year limitations period.[1] Preferred resisted the motion. Though it admitted the policy did contain a two-year limitations period, Preferred claimed Le Mars "never disclosed the limitation period to [Preferred] when entering into the policy, " Le Mars did not include the limitation period "in the declarations or renewal documents, " Le Mars did not inform Preferred of the contractual limitation period after Preferred submitted its loss claim, and when Le Mars refused to make any additional payments under the policy, it never informed Preferred that it had two years from the date of the loss to file a lawsuit. Preferred asserted Le Mars violated its obligation to "fully disclose" all provisions of the policy and should be barred from asserting the limitation as a defense. Preferred also contended that because the two-year limitation period in the policy did not "line up" with the five-year statutory-limitation period for injuries to property, see Iowa Code § 614.1(4) (2016), the policy's limitation period was unreasonable. Preferred also argued the limitations period was unreasonable because Preferred had no opportunity to negotiate the limitation with Le Mars.

         Following a hearing, the district court entered its ruling granting Le Mars's motion. The court found the policy contained the two-year limitations period, and Preferred was therefore bound by the contract even if it did not expressly accept all of the contract provisions or was unaware of them. Additionally, the court concluded that, "[d]espite indulging in every legitimate inference the evidence" would bear, none of the factors contributing to a finding of unconscionability in the bargaining process, "nor any other fact provided by the parties, indicate the bargaining process or any part of the policy [was] unconscionable." The court found nothing "bizarre or oppressive" about the shortened two-year policy limitation. The court also determined, insofar as the policy was a contract of adhesion, Preferred "failed to satisfy its burden to prove the reasonable expectation doctrine." Since Preferred was required to file its suit against Le Mars within two years after the date of its loss and it failed to do so, the court granted summary judgment in favor of Le Mars.

         Thereafter, Preferred filed a motion to amend or enlarge the district court's ruling pursuant to Iowa Rule of Civil Procedure 1.904(2). It argued

the Court neglected to [make] findings on [Preferred's] argument that [Le Mars's] failure to disclose or provide notice of the contractual limitation period in the policy acts to prevent [Le Mars] from relying on such pertinent provision of the policy in order to avoid liability under or dismiss [Preferred's] claims.

         Citing Iowa Administrative Code rule 191-15.41(1) (2013), Preferred argued that when a claim is presented, property and casualty insurers in Iowa "shall fully disclose to first-party claimants all pertinent benefits, coverages or other provisions of a policy or contract under which a claim is presented." Preferred asserted

[Le Mars] never disclosed the contractual limitation period to [Preferred] when entering into the policy. Furthermore, the contractual limitation period was not included in the declarations or renewal documents. Further and most importantly, when [Preferred] submitted [its] claim for the current loss, [it] was not informed of the contractual limitation period. Finally, when [Le Mars] rejected any additional payments under the policy, [Le Mars] never informed [Preferred] that [it] had two years from the date of the loss to file [its] lawsuit. [Le Mars] never disclosed the claim limitation of the policy once the claim was made by [Preferred], and as such, violated its obligation to "fully disclose" all pertinent provisions of a policy under which a claim is presented.

         Preferred argued Le Mars was equitably estopped from now asserting the ...


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