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Dunigan v. Liberty Mutual Insurance Co.

Court of Appeals of Iowa

June 5, 2019

LESTER DUNIGAN, Plaintiff-Appellant,

          Appeal from the Iowa District Court for Polk County, Paul D. Scott, Judge.

         Lester Dunigan appeals the adverse summary judgment ruling on his claim for underinsured motorist insurance coverage against Liberty Mutual Insurance Company.

          Zachary C. Priebe and Jeff Carter of Jeff Carter Law Offices, P.C., Des Moines, for appellant.

          Benjamin T. Erickson and Andrew D. Hall of Grefe & Sidney. P.L.C., Des Moines, for appellee.

          Heard by Vogel, C.J., and Mullins and Bower, JJ.

          Mullins, Judge.

         Lester Dunigan appeals the adverse summary judgment ruling on his claim for underinsured motorist coverage against Liberty Mutual Insurance Company (Liberty Mutual). He argues the district court erred by applying Illinois law to the insurance policy, contending the plain language of the policy requires the application of Iowa law. Further, he argues Liberty Mutual failed to obtain a written declination of underinsured motorist coverage as required by Iowa Code section 516A.1 (2014), which results in underinsured motorist coverage being read into his policy.

         I. Background Facts and Proceedings

         On October 8, 1997, Lester Dunigan and his wife Ella completed and signed an application for motor vehicle insurance covering multiple vehicles with Liberty Mutual. The application provided the insurance would commence at 12:01 a.m. on October 9. Dunigan's address on the application was in Rock Island, Illinois, and the application indicated that he provided an Illinois driver's license. The insurance coverage's liability limit for uninsured motorists was $20, 000 to $40, 000 with no coverage for underinsured motorists, as indicated by a line through the designated box. The application also included a provision that stated, "I reject uninsured and underinsured motorists coverage equal to my bodily injury liability limits and instead select the limits indicated on my option form." The box next to the line was not checked, but Dunigan's signature appears on the signature line immediately below the provision.

         On a separate page noted as "3 of 5" and titled "Uninsured Motorists Property Damage Coverage," two options were provided "[i]f you do not have Collision Coverage." Option 1 allowed for the election of coverage on specific vehicles. Option 2 was the rejection of coverage for all vehicles. Neither option was selected on the form. The form also included the following paragraph:

I am aware, unless I indicate otherwise to Liberty Mutual in writing, that my coverage choices of Uninsured Motorists Coverage, Underinsured Motorists Coverage, and Uninsured Motor Vehicle Property Damage coverage shall apply throughout the policy period, regardless of any changes such as the replacement or addition of vehicles or drivers, and to all renewals, amendments, replacements or reinstatements of this policy.

         Dunigan signed his name on the signature line below the paragraph. A fourth form, noted "Dunigan" and "4 of 5" at the top, provided:

We recommend that you maintain UNINSURED MOTORISTS COVERAGE limits equal to your bodily injury limits. . . .
Please be aware that any summary of coverage on these pages is necessarily general in nature. Your policy contains specific definitions, exclusions, terms, and conditions. In case of any conflict, your policy language will control the resolution of any coverage questions. If you have any questions about this coverage or its cost, please contact your local Liberty Mutual Sales Office before completing this form.
Listed below are the available single and separate limits of UNINSURED and UNDERINSURED MOTORISTS COVERAGE and the applicable premium for each. Please check the box next to the limits you wish to select.

         The form allowed Dunigan the option to either: (1) "elect Uninsured Motorists Bodily Injury Coverage at the minimum financial responsibility limits required by Illinois law. ($20, 000 per person and $40, 000 per accident)" or (2) "elect an Uninsured Motorists Bodily Injury Coverage limit and Underinsured Motorists Bodily Injury Coverage limit equal to or lower than the liability limit of my policy." The second option included a note: "The charges for all Limits below include both Uninsured Motorists Bodily Injury Coverage and Underinsured Motorists Bodily Injury Coverage." The first option was marked on the form. There were no initials or signature on the page. The record provides that the insurance policy was renewed yearly, including on October 9, 2014.

         On February 9, 2015, Dunigan was involved in a traffic accident at the intersection of 19th Street and College Avenue in Des Moines. Dunigan was driving north on 19th Street, a one-way street. A driver heading east on College Avenue stopped at the stop sign at the intersection with 19th Street and continued through the intersection but failed to yield to Dunigan as he proceeded through the intersection. There was no stop sign for traffic heading north on 19th Street at the intersection. The driver hit Dunigan on the driver's side. The police report identified that both vehicles sustained minor damage and the other driver took complete responsibility for the accident. The accident form listed Rock Island, Illinois as both Dunigan's home and vehicle registration address. Dunigan's driver's license was listed as an Illinois license.

         Following the accident, Dunigan settled his claim against the other driver for the liability policy limits of the other driver's auto insurance policy. Dunigan filed suit against Liberty Mutual in February 2017 to recover under the uninsured and underinsured motorist benefits provisions of his insurance policy. He claimed his sustained damages exceeded the liability limits of the other driver's insurance policy. In November, Liberty Mutual moved for summary judgment. It claimed Illinois law applied and under Illinois law, because Dunigan elected to carry only the statutory minimum amount of uninsured motorist insurance coverage, it was not contractually obligated to provide underinsured motorist coverage. Further, it was not required to ask for or obtain a rejection each time the policy came up for renewal. Dunigan resisted the motion, arguing that Iowa law applied and, under Iowa Code section 516A.1, underinsured coverage must be read into his policy because Liberty Mutual failed to obtain his written rejection of the coverage.

         The court heard the motion in January 2018 and filed its ruling in April. The court identified that the only issue before it was "whether Illinois law or Iowa law governs the insurance policy at issue." The district court found there was no choice-of-law provision in the insurance policy, therefore it applied the "most significant relationship" test to determine which state's laws governed the policy. See Gabe's Constr. Co. v. United Capitol Ins. Co., 539 N.W.2d 144, 146 (Iowa 1995); see also Restatement (Second) of Conflict of Laws § 188(1)-(2) (Am. Law Inst. 1971). The district court concluded, even when viewing the facts in the light most favorable to Dunigan, Illinois law controlled the policy. It found that under Illinois law, Dunigan properly rejected underinsured motorist coverage when he applied for the initial insurance policy, continued to reject the coverage when renewing the policy, and consequently, he did not have underinsured motorist coverage at the time of the accident. Based upon its findings, the court granted Liberty Mutual's motion for summary judgment. Dunigan appeals.

         II. ...

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