Covia v. Robinson

• Decision Date: 20 October 1993
• Docket Number: No. 92-1769,92-1769
• Citation: 507 N.W.2d 411
• Parties: COVIA, Employer, and Chubb Group of Insurance Companies, Insurance Carrier, Appellees, v. Frederick ROBINSON, Jr., Surviving Spouse of Diana Patricia Robinson, Appellant.
• Court: Iowa Supreme Court

Page 411

507 N.W.2d 411

COVIA, Employer, and Chubb Group of Insurance Companies, Insurance Carrier, Appellees, v. Frederick ROBINSON, Jr., Surviving Spouse of Diana Patricia Robinson, Appellant.

No. 92-1769.

Supreme Court of Iowa.

Oct. 20, 1993.

Barry Moranville, West Des Moines, and Pamela Greenman Dahl of Harry W. Dahl, P.C., Des Moines, for appellant.

Roy M. Irish of Patterson, Lorentzen, Duffield, Timmons, Irish, Becker & Ordway, Des Moines, for appellees.

Considered by McGIVERIN, C.J., and LARSON, CARTER, SNELL, and TERNUS, JJ.

SNELL, Justice.

I. On this appeal, we determine whether Covia, appellee, should be penalized under Iowa Code section 86.13 (1989) for delaying payment of workers' compensation death benefits to Frederick Robinson, Jr., claimed in connection with the 1989 death of his wife, Diana. The Iowa Industrial Commissioner held Covia's delay unreasonable. The Commissioner ruled the arguments advanced by Covia justifying their delay failed to present "fairly debatable" questions of fact or law. The district court reversed this ruling. The sole issue on appeal is whether Covia's reasons for delay were supported by arguments presenting fairly debatable questions of law. Our review is for errors at law. Iowa R.App.P. 4.

II. Diana Robinson died in the July 19, 1989 crash of United Airlines Flight 232 in Sioux City, Iowa. She was en route from Denver, Colorado, to Rosemont, Illinois. It is undisputed that Robinson was traveling to Rosemont that day in the course of her employment with Covia. Covia is a computer firm headquartered in Rosemont, Illinois. Her husband, Frederick, filed for workers' compensation benefits both in Colorado and in Iowa. Benefits were immediately paid to Frederick Robinson in Colorado. However, Covia challenged the jurisdiction of the Iowa Industrial Commissioner exercised pursuant to Iowa Code section 85.3. Iowa Code § 85.3 (1989). All third-party claims are now settled. However, Robinson alleges Covia unreasonably delayed payment of death benefits under the Iowa Workers' Compensation Act. Id. § 86.13. Robinson contends Covia's jurisdictional arguments present no fairly debatable questions of law. Consequently, he argues that Covia should be penalized for their delay pursuant to Iowa Code section 86.13. Id.

Covia is a travel agency and computer support firm serving, ironically, United Airlines. It is a partnership based in Delaware. Of its approximately 3000 employees in 1989, two resided in the state of Iowa. In 1989, approximately 1.8% of Covia's revenue was generated in Iowa. Of all the travel agents worldwide utilizing Covia's shared computerized travel service network, only 1.74% of those agents were located in Iowa.

Diana Robinson resided in Colorado. As part of her employment arrangement with Covia, it was expected she would travel often to Rosemont, Illinois, on business. Iowa was never a place of destination for Robinson in the course of any of her business travels.

III. Iowa Code section 86.13 provides in part:

If a delay in commencement or termination of benefits occurs without reasonable or probable cause or excuse, the industrial commissioner shall award benefits in addition to those benefits payable under this chapter, ... up to fifty percent of the amount of benefits that were unreasonably delayed or denied.

Section 86.13 codifies, in the workers' compensation insurance context, the common law rule that insurers with good faith disputes over the legal or factual validity of claims can challenge them, if their arguments for doing so present fairly debatable issues. See Dirks v. Farm Bureau Mut. Ins. Co., 465 N.W.2d 857, 861 (Iowa 1991); Dolan v. Aid Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988). There is no debate on the part of either party as to the applicability of this rule to this case.

The crux of this appeal is whether Covia's challenge to the exercise of in personam jurisdiction over them by the Iowa Industrial Commissioner presents a fairly debatable issue. Jurisdiction was exercised pursuant to Iowa Code section 85.3(2) which states:

Any employer who is a nonresident of the state, for whom services are performed within the state by employees entitled to rights under this chapter ... by virtue of having such services performed shall be subject to the jurisdiction of the industrial commissioner and to all of the provisions of this chapter ... as to any and all personal injuries sustained by an employee arising out of and in the course of such employment within this state.

Iowa Code § 85.3(2).

Section 85.3 is essentially a "long arm" statute. The statute specially authorizes the exercise of in personam jurisdiction by the Iowa Industrial Commissioner over nonresident defendants. See id. In analyzing "long arm" statutes, we are guided by a two-step procedure. See Kagin's Numismatic Auctions, Inc. v. Criswell, 284 N.W.2d 224, 227-28 (Iowa 1979). First, we determine whether the exercise of in personam jurisdiction is authorized by the statute. Id. In effect, we simply determine whether the statute is applicable to the facts in the instant case. Second, we determine whether the exercise of in personam jurisdiction over the parties is constitutional under the limits of the Due Process Clause of the Fourteenth Amendment. U.S. Const. amend. XIV; Id. at 228. The second inquiry requires this court to determine whether Covia maintains the requisite "minimum contacts with the forum state such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " Heslinga v. Bollman, 482 N.W.2d 921, 922 (Iowa 1992). If the prospective resolution of these two questions sets a stage for fair debate, the imposition of a penalty against Covia was erroneous as a matter of law. Dirks, 465 N.W.2d at 861.

IV. Legal Issues.

Robinson argues, with respect to the applicability of section 85.3 to Covia, that Diana Robinson was unquestionably performing services within the state of Iowa. Moreover, Robinson argues Diana Robinson's death, without doubt, arose "out of and in the course of [her] employment within the state." Iowa Code § 85.3. Essentially, he contends the mere act of traveling in the air space of Iowa in the course of her employment with Covia places Covia within the jurisdictional power of the Iowa Industrial Commissioner. Moreover, Robinson notes that other states' workers' compensation acts authorize jurisdiction over all work-related injuries occurring within their borders. He contends Iowa's statute does the same. Finally, Robinson contends Iowa has a policy interest in assuming jurisdiction over Covia and presumably all other parties with economic interests resulting from the crash. Robinson notes that medical care for the injured and autopsies of the dead took place in Iowa, not anywhere else. These facts, according to Robinson, weigh in favor of finding the exercise of in personam jurisdiction over Covia indisputably proper.

Covia argues section 85.3 does not contemplate authorization of an exercise of personal jurisdiction over parties based on the happenstance occurrence that an employee of a nonresident employer is injured in an airplane crash within the state's borders. Covia contends it was not reasonably expected by anyone that Robinson would ever have performed services within the state of Iowa. According to Covia, section 85.3, to be triggered, requires more. At the very least, Covia contends, the question is fairly debatable and they should not have been penalized for raising it.

As to the constitutional due process question, Robinson argues Covia maintained more than enough significant contacts with the state of Iowa. Thus, the exercise of in personam jurisdiction over Covia, according to Robinson, clearly does not violate "traditional notions of fair play and substantial justice." Robinson reminds the court that a massive presence in the state is not required to satisfy the demands of due process under the Constitution. Covia maintained two employees in the state and Diana Robinson's death occurred in the state. These two factors, according to Robinson, bring the exercise of in personam jurisdiction over Covia within the fundamental requirements of due process.

Robinson also contends that to hold this exercise of in personam jurisdiction invalid, we would effectively be declaring section 85.3 unconstitutional. Because we choose not to rule whether the exercise of jurisdiction was proper, we do not address this argument. Our only concern is whether the issue is fairly debatable. Moreover, we think Robinson's reliance on the Full Faith and Credit Clause of the Constitution is misplaced. There is no question arising in this case as to whether proceedings in Iowa are precluded by prior proceedings which took place in Colorado. See Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U.S. 493, 497-98, 59 S.Ct. 629, 631, 83 L.Ed. 940, 944 (1939). Rather, we are concerned about whether the Iowa Industrial Commissioner possesses the jurisdictional power to hale Covia into its forum. Such inquiries are governed by the demands of the Fourteenth Amendment, not the Full Faith and Credit Clause. See Carr v. Iowa Employment Sec. Comm'n, 256 N.W.2d 211, 214 (Iowa 1977); compare Schmidt v. Pittsburgh Plate Glass Co., 243 Iowa 1307, 1311, 55 N.W.2d 227, 229 (1952).

Regarding the due process issue, Covia contends it did not maintain sufficient minimum contacts with the state of Iowa to become subject to the in personam jurisdictional power of the state industrial commissioner. The only connection this case has with the state of Iowa, Covia asserts, is the fluke that the pilot of the United Airlines plane decided to attempt an emergency landing in Sioux City. Covia recognizes it possessed other unrelated contacts with the state. It employs two travel agents in Iowa and generates a minimal amount of revenue in Iowa. However, Covia argues that under the progeny of cases following International...