Frunzar v. Allied Property and Cas. Ins. Co.

• Decision Date: 22 May 1996
• Docket Number: No. 95-245,95-245
• Citation: 548 N.W.2d 880
• Parties: Elizabeth FRUNZAR, Appellee, v. ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant.
• Court: Iowa Supreme Court

Page 880

548 N.W.2d 880

Elizabeth FRUNZAR, Appellee, v. ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant.

No. 95-245.

Supreme Court of Iowa.

May 22, 1996.

Stanley J. Thompson of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellant.

Marc S. Harding, Des Moines, for appellee.

Considered by McGIVERIN, C.J., and CARTER, NEUMAN, SNELL, and ANDREASEN, JJ.

McGIVERIN, Chief Justice.

The overall issue in the present case is whether the district court properly awarded plaintiff Elizabeth Frunzar uninsured motorist coverage under an insurance policy issued to her father for injuries she sustained in an automobile accident. We affirm in part, reverse in part, and remand with instructions.

I. Background facts and proceedings. On March 26, 1993, plaintiff Frunzar was a passenger in an automobile driven by a friend named Bobby Kilgore. At approximately 3:00 a.m., Frunzar and Kilgore were involved in an automobile accident at an intersection on a Des Moines street in which Kilgore's vehicle was struck on the passenger side by another vehicle and propelled into a light pole. Frunzar, who was thrown thirty feet from Kilgore's vehicle upon impact, suffered severe facial and other bodily injuries in the accident and was hospitalized for five days following the accident.

Frunzar, age twenty-nine at the time of the accident, is the biological daughter of Alan and Diana Elder of Urbandale. At the time of the accident, Alan (Frunzar's father) maintained an automobile insurance policy with defendant Allied Property and Casualty Insurance Company (Allied). The insurance policy contained uninsured motorist (UM) coverage as required by Iowa Code section 516A.1 (1993). The limit of liability for UM coverage in Alan's policy with Allied was $300,000 per accident.

After the accident, Frunzar sought UM coverage from Allied as an insured under her father Alan's insurance policy. In a letter to Frunzar, Allied denied her claim for UM coverage under the policy because, in Allied's opinion, Frunzar was not an "insured" or "family member" as defined in the policy. In its letter denying coverage, Allied expressly reserved "all other rights, defenses or contentions" which were available to it under the policy and stated it did not "waive any rights or defenses which it ... [had] or which may become known to it in the future."

In November 1993, after Allied denied her claim for UM coverage under her father Alan's policy, Frunzar filed a petition in district court seeking contract damages against Allied. In her petition, plaintiff alleged neither the driver of the automobile in which she was riding nor the driver of the vehicle which struck the vehicle in which she was riding had bodily injury liability coverage at the time of the accident. Although Allied denied this averment in its answer for lack of sufficient information to respond, it later stated in its answers to plaintiff's request for admissions that discovery was ongoing concerning this issue.

The case proceeded to a bench trial. The district court believed the fighting issue at trial was whether or not Frunzar was a resident of her father Alan's household at the time of the accident to qualify for coverage under the UM coverage section of his automobile insurance policy.

At the close of plaintiff's case-in-chief and at the close of all of the evidence, Allied moved for a directed verdict. See Iowa R.Civ.P. 216. In its motion, Allied contended:

[P]laintiff must prove ... that either the owner or the operator of the vehicle at fault [for the accident] was uninsured. There has been absolutely no competent evidence in this trial at all, even if the court could make findings ... of insurance or lack thereof.

That is a matter of proof that the plaintiff has. It's a matter that the plaintiff certainly was aware of when ... [she] filed [her] petition. It was certainly something that plaintiff was aware of in the request for admissions. It's not a [surprise] in this case that those are matters that need proof, and there has simply been no proof whatsoever of whether either of the two vehicles were either owned or operated by uninsured motorists.

And finally, defendant [Allied] would move for directed verdict on the ground that there is insufficient evidence to prove that the plaintiff was a family member who was a resident of Alan G. Elder's household on March 26, 1993.

The court overruled Allied's motion.

After the bench trial in this law action, the court filed its findings of fact, conclusions of law, and judgment. The court found that the accident was caused by the other motor vehicle that struck the vehicle in which plaintiff was a passenger (the Kilgore vehicle) and that plaintiff was not at fault in the accident. The court ruled plaintiff was a resident of her father Alan's household at the time of the accident and, therefore, an insured under the Allied policy. Further, the court ruled no insurance (other than the Allied policy) was available to plaintiff from the Kilgore vehicle or the other vehicle that would cover her bodily injuries sustained in the accident. In sum, the court found plaintiff incurred damages in the automobile accident on March 26, 1993, and was legally entitled to recover damages from the owner or operator of an uninsured motor vehicle.

The court ordered Allied to pay plaintiff $191,985.00 in damages plus interest under the UM coverage section of the policy. The court's judgment did not state the rate of interest or the interest commencement date.

After the court's ruling, Allied filed a motion pursuant to Iowa rule of civil procedure 179(b) requesting that the court specify whether the interest on the judgment was recoverable under Iowa Code section 535.3 or under Iowa Code section 668.13. Allied also challenged, in the event the court awarded interest under section 535.3, the constitutionality of the interest award under the Fourteenth Amendment to the United States Constitution and article I, section 6 of the Iowa Constitution which guarantee equal protection of federal and state laws.

In its ruling on Allied's rule 179(b) motion, the court ordered that interest at a rate of ten percent be taxed on the entire judgment from the date plaintiff filed her petition. See Iowa Code § 535.3. The court rejected Allied's equal protection argument.

Allied appealed the judgment and the ruling on its rule 179(b) motion. Iowa R.App.P. 1.

Unless otherwise stated, we review the court's legal conclusions for errors at law. Iowa R.App.P. 4.

II. Proof of UM claim. Allied's insurance policy sets forth conditions plaintiff must satisfy in order to recover UM benefits. Under the UM coverage provisions of Alan's policy, Allied agreed to

... pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury:"

1. Sustained by an "insured;" and

2. Caused by an accident.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle."

An "insured" under the policy included Frunzar's father Alan, the named insured, and any "family member." The policy defined a "family member" as a person related to the named insured "by blood, marriage or adoption who is a resident of [the named insured's] household." Under the terms of the policy, an "uninsured motor vehicle" means a land motor vehicle or trailer of any type to which "no bodily injury liability bond or policy applies at the time of the accident."

As a condition of recovering UM benefits, plaintiff bears the burden of proving she was a resident of the named insured's (her father's) household on the date of the accident. Plaintiff also bears the burden of proving that the motor vehicle or vehicles responsible for causing her injuries were not covered by liability insurance on the date of the accident. Griffith v. Farm & City Ins. Co., 324 N.W.2d 327, 329-30 (Iowa 1982).

III. Insurance coverage issues. In the present case, Allied contends plaintiff did not present substantial evidence to satisfy the following two coverage conditions under the policy: (1) plaintiff was an "insured" (as a resident of the named insured's household) under the policy at the time of the accident; and (2) the Kilgore vehicle (in which plaintiff was a passenger) and the other vehicle which caused the accident were uninsured under the policy at the time of the accident.

In its motion for directed verdict, Allied contended that plaintiff's evidence was not sufficient to prove that plaintiff was a resident of the named insured's (her father's) household on March 26, 1993, the date of the accident. Allied also contended that substantial evidence did not support plaintiff's claim at trial that the owner or operator of either of the two vehicles involved in the March 26, 1993, accident was uninsured under the terms of Allied's policy.

On appeal, Allied contends that no fact question was generated at the trial on the above issues and, therefore, the court should have sustained its motion for directed verdict. In considering the propriety of a motion for directed verdict, we consider the evidence in the light most favorable to the party against whom the motion was made. Iowa R.App.P. 14(f)(2); Wieseler v. Sisters of Mercy Health Corp., 540 N.W.2d 445, 448 (Iowa 1995).

When reviewing the district court's decision on plaintiff's motion for directed verdict, we review the evidence in the same light as the district court and determine whether a fact or jury question was generated by the evidence. Fiala v. Rains, 519 N.W.2d 386, 387 (Iowa 1994). The court's findings of fact in this law action are binding upon us if supported by substantial evidence. Iowa R.App.P. 14(f)(1). Evidence is substantial for purposes of sustaining a finding of fact if a reasonable person would accept the evidence as adequate to reach a conclusion. Falczynski v. Amoco Oil Co., 533 N.W.2d 226,...