Fuhrmann v. Majors, No. 8-253/07-1531 (Iowa App. 7/16/2008), No. 8-253/07-1531

• Court: Court of Appeals of Iowa
• Writing for the Court: Eisenhauer
• Decision Date: 16 July 2008
• Parties: TRAVIS FUHRMANN, Plaintiff-Appellee, v. ROYCE M. MAJORS, Defendant, AMERICAN FAMILY INSURANCE COMPANY, Defendant-Appellant.
• Docket Number: No. 8-253/07-1531

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TRAVIS FUHRMANN, Plaintiff-Appellee,
v.
ROYCE M. MAJORS, Defendant,
AMERICAN FAMILY INSURANCE COMPANY, Defendant-Appellant. No. 8-253/07-1531 Court of Appeals of Iowa. Filed July 16, 2008

Appeal from the Iowa District Court for Linn County, Douglas S. Russell, Judge.

Insurance company appeals the district court's award of $100,000 under policy's underinsured motorist endorsement. REVERSED AND REMANDED.

Ted J. Wallace, Davenport, for appellant.

Matthew G. Novak and Thad J. Collins of Pickens, Barnes & Abernathy, Cedar Rapids, for appellee.

Heard by Miller, P.J., and Vaitheswaran and Eisenhauer, JJ.

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EISENHAUER, J.

American Family Insurance Company appeals the district court's judgment requiring it to pay $100,000 in underinsured motorist coverage (UIM) to Travis Furhmann under Iowa law. We reverse and remand.

I. BACKGROUND FACTS AND PROCEEDINGS.

The case was submitted to the court without hearing based on the parties' stipulated factual record and trial briefs. Previously, a motion for summary judgment filed by American Family had been overruled with the court finding "Iowa law should apply to determine the amount of damages." The issue at trial was: "Is Plaintiff entitled to recover underinsured motorist coverage under the terms of the American Family Insurance Policy that was issued to his parents, Jayme and Debbie Fuhrmann?"¹

In 2004, Furhmann lived with his parents in South Dakota, held a South Dakota driver's license, was attending school in South Dakota, was working part-time at his father's company, and was covered by his parents' South Dakota family car policy. Furhmann's parents purchased the insurance policy in South Dakota from an agent licensed to sell insurance only in South Dakota. The insured car was licensed in South Dakota and was principally garaged in South Dakota.

On October 1, 2004, Furhmann was driving the insured car in Iowa and was injured in an accident caused by Royce Majors, an Iowa resident. Majors

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had $100,000 in liability insurance which was paid to Furhmann to settle Majors' liability.² American Family consented to the settlement. American Family agrees Fuhrmann's damages exceed $200,000 and agrees the accident was Majors' fault. The district court awarded Furhmann $100,000, the policy's UIM limit.

II. STANDARD OF REVIEW.

Our standard of review is for correction of errors at law. Iowa R. App. P. 6.4. We will not set aside a bench trial decision unless "it was induced by an error at law." Evans v. Benson, 731 N.W.2d 395, 397 (Iowa 2007).

III. MERITS.

The Furhmann American Family policy provided for $100,000 in UIM coverage in an endorsement. American Family argues South Dakota law applies and under South Dakota law Furhmann is not entitled to UIM proceeds. South Dakota statutory law states underinsured coverage is limited to underinsured benefits "less the amount paid by [the tortfeasor's] liability insurer." See S.D. Codified Laws § 58-11-9.5 (2004). South Dakota considers this a "difference of limits" statute.³ See Gloe v. Union Ins. Co., 694 N.W.2d 252, 257 (S.D. 2005). The American Family endorsement's provisions track the statutory law. Because the tortfeasor's [Majors] policy provided liability benefits in an amount identical to the UIM coverage purchased by Furhmann, under South Dakota law Furhmann is not entitled to UIM proceeds.

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Under Iowa law, no deduction of the tortfeasor's liability payment is required, therefore, there is a conflict of laws: South Dakota would bar Furmann's claim and Iowa law would award UIM proceeds. See Veach v. Farmers Ins. Co., 460 N.W.2d 845, 848 (Iowa 1990) (holding...