Gardner v. Hartford Ins. Acc. & Indemn. Co.

• Citation: 659 N.W.2d 198
• Decision Date: 26 February 2003
• Docket Number: No. 01-1740.,01-1740.
• Parties: Elois Anne GARDNER, Appellant, v. HARTFORD INSURANCE ACCIDENT & INDEMNITY CO.; Hartford Casualty Insurance Co.; Hartford Insurance Company of the Midwest; Hartford Fire Insurance Co.; and Hartford Life & Auto Accident Co. d/b/a ITT Hartford Insurance Group, Appellees.
• Court: United States State Supreme Court of Iowa

659 N.W.2d 198

Elois Anne GARDNER, Appellant, v. HARTFORD INSURANCE ACCIDENT & INDEMNITY CO.; Hartford Casualty Insurance Co.; Hartford Insurance Company of the Midwest; Hartford Fire Insurance Co.; and Hartford Life & Auto Accident Co. d/b/a ITT Hartford Insurance Group, Appellees.

No. 01-1740.

Supreme Court of Iowa.

February 26, 2003.

Rehearing Denied April 18, 2003.

Richard G. Book of Huber, Book, Cortese, Happe & Brown, P.L.C., Des Moines, for appellant.

Frank A. Comito, Patrick J. Hopkins and Kent A. Gummert of Gaudineer, Comito & George, L.L.P., Des Moines, for appellees.

STREIT, Justice.

Elois Gardner seeks to bring a tort action for bad faith denial of benefits against her employer's workers' compensation insurer, Hartford Insurance Accident & Indemnity Company. Hartford argues Gardner's tort suit is barred by the earlier workers' compensation contested case settlement Gardner agreed to under Iowa Code chapter 85. Hartford also asserts Gardner failed to exhaust her administrative remedies. The district court agreed issue preclusion applies in this case, but found Gardner did not fail to exhaust her administrative remedies. Gardner appeals and Hartford cross-appeals. Hartford also asserts we must dismiss this appeal for untimeliness. Because we find issue preclusion bars Gardner's tort claim, we affirm the district court's grant of summary judgment. Our holding renders it unnecessary for us to address the cross-appeal.

I. Background and Facts

Elois Gardner suffered a cumulative injury to her left shoulder as the result of years of wear and tear while working for Donnelly Marketing Incorporated. She asserted the injury date was January 1996. Donnelly's workers' compensation carrier is ITT Hartford. Initially, Hartford paid workers' compensation benefits to Gardner.

On April 17, 1996, Gardner had surgery on her left shoulder. After the surgery, Gardner's condition worsened. Hartford arranged for the management of Gardner's case by Susan Fletcher-White of Industrial Disability Management Incorporated. Gardner was suffering from headaches and a CT scan was recommended. Either Hartford or Fletcher-White canceled the scan. Gardner underwent a bilateral MRI of her shoulders.

On July 16, 1996, Gardner's primary care physician recommended Gardner have exploratory surgery to determine the problem in her shoulder. On July 24, Hartford told Fletcher-White they would not authorize the second surgery unless Gardner obtained a second opinion. It appears Gardner was not informed if she proceeded with the second surgery her workers' compensation benefits would be canceled for unauthorized treatment. Either Hartford or Fletcher-White tried to cancel the second surgery. However, Gardner went ahead with it on July 31. Hartford terminated Gardner's workers' compensation benefits.

Gardner filed a workers' compensation action asserting Hartford wrongfully terminated her benefits without reasonable or probable cause. She also raised issues regarding payment of medical expenses and the extent of permanent disability. In a pre-hearing conference report signed by Gardner and Hartford, the parties identified their dispute as encompassing virtually all of the controversies that had arisen since Gardner's injury in January 1996. Specifically, the parties disagreed on the issue of whether the claimed injury arose because of her employment.

In April 1998, the parties filed an application with the Iowa Industrial Commissioner for approval of a contested case settlement pursuant to Iowa Code section 85.35 (1997). They stated a "bona fide" dispute existed under section 85.35(8) regarding whether a substantial portion of the claimed disability "related to physical or medical conditions other than those caused by the injury." The parties jointly submitted medical documentation to support a finding of a bona fide dispute. The industrial commissioner approved the settlement.

In July 1998, Gardner filed a tort suit against Hartford for bad faith denial of workers' compensation benefits and negligent medical care. Hartford filed a motion for summary judgment arguing Gardner's claim for bad faith denial of benefits was barred by the doctrine of issue preclusion. It also asserted Gardner failed to exhaust administrative remedies on the issue of medical treatment. The court initially granted Hartford's motion upon both asserted grounds.

On August 4, 2000, Gardner filed a motion for amendment of findings and substitution of judgment pursuant to Iowa Rule of Civil Procedure 1.904(2) (former rule 179(b)). Gardner challenged the district court's application of the doctrine of issue preclusion and the court's determination she failed to exhaust her administrative remedies. The court confirmed its earlier determination that Gardner's claim was barred by issue preclusion. The court, however, also ruled Gardner had not failed to exhaust her administrative remedies. Gardner appeals and Hartford cross-appeals.

II. Scope of Review

We review the district court's grant of the motion for summary judgment for correction of errors of law. Mason v. Schweizer Aircraft Corp., 653 N.W.2d 543, 547 (Iowa 2002). Summary judgment is appropriate when the record shows "there is no genuine issue as to any material fact and that the moving part is entitled to a judgment as a matter of law." Iowa R. Civ. P. 1.981(3).

III. The Merits

On appeal Gardner argues the court erred in granting summary judgment based upon its finding her bad faith tort claim was barred by the doctrine of issue preclusion. Hartford cross-appeals asserting the court erred in denying the portion of its motion for summary judgment claiming Gardner failed to exhaust her administrative remedies. Because we find the matter of issue preclusion to be determinative of this case, it is unnecessary to address Hartford's cross-appeal. Before turning to the main issue, we briefly address Hartford's contention Gardner's appeal is untimely and must be dismissed.

A. Motion to Dismiss Appeal

Hartford argues Gardner did not appeal within thirty days from final judgment as required by Iowa Rule of Appellate Procedure 6.5(1). Hartford asserts it was inappropriate for Gardner to file a 1.904(2) motion after the court sustained Hartford's motion for summary judgment dismissing Gardner's petition. Specifically Hartford contends Gardner did nothing more than rehash the legal issues raised and decided adversely to her. See Explore Info. Servs. v. Iowa Ct. Info. Sys., 636 N.W.2d 50, 57 (Iowa 2001)

(holding rule 1.904(2) motion does not toll time for appeal where motion merely rehashes legal issues raised and decided adversely to movant in prior motion to adjudicate law points). Hartford asks us to dismiss this appeal as untimely.

The district court granted Hartford's motion for summary judgment on July 26, 2000. Gardner then timely filed a rule 1.904(2) motion asking the court to amend its findings. On October 4, 2001, the court ruled on Gardner's 1.904(2) motion. Twenty-five days later, Gardner filed her notice of appeal. Hartford argues Gardner's appeal is untimely because she did not file notice of appeal within thirty days from the court's order granting summary judgment. We disagree and decline to dismiss Gardner's case based upon this ground.

In Orr v. Iowa Public Service Co., we held a motion to reconsider the granting of summary judgment was not authorized by rule 1.904(2). 277 N.W.2d 899, 900 (Iowa 1979). However, this case was superseded by rule as stated in Peoples Trust & Savings Bank v. Baird, 346 N.W.2d 1, 3 (Iowa 1984). In Peoples Trust, we held rule 1.981 (formerly rule 237(c)) allows the filing of a rule 1.904(2) motion after the court renders summary judgment upon the entire case in accordance with the legislature's 1980 amendment of Iowa Rule of Civil Procedure 1.981. Peoples Trust, 346 N.W.2d at 3. Under such circumstances, a notice of appeal is timely if filed within thirty days of the ruling on what was, in essence, a rule 1.904(2) motion. See id.

In the case before us, the district court rendered summary judgment upon the entire case. Because Gardner filed her notice of appeal within thirty days from the entry of the court's ruling on the 1.904(2) motion, her appeal is timely. Because this case involves a summary judgment ruling, it is unnecessary for us to examine the basis for the 1.904(2) motion to determine if it "raised factual issues tried to the court" or raised an issue the district court failed to resolve as required in Explore. See Explore Info. Servs., 636 N.W.2d at 57. We now turn to the merits of this appeal.

B. Issue Preclusion

Hartford argues Gardner is barred from maintaining her tort action for bad faith under the doctrine of issue preclusion. Issue preclusion provides once a court has decided an issue of fact or law necessary to its judgment, the same issue should not be relitigated in later proceedings. Hunter v. City of Des Moines, 300 N.W.2d 121, 123 (Iowa 1981). The purpose of issue preclusion is to protect litigants from the "vexation of relitigating identical issues with identical parties or those persons with a sufficient connective interest to the prior litigation." United Fire & Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 655 (Iowa 2002) (quoting State ex rel. Casas v. Fellmer, 521 N.W.2d 738, 740-41 (Iowa 1994)). The doctrine also promotes judicial economy. Id. The doctrine of issue preclusion is applicable if four factors are satisfied: (1) the issue determined in the prior action is identical to the present issue; (2) the issue was raised and litigated in the prior action; (3) the issue was material and relevant to the disposition in the prior action; and (4) the determination made of the issue in the prior action was necessary and essential to the resulting judgment. Id.

Here, Hartford attempts to use the doctrine defensively as a shield against Gardner's bad faith tort suit. Hartford is relying upon the findings of the industrial...