Global Aviation Ins. Managers v. Lees

Decision Date26 March 1985
Docket NumberNo. 84-246,84-246
Citation368 N.W.2d 209
PartiesGLOBAL AVIATION INSURANCE MANAGERS, Attorney in Fact for Ideal Mutual Insurance Company, Plaintiff-Appellant, v. David V. LEES, Defendant-Appellee.
CourtIowa Court of Appeals

Thomas C. Farr of Peddicord & Wharton, Des Moines, Iowa, for plaintiff-appellant.

Darrell Isaacson of Laird, Burington, Heiny, McManigal, Walters & Winga, Mason City, Iowa, for defendant-appellee.

Heard by OXBERGER, C.J., and HAYDEN and SACKETT, JJ.

HAYDEN, Judge.

Plaintiff appeals from an adverse judgment in a declaratory judgment action arising from an airplane accident.

Defendant, David Lees, was the owner of a 1975 Cessna 210 aircraft. On June 26, 1980, he obtained a one-year insurance policy for the airplane from the Shelby Mutual Insurance Company through James Dunn of the insurance agency of Anton, Hammond & Dunn. Shortly before the expiration date of that policy Dunn contacted defendant concerning renewal of his aviation insurance. In response to questioning by Dunn, defendant informed him that the date of his last medical examination and aircraft inspection was April 14, 1980, but that those would be performed in the near future as required by FAA regulations. Dunn stated that he would apply for "all risk" coverage. Thereafter, Dunn completed an application and a pilot questionnaire and forwarded them to the firm of Crump-Babcock Underwriters, Inc.

On June 10, 1981, Crump bound a policy of insurance through plaintiff, Global Aviation Insurance Managers, Inc., attorney-in-fact for Ideal Mutual Insurance Company. Dunn orally notified defendant of the binder which was effective beginning June 26, 1981. Defendant was not informed that failure to obtain a valid medical certificate and aircraft inspection certificate would deny him coverage under the policy.

On July 17, 1981, the aircraft was totally destroyed while defendant was attempting to land it on a grass strip. It was determined that the sole cause of the accident was pilot error in that defendant misjudged distance and speed in attempting to land on a wet runway surface. At the time of the loss defendant did not possess a valid medical certificate or a valid aircraft airworthiness certificate. It is undisputed, however, that neither defendant's physical condition nor the condition of the airplane contributed to the accident in any way.

Defendant received the policy sometime after September 23, 1981, the date it was prepared and executed. The policy contained the following declaration:

7. Pilot Clause: Only the following pilot or pilots holding valid and effective pilot and medical certificates with ratings as required by the Federal Aviation Administration for the flight involved will operate the aircraft in flight.

An endorsement to this item listed defendant as the only authorized pilot. In the section entitled "Exclusions" the policy provided:

This policy does not apply:

* * *

* * *

2. to any occurrence or to any loss or damage occurring while the aircraft is operated in flight by other than the pilot or pilots set forth under Item 7 of the Declarations;

* * *

* * *

4. to any Insured:

* * *

* * *

(b) who operates or permits the operation of the aircraft, while in flight, unless its airworthiness certificate is in full force and effect; ....

The parties have agreed that the same language quoted above would have been contained in the policy had it been issued prior to the loss.

Plaintiff filed the present action seeking a declaration that it is not liable because of defendant's failure to have current certificates as required by the policy. The trial court held that Iowa Code section 515.101 was applicable and ruled in favor of defendant. The trial court also reasoned that defendant was entitled to prevail under the doctrine of reasonable expectations. Plaintiff challenges both conclusions on appeal.

Our review of this equitable proceeding is de novo. Iowa R.App.P. 4. We are not bound by the trial court's findings, but we give weight to them especially where they depend upon the credibility of witnesses. Iowa R.App.P. 14(f)(7).

I. The Statute. Iowa Code section 515.101 provides:

Any condition or stipulation in an application, policy, or contract of insurance making the policy void before the loss occurs, shall not prevent recovery thereon by the insured, if it shall be shown by the plaintiff that the failure to observe such provision or the violation thereof did not contribute to the loss.

The parties agree that the failure to have current airworthiness and medical certificates did not contribute to the loss. However, plaintiff argues that the statute is inapplicable to risks clearly excluded from coverage by the policy.

The same question has arisen in other jurisdictions. In Omaha Sky Divers Parachute Club, Inc. v. Ranger Insurance Co., 189 Neb. 610, 204 N.W.2d 162 (1973), the issue was whether an insurance company was liable for damage to an aircraft under a policy clearly excluding from coverage pilots who did not have medical certificates. At the time of the loss the pilot's medical certificate had lapsed but the failure to have the certificate in no way contributed to the accident. Id. at 611-12, 204 N.W.2d at 163. A Nebraska statute provided in part: "The breach of a warranty or condition in any contract or policy of insurance shall not avoid the policy nor avail the insurer to avoid liability, unless such breach shall ... contribute to the loss...." Id. at 613, 204 N.W.2d at 164. The Nebraska court held that the statute was inapplicable because the exclusion clause was not a "warranty or condition" within the meaning of the statute. Therefore, the court held the insurer was not liable. Id.

The Florida Court of Appeals reached a different result in Pickett v. Woods, 404 So.2d 1152 (Fla.Dist.Ct.App.1981). In that case an aviation insurance policy excluded any insured operating an aircraft unless its airworthiness certificate was current. A statute provided: "A breach or violation by the insured of any warranty, condition, or provision of any ... insurance policy ... shall not render void the policy or contract, or constitute a defense to a loss thereon, unless such breach or violation increased the hazard by any means within the control of the insured." Id. at 1152-53. In interpreting the statute the court stated:

This statute speaks of breach by the insured of any "warranty, condition, or provision" of the policy. Here we are confronted with what was labeled in the policy as an exclusion. However, we believe that...

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    • September 10, 2010 the Loss Statute: A Primer and A Partial Critique, 61 Neb. L.Rev. 209 (1982). 31See id. 32See, e.g., Global Aviation Ins. Managers v. Lees, 368 N.W.2d 209 (Iowa App.1985), abrogated on other grounds, Schneider Leasing v. U.S. Aviation Underw., 555 N.W.2d 838 (Iowa 1996). 33See, Stortenbe......
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    ...(D.C.Mass.1980); American States Ins. Co. v. Byerly Aviation Inc., 456 F.Supp. 967, 970 (S.D.Ill.1978); Global Aviation Ins. Managers v. Lees, 368 N.W.2d 209, 211 (Iowa Ct.App.1985); Security Mutual Cas. Co. v. O'Brien, 99 N.M. 638, 662 P.2d 639, 640-41 11. Act of June 7, 1951, 52nd Leg., R......
  • Schneider Leasing, Inc. v. U.S. Aviation Underwriters, Inc.
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    • November 20, 1996 this litigation is not of a type that triggers section 515.101. Although the court of appeals, in Global Aviation Managers v. Lees, 368 N.W.2d 209, 212 (Iowa App.1985), broadly interpreted section 515.101 to apply to all provisions contained in a policy of insurance, the effect of which ......

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