Mewes v. State Farm Auto Ins. Co., Inc.

• Decision Date: 26 April 1995
• Docket Number: No. 93-1649,93-1649
• Citation: 530 N.W.2d 718
• Parties: Jack L. MEWES and Jane M. Mewes, Appellants, v. STATE FARM AUTOMOBILE INSURANCE COMPANY, INC., an Illinois Corporation, Appellee.
• Court: Iowa Supreme Court

Page 718

530 N.W.2d 718

Jack L. MEWES and Jane M. Mewes, Appellants, v. STATE FARM AUTOMOBILE INSURANCE COMPANY, INC., an Illinois Corporation, Appellee.

No. 93-1649.

Supreme Court of Iowa.

April 26, 1995.

Stephen A. Rubes, Council Bluffs, for appellants.

Darrell J. Isaacson of Laird, Heiny, McManigal, Wings, Duffy & Stambaugh, P.L.C., Mason City, for appellee.

Considered by CARTER, P.J., and LAVORATO, NEUMAN, SNELL, and TERNUS, JJ.

SNELL, Justice.

In this case, Jane M. and Jack L. Mewes appeal a district court decision which granted summary judgment in favor of the State Farm Automobile Insurance Company. At issue is the propriety of State Farm policy provisions which limited the Mewes' total recovery of underinsurance coverage to an amount equal to the highest applicable State Farm policy limit rather than to an amount that would have provided them full compensation. The district court held State Farm's policies only applied to the extent the highest limit of the State Farm policies exceeded the underinsured motorist coverage provided by the primary insurer. Since the highest limit on a State Farm policy equaled the amount the primary insurer paid, the district court held that State Farm was not responsible for any additional amount. We affirm.

I. Factual and Procedural Background

On July 30, 1991, a vehicle driven by Rhonda Groesbeck struck from behind a vehicle being driven by Tammy Kraft in Cerro Gordo County, Iowa. The vehicle being driven by Tammy Kraft was owned by Dana Kraft. Jane Mewes was a passenger in the Kraft vehicle and sustained serious personal injuries as a result of the accident.

At the time of the accident, the Krafts carried an IMT Insurance Company policy which provided underinsured motorist insurance and medical payments coverage. This policy covered Jane Mewes as a passenger in the Kraft vehicle. The underinsured motorist coverage limit under this policy was $50,000. Three insurance policies issued by State Farm also covered the Mewes. Two of these policies held underinsured motorist limits of $20,000 and the third policy carried an underinsured motorist policy limit of $50,000. The vehicles the three State Farm policies covered were not involved in the accident.

Mewes and her husband, Jack, brought an action against Groesbeck and Tammy and Dana Kraft alleging that both Tammy Kraft and Groesbeck were negligent and the negligence of each proximately caused Jane's injuries. Jack Mewes' claims were based on loss of consortium. Shortly after bringing suit, the Mewes filed an amended petition which joined IMT and State Farm as parties.

In their amended petition, the Mewes alleged they had complied with all the terms and conditions of the State Farm policies, but State Farm had in bad faith failed to make any payments under the policies. The Mewes sought recovery from State Farm for the amount of their total damages which IMT's policy did not cover and also sought punitive damages. State Farm responded to the Mewes' petition by denying that it owed them any underinsured motorist coverage due to "antistacking" and "excess" provisions in the Mewes' policies. State Farm's policies contained the following pertinent "other insurance" provisions:

If There is Other Underinsured Motor Vehicle Coverage

....

3. If the insured sustains bodily injury while occupying a vehicle not owned by you, your spouse or any relative, this coverage applies:

a. as excess to any underinsured motor vehicle coverage which applies to the vehicle as primary coverage, but

b. only in the amount by which it exceeds the primary coverage.

If coverage under more than one policy applies as excess:

a. the total liability shall not exceed the difference between the limit of liability of the coverage that applies as primary and the highest limit of liability of any one of the coverages that apply as excess; and

b. we are liable only for our share. Our share is that per cent of the damages that the limit of liability of this coverage bears to the total of all underinsured motor vehicle coverage applicable as excess to the accident.

Relying on these provisions, State Farm asserted it was only responsible to the Mewes for any amount by which its highest policy limit exceeded IMT's policy limit.

Groesbeck carried liability insurance for bodily injury provided by the Midwest Mutual Insurance Company. Midwest paid its policy limit of $20,000 to the Mewes in settlement for claims the Mewes brought against Groesbeck. IMT settled with the Mewes for their underinsured motorist policy limit of $50,000.

Only State Farm remained as a defendant in the case. The Mewes filed a motion for partial summary judgment against State Farm on the ground that no material fact existed on the issue of State Farm's responsibility to pay the Mewes underinsured motorist benefits and the Mewes were entitled to these payments as a matter of law. State Farm filed a resistance to the Mewes' motion and filed its own motion for summary judgment. State Farm sought summary judgment on the ground that its policy and Iowa statutory law did not require it to pay any underinsurance benefits because IMT already paid the Mewes its policy limit of $50,000 for underinsured benefits, and State Farm's policy limits did not exceed that amount. State Farm asserted that to require State Farm to pay additional underinsured benefits would amount to "stacking" of coverage in contravention of the applicable policy and statutory law.

Following a hearing, the district court denied the Mewes' motion and granted State Farm's motion. The court held that State Farm was entitled to summary judgment because the clear intent of the relevant section of the Iowa Code was to prohibit interpolicy stacking and therefore, State Farm was only responsible for any amount by which its highest policy limit exceeded IMT's policy limit. Since State Farm's highest policy limit, $50,000, did not exceed IMT's $50,000 policy limit, the court held State Farm was not responsible for payment of any underinsured motorist benefits.

The Mewes have appealed to this court. On appeal, they assert summary judgment in favor of State Farm was inappropriate for three reasons. First, the Mewes contend Iowa Code section 516A.2 (1993) does not prohibit payment by both IMT and State Farm in this case because the exception located in 516A.2(1) states that the section's antistacking provisions do not apply to policies which contain both uninsured and underinsured motor vehicle coverage and IMT's policy includes both types of coverage. Second, if section 516A.2, as applied to this situation, only allowed recovery up to the highest underinsured motor vehicle policy limit, this would violate the purpose of underinsured motorist coverage which is to provide full compensation to victims to the extent of the injuries suffered. Finally, if section 516A.2 is applicable to the case at hand, the second unnumbered paragraph of section 516A.2(1), which expressly overrules our decision in Hernandez v. Farmers Insurance Co., 460 N.W.2d 842 (Iowa 1990), does not prohibit payment of additional underinsured benefits by State Farm because this express statement in section 516A.2(1) only holds that interpolicy stacking is prohibited when the different policies at issue are all written by the same insurer.

II. Standard and Scope of Review

We review a district court grant of a motion for summary judgment for errors of law. Iowa R.App.P. 4; Ciha v. Irons, 509 N.W.2d 492, 493 (Iowa 1993); Keller v. State, 475 N.W.2d 174, 179 (Iowa 1991); Veach v. Farmers Ins. Co., 460 N.W.2d 845, 847 (Iowa 1990). We consider the evidence in the entire record in the light most favorable to the non-movant and determine whether any issue as to any material fact exists. Ciha, 509 N.W.2d at 493; West Bend Mut. Ins. Co. v. Iowa Iron Works, Inc., 503 N.W.2d 596, 598 (Iowa 1993). Summary judgment is appropriate if no issue as to any material fact exists and the moving party is entitled to judgment as a matter of law. Ciha, 509 N.W.2d at 493; West Bend Mut. Ins., 503 N.W.2d at 598.

III. Issues on Appeal

The facts of this case are not in dispute and the issues the Mewes raise involve the construction of their State Farm insurance policies and the application of Iowa Code section 516A.2 to this matter. When we construe the underinsured motorist provisions of an insurance policy, section 516A.2 forms a basic part of the policy and we treat section 516A.2 as if the parties had actually written it into the policy. Rodish v. State Farm Mut. Auto. Ins. Co., 501 N.W.2d 514, 515 (Iowa 1993); Veach, 460 N.W.2d at 847; Tri-State Ins. Co. v. De Gooyer, 379 N.W.2d 16, 17 (Iowa 1985). We construe the insurance policy in light of the purposes and intent of section 516A.2. Veach, 460 N.W.2d at 847; Tri-State, 379 N.W.2d at 17.

Resolution of the matter at hand ultimately depends on our interpretation of section 516A.2. In construing statutes, our goal is to determine and give effect to the legislature's intention. State v. Sullins, 509 N.W.2d 483, 485 (Iowa 1993). We seek a reasonable interpretation which will best effectuate the purpose of the statute and redress the wrongs the legislature sought to remedy. Id.; Krueger v. Iowa Dep't of Transp., 493 N.W.2d 844 (Iowa 1992). We will consider all parts of an enactment together and will not place undue importance on any single or isolated portion. General Elec. v. Iowa State Bd. of Tax Review, 492 N.W.2d 417, 420 (Iowa 1992).

Section 516A.2, "Construction--minimum coverage--stacking," provides in relevant part:

1. Except with respect to a policy containing both underinsured motor vehicle coverage and uninsured or hit-and-run motor vehicle coverage, nothing contained in this chapter shall be construed as requiring forms of coverage provided pursuant hereto, whether alone or in combination with similar coverage afforded under other automobile liability or motor vehicle liability policies, to afford limits in excess of...