Miller v. Westfield Ins. Co.

• Decision Date: 20 January 2000
• Docket Number: No. 98-73.,98-73.
• Citation: 606 N.W.2d 301
• Parties: Craig S. MILLER, Sr., Karen Sue Miller, Dani Lee Miller, and Craig S. Miller, Jr., Appellants, v. WESTFIELD INSURANCE COMPANY, Appellee.
• Court: Iowa Supreme Court

606 N.W.2d 301

Craig S. MILLER, Sr., Karen Sue Miller, Dani Lee Miller, and Craig S. Miller, Jr., Appellants, v. WESTFIELD INSURANCE COMPANY, Appellee.

No. 98-73.

Supreme Court of Iowa.

January 20, 2000.

Rehearing denied March 13, 2000.¹

Richard A. Bartolomei of Bartolomei & Lange, P.C., Des Moines, for appellants.

J. Michael Weston and Brenda K. Wallrichs of Moyer & Bergman, P.L.C., Cedar Rapids, for appellee.

Considered en banc.

TERNUS, Justice.

This case concerns the enforceability of an owned-but-not-insured exclusion in the uninsured motorists (UM) coverage of a motor vehicle liability policy. The trial court held that the exclusion was enforceable and precluded the plaintiffs' recovery under the UM coverage. We agree and so affirm.

I. Background Facts and Proceedings.

The facts underlying this case were undisputed by the parties. The plaintiff, Craig S. Miller, Sr., was injured in an accident caused by an uninsured motorist. At the time of the accident, Miller was riding a motorcycle that he owned and had insured through Midwest Mutual Insurance Company. The Midwest policy did not include UM coverage, however, because Miller had expressly rejected, in writing, Midwest's offer of such coverage.

Miller also owned a pickup that he had separately insured under a liability policy issued by the defendant, Westfield Insurance Company. The Westfield policy included UM coverage. This action was commenced by Miller, his wife, Karen Sue Miller, and his children, Dani Lee Miller and Craig S. Miller, Jr., to recover benefits under the UM coverage of the Westfield policy.

Westfield claimed that the following exclusion in its policy precluded any recovery by the plaintiffs:

We do not provide Uninsured Motorists Coverage for bodily injury sustained by any person:

1. While occupying, or when struck by, any motor vehicle owned by you or any family member which is not insured for this coverage under this policy.

This exclusion is commonly referred to as an owned-but-not-insured exclusion. The plaintiffs did not dispute that the exclusion, if applied, would prevent them from recovering under the UM coverage of the Westfield policy. They argued instead that the exclusion was unenforceable under our decision in Lindahl v. Howe, 345 N.W.2d 548 (Iowa 1984), which held that under the facts of that case the owned-but-not-insured exclusion was contrary to Iowa's uninsured motorist statute, Iowa Code chapter 516A, and therefore was unenforceable. The district court held that Lindahl was distinguishable because Miller, unlike the insured in Lindahl, had expressly rejected UM coverage in the policy insuring the vehicle involved in the accident. Accordingly, the court applied the exclusion and ruled that the plaintiffs were not entitled to recover under the Westfield policy.

The plaintiffs appealed the district court's decision. Our review is for correction of errors of law. See Iowa R.App. P. 4.

II. General Principles Governing Statutory Interpretation.

As we have already mentioned, there is no disagreement that the owned-but-not-insured exclusion contained in Westfield's insurance policy precludes Miller from recovering under the policy, if the exclusion is enforceable under chapter 516A, Iowa's uninsured and underinsured motorist statute. The enforceability of the exclusion under chapter 516A becomes an issue because we have repeatedly held that the terms of this statute "form a basic part of the policy." Hollingsworth v. Schminkey, 553 N.W.2d 591, 595 (Iowa 1996); accord Hornick v. Owners Ins. Co., 511 N.W.2d 370, 372 (Iowa 1993)

. Consequently, the resolution of this case depends on the legislative intent encompassed in chapter 516A.

In determining legislative intent, we apply well-settled rules of statutory construction:

In construing statutes, our goal is to determine and give effect to the legislature's intention. We seek a reasonable interpretation which will best effectuate the purpose of the statute and redress the wrongs the legislature sought to remedy. We will consider all parts of an enactment together and will not place undue importance on any single or isolated portion.

Mewes v. State Farm Auto. Ins. Co., 530 N.W.2d 718, 722 (Iowa 1995) (citations omitted). With these principles in mind, we now examine chapter 516A to ascertain the legislature's intent.

III. Legislative Intent as Shown by the Uninsured Motorist Statute.

The fundamental goal of the UM statute is to provide insureds with insurance protection when injured as a result of the fault of an uninsured motorist. See Iowa Code § 516A.1 (1997) (stating that no motor vehicle liability insurance policy may be issued in this state unless uninsured motorist coverage is provided in such policy with limits at least equal to the liability limits required under Iowa Code section 321A.1(10)); see also Douglass v. American Family Mut. Ins. Co., 508 N.W.2d 665, 667 (Iowa 1993)

(stating that the purpose of UM coverage is "to provide to the victim of an accident the same protection that the victim would have had if the negligent tortfeasor had had minimum insurance coverage"). The goal of providing UM coverage to Iowa insureds is not, however, without its limitations. Section 516A.1 specifically allows an insured to reject UM coverage, if done so in writing. See Iowa Code § 516A.1 ("However, the named insured may reject all of such coverage...."). In effect, then, Iowa's UM statute does not implement mandatory UM coverage; it merely mandates that such coverage be offered to all insureds purchasing motor vehicle liability insurance.

Once an insured chooses to purchase UM coverage, Iowa Code section 516A.2(1) becomes relevant.² That statute allows insurers to limit UM coverage to the minimum limits prescribed by section 321A.1(10). See Iowa Code § 516A.2(1). More important, it permits insurers to include in UM coverage "terms, exclusions, limitations, conditions, and offsets which are designed to avoid duplication of insurance or other benefits." Id. We first had an opportunity to interpret this provision of chapter 516A in the Lindahl case, which we now discuss.

IV. Lindahl Decision.

In Lindahl, this court considered the enforceability of an owned-but-not-insured exclusion contained in the insured's UM coverage provided under his automobile policy. 345 N.W.2d at 549. As in the present case, at the time of the accident the insured was operating a motorcycle he owned, but had not insured under the auto policy. Id. We first determined that "[t]he conditions for mandatory coverage specified in section 516A.1 [were] present." Id. at 550. We then examined whether the exclusion was, nonetheless, authorized under section 516A.2(1). Id. at 551. We specifically focused on the statutory language permitting exclusions "which are designed to avoid duplication of insurance or other benefits." Id.

In interpreting this language, this court noted that the record before it lacked any evidence of the "insurance or benefits the exclusion is designed to avoid duplicating." Id. The court concluded, therefore, that the case was distinguishable from prior cases wherein the "potential duplication identified in the policy was found to exist." Id. This distinction was important to the court because it "believe[d] our legislature intended only to authorize insurers to exclude coverage for contingencies in which duplication actually occurs." Id. (emphasis added). We explained:

The broad mandate of coverage under section 516A.1 would mean little if an insurer could defend any exclusion of coverage by asserting it was designed to prevent a possible duplication of insurance or other benefits without regard to whether such duplication occurs.

Id.

The district court did not apply Lindahl to the case before us, concluding that it was distinguishable because here the insured expressly waived UM coverage under his motorcycle liability policy, a fact not apparent from the record before the court in Lindahl. We find it unnecessary, however, to consider whether this fact renders the Lindahl decision inapplicable here. Upon our examination of Lindahl, we conclude it was erroneously decided and should be overruled. Our first concern with Lindahl is our failure to apply a fundamental rule of statutory construction: "a statute [will not be construed] to make any part of it superfluous unless no other construction is reasonably possible." Civil Serv. Comm'n v. Iowa Civil Rights Comm'n, 522 N.W.2d 82, 86 (Iowa 1994); accord Iowa Auto Dealers Ass'n v. Iowa Dep't of Revenue, 301 N.W.2d 760, 765 (Iowa 1981)

. Accordingly, "[w]e presume the legislature included every part of a statute for a purpose, and intended each part be given effect." George H. Wentz, Inc. v. Sabasta, 337 N.W.2d 495, 500 (Iowa 1983),

overruled on other grounds by Henriksen v. Younglove Constr., 540 N.W.2d 254, 258 (Iowa 1995); accord State v. Jennie Coulter Day Nursery, 218 N.W.2d 579, 582 (Iowa 1974). In addition, the Lindahl decision violates the rule of statutory construction quoted earlier in this opinion: the court "will not place undue importance on any single or isolated portion" of a statute. Mewes, 530 N.W.2d at 722.

The legislature stated in section 516A.2(1) that exclusions "which are designed to avoid duplication of insurance or other benefits" are permissible. Iowa Code § 516A.2(1) (emphasis added). In Lindahl, this court simply read the words "are designed to" out of the statute. By holding that an exclusion is permissible under the statute only when actual duplication occurs, this court effectively rewrote the statutory language to read: "Such forms of coverage may include exclusions which avoid duplication of insurance or other benefits." If we presume that the legislature "included every part of a statute for a purpose, and intended each part be given effect," Sabasta, 337 N.W.2d at 500, then we must give meaning to the words "are designed to."

We assume the legislature intends the words it uses in a...