Otterberg v. Farm Bureau Mut. Ins. Co.

• Decision Date: 06 May 2005
• Docket Number: No. 04-0251.,04-0251.
• Citation: 696 N.W.2d 24
• Parties: Darin OTTERBERG, Appellant, v. FARM BUREAU MUTUAL INSURANCE COMPANY, Appellee.
• Court: Iowa Supreme Court

696 N.W.2d 24

Darin OTTERBERG, Appellant, v. FARM BUREAU MUTUAL INSURANCE COMPANY, Appellee.

No. 04-0251.

Supreme Court of Iowa.

May 6, 2005.

Christopher D. Spaulding of Berg, Rouse, Spaulding & Schmidt, P.L.C., Des Moines, for appellant.

Edward G. Parker of Morain & Pugh, P.L.C., West Des Moines, for appellee.

CADY, Justice.

In this appeal from a declaratory judgment entered by the district court, we must primarily decide if an insured can recover under an uninsured motorist provision of an automobile insurance policy based on injuries covered by workers' compensation sustained while he was a passenger in a motor vehicle owned by his employer and operated by a co-employee. We also consider the impact of the preservation-of-error doctrine on the failure of a nonmoving party to a motion for summary judgment to file a resistance to the motion. Upon our review, we affirm the judgment of the district court.

I. Background Facts and Proceedings

Darin Otterberg was employed by Jefferson County Ambulance as a paramedic. On December 21, 2000, he was a passenger in an ambulance driven by his coworker, Eric Beard. They were transporting a patient to the hospital. Beard lost control of the ambulance, resulting in a single-vehicle accident. The accident caused back and neck injuries to Otterberg. Otterberg subsequently received workers' compensation benefits from the workers' compensation insurance carrier for Jefferson County Ambulance.

Otterberg also owned an automobile insurance policy with Farm Bureau Mutual Insurance Company. The policy included uninsured motorist (UM) coverage. The relevant part of the UM provision provided:

We will pay damages for bodily injury an insured is legally entitled to recover from the owner or operator of an un-insured motor vehicle. The bodily injury must be caused by an accident and arise out of the ownership, maintenance or use of an un-insured motor vehicle.¹

Otterberg made a claim against Farm Bureau under the UM provision. Although the ambulance was covered under a liability insurance policy maintained by Jefferson County Ambulance, Otterberg claimed the ambulance was an uninsured vehicle under his Farm Bureau policy because the Jefferson County Ambulance policy did not extend coverage to him due to the applicability of the workers' compensation laws. Farm Bureau denied the claim. It asserted that, even assuming the ambulance was an uninsured vehicle, the UM provision did not provide coverage because Otterberg was not "legally entitled to recover" from the employer or the co-employee who was operating the ambulance.

Otterberg filed a petition for declaratory judgment against Farm Bureau. Farm Bureau counterclaimed, asking the court to declare that no coverage existed under its policy. Farm Bureau then moved for summary judgment. It claimed Otterberg was not "legally entitled to recover" damages from the owner or operator of the uninsured ambulance due the exclusivity provision of the workers' compensation statute.² Otterberg failed to file a resistance prior to the summary judgment hearing. The district court accepted Farm Bureau's argument and granted the motion for summary judgment.

Otterberg appeals. First, he argues he is entitled to UM benefits under the doctrine of reasonable expectations. Second, he argues the "legally entitled to recover" language in his policy does not bar his claim for UM benefits.

II. Standard of Review

We review a ruling on a motion for summary judgment for correction of errors at law. In re Estate of Graham, 690 N.W.2d 66, 69-70 (Iowa 2004) (citing Barreca v. Nickolas, 683 N.W.2d 111, 116 (Iowa 2004)). A motion for summary judgment should only be granted if, viewing the evidence in the light most favorable to the nonmoving party,

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Iowa R. Civ. P. 1.981(3); see Wernimont v. Wernimont, 686 N.W.2d 186, 189 (Iowa 2004) ("[W]e view the record in the light most favorable to the nonmoving party and allow that party all reasonable inferences that can be drawn from the record." (citing Delaney v. Int'l Union UAW Local No. 94, 675 N.W.2d 832, 834 (Iowa 2004))).

In addition,

[w]e review the interpretation of the language of an insurance policy for correction of errors at law.... Due to the nature of an insurance policy, the benefit of the doubt in the drafting is interpreted against the insurance company. As such, limits in "coverage are construed strictly against the insurer."

Westfield Ins. Cos. v. Econ. Fire & Cas. Co., 623 N.W.2d 871, 875-76 (Iowa 2001) (citations omitted).

III. Preservation of Error

Farm Bureau argues Otterberg failed to preserve error on the issues raised on appeal because he failed to file a written resistance to Farm Bureau's motion for summary judgment in district court. Although our rules of procedure allow a nonmoving party to resist summary judgment, the burden is still on the moving party "to show the district court that there was no genuine issue of material fact and that it was entitled to a judgment as a matter of law." Bill Grunder's Sons Constr., Inc. v. Ganzer, 686 N.W.2d 193, 197 (Iowa 2004) (citing Iowa R. Civ. P. 1.981(3)). Thus, a party faced with a motion for summary judgment can rely upon the district court to correctly apply the law and deny summary judgment when the moving party fails to establish it is entitled to judgment as a matter of law. Yet, as we recently observed in Bill Grunder's Sons Construction, Inc. v. Ganzer,

if the movant has failed to establish its claim and the court nevertheless enters judgment, the nonmovant must at least preserve error by filing a motion following the entry of judgment, allowing the district court to consider the claim of deficiency.

Id. at 197-98. This rule of error preservation is "`[b]ased upon considerations of fairness.'" Id. at 197 (quoting Sorci v. Iowa Dist. Ct., 671 N.W.2d 482, 489 (Iowa 2003)). That is, "[i]t is fundamentally unfair to fault the trial court for failing to rule correctly on an issue it was never given the opportunity to consider." Id. (internal quotations omitted).

In this case, Otterberg filed a motion to reconsider with the district court after the summary judgment motion was granted. The motion raised both issues presented on appeal. However, before a hearing could be held on the motion, Otterberg filed a notice of appeal from the summary judgment ruling. The district court never held the hearing. Farm Bureau asserts that the notice of appeal divested the district court of its jurisdiction over the case and deprived the district court of any opportunity to consider the issues now raised on appeal. Consequently, by failing to give the district court the opportunity to consider the errors raised on appeal, Farm Bureau claims Otterberg has failed to preserve error under our rule in Bill Grunder's Sons Construction, Inc.

In addressing this preservation-of-error claim raised by Farm Bureau, we turn to the rationale for the rule articulated in Bill Grunder's Sons Construction, Inc. An important consideration of error preservation is for the district court to have an opportunity to consider the issue raised on appeal. Id. 197-98. If the district court considered the issue raised on appeal by the nonmovant in ruling on an uncontested summary judgment motion, the rationale for requiring the nonmovant to file a postjudgment motion with the district court to preserve error on appeal is inapplicable. Thus, if a motion for summary judgment presented the issue to the district court and the district court ruled on it, the rule requiring the district court to first consider issues raised on appeal is satisfied.

In Bill Grunder's Sons Construction, Inc., the issue raised on appeal by the nonresisting party to the summary judgment motion in district court was not an issue considered and ruled on by the district court in ruling on the motion for summary judgment. Id. at 194. In this case, the basis for the summary judgment motion by Farm Bureau was that the UM provision did not apply because Otterberg was not "legally entitled to recover damages." This was the issue presented and decided by the district court. Consequently, Otterberg may raise this issue on appeal without violating the preservation-of-error doctrine. However, Otterberg's claim that the UM provision of the policy also violates the reasonable-expectations doctrine was never considered by the district court. Consequently, error was not preserved on that issue.

IV. "Legally Entitled to Recover"

We have never determined whether an insured is "legally entitled to recover" within the meaning of the UM provision of an insurance policy or our UM insurance statute when the injuries are covered under the workers' compensation system. Among the courts that have decided this issue, the great weight of authority holds that an insured is not entitled to UM benefits when the insured could not sue the uninsured co-employee because of the workers' compensation exclusivity provision. Compare Ex parte Carlton, 867 So.2d 332, 338 (Ala.2003) (holding that when plaintiff's co-employee was immune from suit under workers' compensation exclusivity provision, plaintiff was not "legally entitled to recover" under UM policy), and Allstate Ins. Co. v. Boynton, 486 So.2d 552, 555 (Fla.1986) (same), and State Farm Mut. Auto. Ins. Co. v. Royston, 72 Haw. 338, 817 P.2d 118, 122 (1991) (same), and Wachtler v. State Farm Mut. Auto. Ins. Co., 835 So.2d 23, 28 (Miss.2003) (same), and Estate of Libby v. State Farm Mut. Auto. Ins. Co., 147 N.H. 616, 809 A.2d 768, 771 (2002) (same), and State Farm Mut. Auto. Ins. Co. v. Webb, 54 Ohio St.3d 61, 562 N.E.2d 132, 135 (1990) (same), and 6 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 110.05[10], at...