Robinson v. Allied Prop. & Cas. Ins. Co.

• Decision Date: 29 June 2012
• Docket Number: No. 10–1721.,10–1721.
• Citation: 816 N.W.2d 398
• Parties: Karen ROBINSON, Appellant, v. ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellee.
• Court: Iowa Supreme Court

816 N.W.2d 398

Karen ROBINSON, Appellant,

v.ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellee.

No. 10–1721.

Supreme Court of Iowa.

June 29, 2012.

Randall J. Shanks of Shanks Law Firm, Council Bluffs, for appellant.

Joseph D. Thornton and Marvin O. Kieckhafer of Smith Peterson Law Firm, LLP, Council Bluffs, for appellee.

WATERMAN, Justice.

In this appeal, we must decide whether to judicially invalidate an insurance contract requirement that the insured file her lawsuit for underinsured motorist coverage (UIM) within two years of her auto accident. Plaintiff, Karen Robinson, argues the deadline is unenforceable because, although she was still experiencing pain two years after the accident, only later did she discover the full extent of her injuries and realize her claim exceeded the other driver's liability limits. She filed this UIM action against her insurer, defendant, Allied Property and Casualty Insurance Company, nearly six years after the accident. The district court granted Allied's motion for summary judgment enforcing the contractual deadline as reasonable. The court of appeals reversed, holding the two-year limitation period “was unreasonable under these circumstances.” We granted Allied's application for further review.

We hold this two-year UIM insurance policy deadline is enforceable as a matter of law because it matches the two-year statute of limitations in Iowa Code section 614.1(2) (2009) for personal injury actions. The Iowa legislature chose that statutory deadline for lawsuits alleging personal injuries, and we decline to invalidate the same limitations period as unreasonable in a contract for UIM coverage. In both situations, the injured party must file suit within two years even if the full extent of the injury is not reasonably discovered until later.

I. Background Facts and Proceedings.

On June 15, 2004, Karen Robinson injured her neck in a car crash caused by another driver insured by State Farm with $100,000 liability policy limits. At the time of the accident, Robinson carried an underinsured motorist policy with Allied with a $50,000 limit. The Allied policy provided:

No one may bring a legal action against us under this Coverage Form until there has been full compliance with all the terms of this Coverage Form. Further, any suit against us under this Coverage Form will be barred unless commenced within two years after the date of the accident.

(Emphasis added.)

Paramedics took Robinson by ambulance to a hospital for treatment of her injuries, and she was not released until the next day. She was instructed to follow up with her family physician, Dr. Johnson. He diagnosed a neck sprain and strain and prescribed a regimen of physical therapy and anti-inflammatories. In October, Dr. Johnson noted Robinson was continuing to have neck pain and numbness in her arms and hands. He recommended a nerve-conduction study, which was interpreted as normal. In December, Dr. Johnson noted the physical therapy was not helping Robinson and that she “did not have improvement of any significance” and “[c]ontinued to have quite limited [range of motion] and pain with movement.” A second nerve-conduction study conducted on December 29 again failed to document a physical abnormality.

In January 2005, although Robinson was still experiencing discomfort, Dr. Johnson released her from his care for the injuries sustained in her accident. In a report authored in March 2005, Dr. Johnson stated: “I think as time progresses, the soft tissue injury will gradually repair itself. It is not going to be an overnight type resolution.” He predicted “no possible complications or negative secondary effects” and did not anticipate any additional procedures or treatments. “It is my opinion,” Dr. Johnson wrote, “that there will be no restrictions upon Ms. Robinson and it is my opinion that this will gradually improve with time although it will probably be a long time.”

On August 1, Robinson's attorney opened settlement discussions with State Farm, the insurance carrier for the driver who caused the accident. Based upon Dr. Johnson's prognosis and her medical expenses of $5111, her initial settlement demand was for $40,000, well within State Farm's $100,000 limits. State Farm made a counteroffer to settle for $7000. Robinson subsequently reduced her settlement demand to $30,000 and then $20,000 before negotiations with State Farm broke down. She filed suit against State Farm's insured on October 27, 2005, with more than eight months remaining in the two-year limitations period.

Meanwhile, Robinson had returned to Dr. Johnson the preceding month because of continuing neck pain. She underwent a cervical MRI on September 10, 2005. After Robinson's MRI study reported a normal cervical spine, she consulted a pain specialist who administered cervical facet joint injectionsin November and December of 2005. The injections provided temporary pain relief for a few weeks each time, but her pain returned.

As the two-year anniversary of her car accident approached, her neck and back pain persisted, and her pending tort action against State Farm's insured was nowhere close to settlement. In the first six months of 2006, Robinson continued to see Dr. Johnson occasionally with complaints of neck and back pain. Robinson's attorney did not file a UIM action or ask Allied to suspend the June 4, 2006 deadline through a tolling agreement, and that contractual deadline expired.

In November 2006, two years and three months after the accident, Robinson underwent an MRI of her lumbar spine, which indicated a mild central bulge in L4–5. A month later, an x-ray of her cervical spine indicated mild C6–7 degenerative disc changes. She began physical therapy in late December. Although the therapy provided some relief, she continued to experience pain. In February 2007, Robinson was examined by a surgeon, Dr. Jensen, who for the first time proposed a surgical option for Robinson's condition. Dr. Jensen performed an anterior cervical interbody discectomy on April 7, 2007. The surgery was successful, and Robinson experienced significant improvement.

Dr. Jensen authored a report in July 2007 stating Robinson's “[c]urrent prognosis is guarded. She may well harbor a permanent degree of paracervical pain as a result of her injury.” He estimated future medical expenses in the range of $5000 to $10,000 and predicted that Robinson will have permanent activity restrictions.

At the end of July 2008, State Farm offered its policy limit of $100,000 to settle Robinson's claim. Robinson promptly notified Allied of this development and also offered to settle her UIM claim against Allied for $50,000, the policy limit. On August 13, Allied denied her UIM claim as untimely based on the two-year limitation contained in Robinson's insurance contract. On August 28, Robinson accepted State Farm's policy limits settlement.

Robinson waited over another twenty-one months to file this UIM action against Allied on May 13, 2010, nearly six years after her auto accident. Allied moved for summary judgment on grounds the two-year deadline in its UIM policy had expired. Robinson resisted, arguing the deadline was unreasonable because she was unable to ascertain her damages within two years of her accident. The district court ruled the two-year provision was reasonable and entered summary judgment for Allied because the UIM claim was untimely. Robinson appealed, and the court of appeals reversed the summary judgment, concluding the two-year limitation was unreasonable under the circumstances because Robinson was not “able to ascertain her damages” within that period. We granted Allied's application for further review.

II. Scope of Review.

We review a district court's grant of summary judgment for errors at law. Nicodemus v. Milwaukee Mut. Ins. Co., 612 N.W.2d 785, 786 (Iowa 2000); Iowa R.App. P. 6.907. We view the evidence in the light most favorable to the nonmoving party. Faeth v. State Farm Mut. Auto. Ins. Co., 707 N.W.2d 328, 331 (Iowa 2005). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id.;Iowa R. Civ. P. 1.981(3).

In this case, the facts relevant to the limitations issue are undisputed, so the enforceability of the contractual limitations period is a question of law for the court. Nicodemus, 612 N.W.2d at 787. We will decide if “the district court correctly applied the law to the undisputed facts in deciding that [Allied] was entitled to summary judgment.” Id.

III. Analysis.

Iowa law requires insurers to include UIM coverage in motor vehicle liability insurance policies unless rejected by the insured. Iowa Code § 516A.1. A UIM claim is contractual and therefore subject to the ten-year statute of limitations for written contracts. See Douglass v. Am. Family Mut. Ins. Co., 508 N.W.2d 665, 666 (Iowa 1993) (citing Iowa Code section 614.1(5) (1991)), overruled on other grounds by Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 784 (Iowa 2000). However, as we noted in Douglass, “[u]nder general contract law, it is clear that the parties may agree to a modification of statutory time limitations.” Id. We emphasized that “Iowa has long recognized the rights of insurers to limit time for claims, irrespective of a legislative imprimatur on such provisions.” Id. at 667. In that case, we surveyed the authorities to conclude that the contractual deadline must allow the insured a reasonable period to sue for the policy benefits. Id. at 666–68.

We specifically held in Douglass “that the two-year limitation provided by the policy was valid and enforceable.” Id. at 668. We enforced that deadline even though the insured “was not aware that the tortfeasors were judgment proof until the two years had passed.” Id. at 667. We affirmed the summary judgment in favor of the insurer dismissing the insured's claim for uninsured motorist (UM) coverage filed more than two years after the...