Weber v. State Farm Mut. Auto. Ins. Co., Civ. No. 3-90-CV-10033.

CourtUnited States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
Writing for the CourtDaniel J. Hanson, Henry A. Harmon, Grefe & Sidney, Des Moines, IA, for State Farm Mut. Auto. Ins. Co
Citation873 F. Supp. 201
Docket NumberCiv. No. 3-90-CV-10033.
Decision Date29 July 1994
PartiesPatrick Richard WEBER; et al., Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

873 F. Supp. 201

Patrick Richard WEBER; et al., Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

Civ. No. 3-90-CV-10033.

United States District Court, S.D. Iowa, Davenport Division.

July 29, 1994.


873 F. Supp. 202

J. Bryan Schulte, Ruther Bauer Schulte & Hahn, Burlington, IA, Steven J. Crowley, Crowley Law Firm, Burlington, IA, for Robert J. Todd.

J. Bryan Schulte, Ruther Bauer Schulte & Hahn, Burlington, IA, Mary Ann Brown, Bauer Schulte Hahn, Burlington, IA, Steven J. Crowley, Crowley Law Firm, Burlington, IA, for Patrick Richard Weber, Edith Kelly.

Daniel J. Hanson, Henry A. Harmon, Grefe & Sidney, Des Moines, IA, for State Farm Mut. Auto. Ins. Co.

Charles W. Brooke, Noyes & Obrien, Davenport, IA, for Daniel E. Cahill.

J. Bryan Schulte, Ruther Bauer Schulte & Hahn, Burlington, IA, Mary Ann Brown, Bauer Schulte Hahn, Burlington, IA, for Kelly Joseph Weber.

ORDER

LONGSTAFF, District Judge.

THE COURT HAS BEFORE IT a motion for summary judgment, submitted by the defendant on May 16, 1994. Plaintiffs resisted defendant's motion with a cross-motion for summary judgment on June 10, 1994. The court held a telephonic hearing on July 26, 1994.

I. BACKGROUND

On November 28, 1988, Richard Weber was driving his car on the highway when he crossed the center line and had a head-on collision with another vehicle. At the time of the accident Richard Weber was accompanied by his wife, Mary Weber, and his three minor sons, Tommy, age nine, Patrick, age thirteen, and Kelly, age seventeen. Richard, Mary and Tommy were killed in the accident. Patrick and Kelly Weber sustained various injuries.

Edith Kelly, grandmother of the Weber children, was appointed guardian and conservator for the surviving minor children, Patrick and Kelly, on December 5, 1988. The defendant states that Robert Todd was retained by the Weber family to represent the legal interests of the three decedents' estates and the two surviving children. (Defendant's Statement of Undisputed Facts p. 1-2). The plaintiffs dispute this, claiming Todd was appointed administrator of the estates by the Iowa District Court and Edith Kelly asked for his assistance in obtaining her appointment as the conservator and guardian for the surviving children. (Plaintiffs' Response to Defendant's Statement of Undisputed Facts pp. 13-14). The plaintiffs state that at Edith Kelly's request Todd did assist with the opening and administration of the guardianships and conservatorships. (Plaintiffs' Response to Defendant's Statement of Undisputed Facts pp. 13-14).

When informed of the accident, State Farm opened files for coverage on collision, medical payments, funeral benefits and uninsured motorist coverage under the Weber automobile policy. (Defendant's Undisputed Facts p. 2). Steve Logan, a State Farm claim representative, was assigned to handle the claims from the Weber collision. (Plaintiffs' Statement of Undisputed Facts p. 2). On December 6, 1988, Logan telephoned Todd and left a message with Todd's secretary that he was handling the file and Todd should contact Logan "when he's ready." (Plaintiffs' Exhibit 118-1). On December 7, 1988, Logan told Todd during a telephone conversation about policy coverage available for the payment of medical expenses, funeral expenses and collision damages. (Plaintiffs'

873 F. Supp. 203
Statement of Undisputed Facts p. 4, Plaintiffs' Exhibit 118-1). At that time, Logan knew the plaintiffs had potential claims under the insurance policy's uninsured motorist provision, but did not discuss this coverage with Todd. (Defendant's Statement of Undisputed Facts p. 2)

On January 5, 1989, Logan telephoned Todd to arrange a personal meeting. (Plaintiffs' Statement of Undisputed Facts p. 6). Todd and Logan met on January 6, 1989, at Todd's office. The meeting included a discussion of insurance coverage. Although there is some dispute between the parties regarding how and what Todd asked Logan about the family exclusion provision in the policy, both agree that Logan pointed out the family exclusion to liability coverage language to Todd at the meeting. (Defendant's Statement of Undisputed Facts p. 3, Plaintiffs' Statement of Undisputed Facts p. 6). However, Logan did not inform Todd that coverage existed under the uninsured motorist provision of the policy, even though Logan knew that Iowa case law required this coverage. See Rodman v. State Farm Mutual Auto. Ins. Co., 208 N.W.2d 903 (Iowa 1973) (allowing the insured to recover under the uninsured motorist provision of an automobile insurance policy when the insured's recovery would otherwise be barred by a family exclusion in the insurance policy). Logan admits that there was never any doubt that the uninsured motorist coverage applied to the Weber claim. (Plaintiffs' Exhibit D — Logan's Deposition p. 77). State Farm representatives thought that Todd was unaware or did not understand the uninsured motorist coverage under the Rodman case. (Defendant's Statement of Undisputed Facts p. 3).

Prior to the January 6, 1989, meeting with Todd, Logan discussed the plaintiffs' coverage under the policy with his supervisor, Lloyd Cleven. Exactly what Cleven instructed Logan regarding disclosure of the uninsured motorist coverage is disputed by the parties. Cleven instructed Logan that he was not obligated to explain the law to attorneys. (Defendant's Statement of Undisputed Facts pp. 3-4).

On April 3, 1989, Edith Kelly hired attorney Daniel Cahill. (Plaintiffs' Statement of Undisputed Facts p. 9). The plaintiffs assert Cahill was hired to investigate possible claims the Weber children had from the November 28, 1988 collision. Id. The defendant disputes this, claiming Cahill was hired to investigate insurance coverage for the Weber family. (Defendant's Response to Plaintiffs' Statement of Undisputed Facts p. 5). This Court's examination of Cahill's deposition indicates that he was hired to find money in the form of insurance coverage for the two Weber children. (Plaintiffs' Exhibit I — Cahill's Deposition p. 66). Cahill contacted State Farm on April 7, 1989, requesting a copy of the insurance policy. (Plaintiffs' Exhibit 31 — Cahill's Letter). In the letter Cahill stated that he was trying to discover whether the two surviving Weber children had any claim against State Farm. Id. Logan wrote back to Cahill on April 10, 1989, stating he did not have a copy of Weber's actual policy, but would enclose a copy of a sample policy containing the same provisions. (Plaintiffs' Statement of Undisputed Facts p. 10). The sample policy Logan sent Cahill highlighted the family exclusion language. Id. See also Plaintiffs' Exhibit 33A-6 (showing the highlighted portions of the policy).

A copy of Logan's letter to Cahill was also sent to Cleven. Once Cleven reviewed the copy, he informed Logan that it was necessary to send a follow-up letter disclosing all coverage under the policy. (Plaintiffs' Statement of Undisputed Facts p. 10). Logan sent both Cahill and Todd a letter on May 5, 1989. The parties dispute the clarity of that letter regarding the disclosure of the applicability of uninsured motorist coverage under the policy. Logan wrote a second letter to Cahill on May 16, 1989, which again discussed the uninsured motorist coverage under the policy. A progress report prepared by Logan on May 19, 1989, noted: "I have informed Mr. Cahill that U uninsured coverage would apply. Mr. Cahill indicated he was happy that I have responded so quickly to his requests and I got no indication he felt we had tried to hide anything." (Plaintiffs' Exhibit 56). On May 8, 1989, Todd telephoned Logan to ask who Cahill represented. (Plaintiffs' Statement of Undisputed Facts p. 11). Logan wrote in his claim activity log on

873 F. Supp. 204
May 8, 1989, "Atty Todd ph — got my letter; wanted to know who Cahill represents; also asked if we were paying Mo. clmt. under A. Told him yes! I still don't think he has caught on yet." (Plaintiffs' Exhibit 118-4 — Logan's Activity Log)

After receiving the information regarding uninsured motorist coverage, Cahill filed a lawsuit on May 19, 1989, against Richard Weber's estate on behalf of the estates of Mary Weber and Thomas Lee Weber, and the conservatorships of Patrick Weber and Kelly Weber. This case was settled in November, 1989, for $185,000. There is some dispute between the parties as to whether the Webers released all claims under the policy in the settlement, including claims against State Farm. The present suit was filed on March 2, 1990, by the plaintiffs against the defendant alleging first-party bad faith.

II. DISCUSSION OF APPLICABLE LAW

A. Summary Judgment

Summary judgment is properly granted when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party must establish its right to judgment with such clarity there is no room for controversy. Jewson v. Mayo Clinic, 691 F.2d 405, 408 (8th Cir.1982). "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). An issue is "genuine," if the evidence is sufficient to persuade a reasonable jury to return a verdict for the non-moving party. Id. at 248, 106 S.Ct. at 2510. "As to materiality, the substantive law will identify which facts are material.... Factual disputes that are irrelevant or unnecessary will not be counted." Id.

B. First-Party Bad Faith Claims

The Iowa Supreme Court has followed the majority of jurisdictions in recognizing a tort claim for first-party bad faith. Dolan v. Aid Insurance Co., 431 N.W.2d 790 (Iowa 1988). First-party bad faith occurs when an insurance company intentionally denies or fails to process its insured's claim without a...

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11 practice notes
  • Hanna v. Fleetguard, Inc., No. C 95-3020.
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • August 23, 1995
    ...insured's claim without reasonable basis for that action.7 Dolan, 431 N.W.2d at 792; see also Weber v. State Farm Mut. Auto. Ins. Co., 873 F.Supp. 201, 204 (S.D.Iowa 1994) (citing Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d 250, 253 (Iowa 1991), in turn, citing Anderson v. Continen......
  • Grasshopper Natural Med., LLC v. Hartford Cas. Ins. Co., No. CIV 15-0338 JB/CEG
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
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    ...aspect of the covenant of good faith and fair dealing is commonly found in insurance cases. See Weber v. State Farm Mut. Auto. Ins. Co., 873 F. Supp. 201, 208 (S.D. Iowa 1994)(duty to disclose coverage); Sears Mortgage Corp. v. Rose, 134 N.J. 326, 634 A.2d 74, 86 (1993)(obligation to disclo......
  • 1999 -NMSC- 6, Allsup's Convenience Stores, Inc. v. North River Ins. Co., No. 22,621
    • United States
    • New Mexico Supreme Court of New Mexico
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    ...aspect of the covenant of good faith and fair dealing is commonly found in insurance cases. See Weber v. State Farm Mut. Auto. Ins. Co., 873 F.Supp. 201, 208 (S.D.Iowa 1994) (duty to disclose coverage); Sears Mortgage Corp. v. Rose, 134 N.J. 326, 634 A.2d 74, 86 (1993) (obligation to disclo......
  • Woodke v. Dahm, No. C 94-4050.
    • United States
    • United States District Courts. 4th Circuit. Northern District of West Virginia
    • January 17, 1995
    ...over which this court has subject matter jurisdiction. Specifically, Woodke has stated a claim of "reverse passing off," or selling of 873 F. Supp. 201 his trailers as those of the defendants, in violation of § 43 of the Lanham Act, 15 U.S.C. § 1125. Thus, the Florida defendants' motion to ......
  • Request a trial to view additional results
11 cases
  • Hanna v. Fleetguard, Inc., No. C 95-3020.
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • August 23, 1995
    ...insured's claim without reasonable basis for that action.7 Dolan, 431 N.W.2d at 792; see also Weber v. State Farm Mut. Auto. Ins. Co., 873 F.Supp. 201, 204 (S.D.Iowa 1994) (citing Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d 250, 253 (Iowa 1991), in turn, citing Anderson v. Continen......
  • Grasshopper Natural Med., LLC v. Hartford Cas. Ins. Co., No. CIV 15-0338 JB/CEG
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • July 7, 2016
    ...aspect of the covenant of good faith and fair dealing is commonly found in insurance cases. See Weber v. State Farm Mut. Auto. Ins. Co., 873 F. Supp. 201, 208 (S.D. Iowa 1994)(duty to disclose coverage); Sears Mortgage Corp. v. Rose, 134 N.J. 326, 634 A.2d 74, 86 (1993)(obligation to disclo......
  • 1999 -NMSC- 6, Allsup's Convenience Stores, Inc. v. North River Ins. Co., No. 22,621
    • United States
    • New Mexico Supreme Court of New Mexico
    • December 3, 1998
    ...aspect of the covenant of good faith and fair dealing is commonly found in insurance cases. See Weber v. State Farm Mut. Auto. Ins. Co., 873 F.Supp. 201, 208 (S.D.Iowa 1994) (duty to disclose coverage); Sears Mortgage Corp. v. Rose, 134 N.J. 326, 634 A.2d 74, 86 (1993) (obligation to disclo......
  • Woodke v. Dahm, No. C 94-4050.
    • United States
    • United States District Courts. 4th Circuit. Northern District of West Virginia
    • January 17, 1995
    ...over which this court has subject matter jurisdiction. Specifically, Woodke has stated a claim of "reverse passing off," or selling of 873 F. Supp. 201 his trailers as those of the defendants, in violation of § 43 of the Lanham Act, 15 U.S.C. § 1125. Thus, the Florida defendants' motion to ......
  • Request a trial to view additional results

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