Preferred Marketing, Inc., D/B/A Broken Arrow Wear v. Le Mars Insurance Company

IN THE COURT OF APPEALS OF IOWA

No. 16-1733
Filed August 2, 2017

PREFERRED MARKETING, INC., d/b/a BROKEN ARROW WEAR,
Plaintiff-Appellant,

vs.

LE MARS INSURANCE COMPANY,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, David Porter, Judge.

An insured appeals the district court’s grant of summary judgment in favor

of the insurer, wherein the court found the insured’s business owners insurance

policy’s two-year limitations period barred the insured’s suit. AFFIRMED.

David E. Brick of Brick Gentry, P.C., West Des Moines, for appellant.

Rene Charles Lapierre and Ryland Deinert of Klass Law Firm, L.L.P.,

Sioux City, for appellee.

Considered by Vogel, P.J., and Doyle and McDonald, JJ.
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DOYLE, Judge.

Preferred Marketing, Inc. (Preferred) appeals the district court’s grant of

summary judgment in favor of Le Mars Insurance Company (Le Mars). Preferred

contends the district court erred in finding its suit against Le Mars was barred by

the two-year limitations period contained in the insurance policy issued to

Preferred by Le Mars. We affirm.

I. Background Facts and Proceedings.

In June 2013, a lightning strike damaged computer equipment owned by

Preferred. Preferred filed a claim with its insurer, Le Mars. Le Mars paid a

portion of the claim. A dispute arose, and Le Mars declined to make any

additional payments on the claim. On February 10, 2016, Preferred filed suit

against Le Mars seeking, among other things, compensation for damages related

to Preferred’s business interruption, restoration costs, and loss of profits resulting

from the lightning strike.

Le Mars answered and subsequently filed a motion for summary

judgment. Le Mars asserted it was entitled to summary judgment in its favor

because Preferred failed to file its lawsuit within the policy’s two-year limitations

period.1 Preferred resisted the motion. Though it admitted the policy did contain

a two-year limitations period, Preferred claimed Le Mars “never disclosed the

limitation period to [Preferred] when entering into the policy,” Le Mars did not

1
The policy provides:
4. Legal Action Against Us
No one may bring a legal action against us under this insurance unless:
a. There has been full compliance with all of the terms of this
insurance; and
b. The action is brought within 2 years after the date on which the
direct physical loss or damage occurred.
 3

include the limitation period “in the declarations or renewal documents,” Le Mars

did not inform Preferred of the contractual limitation period after Preferred

submitted its loss claim, and when Le Mars refused to make any additional

payments under the policy, it never informed Preferred that it had two years from

the date of the loss to file a lawsuit. Preferred asserted Le Mars violated its

obligation to “fully disclose” all provisions of the policy and should be barred from

asserting the limitation as a defense. Preferred also contended that because the

two-year limitation period in the policy did not “line up” with the five-year

statutory-limitation period for injuries to property, see Iowa Code § 614.1(4)

(2016), the policy’s limitation period was unreasonable. Preferred also argued

the limitations period was unreasonable because Preferred had no opportunity to

negotiate the limitation with Le Mars.

Following a hearing, the district court entered its ruling granting Le Mars’s

motion. The court found the policy contained the two-year limitations period, and

Preferred was therefore bound by the contract even if it did not expressly accept

all of the contract provisions or was unaware of them. Additionally, the court

concluded that, “[d]espite indulging in every legitimate inference the evidence”

would bear, none of the factors contributing to a finding of unconscionability in

the bargaining process, “nor any other fact provided by the parties, indicate the

bargaining process or any part of the policy [was] unconscionable.” The court

found nothing “bizarre or oppressive” about the shortened two-year policy

limitation. The court also determined, insofar as the policy was a contract of

adhesion, Preferred “failed to satisfy its burden to prove the reasonable

expectation doctrine.” Since Preferred was required to file its suit against Le
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Mars within two years after the date of its loss and it failed to do so, the court

granted summary judgment in favor of Le Mars.

Thereafter, Preferred filed a motion to amend or enlarge the district court’s

ruling pursuant to Iowa Rule of Civil Procedure 1.904(2). It argued

the Court neglected to [make] findings on [Preferred’s] argument
that [Le Mars’s] failure to disclose or provide notice of the
contractual limitation period in the policy acts to prevent [Le Mars]
from relying on such pertinent provision of the policy in order to
avoid liability under or dismiss [Preferred’s] claims.

Citing Iowa Administrative Code rule 191-15.41(1) (2013), Preferred argued that

when a claim is presented, property and casualty insurers in Iowa “shall fully

disclose to first-party claimants all pertinent benefits, coverages or other

provisions of a policy or contract under which a claim is presented.” Preferred

asserted

[Le Mars] never disclosed the contractual limitation period to
[Preferred] when entering into the policy. Furthermore, the
contractual limitation period was not included in the declarations or
renewal documents. Further and most importantly, when
[Preferred] submitted [its] claim for the current loss, [it] was not
informed of the contractual limitation period. Finally, when [Le
Mars] rejected any additional payments under the policy, [Le Mars]
never informed [Preferred] that [it] had two years from the date of
the loss to file [its] lawsuit. [Le Mars] never disclosed the claim
limitation of the policy once the claim was made by [Preferred], and
as such, violated its obligation to “fully disclose” all pertinent
provisions of a policy under which a claim is presented.

Preferred argued Le Mars was equitably estopped from now asserting the

contractual time limitation as a defense.

Le Mars resisted. It contended the district court found that Le Mars

disclosed the terms of its policy when it provided the policy to Preferred and that

Preferred did not deny that Le Mars provided Preferred with a copy of the policy
 5

“when they entered into their contractual relationship.” Le Mars contended it

complied with rule 191-15.41(1) when it provided a copy of the policy to

Preferred. Further, Le Mars pointed out that Preferred was represented by

previous counsel during the claims process. It also cited Iowa Supreme Court

precedent, which holds an insurer does not have a duty to warn an insured that

the time period for filing suit is running out.

After a hearing, the court denied Preferred’s motion. The court found it

was “undisputed” that Le Mars furnished a written copy of the entire policy to

Preferred at the time the policy was purchased—some three months prior to the

date of the loss. The court did not buy Preferred’s argument that Le Mars was

under an obligation to make an additional disclosure of the contractual-limitation

provision when Preferred presented its claim. Additionally, the court found

there is no evidence in this record regarding 1) what (if any)
consideration or investigation [Preferred’s] counsel gave to the
statute of limitations, 2) what time period [Preferred’s] counsel
thought he had to bring suit, 3) whether [Preferred’s] counsel was
aware the policy had a “two years after the date on which the direct
physical loss or damage occurred” statute of limitations, and 4)
whether [Preferred’s] counsel contacted [Le Mars] or [Le Mars’s]
counsel to obtain a copy of the policy (or if not, why not).

The district court concluded Preferred failed to make the requisite showing to

support a claim of equitable estoppel. The court once again found Le Mars was

entitled to judgment as a matter of law, and it denied Preferred’s motion to

reconsider.

Preferred now appeals, arguing the district court erred in finding Le Mars

“provided the required disclosure of the contractual limitations period and was not

barred from relying on the contractual limitations period.” Preferred also
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contends the court erred in finding it was reasonable to enforce the policy’s two-

year limitations period.

II. Standard of Review.

The appellate courts review rulings on motions for summary judgment for

correction of errors at law. See Homan v. Branstad, 887 N.W.2d 153, 163 (Iowa

2016). Summary judgment is appropriate when the pleadings, depositions,

answers to interrogatories, admissions on file, and affidavits show there is no

genuine issue of material fact, and the moving party is entitled to a judgment as a

matter of law. Iowa R. Civ. P. 1.981(3); Mueller v. Wellmark, Inc., 818 N.W.2d

244, 253 (Iowa 2012). The district court’s findings of fact are binding on us if

supported by substantial evidence. Iowa R. App. P. 6.904(3)(a). If the moving

party has shown there is no genuine issue regarding any material fact, entitling

the moving party to judgment as a matter of law, summary judgment is

appropriate. See Iowa R. Civ. P. 1.981(3). Therefore, our review is limited to

two questions: (1) whether there is a genuine dispute regarding the existence of

a material fact, and (2) whether the district court correctly applied the law to the

undisputed facts. See Homan, 887 N.W.2d. at 164.

A fact is material if it may affect the lawsuit’s outcome. See id. There is a

genuine dispute as to the existence of a fact if reasonable minds can differ as to

how the factual question should be resolved. See id. “Even if facts are

undisputed, summary judgment is not proper if reasonable minds could draw

from them different inferences and reach different conclusions.” Walker Shoe

Store v. Howard’s Hobby Shop, 327 N.W.2d 725, 728 (Iowa 1982).
 7

In reviewing summary judgment rulings, we view the record in the light

most favorable to the nonmoving party. See Homan, 887 N.W.2d at 163-64.

This includes drawing all legitimate inferences that the record supports in favor of

the nonmoving party. See id. at 164. The nonmoving party is also given the

benefit of any doubt in determining whether granting summary judgment is

appropriate. See Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct.

App. 1994). We therefore view the record in the light most favorable to

Preferred, the nonmoving party. See id.

III. Discussion.

A. Validity of Policy’s Two-Year Limitations Period.

We first address whether the policy’s two-year limitation is valid, for if it is

not, it is dispositive of the appeal. Because Preferred’s property and casualty

claims are contractual, they are presumptively subject to a ten-year statute of

limitations. Iowa Code § 614.1(5). The Iowa Supreme Court has “held that

parties to an insurance contract can modify the deadline for bringing suit,” but the

limitation is only enforceable if reasonable. Osmic v. Nationwide Agribusiness

Ins. Co., 841 N.W.2d 853, 858-59 (Iowa 2014). In the context of uninsured (UM)

and underinsured (UIM) claims, the supreme court has held a contractual two-

year limit on filing suit to be reasonable. See id. at 859 (“In certain prior cases,

we have upheld contractual limitations provisions that require suit to be brought

for UIM or uninsured motorist . . . benefits within two years of the accident.

There is no question that the two-year contractual limit was reasonable in this

case.” (citations omitted)). We note the contractual two-year limit in those cases

mirrors the two-year statute of limitations for personal injuries. See Iowa Code
 8

§ 614.1(2). But here, the statute of limitations for injuries to property is five

years. See id. § 614.1(4). So, unlike the UM and UIM cases, the policy’s two-

year contractual limitation does not mirror the five-year property damage statute

of limitations. Our supreme court has upheld the validity of one-year contractual

limitations in property damage cases. See Stahl v. Preston Mut. Ins. Ass., 517

N.W.2d 201, 202 (Iowa 1994) (noting the policy at issue was modeled after the

statutory standard fire insurance policy form which provided suit to be filed “within

twelve months next after inception of the loss,” citing what is now Iowa Code

§ 515.109 (2017)); see also Davidson v. Wal-Mart Assocs. Health & Welfare

Plan, 305 F. Supp. 2d 1059, 1070 (S.D. Iowa 2004) (finding a one-year

contractual limitations period was enforceable under Iowa law if reasonable, even

though claims for benefits are considered contractual and subject to the statutory

ten-year statute of limitations). Based upon Osmic and cases cited therein, we

conclude the two-year contractual limit is reasonable here. See 841 N.W.2d at

858-59. We move on to consider the balance of Preferred’s arguments.

B. Disclosure.

On appeal Preferred argues the district court erroneously found that Le

Mars adequately disclosed the policy’s contractual limitations period as required

under Iowa law and was not barred from reliance of such limitations period.

Under Iowa’s Insurance Trade Practices Act, found in Iowa Code chapter 507B,

the Iowa Insurance Division promulgated administrative rule 191-15.41(1)

requiring property and casualty insurers to “fully disclose to first-party claimants

all pertinent benefits, coverages or other provisions of a policy or contract under

which a claim is presented.” Here, Preferred, the policy holder, is the first-party
 9

claimant. Preferred contends “[t]he language of [r]ule 191-15.41(1) provides that

a property or casualty insurer must expressly disclose pertinent benefits and

provisions of a policy once a claim is presented under the policy.” Preferred

contends that after it presented its claim to Le Mars, it was not informed of the

contractual-limitation period until Le Mars furnished a full copy of the policy after

filing its motion for summary judgment. And since no timely post-claim disclosure

was made, Preferred argues Le Mars is equitably estopped from asserting the

suit is time barred by the shortened contractual-limitations period. Le Mars

contends all it “was required to do under [the rule] was to provide its business

owners policy to [Preferred] at the time it was procured.”

The parties disagree on whether Le Mars provided the policy to Preferred

at any point in time. In this regard, the record is long on lawyer talk, but short on

facts. The disagreement is immaterial, however. It is well-settled that a party is

bound by the terms and conditions of a contract whether or not the party actually

took the opportunity to read the contract. See Peak v. Adams, 799 N.W.2d 535,

543 (Iowa 2011). It is also well-settled that “an insurer does not have the duty to

warn its policyholders that the time period for filing suit against it is running out.”

Osmic, 841 N.W.2d at 861. Absent a specific request by the insured for the

policy or relevant policy provision and a denial of the request by the insurer, the

limitations period is thus valid and enforceable. See id at 862 (stating “an insurer

has no affirmative obligation to disclose a contractual limitations period, such as

by providing a copy of the insurance policy, absent a specific request”). Here,

although Preferred contends Le Mars may not have provided a copy of the policy

(although it even hedges on that issue), it does not contend it ever requested a
 10

copy of the policy. Accordingly, the issue of disclosure is immaterial in this case

and the limitation period is enforceable.

C. Equitable Estoppel.

To successfully establish equitable estoppel, the plaintiff has the burden to

show by clear and convincing evidence:

(1) The defendant has made a false representation or has
concealed material facts; (2) the plaintiff lacks knowledge of the
true facts; (3) the defendant intended the plaintiff to act upon such
representations; and (4) the plaintiff did in fact rely upon such
representations to his prejudice.

Osmic, 841 N.W.2d at 864 (citations omitted). Preferred argues Le Mars should

be equitably estopped and barred from now asserting the policy’s suit-limitation

provision as a defense because Le Mars allegedly violated rule 191-15.41(1).

Even if Le Mars violated rule 191-15.41(1), that violation would not be sufficient,

in and of itself, to equitably estop Le Mars from enforcing the policy’s suit-

limitation provision.

Our supreme court has held that the complete failure to provide the policy

to the insured would not preclude enforcement of the policy’s limitations clause

so long as the insurer did not deny a request for the policy. See Osmic, 841

N.W.2d at 862. Specifically, Osmic says:

Where the insurer wrongfully and unjustifiably withholds the
policy from the insured, the insurer may be estopped from relying
on the suit limitation clause. . . .
On the other hand, an insurer’s failure to provide a copy of a
policy did not create a waiver or estoppel regarding the policy’s
limitation provision under the following circumstances:
....
There was no request for a copy of the policy.
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17 Lee R. Russ & Thomas F. Segalla, Couch on Insurance
3d § 238:22, at 238-40 to -41 (2005) [hereinafter Couch on
Insurance 3d].

Id. Here, there is no evidence in the summary judgment record that Preferred

requested a copy of the policy and was refused by Le Mars. Under the record

before us, the following passage from Osmic is dispositive of this appeal.

We find that summary judgment record insufficient to raise a
genuine issue of material fact as to equitable estoppel. The record
does not show misrepresentation or concealment, nor does it show
plaintiff’s reliance on a misrepresentation or concealment.
Nationwide did not refuse to provide a copy of the policy (which
contains the UIM endorsement); rather, Esad’s counsel never
asked for one.
“[F]ailure to provide a copy of a policy [does] not create [an]
estoppel regarding the policy’s limitation provision . . . [when]
[t]here was no request for a copy of the policy.” 17 Couch on
Insurance 3d § 238:22, at 238-41. . . .

Id. at 864 (alterations in original) (internal citations omitted).

Like the Osmic court, we find the summary-judgment record insufficient to raise a

genuine issue of material fact as to equitable estoppel.

IV. Conclusion.

The policy’s two-year suit limitations period is valid and enforceable.

Preferred has not established evidence of conduct amounting to estoppel.

Because the district court did not err in determining Le Mars was entitled to

summary judgment as a matter of law, we affirm its judgment.

AFFIRMED.