Lester Dunigan v. Liberty Mutual Insurance Company d/b/a Liberty Mutual Fire Insurance Company

IN THE COURT OF APPEALS OF IOWA

No. 18-0692
Filed June 5, 2019

LESTER DUNIGAN,
Plaintiff-Appellant,

vs.

LIBERTY MUTUAL INSURANCE COMPANY d/b/a LIBERTY MUTUAL FIRE
INSURANCE COMPANY,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Paul D. Scott, Judge.

Lester Dunigan appeals the adverse summary judgment ruling on his claim

for underinsured motorist insurance coverage against Liberty Mutual Insurance

Company. AFFIRMED.

Zachary C. Priebe and Jeff Carter of Jeff Carter Law Offices, P.C., Des

Moines, for appellant.

Benjamin T. Erickson and Andrew D. Hall of Grefe & Sidney. P.L.C., Des

Moines, for appellee.

Heard by Vogel, C.J., and Mullins and Bower, JJ.
2

MULLINS, Judge.

Lester Dunigan appeals the adverse summary judgment ruling on his claim

for underinsured motorist coverage against Liberty Mutual Insurance Company

(Liberty Mutual). He argues the district court erred by applying Illinois law to the

insurance policy, contending the plain language of the policy requires the

application of Iowa law. Further, he argues Liberty Mutual failed to obtain a written

declination of underinsured motorist coverage as required by Iowa Code section

516A.1 (2014), which results in underinsured motorist coverage being read into his

policy.

I. Background Facts and Proceedings

On October 8, 1997, Lester Dunigan and his wife Ella completed and signed

an application for motor vehicle insurance covering multiple vehicles with Liberty

Mutual. The application provided the insurance would commence at 12:01 a.m.

on October 9. Dunigan’s address on the application was in Rock Island, Illinois,

and the application indicated that he provided an Illinois driver’s license. The

insurance coverage’s liability limit for uninsured motorists was $20,000 to $40,000

with no coverage for underinsured motorists, as indicated by a line through the

designated box. The application also included a provision that stated, “I reject

uninsured and underinsured motorists coverage equal to my bodily injury liability

limits and instead select the limits indicated on my option form.” The box next to

the line was not checked, but Dunigan’s signature appears on the signature line

immediately below the provision.

On a separate page noted as “3 of 5” and titled “Uninsured Motorists

Property Damage Coverage,” two options were provided “[i]f you do not have
3

Collision Coverage.” Option 1 allowed for the election of coverage on specific

vehicles. Option 2 was the rejection of coverage for all vehicles. Neither option

was selected on the form. The form also included the following paragraph:

I am aware, unless I indicate otherwise to Liberty Mutual in
writing, that my coverage choices of Uninsured Motorists Coverage,
Underinsured Motorists Coverage, and Uninsured Motor Vehicle
Property Damage coverage shall apply throughout the policy period,
regardless of any changes such as the replacement or addition of
vehicles or drivers, and to all renewals, amendments, replacements
or reinstatements of this policy.

Dunigan signed his name on the signature line below the paragraph. A fourth form,

noted “Dunigan” and “4 of 5” at the top, provided:

We recommend that you maintain UNINSURED MOTORISTS
COVERAGE limits equal to your bodily injury limits. . . .
Please be aware that any summary of coverage on these
pages is necessarily general in nature. Your policy contains
specific definitions, exclusions, terms, and conditions. In case
of any conflict, your policy language will control the resolution of any
coverage questions. If you have any questions about this coverage
or its cost, please contact your local Liberty Mutual Sales Office
before completing this form.
Listed below are the available single and separate limits of
UNINSURED and UNDERINSURED MOTORISTS COVERAGE and
the applicable premium for each. Please check the box next to the
limits you wish to select.

The form allowed Dunigan the option to either: (1) “elect Uninsured Motorists

Bodily Injury Coverage at the minimum financial responsibility limits required by

Illinois law. ($20,000 per person and $40,000 per accident)” or (2) “elect an

Uninsured Motorists Bodily Injury Coverage limit and Underinsured Motorists

Bodily Injury Coverage limit equal to or lower than the liability limit of my policy.”

The second option included a note: “The charges for all Limits below include both

Uninsured Motorists Bodily Injury Coverage and Underinsured Motorists Bodily

Injury Coverage.” The first option was marked on the form. There were no initials
4

or signature on the page. The record provides that the insurance policy was

renewed yearly, including on October 9, 2014.

On February 9, 2015, Dunigan was involved in a traffic accident at the

intersection of 19th Street and College Avenue in Des Moines. Dunigan was

driving north on 19th Street, a one-way street. A driver heading east on College

Avenue stopped at the stop sign at the intersection with 19th Street and continued

through the intersection but failed to yield to Dunigan as he proceeded through the

intersection. There was no stop sign for traffic heading north on 19th Street at the

intersection. The driver hit Dunigan on the driver’s side. The police report

identified that both vehicles sustained minor damage and the other driver took

complete responsibility for the accident. The accident form listed Rock Island,

Illinois as both Dunigan’s home and vehicle registration address. Dunigan’s

driver’s license was listed as an Illinois license.

Following the accident, Dunigan settled his claim against the other driver

for the liability policy limits of the other driver’s auto insurance policy. Dunigan filed

suit against Liberty Mutual in February 2017 to recover under the uninsured and

underinsured motorist benefits provisions of his insurance policy. He claimed his

sustained damages exceeded the liability limits of the other driver’s insurance

policy. In November, Liberty Mutual moved for summary judgment. It claimed

Illinois law applied and under Illinois law, because Dunigan elected to carry only

the statutory minimum amount of uninsured motorist insurance coverage, it was

not contractually obligated to provide underinsured motorist coverage. Further, it

was not required to ask for or obtain a rejection each time the policy came up for

renewal. Dunigan resisted the motion, arguing that Iowa law applied and, under
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Iowa Code section 516A.1, underinsured coverage must be read into his policy

because Liberty Mutual failed to obtain his written rejection of the coverage.

The court heard the motion in January 2018 and filed its ruling in April. The

court identified that the only issue before it was “whether Illinois law or Iowa law

governs the insurance policy at issue.” The district court found there was no

choice-of-law provision in the insurance policy, therefore it applied the “most

significant relationship” test to determine which state’s laws governed the policy.

See Gabe’s Constr. Co. v. United Capitol Ins. Co., 539 N.W.2d 144, 146 (Iowa

1995); see also Restatement (Second) of Conflict of Laws § 188(1)–(2) (Am. Law

Inst. 1971). The district court concluded, even when viewing the facts in the light

most favorable to Dunigan, Illinois law controlled the policy. It found that under

Illinois law, Dunigan properly rejected underinsured motorist coverage when he

applied for the initial insurance policy, continued to reject the coverage when

renewing the policy, and consequently, he did not have underinsured motorist

coverage at the time of the accident. Based upon its findings, the court granted

Liberty Mutual’s motion for summary judgment. Dunigan appeals.

II. Standard of Review

“We review grants of summary judgment for correction of errors at law.”

United Suppliers, Inc. v. Hanson, 876 N.W.2d 765, 772 (Iowa 2016). Further, “the

interpretation of an insurance policy is a matter of law,” and consequently, our

review “is for errors at law.” Greenfield v. Cincinnati Ins. Co., 737 N.W.2d 112,

117 (Iowa 2007).

“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.”
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Hanson, 876 N.W.2d at 772. In reviewing a district court’s determination that the

defendants met their burden under this standard, “we view the evidence in a light

most favorable to the nonmoving party.” Merriam v. Farm Bureau Ins., 793 N.W.2d

520, 522 (Iowa 2011) (quoting Langwith v. Am. Nat’l Gen. Ins. Co., 793 N.W.2d

215, 218 (Iowa 2010)). “In deciding whether there is a genuine issue of material

fact, the court . . . afford[s] the nonmoving party every legitimate inference the

record will bear.” Kern v. Palmer Coll. of Chiropractic, 757 N.W.2d 651, 657 (Iowa

2008) (alteration in original) (quoting Smidt v. Porter, 695 N.W.2d 9, 14 (Iowa

2005)).

III. Analysis

A. Applicable Law

Dunigan asserts the district court erred in failing to consider the plain

language of his insurance policy when determining whether Iowa law applies to his

insurance policy. He further argues his ties to Iowa and his understanding of the

insurance policy require the application of Iowa law.

In support of its ruling, the district court cited Gabe’s Construction Company

v. United Capitol Insurance Company, , which stated that we look to “intent of the

parties or the most significant relationship” when determining “choice-of-law issues

in insurance policy cases.” 539 N.W.2d at 146. “In the absence of a choice-of-law

clause in the policy, the rights of the parties are determined by the law of the state

which ‘has the most significant relationship to the transaction and the parties.’” Id.

(quoting Restatement (Second) of Conflict of Laws § 188(1)).
7

Dunigan argues that the out-of-state provision in his insurance policy

operates as a general choice-of-law provision and therefore Iowa law should apply

to determine Liberty Mutual’s coverage obligations. The provision requires:

If an auto accident to which this policy applies occurs in any
state or province other than the one in which “your covered auto” is
principally garaged, we will interpret your policy for that accident as
follows:
A. If the State or province has:
....
2. A compulsory insurance or similar law requiring a
nonresident to maintain insurance whenever the nonresident
uses a vehicle in that state . . ., your policy will provide at least
the required minimum amounts and types of coverage.

Dunigan contends that Iowa law requires a written rejection of underinsured

motorist coverage, pursuant to Iowa Code section 516A.1,1 and given that he

1 Section 516A.1 reads as follows:
No automobile liability or motor vehicle liability insurance policy
insuring against liability for bodily injury or death arising out of the
ownership, maintenance, or use of a motor vehicle shall be delivered or
issued for delivery in this state with respect to any motor vehicle registered
or principally garaged in this state, unless coverage is provided in such
policy or supplemental thereto, for the protection of persons insured under
such policy who are legally entitled to recover damages from the owner or
operator of an uninsured motor vehicle or a hit-and-run motor vehicle or an
underinsured motor vehicle because of bodily injury, sickness, or disease,
including death resulting therefrom, caused by accident and arising out of
the ownership, maintenance, or use of such uninsured or underinsured
motor vehicle, or arising out of physical contact of such hit-and-run motor
vehicle with the person insured or with a motor vehicle which the person
insured is occupying at the time of the accident. Both the uninsured motor
vehicle or hit-and-run motor vehicle coverage, and the underinsured motor
vehicle coverage shall include limits for bodily injury or death at least equal
to those stated in section 321A.1, subsection 11. The form and provisions
of such coverage shall be examined and approved by the commissioner of
insurance.
However, the named insured may reject all of such coverage, or
reject the uninsured motor vehicle (hit-and-run motor vehicle) coverage, or
reject the underinsured motor vehicle coverage, by written rejections
signed by the named insured. If rejection is made on a form or document
furnished by an insurance company or insurance producer, it shall be on a
separate sheet of paper which contains only the rejection and information
directly related to it. Such coverage need not be provided in or
8

provided no written rejection of the coverage to Liberty Mutual, the coverage must

be read into his policy.

The district court determined the out-of-state clause in Dunigan’s insurance

policy did not constitute a choice-of-law provision. On our review of the record, we

agree. We find that the provision highlighted by Dunigan does not amount to an

agreement that the law of Iowa would apply to this case.

An examination of the language contained in the “out of state”
coverage provision of the instant policy reveals that it was not
intended to be a choice of law provision. Indeed, the provision
contains no language mandating that the policy be interpreted
according to the law of the state where the accident occurred.
Rather, the plain language of the “out of state” coverage provision
provides that, in the event an accident occurs in a state that has a
financial responsibility or compulsory insurance law that requires
certain minimal amounts and types of coverage, [Liberty Mutual]
would provide that coverage to its insured.

W. States Ins. Co. v. Zschau, 698 N.E.2d 198, 201 (Ill. App. Ct. 1998). Further,

we find there is no other choice-of-law provision in Dunigan’s policy. Accordingly,

as there is no choice-of-law clause in the policy, we must look at which state “has

the most significant relationship to the transaction and the parties.” Gabe’s Constr.,

539 N.W.2d at 146. We consider:

(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation
and place of business of the parties.

supplemental to a renewal policy if the named insured has rejected the
coverage in connection with a policy previously issued to the named
insured by the same insurer.
9

Restatement (Second) of Conflict of Laws § 188(2). Further, we must consider

these contacts “according to their relative importance with respect to the particular

issue.” Id. Additionally,

The validity of a contract of fire, surety or casualty insurance and the
rights created thereby are determined by the local law of the state
which the parties understood was to be the principal location of the
insured risk during the term of the policy, unless with respect to the
particular issue, some other state has a more significant relationship.

Gabe’s Constr., 539 N.W.2d at 146–47 (quoting Restatement (Second) of Conflict

of Laws § 193). Liability and collision insurance are included in the various types

of casualty insurance. Restatement (Second) of Conflict of Laws § 193 cmt. a.

In this matter, the insurance policy was contracted for and made in Illinois.

The vehicles covered in the policy were all licensed and registered in Illinois at the

time of the application. The vehicle involved in the accident was licensed and

registered in Illinois at the time of the accident. Dunigan’s driver’s license is also

from Illinois.2 Dunigan’s address on the 1997 initial application form, 2014 renewal

declaration page, and the 2015 accident report are all listed as the same Illinois

address. Additionally, both the application and renewal forms make reference to

Illinois. The application includes an option for uninsured motorist coverage at the

minimum levels “required by Illinois law.” The renewal contains a list of

“Endorsements-Changes to Your Policy” which includes “Amend of Policy

Provisions-Illinois.”

2
We note the Illinois driver’s license number listed on the 2015 accident report is the same
one listed on the initial insurance application from 1997. However, the 2014 insurance
policy renewal declarations form indicates an Iowa driver’s license number.
10

Though Dunigan indicated in his brief that two of the vehicles listed in his

insurance policy were licensed in Iowa at the time of the accident, the record does

not reflect such information. The 2014 policy renewal declarations page lists the

vehicles covered by the insurance policy but only provides each vehicle’s make,

model, and vehicle identification number. It does not provide the state where each

vehicle is registered and licensed.

Further, while Dunigan argues that he had resided in Iowa for two years at

the time of the accident and “Liberty Mutual was well aware of Mr. Dunigan’s

connection to the state of Iowa,” the record does not reflect such information.

There is no record of communication between the parties that reflects Dunigan

provided Liberty Mutual with an Iowa address or which, if any, vehicles were

primarily garaged in Iowa. There is also nothing in the record that indicates either

party believed Iowa was to be the “principal location of the insured risk.” Based

upon our review of the record, we find that Illinois has the most significant

relationship to the transaction and the parties. Accordingly, the district court was

correct in applying Illinois law to Dunigan’s insurance policy.

B. Underinsured Coverage

With some exceptions not applicable to this matter, Illinois law “requires

liability insurance coverage for all motor vehicles designed to be used on a public

highway.” Thounsavath v. State Farm Mut. Auto. Ins. Co., 104 N.E.3d 1239, 1244

(Ill. 2018). Insurance policies must contain specific minimum liability amounts. Id.

At the time Dunigan submitted his insurance application and at the time of the 2014

policy renewal, the minimum liability coverage limit was
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not less than $20,000 because of bodily injury to or death of any one
person in any one motor vehicle accident and, subject to said limit
for one person, to a limit of not less than $40,000 because of bodily
injury to or death of 2 or more persons in any one motor vehicle
accident.

Alshwaiyat v. Am. Serv. Ins. Co., 986 N.E.2d 182, 188 (Ill. App. Ct. 2013) (quoting

625 Ill. Comp. Stat. 5/7–203 (2008)).3

However, “a driver covered by such mandatory liability insurance is not

similarly protected against damages caused by other drivers who may not possess

similar insurance.” Id. Therefore, Illinois law “specifically requires that all policies

of liability insurance must also provide [uninsured motorist] insurance,” which

“must provide coverage limits that are, at a minimum, equal to the above-

referenced statutory minimums contained in the Financial Responsibility Law.” Id.

While there is a statutory minimum amount of uninsured motorist coverage

required in each policy, “there is nothing to preclude a motorist from obtaining a

policy of insurance providing liability coverage in excess of the minimum amounts

required.” Id.

“If the limits for the insured’s liability coverage exceed the minimum

amounts required by law, the uninsured motorist provisions must provide the same

higher coverage amounts unless the excess amount is specifically rejected by the

insured.” Thounsavath, 104 N.E.3d at 1244. Insureds and insurance applicants

can reject the additional uninsured motorist coverage by making a written request

for their coverage to be less than their bodily injury liability limits or providing a

3
We note that as of January 1, 2015, the minimum bodily injury liability limits increased to
$25,000 person and $50,000 per accident, thus increasing the statutory minimum amount
of uninsured motorist coverage. 625 Ill. Comp. Stat. 5/7-203 (2015). However, the
increase applies only to policies issued or renewed on or after January 1, 2015. Id.
12

written rejection of coverage in excess of the minimum statutory requirements.

See 215 Ill. Comp. Stat. 5/143a-2(2) (2015).

In order to reject additional uninsured motorist coverage, the rejection must

meet certain statutory requirements. At the time Dunigan submitted his insurance

application, Illinois law required “every application for motor vehicle coverage must

contain a space for indicating the rejection of additional uninsured motorist

coverage.” 215 Ill. Comp. Stat. 5/143a-2(2) (1997). Further, the rejection of the

additional coverage was not effective “unless the applicant signs or initials the

indication of rejection.” Id. Once an insured either elects to purchase uninsured

motorist coverage limits less than their bodily injury liability coverage or rejects

limits greater than required by statute, the insurance company is not required to

provide that coverage in “any renewal, reinstatement, reissuance, substitute,

amended, replacement or supplementary policy” unless the insured makes a

written request. Id. The initial application, including copies of the original

application, “indicating the applicant’s selection of uninsured motorist coverage

limits [constituted] sufficient evidence of the applicant’s selection of uninsured

motorist coverage limits and shall be binding on all persons insured under the

policy.” Id. § 5/143a-2(3).

By the time of the 2014 renewal of Dunigan’s insurance and the 2015

accident, Illinois had revised the statute enumerating the requirements for rejecting

additional uninsured motorist coverage. Illinois law now requires motor vehicle

insurance policies to include uninsured motorist coverage in an “amount equal to

the insured’s bodily injury liability limits unless specifically rejected by the insured

as provided in paragraph (2).” 215 Ill. Comp. Stat. 5/143a-2(1) (2015). Paragraph
13

two requires insureds and insurance applicants to submit a “written request for

limits of uninsured motorist coverage which are less than bodily injury liability limits

or a written rejection of limits in excess of those required by law.” Id. § 5/143a-

2(2). The law no longer requires insurance applications to include a space to

indicate the rejection or additional coverage or a signature or initialization of the

rejection. Compare 215 Ill. Comp. Stat. Ann. 5/143a-2(2) (1997), with 215 Ill.

Comp. Stat. Ann. 5/143a-2(2) (2015). “If the insured’s uninsured motorist

coverage limit exceeds the minimum liability limit required by the Financial

Responsibility Law, the policy must also include underinsured motorist coverage

in an amount equal to the uninsured motorist coverage.” Thounsavath, 104 N.E.3d

at 1244–45 (citing 215 ILCS 5/143a–2(4) (2012)). “In contrast to the uninsured

motorist provision, the underinsured motorist provision does not include a right of

rejection.” Id. at 1245.

Here, Dunigan and Liberty Mutual contracted for liability insurance in the

amounts of $100,000 per person and $300,000 per accident. This exceeded the

minimum statutory limits. “Pursuant to section 143a of the Insurance Code,

[Liberty Mutual] was required to include uninsured motorist coverage in those

amounts in [Dunigan’s] policies unless [Dunigan] specifically rejected the higher

coverage amounts.” Id. at 1247–48. At the time Dunigan submitted his insurance

application in 1997, the application contained a section that stated, “I reject

uninsured and underinsured motorists coverage equal to my bodily injury liability

limits and instead select the limits indicated on my option form.” Dunigan signed

on the signature line directly below this statement. On page three of the

application, Dunigan signed underneath a paragraph that stated:
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I am aware, unless I indicate otherwise to Liberty Mutual in writing,
that my coverage choices of Uninsured Motorists Coverage,
Underinsured Motorists Coverage, and Uninsured Motor Vehicle
Property Damage coverage shall apply throughout the policy period,
regardless of any changes such as the replacement or addition of
vehicles or drivers, and to all renewals, amendments, replacements
or reinstatements of this policy.

On page four, option one is selected. This option stated, “I elect Uninsured

Motorists Bodily Injury Coverage at the minimum financial responsibility limits

required by Illinois law. ($20,000 per person and $40,000 per accident.).”

We find the selected options and Dunigan’s signatures meet the

requirements to reject additional uninsured motorist coverage above Dunigan’s

selected bodily injury liability limits and reject a limit in excess of what Illinois law

required at that time. As such, the original policy delivered to Dunigan did not

provide uninsured motorist coverage above the statutory minimum. Accordingly,

because Dunigan’s uninsured motorist coverage did not exceed the statutory

minimum required by law, underinsured motorist coverage was not required to be

included in the policy at the time of the application. The application clearly provided

no underinsured motorist coverage was included in the policy.

At the time of the 2014 insurance renewal and the 2015 accident, Dunigan’s

coverage for liability, medical payments, and uninsured motorists remained the

same as it was on the 1997 application. The statutory minimum amount of

coverage also remained the same. Since Dunigan “elected to purchase limits of

uninsured motorist coverage which are less than bodily injury liability limits or to

reject limits in excess of those required by law,” Liberty Mutual was not required to

provide in any renewal “coverage in excess of that elected by the insured in

connection with a policy previously issued to such insured by the same insurer
15

unless [Dunigan] subsequently [made] a written request for such coverage.” 215

Ill. Comp. Stat. 5/143a-2(2) (2014). There is no such written request by Dunigan

in the record. Again, because Dunigan’s motorist coverage did not exceed the

statutory minimum required by law at the time of the renewal or the accident,

underinsured motorist coverage was not required to be included in the policy. 4

Therefore, Dunigan did not have underinsured motorist coverage at the time of the

accident and cannot recover such benefits under his policy. Accordingly, we affirm

the district court’s grant of Liberty Mutual’s motion for summary judgment.

AFFIRMED.

4
Dunigan’s renewal form states: “Where no premium is shown, you have not purchased
the indicated coverage for that vehicle.” There is no premium listed for underinsured
coverage on the renewal form.