Esad Osmic v. Nationwide Agribusiness Insurance Company
2014 Iowa Sup. LEXIS 4
Iowa2014Background
- On May 23, 2009 Esad Osmic was a passenger in a vehicle owned by Selim (the named insured) and was injured in a rollover caused by another driver; the tortfeasor’s insurer (Progressive) paid part of the loss.
- Selim’s Nationwide policy included underinsured motorist (UIM) coverage and a contractual clause: “any suit against us under this [UIM] Coverage will be barred unless commenced within two years after the date of the accident.”
- Esad’s counsel first contacted Nationwide about the claim in June 2010 and exchanged records and demands with Nationwide and Progressive in early 2011; Progressive offered limited policy limits.
- Nationwide consented to settle Progressive’s offer and reviewed file materials but did not provide the policy’s limitations clause to Esad; Nationwide later declined UIM coverage as time-barred because Esad sued about one month after the two-year contractual deadline.
- The district court denied Nationwide summary judgment (finding Nationwide had not furnished the policy and had not completed its investigation before the deadline); the court of appeals affirmed; the Iowa Supreme Court granted further review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a passenger-insured (non-policyholder) is bound by the policy’s two-year contractual suit limitation | Osmic: as a non-signatory he should not be bound by the contractual deadline or Nationwide had a duty to disclose it | Nationwide: a passenger who is an insured/third-party beneficiary takes rights subject to policy terms, including the two-year limit | Held: Passenger is an insured/third-party beneficiary and is bound by the two-year contractual limitation |
| Whether Nationwide had an affirmative duty to disclose the contractual limitations period to the passenger’s attorney | Osmic: Nationwide knew of the claim and withheld the deadline, so it had a duty to disclose | Nationwide: no general duty to warn insureds/third parties of contractual deadlines absent a request or special circumstances | Held: No general affirmative duty to disclose; Morgan controls — insurer need not notify of approaching contractual deadline |
| Whether the contractual two-year limit was reasonable and enforceable | Osmic: argued limitations should not apply (e.g., discovery rule / lack of notice) | Nationwide: two-year clause is reasonable here because claimant knew injuries and counsel had time to sue; clause is enforceable | Held: Two-year limitation is reasonable and enforceable on these facts |
| Whether equitable estoppel bars enforcement of the limitation | Osmic: Nationwide’s conduct (withholding policy/declarations, promises to investigate) misled counsel and induced delay | Nationwide: no concealment or misrepresentation; counsel never requested the policy; no evidence of reliance | Held: Estoppel not established — plaintiff failed to show concealment, misrepresentation, or reliance by clear and convincing evidence |
Key Cases Cited
- Douglass v. American Family Mutual Insurance Co., 508 N.W.2d 665 (Iowa 1993) (contractual limitations provision enforceable if reasonable)
- Robinson v. Allied Property & Casualty Insurance Co., 816 N.W.2d 398 (Iowa 2012) (parties may modify statutory deadline; enforceability assessed for reasonableness)
- Morgan v. American Family Mutual Insurance Co., 534 N.W.2d 92 (Iowa 1995) (insurer has no general duty to warn policyholders that contractual filing period is running out)
- Nicodemus v. Milwaukee Mutual Insurance Co., 612 N.W.2d 785 (Iowa 2000) (contractual limitations subject to reasonableness inquiry)
- Jones v. Poole, 579 N.W.2d 739 (Wis. Ct. App. 1998) (passenger as third-party beneficiary bound by policy provisions)