Michele M. Pitts v. Farm Bureau Life Insurance Company and Donald Schiffer, 2012 Iowa Sup. LEXIS 76

Background

Tom Pitts owed child support and was required to maintain $35,000 life insurance payable to his daughter Jamie as long as support lasted.
Tom and Michele Pitts married in 1993 and purchased a Farm Bureau life policy; beneficiary designations changed multiple times in 1993, 1995, and 1996, with Jamie initially primary and Michele as the balance recipient.
In 2005, Tom allegedly asked Schiffer to change the beneficiary so Jamie would no longer be the primary for the first $35,000; Michele contends Schiffer told them Tom had changed it, but no clear written evidence was produced.
After Tom’s death in 2007, Michele learned from Schiffer that Jamie remained the primary for the first $35,000, reducing Michele’s expected proceeds to about $74,000 from the policy’s total ~ $108,000.
Michele sued Schiffer (negligence and negligent misrepresentation) and Farm Bureau (respondeat superior); Farm Bureau moved for summary judgment arguing lack of a written change, no duty to Michele, and no misrepresentation liability.
The district court granted summary judgment on grounds including lack of a written beneficiary change; appellate courts reversed to consider whether Schiffer owed a duty and whether misrepresentation claims could survive, leading to the current decision.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a life insurance agent owes a duty of care to an intended beneficiary.	Michele asserts Schiffer owed duty to intended beneficiary under agency principles.	Farm Bureau contends no such duty exists; beneficiary duty limited to the policyholder and written change requirements control.	Yes; a duty to an intended beneficiary, in limited circumstances, can exist.
Whether a life insurance agent can be liable for negligent misrepresentation to an intended beneficiary.	Schiffer’s misrepresentations to Michele about beneficiary status were for her guidance and caused harm.	Misrepresentation liability should be limited to those in the business of supplying information; the agent-insured dynamic complicates applicability.	Yes; Schiffer may be liable for negligent misrepresentation to Michele as the agent providing intended-beneficiary information.
Whether genuine issues of material fact preclude summary judgment on Michele’s claims.	There are disputed facts about Tom’s intent and Schiffer’s statements that could show negligence and misrepresentation.	Without a viable duty or proper misrepresentation theory, no triable issue exists.	Yes; material facts are disputed, so summary judgment was inappropriate.
Whether the economic loss rule bars Michele’s negligence claim.	The claim arises from party-independent economic loss due to agent's negligence in carrying out a contract.	Economic loss rule applies; liability should not extend to indirect economic harms in this context.	The court reserves ruling on the economic loss issue; no binding result reached on this basis.
Whether the district court’s reliance on lack of a written beneficiary change was proper grounds for summary judgment.	District court ignored disputed intent and reliance issues; expert and lay testimony could show negligence.	Written designation requirements control; failure to obtain written change defeats duty.	No; the written-change ground does not resolve all issues; other grounds for liability remain.

Key Cases Cited

Schreiner v. Scoville, 410 N.W.2d 679 (Iowa 1987) (duty to intended beneficiaries under testamentary instruments)
Holsapple v. McGrath, 521 N.W.2d 711 (Iowa 1994) (limiting entitlement of intended beneficiaries; privity-like concerns)
Langwith v. American National General Ins. Co., 793 N.W.2d 215 (Iowa 2010) (adopts flexible duty analysis for insurance agents under agency principles)
Sandbulte v. Farm Bureau Mut. Ins. Co., 343 N.W.2d 457 (Iowa 1984) (initially limited duty of agents to procure insurance;} {)
Carr v. Bankers Trust Co., 546 N.W.2d 901 (Iowa 1996) (limits liability to intended beneficiaries with potential conflicts of interest)
Duffie v. Bankers’ Life Ass’n of Des Moines, 160 Iowa 19, 139 N.W. 1087 (Iowa 1913) (negligence action possible for estate but not for beneficiary when duty owed to deceased)