Preferred Marketing, Inc., D/B/A Broken Arrow Wear v. Le Mars Insurance Company
16-1733
Iowa Ct. App.Aug 2, 2017Background
- Preferred Marketing (insured) suffered lightning damage to computer equipment in June 2013 and submitted a first‑party claim to Le Mars Insurance. Le Mars paid part of the claim and then refused further payment. Preferred sued on February 10, 2016 for business interruption, restoration costs, and lost profits.
- The Le Mars business owners policy contained a contractual provision requiring suit to be brought within two years after the date of the direct physical loss or damage.
- Le Mars moved for summary judgment, arguing Preferred’s suit was time barred by the two‑year policy limitation. The district court granted summary judgment, finding the limitation valid and enforceable and that Preferred failed to establish unconscionability or equitable estoppel.
- Preferred argued on appeal (1) Le Mars failed to disclose the two‑year limitation post‑claim as required by Iowa Admin. Code r. 191‑15.41(1), (2) the two‑year limit is unreasonable because it conflicts with the five‑year property‑damage statute of limitations, and (3) Le Mars is equitably estopped from asserting the limitation.
- The district court found (and the court of appeals accepted on summary judgment record) that Preferred had been furnished a copy of the policy when purchased, made no request for the policy after the loss, and presented no evidence Le Mars refused any policy request; thus Le Mars had no duty to make additional post‑claim disclosures or warnings about running of the limitation period.
- The court of appeals affirmed: the two‑year contractual limitation was reasonable and enforceable, Preferred failed to show grounds for equitable estoppel, and there was no genuine fact dispute defeating summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of two‑year contractual limitations clause | Two years is unreasonably short relative to the five‑year property‑damage statute | Parties may contractually shorten the limitations period; two years is reasonable | Clause valid and enforceable |
| Adequacy of disclosure under IA Admin. Code r. 191‑15.41(1) | Insurer failed to "fully disclose" the limitations post‑claim; never informed Preferred of two‑year deadline | Insurer provided policy at procurement; no post‑claim disclosure required absent request | No issue: record shows policy furnished at purchase and no request for policy after loss |
| Equitable estoppel (failure to disclose) | Le Mars should be estopped from asserting the limitation because it did not disclose the provision after claim presentation | No request for policy was made and insurer did not refuse a request; mere nondisclosure does not create estoppel | Estoppel not proven; summary judgment appropriate |
| Duty to warn that suit deadline is running | Le Mars had duty to notify insured the two‑year period was running | Insurer has no duty to warn of approaching suit deadline absent special circumstances | No duty to warn; insurer may rely on contractual limitation |
Key Cases Cited
- Osmic v. Nationwide Agribusiness Ins. Co., 841 N.W.2d 853 (Iowa 2014) (insurer has no affirmative obligation to disclose contractual limitations absent a specific request; estoppel requires more than nondisclosure)
- Stahl v. Preston Mut. Ins. Ass'n, 517 N.W.2d 201 (Iowa 1994) (one‑year contractual limitations in property damage policy can be enforceable)
- Peak v. Adams, 799 N.W.2d 535 (Iowa 2011) (parties are bound by contract terms even if they did not read them)
- Davidson v. Wal‑Mart Assocs. Health & Welfare Plan, 305 F. Supp. 2d 1059 (S.D. Iowa 2004) (one‑year contractual limitations enforceable under Iowa law if reasonable)