Rose v. American Family Ins. Co.
995 N.W.2d 650
Neb.2023Background
- Feb. 3, 2018: Teresa Rose was injured when the car she was driving (a Nebraska-registered vehicle borrowed from her Nebraska-resident boyfriend) was struck by an underinsured motorist; Rose lived in Carter Lake, Iowa and held an Iowa license.
- Rose settled with the at-fault driver and with the vehicle owner’s insurer for available limits and then sought underinsured motorist (UIM) benefits under an American Family policy issued to her sister, Shauna Bosques.
- The American Family policy was issued in Iowa, listed the Carter Lake (Iowa) residence in the Declarations, and contained a choice-of-law clause applying the law of the state shown as the insured’s residence and a 2-year contractual limitation: “any suit against [American Family] will be barred unless commenced within two years from the date of the accident.”
- American Family denied Rose’s UIM claim on Nov. 15, 2019. Rose sued in Douglas County, Nebraska on Sept. 3, 2020.
- The district court granted summary judgment for American Family, concluding Iowa law governed under the policy’s choice-of-law clause, Iowa law permits reasonable 2-year UIM limitations, and Rose’s suit was time barred; Rose appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nature of claim: tort statute vs. contract | Rose: Nebraska 4-year tort statute should control because claim arises from an auto accident | American Family: UIM claim arises from the insurance contract; contract law governs | Held: Claim is contractual; contract principles apply |
| Choice of law | Rose: Nebraska law should apply or contractual choice not controlling | American Family: Policy’s choice-of-law (Iowa) governs because declarations list Iowa residence | Held: Choice-of-law clause is effective; Iowa law applies |
| Validity/reasonableness of 2‑year limitation | Rose: 2‑year deadline is unreasonable under facts (late discovery of damages) | American Family: Iowa law permits and has upheld 2‑year UIM limitation clauses; reasonableness measured at contract formation | Held: Under Iowa law a 2‑year contractual limitation is permissible and was reasonable when made; enforceable |
| Nebraska public policy / statutes precluding shorter limitations | Rose: Nebraska statutes (e.g., contract limitations) should override or render clause unenforceable here | American Family: Nebraska enforces valid out-of-state contractual provisions under full faith and credit; out-of-state contracts may be enforced in Nebraska | Held: Nebraska will enforce a valid contractual limitation made under another state’s law; clause enforced |
Key Cases Cited
- Schuemann v. Timperley, 314 Neb. 298 (Neb. 2023) (summary judgment standard)
- Johnson v. United States Fidelity & Guar. Co., 269 Neb. 731 (Neb. 2005) (insurance policy interpreted as ordinary contract)
- American Nat. Bank v. Medved, 281 Neb. 799 (Neb. 2011) (parties’ choice of law will ordinarily govern)
- Robinson v. Allied Property & Cas. Ins., 816 N.W.2d 398 (Iowa 2012) (Iowa recognizes and enforces some 2‑year UM/UIM contractual deadlines; reasonableness judged at contract formation)
- Osmic v. Nationwide Agribusiness Ins. Co., 841 N.W.2d 853 (Iowa 2014) (upholding a 2‑year limitation clause)
- Douglass v. American Family Mut. Ins. Co., 508 N.W.2d 665 (Iowa 1993) (earlier Iowa recognition of contractual limitation clauses)
- Avondale v. Sovereign Camp, W. O. W., 134 Neb. 717 (Neb. 1938) (Nebraska enforces contractual limitations valid where contract was made)
- Young v. Order of United Commercial Travelers, 142 Neb. 566 (Neb. 1942) (full faith and credit requires enforcement in Nebraska of valid out‑of‑state insurance contract provisions)