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Sampson v. American Standard Insurance Co.7/29/1998
reasonable basis for refusing to pay Sampson the full limits of UM coverage under the policy and granted American Standard's partial summary judgment motion.
The matter proceeded to trial concerning the value of Sampson's uninsured motorist breach of contract claim. The jury awarded Sampson $3574.32 for past medical expenses, $3000 for future medical expenses, $513 for past loss of wages, $2000 for past pain and suffering, and $3000 for future pain and suffering, totaling $12,087.32. The district court, however, later granted American Standard's motion for a directed verdict concerning Sampson's claim for damages for future pain and suffering and reduced the jury's verdict by the $3,000 awarded by the jury for that item of damages. The court entered judgment in Sampson's favor in the amount of $9,087.32, together with interest and costs. On appeal, Sampson asserts that the district court erred in granting partial summary judgment concerning her bad faith claim against American Standard, but raises no issue as to the jury's verdict and the judgment concerning her uninsured motorist contract claim.
II. Standard of review.
Our review of a grant or denial of summary judgment is at law. Iowa R. App. P. 4; Gabrilson v. Flynn, 554 N.W.2d 267, 270 (Iowa 1996). Summary judgment is only appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 237(c); Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 201 (Iowa 1997). To determine whether there is a genuine issue of material fact, the court must examine the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Iowa R. Civ. P. 237(c). The record here consists of the pleadings, affidavits and exhibits. We review the record in the light most favorable to the party opposing summary judgment; in this sense, we consider a motion for summary judgment as we would a motion for directed verdict. Smith v. CRST Int'l, Inc., 553 N.W.2d 890, 893 (Iowa 1996). Under this standard, summary judgment is inappropriate if reasonable minds would differ on how the issue should be resolved. Dickerson v. Mertz, 547 N.W.2d 208, 212 (Iowa 1996).
III. Sampson's bad faith claim.
A. Background law.
Sampson's bad faith claim stems from American Standard's refusal to settle the claim for the full limits of UM ($25,000) coverage under the policy. Specifically, Sampson contends the district court erred in sustaining defendant American Standard's motion for partial summary judgment concerning her claim for bad faith. Although the record is unclear as to whether Sampson's bad faith claim was also based on failure to pay benefits under the medical coverage provision of the policy ($2000), she does raise this issue on appeal.
To be successful in a first-party bad-faith claim, a plaintiff must prove by substantial evidence (1) the absence of a reasonable basis for denying the claim, and (2) that the defendant knew or had reason to know that its denial was without reasonable basis. Dolan v. AID Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988) (recognizing a tort cause of action against insurer for bad-faith conduct concerning insured's claim); see also Thompson v. United States Fidelity & Guar. Co., 559 N.W.2d 288, 291 (Iowa 1997). Evidence is substantial if a reasonable mind would accept it as adequate to reach a Conclusion. Stover v. Lakeland Square Owners Ass'n, 434 N.W.2d 866, 873 (Iowa 1989) (citations omitted).
An insurance company has the right to debate claims that are "fairly debatable" without being subject to a bad faith tort claim. Morgan v. American Family Mut. Ins. Co., 534 N.W.2d 92,
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