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WAITS v. UNITED FIRE & CAS. CO.12/24/1997
her damages exceeded $90,297.86 before she would be entitled to recover under the policy, that issue was not disputed by either party and therefore was not submitted to the jury; the calculation of Waits' recovery was left to the court. The only issue before the jury was the amount of damages sustained by Waits as a result of Fay's fault. Waits has [572 NW2d Page 570]
not suggested how Allied's decision to pay its policy limits is relevant to that issue.
Waits' reliance on our decision in Leuchtenmacher v. Farm Bureau Mutual Insurance Co., 461 N.W.2d 291 (Iowa 1990), is misplaced. In Leuchtenmacher, the administrator of the insured's estate brought suit against the decedent's underinsured motorist carrier, seeking to recover UIM benefits. 461 N.W.2d at 292. Prior to trial, the plaintiff settled with the tortfeasor for the tortfeasor's liability limits of $55,000. Id. On appeal from a judgment entered against the insurance company for the limits of the UIM coverage, the insurer argued the trial court erred in admitting evidence of the tortfeasor's liability limits. Id. This court held evidence of the insurance limits was admissible to "prove the existence of the insurance contract and its terms." Id. at 294. We said, "Any direct claim against an insurer on a contract dispute necessarily involves introduction of the insurance policy and its terms." Id. at 294-95.
This case is distinguishable from Leuchtenmacher. There is no discussion in the Leuchtenmacher opinion with respect to any stipulations by the UIM insurer, so we assume that all elements of the insured's UIM claim were at issue. Consequently, it was incumbent upon the insured in Leuchtenmacher to prove the terms of the contract and the insured's entitlement to recover pursuant to those terms, including the amount paid by the tortfeasor and damages in excess of this figure. That situation does not exist here because United Fire did not contest the existence of the policy or its terms or the fact that Waits was entitled to recover the amount by which her damages, as determined by the jury, exceeded the tortfeasor's payment. Thus, the payment made by Allied was not relevant to any disputed issue of fact upon which the jury was to make a determination. See Johnson v. State Farm Auto. Ins. Co., 504 N.W.2d 135, 138 (Iowa App. 1993) (affirming, in suit to recover UIM benefits, district court's exclusion of evidence of the amount of insured's settlement with underinsured motorist).
D. Prejudice. United Fire also claims that admission of this evidence resulted in substantial prejudice, citing Handley v. Farm Bureau Mutual Insurance Co., 467 N.W.2d 247 (Iowa 1991). In Handley, the plaintiffs brought a wrongful death claim against the alleged tortfeasor as well as a contract claim against their own insurance company for UIM benefits. 467 N.W.2d at 248. The UIM insurer appealed the trial court's refusal to sever the tort suit from the contract claim. Id. It asserted the jury would return an inflated damage award in the wrongful death case due to prejudice resulting from evidence of the tortfeasor's liability limits and the plaintiffs' UIM limits, evidence that would normally be admissible in the contract case but not in the tort suit. Id. at 249. We acknowledged the potential for prejudice when there is evidence before the jury establishing the tortfeasor's liability limits and the injured party's UIM limits: "It is . . . likely that evidence of insurance will cause the jury to return a larger verdict against [the tortfeasor than] it would have if it were unaware that insurance existed and the amounts thereof." Id. at 250 (emphasis added). Based on the likelihood of prejudice, we held the trial court abused its discretion in
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