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Bellville v. Farm Bureau Mutual Insurance Co.7/29/2005
On review from the Iowa Court of Appeals.
Plaintiffs seek further review of court of appeals decision reversing district court judgment entered on jury's verdict in favor of plaintiffs on their bad faith claim against defendant underinsured motorist carrier. DECISION OF COURT OF APPEALS VACATED. DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.
The plaintiffs, Roger Bellville and the Estate of Sue Ellen Bellville, obtained a judgment against the Bellvilles' underinsured motorist (UIM) carrier, defendant Farm Bureau Mutual Insurance Company, for extracontractual and punitive damages. The State of Iowa intervened on appeal to protect its interest in a statutory share of the punitive damage award.
The Iowa Court of Appeals reversed the judgment, ruling the district court erred in failing to grant Farm Bureau's motion for directed verdict. This court granted further review. Upon our examination of the record and consideration of the arguments of the parties, we reach the same conclusion as the court of appeals, but for slightly different reasons. Therefore, we vacate the decision of the court of appeals, reverse the district court judgment, and remand for entry of judgment in favor of Farm Bureau.
I. Background Facts and Proceedings
On October 9, 1999, Roger Bellville (Bellville) and his wife, Sue Ellen, were involved in a motor vehicle accident with Guy Schueler. Sue Ellen died at the scene; Bellville was unharmed.
At the time of the accident, Schueler had an automobile insurance policy with a liability limit of $50,000. Although this policy provided coverage for his liability arising out of the accident, Schueler owned few other assets. Bellville carried underinsured motorist coverage with Farm Bureau with limits of $300,000.
Early in 2000 Bellville's attorney demanded the limits of the Farm Bureau policy and also requested that Farm Bureau consent to Bellville's settlement with Schueler for the limits of Schueler's liability insurance coverage. Negotiations ensued, but Farm Bureau refused to pay Bellville's reduced demand for a $270,000 payment under the UIM coverage. In addition, Farm Bureau refused to consent to Bellville's settlement with Schueler, asserting it had no duty to do so.
On April 13, 2000, Bellville sued Farm Bureau to recover under the UIM coverage; he also alleged a tort claim for bad faith. (Although Bellville and the estate are named plaintiffs, we will refer to them jointly as Bellville or the plaintiff in the remainder of this opinion.) Bellville's contractual claim was tried first, resulting in an award of the full $300,000 in UIM coverage. The bad faith action was then tried to a jury based on two grounds: (1) Farm Bureau's undervaluation of Bellville's UIM claim; and (2) Farm Bureau's refusal to consent to Bellville's settlement with the underinsured motorist. Farm Bureau's motion for directed verdict was denied, and the jury returned a verdict in favor of the plaintiff, finding bad faith on both grounds. The jury awarded compensatory and punitive damages. The State then intervened on behalf of the Civil Reparations Trust Fund to claim its share of the punitive damages award pursuant to Iowa Code section 668A.1(2)(b) (2001).
Farm Bureau appealed and the case was transferred to the court of appeals. The court of appeals reversed and remanded, finding the evidence was insufficient to prove Farm Bureau lacked a reasonable basis for its valuation of Bellville's claim or for refusing to consent to settlement. The court concluded, therefore, that the district court erred in failing to direct a verdict in favor of Farm Bureau.
This court granted Bellville's appl
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