Opinion ID: 1700793
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Heading Rank: 4

Heading: Contractual Limitations.

Text: American Family asserts that the breach of contract claim is barred by a provision in the policy which limits the time period for filing suit against it. In April 1984 American Family issued a new easy-to-read automobile insurance policy to its policyholders. That policy contained a provision which stated: We may not be sued under the Uninsured Motorist coverage on any claim that is barred by the tort statute of limitations. The statute of limitations for a personal injury tort suit in Iowa is two years. Iowa Code § 614.1(2). Without this provision, the statutory limitations period to file suit under the policy would be the one for written contracts, which is ten years. Id. § 614.1(5); see also Douglass v. American Family Mut. Ins. Co., 508 N.W.2d 665, 667-68 (Iowa 1993) (holding an insurance company may validly shorten the limitations period in uninsured motorist policies to less than the statutory limitations period for a written contract). A cover letter accompanied the new policy. The letter purported to set forth the important changes in the policy, but did not include the reduced time to bring suit under the uninsured motorist policy as one of the changes. American Family argues the contractual limitations period in the policy prohibits the Morgans from recovering under the uninsured motorist policy as a matter of law because they did not bring suit until more than two years after the accident. It therefore argues the court erred in submitting the Morgans' theories of why their claim is not barred to the jury. The Morgans argue that American Family failed to preserve error on the contractual limitations issue because it did not object to submission to the jury of special interrogatories which related to the Morgans' defenses to the limitations provision. American Family's motion for a directed verdict on the contractual limitations issue was sufficient to alert the trial court to its argument that it should prevail on the issue as a matter of law. Therefore, error on the issue was preserved. See Hartman v. Norman, 253 Iowa 694, 697, 112 N.W.2d 374, 376 (1961) (defendants' consent to instructions did not waive right to challenge rulings on motions to direct). The Morgans advanced several theories why the contractual limitations period does not bar their claim. In answering special interrogatories, the jury only reached the first two theories. We now address each of their arguments. First, the Morgans assert the provision does not apply to them because they never received the new easy-to-read policy. In answer to a special interrogatory on this question, the jury determined that the Morgans had received the new policy. Second, the Morgans argue they did not receive notice of the change in the limitations provision. They claim American Family failed to bring the change to their attention because the cover letter accompanying the new policy did not mention it. In answer to a special interrogatory, the jury agreed that the Morgans had not received notice of the policy change. American Family argues the jury's response is not supported by sufficient evidence and is contrary to law. It asserts that because the jury determined the Morgans had in fact received the policy, they were on notice of the terms and conditions contained in the policy as a matter of law. An agreement in writing speaks for itself; and, absent fraud or mistake, ignorance of the contents of a written agreement will not serve to negate or avoid its contents. Small v. Ogden, 259 Iowa 1126, 1132, 147 N.W.2d 18, 22 (1966). A party is charged with notice of the terms and conditions in a contract he or she entered into if the party is able to read the contract and has the opportunity to read it. Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 323 (Iowa 1977). Therefore, because the Morgans received the policy, they are charged with knowledge of its contents. The jury's determination that the Morgans did not receive notice of the policy change is not supported by sufficient evidence as a matter of law. Third, the Morgans assert they did not consent to the policy change and did not receive consideration for it. Their argument is based on the concept that an existing contract cannot be changed without the consent of the parties or new consideration. The policy covering the Morgans at the time of Penny's accident was effective from March 23, 1985 until August 23, 1985. The new policy was sent to policyholders in April 1984. Therefore, the policy in effect at the time of Penny's accident was a new contract. Because the Morgans had received the new policy, their payment of the premium to renew the policy constituted consent to the terms of the policy and consideration for the insurance coverage as provided by the policy. See Mutual Benefit Life Ins. Co. v. Fischer, 236 Iowa 40, 50, 17 N.W.2d 847, 852 (1945) (Mulroney, J., dissenting) (the premium is the consideration paid for the contract of insurance). Fourth, the Morgans argue the word claim in the provision is ambiguous. They contend the word could mean either a claim against the uninsured motorist or a claim against American Family. The construction and interpretation of an insurance policy is a question of law for the court to decide. Johnson v. Farm Bureau Mut. Ins. Co., 533 N.W.2d 203, 206 (Iowa 1995). The policy is to be construed as a whole, giving the words used their ordinary, not technical meaning to achieve a practical and fair interpretation. Gracey v. Heritage Mut. Ins. Co., 518 N.W.2d 372, 373 (Iowa 1994). When the terms of an insurance policy are ambiguous, we will construe them against the insurer. Id. However, the mere fact that the parties disagree on the meaning of a particular term does not establish ambiguity. Id. We will not give a strained or unnatural reading to the words of the policy to create ambiguity where there is none. West Trucking Line, Inc. v. Northland Ins. Co., 459 N.W.2d 262, 263 (Iowa 1990). We believe the only reasonable interpretation of the language is that the word claim refers to an action against the uninsured tortfeasor. Therefore, the policy provides the statute of limitations for a personal injury action in the state where the accident occurred shall be the length of time the insured has for bringing suit against American Family for coverage under the uninsured motorist provision of the policy. Fifth, the Morgans assert that even if the word claim refers to an action against the uninsured motorist, their claim against Fisher was not barred by the tort statute of limitations. Therefore, they argue their suit against American Family is not barred by the contractual limitations period. Prior to bringing this suit against American Family, the Morgans sued Fisher for Penny's injuries and obtained a judgment against him. Although the Morgans did not file this suit until after Iowa's two-year statute of limitations for personal injuries had run, Fisher did not defend the suit and therefore did not assert a limitations defense. The Morgans argue that because the statute of limitations is an affirmative defense that must be raised or waived, see Pride v. Peterson, 173 N.W.2d 549, 552 (Iowa 1970), their claim against Fisher is not barred by the statutory period because he never raised the defense; and therefore their suit against American Family is not barred by the contractual limitations provision. We disagree. As a matter of law, we interpret the contractual limitation provision as barring suit against American Family on any uninsured motorist claim after the time period of the tort statute of limitations has run. Finally, the Morgans assert that American Family is equitably estopped from asserting the contractual limitations defense. To establish estoppel, the Morgans must prove by clear and convincing evidence a false representation or concealment of material facts by American Family, lack of knowledge on the part of the Morgans, intention by American Family that the representation or concealment be acted on, and reliance by the Morgans to their prejudice. See Hicks v. Franklin County Auditor, 514 N.W.2d 431, 441 (Iowa 1994). One estoppel argument is that the cover letter sent with the new easy-to-read policy contained a false representation or concealment of material facts because it purported to set forth important changes in the policy, but neglected to mention that the time the insured has to bring suit against American Family under the uninsured motorist provision was being reduced. The Morgans cannot prevail on this argument, however, because John testified that they never received the policy or the cover letter. As a result, the Morgans could not have relied on the letter to their detriment. The Morgans also assert American Family should be estopped from asserting the contractual limitations defense because when it denied the Morgans' claim for uninsured motorist benefits on July 8, 1987, it did not alert them that it intended to rely on the limitations provision as a defense after August 19, 1987. The Morgans argue that American Family should have warned them of the approaching limitations deadline. We disagree. An insurer does not have the duty to warn its policyholders that the time period for filing suit against it is running out. We also note the Morgans are in a poor position to complain that they were not warned about the approaching limitation period because they retained an attorney to represent them in this matter six months before the limitation period ran, yet did not bring suit until January 1989. Because each of the Morgans' theories as to why the limitations provision should not apply to them was either resolved against them by the jury or should not have been submitted to the jury as a matter of law, we resolve this issue in favor of American Family. The Morgans cannot recover on this breach of contract claim because their suit is barred by the contractual limitations provision in the policy. For the foregoing reasons, we reverse and remand for entry of judgment consistent with this opinion. REVERSED AND REMANDED.