Opinion ID: 2164682
Heading Depth: 1
Heading Rank: 2

Heading: Application of the clause to the facts alleged in the petition. In seeking to invoke arbitration, plaintiff's attorney wrote the following letter to Fireman's Fund:

Text: April 15, 1977 Mr. Raymond Hutchison Senior Claims Representative Fireman's Fund Insurance 4515 Fleur Drive Des Moines, IA 50321 Re: Your File No.: B 470 PA 158436 Your Insured: Dave Ostrem Imports, Inc. D/A 10/25/74 Dear Ray: Please consider this letter to be a demand for immediate arbitration, pursuant to the terms of the policy, and subject to Chapter 679 of the Code of Iowa (1977). According to the policy language, I must make written demand to arbitrate upon you. The matter in dispute is the amount of payment owing under the insurance. My client demands the sum of $10,000.00 for her injuries. Sincerely, Beving, Swanson & Forrest [signed] Charles C. Crook CSC:pjb cc: Carolyn Johnson Plaintiff alleges in her petition that Fireman's Fund sought to impose costs on her before agreeing to arbitrate and failed to perform its duty to settle the dispute by arbitration upon her demand. She also alleges that the policy is read against Fireman's Fund which drafted it and that doubts are resolved in her favor. The policy language must be given its ordinary meaning in accordance with the objectively reasonable expectations of the insured. Rodman v. State Farm Mutual Automobile Ins. Co., 208 N.W.2d 903, 906-907 (Iowa 1973). Because an insurance policy is an adhesion contract, its provisions are construed in the light most favorable to the insured. Connie's Const. v. Fireman's Fund Ins., 227 N.W.2d 207, 210 (Iowa 1975). We believe it was reasonable for plaintiff to think she had done all she was required to do to initiate arbitration when she did what the policy said she should do to invoke it. The arbitration clause does not purport to command additional steps of her, such as the advancing of costs. Even though it states arbitration shall be conducted in accordance with the rules of the American Arbitration Association, unless other means are agreed upon, it does not compel an insured to do more to initiate the process than demand it in writing. The rules of the American Arbitration Association may govern the means by which the dispute is arbitrated, but they do not affect the insured's right to obtain arbitration upon written demand. We hold that when an insured invokes arbitration by written demand under a clause like the one involved here the obligation rests with the insurer to do what is necessary to obtain the services of the American Arbitration Association unless the parties agree on other means of arbitration. Plaintiff had a right to rely upon Fireman's Fund to fulfill this duty. For purposes of reviewing the trial court's ruling we, like the trial court, must accept the well-pleaded factual allegations of the petition as true. By imposing conditions not provided for in the insurance policy and by failing to set the arbitration mechanism in motion, Fireman's Fund frustrated plaintiff's effort to obtain arbitration and breached its duty under the policy. Consequently it has lost its alleged right to arbitrate, and plaintiff has a right to maintain this action. See Dee & Sons Co. v. Key City Fire Ins. Co., 104 Iowa 167, 173, 73 N.W. 594, 595 (1897); Burton-Dixie Corp. v. Timothy Const. Co., 436 F.2d 405 (5 Cir. 1971); Schramm v. Dotz, 23 Wis.2d 678, 127 N.W.2d 779 (1964); 16 Williston on Contracts § 1923 at 570-590 (Third Ed. 1976). The trial court erred in sustaining the motion to dismiss. REVERSED AND REMANDED. REES, ALLBEE, McGIVERIN and LARSON, JJ. concur. REYNOLDSON, C. J., and HARRIS, J., concur specially. UHLENHOPP and LeGRAND, JJ., dissent.