author: NEUMAN, Justice.

text:
    AREA EDUCATION AGENCY 7 and EMC Insurance Companies, Appellees, v. Marilyn BAUCH, Appellant.
    No. 00-1350.
    Supreme Court of Iowa.
    May 8, 2002.
    Rehearing Denied July 1, 2002.

      Robert C. Andres of Fulton, Martin & Andres, P.C., Waterloo, for appellant.
    E.J. Giovannetti and Tina M. Eick of Hopkins & Huebner, P.C., Des Moines, for appellees.
    Michael A. McEnroe and Chad A. Swanson of Dutton, Braun, Staack & Heilman, P.L.C., for amicus curiae, Iowa State Education Association.
   NEUMAN, Justice.

Marilyn Bauch, a special education consultant, was injured at work and applied for workers’ compensation benefits. A dispute arose over the calculation of her benefits because Bauch’s annual salary with her employer, Area Education Agency 7(AEA), is based on a ten-month contract payable in twelve monthly installments. In other words, Bauch earns more each month than she is paid, deferring the remainder of her salary to the summer months when school is not in session.

The chief deputy workers’ compensation commissioner calculated Bauch’s weekly benefits in accordance with the “daily, or hourly” formula of Iowa Code section 85.36(6) (1999). On the employer’s application for judicial review the district court reversed, finding Bauch’s earnings should have been calculated under the “monthly” formula of section 85.36(4), substantially lowering her benefit. On appeal, we are convinced the district court applied the correct statute but overlooked a crucial factor in the formula. We therefore reverse and remand to the agency for a recalculation of the benefits to which Bauch is entitled.

I. Background Facts and Proceedings.

The facts are undisputed. Bauch was employed by AEA during the 1995-96 school year. In June 1996, near the end of her 198-day contract, Bauch slipped on a wet floor, breaking her left elbow and a small bone in her wrist. There.is no dispute this injury arose out of and in the course of Bauch’s employment.

Bauch filed a claim for benefits with the Workers' Compensation Commission. The record made before the agency revealed that Bauch’s gross earnings for the 1995— 96 school year totaled $40,318.20. Her contract required her to work 198 days, or roughly ten months. ’ It was further agreed that, pursuant to the AEA’s collective bargaining agreement, her earnings were paid in twelve monthly installments of $3359.85. For purposes of calculating deductions for unexcused absences, Bauch’s per diem rate of pay was $203.63.

The deputy assigned to hear the case determined that Bauch’s weekly earnings should be calculated under Iowa Code section 85.36(6), based on her per diem compensation. Reasoning this result was “consistent with agency precedence, a requirement of the [deputy’s] position,” the deputy calculated Bauch’s gross weekly wage, at $1018.15 (203.63 x 5), resulting in a weekly benefit of $609.24. The deputy’s decision was affirmed by the agency on AEA’s interagency appeal.

The AEA then petitioned the district court for judicial review. Reversing, the district court noted the agency failed to properly apply either section 85.36(4) or (6), instead crafting a formula tailored to Bauch’s status as an educator. The court decided that because Bauch was paid on a monthly basis, her earnings must be computed pursuant to section 85.36(4). Using her monthly salary as a base, the court calculated Bauch’s gross weekly earnings at $775.35 (3359.85 x 12 r 52), resulting in a weekly benefit of only $478.64. From this decision, Bauch appeals.

II. Scope of Review.

On appeal from judicial review of agency proceedings under Iowa Code chapter 17A, our review is “limited to determining whether the district court correctly applied the law in exercising its section 17A.19(8) judicial review function.” Gilbert v. USF Holland, Inc., 637 N.W.2d 194, 198 (Iowa 2001); accord Myers v. F.C.A. Servs., Inc., 592 N.W.2d 354, 356 (Iowa 1999). While we give deference to an agency’s interpretation of statutes governing its area of expertise, its interpretations of law are not conclusive. Darrow v. Quaker Oats Co., 570 N.W.2d 649, 651 (Iowa 1997); Hanigan v. Hedstrom Concrete Prod., Inc., 524 N.W.2d 158, 160 (Iowa 1994).

III. Issue on Appeal.

The question is whether the workers’ compensation weekly benefits rate for educators should be calculated under Iowa Code section 85.36(4) or section 85.36(6). Because her ten-month contract is paid out annually in monthly installments, Bauch argues it is fairer to calculate her weekly earnings using the per diem formula of section 85.36(6). To do otherwise, she argues, would create inequities when compensating educators depending on whether a collective bargaining agreement calls for payments over a nine-, ten- or twelvemonth period. The Iowa State Education Association, as amicus curiae, joins in this argument. The AEA counters that section 85.36(4) must be applied to calculate Bauch’s weekly benefits based on her monthly wages of $3359.85 paid throughout the year.

IY. Applicable Law.

Several fundamental principles guide our assessment of the parties’ conflicting arguments. First and foremost, we are obliged to apply the pertinent statutes as written. Only in cases of ambiguity do we. resort to rules of statutory construction. Brown v. Star Seeds, Inc., 614 N.W.2d 577, 579 (Iowa 2000). “Strict statutory construction is not to be used to inject doubt when legislative intent is evident through a reasonable construction of the statute.” State v. Bonstetter, 637 N.W.2d 161, 166 (Iowa 2001). We give statutory words their ordinary meaning unless a contrary intent is evident or doing so would lead to absurdity, injustice or contradictions between statutes. Lauhoff Grain Co. v. McIntosh, 395 N.W.2d 834, 838 (Iowa 1986). Because workers’ compensation statutes exist to benefit employees, we view the law with a slant toward that objective. Id. The law’s beneficent purposes should not be defeated by “reading something into it which is not there, or by a strained or narrow construction.” Thomas v. William Knudson & Son, Inc., 349 N.W.2d 124, 126 (Iowa Ct.App.1984).

The parties cite numerous cases from other jurisdictions to support their respective positions. We have reviewed these decisions but find them of very limited value. Each state employs a unique statutory scheme to deal with teacher compensation. Cases from outside our state yield no definitive answer to the question before us.

That brings us to the governing statutes. Iowa Code section 85.36, and its pertinent subparts, describes the benefit calculation this way:

The basis of compensation shall be the weekly earnings of the injured employee at the time of the injury. Weekly earnings means gross salary, wages, or earnings of an employee to which such employee would have been entitled had the employee worked the customary hours for the full pay period in which the employee was injured, as regularly required by the employee’s employer for the work or employment for which the employee was employed, computed or determined as follows and then rounded to the nearest dollar:
4. In the case of an employee who is paid on a monthly pay period basis, the monthly gross earnings multiplied by twelve and subsequently divided by fifty-two.
6. In the case of an employee who is paid on a daily, or hourly basis, or by the output of the employee, the weekly earnings shall be computed by dividing by thirteen the earnings, not including overtime or premium pay, of said employee earned in the employ of the employer in the last completed period of thirteen consecutive calendar weeks immediately preceding the injury.

Iowa Code § 85.36 (emphasis added). Crucial to a full understanding of the statutory language is the separate definition of gross earnings. Gross earnings are defined as:

recurring payments by the employer to the employee for employment, before any authorized or lawfully required deduction or withholding of funds by the employer, excluding irregular bonuses, retroactive pay, overtime, penalty pay, reimbursement of expenses, expense allowances, and the employer’s contribution for welfare benefits.

Id. § 85.61(3) (emphasis added).

Y. Analysis.

Plainly Iowa’s statutory scheme requires the employer to pay benefits based on the employee’s “weekly earnings.” The calculation of weekly earnings starts with an examination of the employer’s method of paying those earnings.

It is undisputed that AEA pays Bauch on a monthly basis. While Bauch and the union contend her wages accrue on a daily basis because she suffers a $203.63 deduction for each unexcused absence, her contract clearly establishes that she will be paid once per month. Agency precedent notwithstanding, the mere fact a teacher’s pay is docked for unexcused absences is irrelevant to the analysis of benefits due. Duran, 731 P.2d at 1344; see Herbst’s Case, 624 N.E.2d at 566. Because the statutory framework requires us to start with the method of payment in determining the applicable code section, the monthly formula of Iowa Code section 85.36(4) cannot be ignored. Thus, contrary to Bauch’s argument, the district court correctly determined section 85.36(4) applies to her case, not section 85.36(6) as the agency originally determined.

Once it is determined that the employee is paid on a monthly basis, a simple two-step process follows. First the monthly gross earnings, as defined in section 85.61(3), must be calculated. After making this calculation, the statutory formula is applied. It is in the first step that we believe the district court erred.

While specifically stating Bauch’s “weekly earnings must be computed pursuant to Iowa Code § 85.36(4),” the court seemingly overlooked the statute’s definition of “gross earnings.” As noted, gross earnings includes all recurring payments but excludes any “lawfully required deduction or withholding of funds by the employer.” Iowa Code § 85.61(3) (emphasis added). In this case, the parties agreed Bauch’s monthly wages were payable at a rate of $3359.85 per month. However, this monthly payment does not reflect Bauch’s earned compensation deferred into the non-school year months.

In Meyer v. Employment Appeal Board, 441 N.W.2d 766, 768-69 (Iowa 1989), we held “deferred wages were actually ‘payable’ [when] earned.” There, in the context of our unemployment statutes, we agreed that once the school year ended, Meyer no longer drew wages; rather, she was merely collecting her past earnings due. Id. at 769. We believe the proposition applies equally well in the workers’ compensation context. While Bauch is paid $3359.85 per month for twelve months, she actually earns approximately $4031.82 per month under her ten-month contract.

The AEA argues that Meyer is inapplicable because adding Bauch’s deferred compensation to the monthly wage calculation does not “artificially lower” her compensation level; it increases it. But Meyer did not rest on the distinction AEA urges. The case simply made the point that “deferred wages were actually ‘payable’ [to the employee] when earned.” Id. at 769.

Once the correct monthly gross earnings are determined, calculating the second step of section 85.36(4) is straightforward. The monthly earnings must be multiplied by twelve and divided by fifty-two. See Iowa Code § 85.36(4). The resulting figure constitutes Bauch’s weekly earnings under section 85.36.

VI. Disposition.

Applying the pertinent statute according to its terms, we conclude the district court erred in holding that Bauch was only entitled to benefits based on her monthly paycheck of $3359.85. Section 85.61’s definition of “gross earnings” necessarily includes the amount of compensation deferred throughout the year. We recognize that the multiplier in section 85.35(4) does not account for the fact that educators like Bauch do not necessarily work year-round, as evidently contemplated by the statute. But it is the prerogative of the legislature, not the courts, to remedy oversights in legislative schemes. Our duty is merely to apply the plain language of the statute as written.

We therefore reverse the decision of the district court and remand to the agency for a recalculation of benefits in accordance with Iowa Code sections 85.36(4) (monthly earnings) and 85.61(3) (“defining gross earnings”).

REVERSED AND REMANDED WITH INSTRUCTIONS.

      : See generally Powell v. Indus. Comm’n, 104 Ariz. 257, 451 P.2d 37, 38-39, 43 (1969) (where statute provides employee should be compensated based on monthly wages, as set forth in the contract of employment, length of teacher's employment contract governs whether teacher’s earning capacity determined on twelve month or some other basis); Wimmer v. Indus. Comm’n, 26 Ariz.App. 524, 549 P.2d 619, 622 (1976) (same); Lynch v. U.S.D. No. 480, 18 Kan.App.2d 130, 850 P.2d 271, 274 (1993) (statute provides “average weekly wage shall be the gross amount of money earned during the number of calendar weeks employed”); Brounette v. E. Baton Rouge Parish Sch. Bd., 610 So.2d 979, 980 (La.Ct.App.1992) (teacher paid in nine monthly installments, but classified as “annual salaried employee,” entitled to benefits based on yearly wages divided by fifty-two); Herbst’s Case, 416 Mass. 648, 624 N.E.2d 564, 565 (1993) (where "average weekly wage” defined as "the earnings of the injured employee during the period of twelve calendar months immediately preceding the date of injury, divided by fifty-two,” court found it appropriate to calculate earnings on basis of fifty-two week year); Duran v. Albuquerque Pub. Schs., 105 N.M. 297, 731 P.2d 1341, 1343 (Ct.App.1986) (statute providing average weekly wage based on salary pursuant to contract of hire, required payment over fifty-two week year where contract of hire extended twelve months); Jones v. Workers' Comp. Appeal Bd., 786 A.2d 1026, 1030 (Pa.Commw.Ct.2001) (where "earnings are fixed by contract, weekly earning power is to be calculated by dividing the yearly salary by [fifty-two] weeks rather than by the number of weeks actually worked”); Stofa v. Workers’ Comp. Appeal Bd., 702 A.2d 381, 383 (Pa.Commw.Ct.1997) (where salary fixed by "actual wages, set by contract on an annual basis,” wages must be divided by fifty-two, not number of contract weeks, to reach average weekly wage).


source: Caselaw Access Project

author: TERNUS, Justice.

license: Public Domain

text:
    Laurie LEE, Appellant, v. GRINNELL MUTUAL REINSURANCE COMPANY, Appellee.
    No. 00-1656.
    Supreme Court of Iowa.
    June 12, 2002.
    Rehearing Denied July 10, 2002.

      Mindi M. Vervaecke of Fitzsimmons & Vervaecke Law Firm, P.L.C., Mason City, for appellant.

      Rustin T. Davenport and David E. Schrock of De Vries, Price & Davenport, Mason City, for appellee.
   TERNUS, Justice.

The appellee, Laurie Lee, was injured in a motor vehicle accident while a passenger in a car owned by Rex Bergo, Jr. She sued the appellant, Grinnell Mutual Reinsurance Company (Grinnell Mutual), seeking underinsured motorist (UIM) benefits under an automobile policy issued to Bergo by Grinnell Mutual. The district court granted summary judgment to the insurer because Lee was not an “insured person” under the policy definition of that term contained in the UIM coverage.

On appeal, Lee argues that Iowa Code section 516A.1 (1997) requires that any person insured under the liability coverage of a policy also be provided UIM benefits. Although the Grinnell Mutual policy at issue here did not include passengers as insureds under the liability coverage, Lee contends that Iowa Code chapter 321 requires that liability policies issued to owners of motor vehicles registered in Iowa must insure any person “using” the insured vehicle with the permission of the 'named insured, a category that includes passengers. See Iowa Code §§ 321.1(24A), .20B (Supp.1997). Lee reasons that, as a consequence of these statutory provisions, liability coverage for passengers should be read into the Grinnell Mutual policy. Once passengers become insured under the liability coverage, Lee asserts, they are automatically insured under the UIM coverage pursuant to section 516A.1.

Grinnell Mutual disputes Lee’s interpretation of the pertinent statutes and contends chapter 321 does not require it to insure — for liability purposes — persons using the insured vehicle. It also asserts that its failure to include persons merely using the insured vehicle as insureds under the UIM coverage is designed to avoid a duplication of coverage and therefore is permitted by Iowa Code section 516A.2 (1997).

Upon our review of the applicable statutes and the legislative intent evidenced by the statutory scheme, we agree with Lee that coverage for persons “using” the insured motor vehicle must be read into liability policies issued pursuant to chapter 321 and not otherwise extending such protection. Additionally, insurers must provide UIM coverage to those persons included as insureds under the liability coverage, absent a valid exclusion. It follows then that any UIM coverage provided in a motor vehicle liability policy must likewise insure persons “using” the insured motor vehicle with the named insured’s consent, notwithstanding a more restrictive policy definition of “insured person.”

With respect to the policy before us, we reject Grinnell Mutual’s contention that the narrow policy definition of insured set forth in its UIM coverage was designed to avoid duplication of coverage. Therefore, Lee is insured under the UIM provisions of the Grinnell Mutual policy to the extent her use of the insured vehicle was with the permission of the named insured.

In view of our interpretation of the governing statutes, we hold the district court erred in granting summary judgment to the insurer. Consequently, we reverse and remand for trial. A more detailed explanation of the basis for this decision follows.

I. Background Facts and Proceedings.

On March 17,1998, Lee was a passenger in a motor vehicle driven by Katie Bergo and owned by Katie’s father, Rex Bergo, Jr. This vehicle was in an accident with a car owned and operated by Marian Johnson. Johnson allegedly ran a stop sign and collided with the Bergo vehicle, causing injuries to Lee.

Lee brought suit against Johnson seeking tort damages and against Grinnell Mutual seeking UIM benefits. Her claim against Johnson was eventually settled. Meanwhile, Grinnell Mutual filed a motion for summary judgment, asserting that, under its policy, “underinsured coverage is only provided to the policyholder, relative, or another person driving the policyholder’s car.” Because it was undisputed that Lee did not fall within any of these categories, the district court granted Grinnell Mutual’s motion and entered judgment in its favor on Lee’s UIM claim. This appeal followed.

II. Applicable Pnnciples of Review.

This court reviews a summary judgment ruling on error. Nicodemus v. Milwaukee Mut. Ins. Co., 612 N.W.2d 785, 786 (Iowa 2000); Iowa R.App. P. 6.4. “A summary judgment will be affirmed when the moving party has shown no genuine issues of material fact exist and the party is entitled to judgment as a matter of law.” Whicker v. Goodman, 576 N.W.2d 108, 110 (Iowa 1998); accord Iowa R. Civ. P. 1.981(3). In a case such as the one before us, where the facts are undisputed, this court simply determines “whether the district court correctly applied the law.” Krause v. Krause, 589 N.W.2d 721, 724 (Iowa 1999).

When the parties offer no extrinsic evidence on the meaning of policy language, the interpretation and construction of an insurance policy are questions of law for the court. Pudil v. State Farm Mut. Auto. Ins. Co., 633 N.W.2d 809, 811 (Iowa 2001); Tropf v. Am. Family Mut. Ins. Co., 558 N.W.2d 158, 159 (Iowa 1997). We view the provisions of an insurance policy “in a light favorable to the insured.” A.Y. McDonald Indus. v. Ins. Co. of N. Am., 475 N.W.2d 607, 619 (Iowa 1991). “[T]he cardinal principle is that the intent of the parties must control; and except in cases of ambiguity this is determined by what the policy itself says.” Id. at 618.

Notwithstanding the principle that the meaning of an insurance contract is generally determined from the language of the policy, statutory law may also affect our interpretation of policy provisions. In discussing the application and effect of Iowa’s uninsured/underinsured motorist statute, chapter 516A, this court has stated:

A statute that authorizes a contract of insurance has application beyond merely permitting or requiring such a policy. The statute itself forms a basic part of the policy and is treated as if it had actually been written into the policy. The terms of the policy are to be construed in light of the purposes and intent of the applicable statute.

Tri-State Ins. Co. v. De Gooyer, 379 N.W.2d 16, 17 (Iowa 1985) (citations omitted). Consequently, when a policy provision conflicts with a statutory requirement, the policy provision is ineffective and the statute controls. Matthess v. State Farm Mut. Auto. Ins. Co., 548 N.W.2d 562, 564 (Iowa 1996). Thus, a determination of the coverage provided by the Grinnell Mutual policy also requires an interpretation of the pertinent statutes.

Our goal in the interpretation of legislative enactments is to give effect to the intent of the legislature. Mewes v. State Farm Auto. Ins. Co., 530 N.W.2d 718, 722 (Iowa 1995). This intent is gleaned from the words used in the statute. Lockhart v. Cedar Rapids Cmty. Sch. Dist., mi N.W.2d 845, 847 (Iowa 1998). Although the court cannot enlarge or otherwise change the terms of a statute, “[w]e will not construe a statute in a way that would produce impractical or absurd results.” Carolan v. Hill, 553 N.W.2d 882, 887 (Iowa. 1996). Rather, we seek a reasonable interpretation that will accomplish “the purpose of the statute and redress the wrongs the legislature sought to remedy.” Mewes, 530 N.W.2d at 722. With these general principles in mind, we turn to the issues at hand.

III. Is Lee Insured Under the UIM Coverage of the Grinnell Mutual Insurance Policy ?

A. Policy provisions. The Grinnell Mutual insurance policy contains the following definition of “insured” for purposes of liability coverage:

As used in this Part, “insured person” or “insured persons” means:
(1) You;
(2) A relative;
(3) Any person driving your insured car;
(4) Any other person or organization, but only with respect to legal liability for:
(a) The acts or omission of you or a relative while driving or occupying your insured car;
(b) The acts or omissions of any person while driving your insured car; or
(c) The acts or omissions of you or a relative while driving or occupying any private passenger car or utility car which is not owned, hired, rented, or leased by that person or organization.

The definition of insured in the UIM coverage is similar:

As used in this Part:
(I) “Insured person” means:
(a) You or a relative;
(b) Any other person driving your insured car; or
(c) Any person for damages that person is entitled to recover because of bodily injury to you, a relative, or another driver of your insured car.

The policy defines the words “you” and “your” to mean “the policyholder named in the declarations and spouse if living in the same household.”

It is undisputed that Lee does not fall within the policy definitions of “insured person.” Lee is not the policyholder, nor is she related to the policyholder. To otherwise qualify as an insured she must be “driving” the insured auto.' Lee concedes that as a mere passenger she was not driving the insured vehicle.

Notwithstanding the language of the policy, Lee asserts we should incorporate into the contract the requirements of chapters 321 and 516A as if those requirements had been written into the policy. We first turn to the, requirements of chapter 321.

B. Chapter 321 and liability coverage. In 1997 the legislature enacted a new law relating to “financial liability coverage for motor vehicles.” 1997 Iowa Acts ch. 139 (codified in part at Iowa Code chapter 321 (Supp.1997)). Before we discuss the substantive provisions of this statute, we address Grinnell Mutual’s assertion that the new law does not apply to the policy issued to Bergo because the law had not gone into effect at the time of the accident.

The accident at issue here occurred on March 17, 1998. The 1997 act was approved on May 9, 1997, and was to take effect on January 1, 1998, provided “an appropriation is made in accordance with section 25B.2, subsection 3.” See id. §§ 17-18. Iowa Code section 25B.2(S) requires that the legislature fund any new mandate imposed on a political subdivision before the political subdivision is required to perform the mandated activity or provide the mandated service. Iowa Code § 25B.2(3) (1997). Grinnell Mutual asserts that no specific appropriation of funds appears to have been made and therefore, when the accident occurred, the financial liability coverage law was not in effect.

The problem with Grinnell Mutual’s argument is that it cannot be determined from the record made here whether and to what extent the 1997 act was not funded. More importantly, the 1998 general assembly repealed that part of the 1997 act making the effective date conditional on compliance with section 25B.2(3). 1998 Iowa Acts ch. 1121, § 8. Not only did the 1998 act repeal the funding requirement included in the 1997 act, it also provided that the 1998 act, “being deemed of immediate importance, takes effect upon enactment and applies retroactively to July 1, 1997.” Id. § 9 (emphasis added). Grin-nell Mutual has not challenged the validity of the repeal and its effective date. Therefore, we hold the 1997 amendments to chapter 321 govern the insurance contract issued in this case. We now turn to the provisions of the 1997 act.

One of the amendments made to chapter 321 in 1997 was the addition of the following provision:

[A] person shall not drive a motor vehicle which is registered in this state on the highways of this state unless financial liability coverage, as defined in section 321.1, subsection 24A, is in effect for the motor vehicle and unless the driver has in the motor vehicle the proof of financial liability coverage card issued for the motor vehicle.

Iowa Code § 321.20B(1) (Supp.1997). The phrase “financial liability coverage” is defined, in part, as

a. An owner’s policy of liability insurance which is issued by an insurance carrier authorized to do business in Iowa to or for the benefit of the person named in the policy as insured, and insuring the person named as insured and any person using an insured motor vehicle with the express or implied permission of the named insured against loss from liability imposed by law for damages arising out of the ownership, maintenance, or use of an insured motor vehicle within the United States of America or Canada, but subject to minimum limits, exclusive of interest and costs, in the amounts specified in section 321A.21 or specified in another provision of the Code, whichever is greater.

Id. § 321.1(24A)(a) (emphasis added). To summarize the relevant portions of the new law, the owner of a motor vehicle must buy liability coverage insuring the policyholder and any person “using” the insured vehicle with the named insured’s consent and must carry a card in the vehicle proving the purchase of such coverage.

The financial liability coverage law did not, however, impose obligations solely on owners of motor vehicles registered in Iowa. Automobile liability insurers were also affected. The “proof of financial liability coverage card” that a driver must carry in the motor vehicle means, in pertinent part, “a liability insurance card issued under section 321.20B.” Id. § 321.1(54A). Section 321.20B(2)(a) requires an insurer to “issue to its insured owners of motor vehicles registered in this state a financial liability coverage card for each registered motor vehicle insured.” This card must show, among other things, “the type of coverage provided” and “the expiration date of the applicable insurance coverage.” Id. § 321.20B(2)(a).

Lee argues these provisions, considered in their entirety, require an insurer who issues a liability policy to an Iowa motor vehicle owner to provide “financial liability coverage” as that term is defined in chapter 321. Grinnell Mutual responds that the financial liability coverage law “does not impose duties upon an insurance company, nor does it delineate types of insurance coverage required to be provided.”

While it is true that the statute does not expressly require insurers to issue liability insurance policies that meet the statutory definition of “financial liability coverage,” any other interpretation of the statute would lead to absurd results and defeat the purpose of the law. Clearly, the intent of the legislature in requiring insurers to issue cards to their insureds is to have the cards serve as verification that the owner has purchased the insurance required by chapter 321, i.e., financial liability coverage. See Iowa Code §§ 321.1(54A), .20B(1) (referring to card as a “proof of financial liability coverage card” (emphasis added)). It would be absurd to allow an insurer to issue a card to its insured in compliance with its obligation under section 321.20B(2)(a) without having first sold a policy to its insured that provides “financial liability coverage” as required by section 321.20B(1). Surely Grinnell Mutual does not believe that it could issue any type of coverage, provide its insured with a “proof of financial liability coverage card,” and fulfill its statutory duty.

We hold that an insurer who provides liability coverage for a motor vehicle registered in this state must issue a policy to its insured that includes financial liability coverage as that term is defined in section 321.1(24A)(a). Only by requiring the inclusion of such coverage will the legislative purpose implicit in section 321.20B(2)(u) be accomplished. In other words, only in this way will, the card issued to the insured by the insurance company serve as reliable proof of the existence of the required coverage.

Because chapter 321 requires that the liability coverage provided by Grinnell Mutual conform to the statutory definition of “financial liability coverage,” “[t]he statute itself forms a basic part of the policy arid is treated as if it had actually been written into the policy.” Tri-State Ins. Co., 379 N.W.2d at 17. Therefore, Grinnell Mutual was required to include, in its policy, liability coverage for “any person using an insured motor vehicle with the express or implied permission of the named insured ... in the amounts specified in section 321A.21 or specified in another provision of the Code, whichever is greater.” Iowa Code § 321.1(24A)(a). Because it did not, we read this requirement into the Grinnell Mutual policy.

Having determined the scope of liability coverage provided by the policy, we now examine the facts of this case to determine whether Lee falls within this coverage. There appears to be no dispute that Lee was a person using the Bergo vehicle. See generally Van Zwol v. Branon, 440 N.W.2d 589, 593 (Iowa 1989) (noting that term “use” is distinguishable from and broader than term “operate”); cf. Grinnell Mut. Reinsurance Co. v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 176, 180 (Iowa 1997) (holding, in context of consent provision in policy, “use” refers to the use of the vehicle in general rather than its use by the person seeking coverage). Therefore, provided Lee was using the car with the named insured’s permission, she would qualify as an insured person under the liability coverage of the Grinnell Mutual policy. This coverage would, of course, be limited to that required by section 321.1(24A)(a). See Iowa Code §§ 321.1(24A)(a) (defining the required insurance to be at least in the amount “specified in section 321A.21”), 321A.21(2)(6) (1997) (providing for minimum limits of $20,000 per person and $40,000 per accident); Preferred Risk Mut. Ins. Co. v. Federated Mut. Ins. Co., 611 N.W.2d 283, 285-86 (Iowa 2000) (holding that where no waiver of uninsured motorist (UM) coverage for particular category of insured for which no UM coverage was provided, UM coverage in the minimum amount required by law would be read into the policy, despite higher limits expressly provided in the policy for other insureds).

Having concluded that Lee is afforded liability insurance under the Grinnell Mutual policy, provided her use was with Ber-go’s consent, we now consider whether Lee is likewise insured under the UIM coverage.

C. Chapter 516A and UIM coverage. As noted above, the Grinnell Mutual policy does not expressly include passengers or persons merely using the insured vehicle as insureds under the UIM coverage of the policy. Nonetheless, Lee argues that chapter 516A requires that such coverage be extended to her because she is insured under the La-bility provisions of the Grinnell Mutual policy, as supplemented by the requirements of chapter 321.

Iowa Code section 516A.1 provides in pertinent part:

No automobile liability ... insurance policy insuring against Lability for bodily injury or death arising out of the ownership, maintenance, or use of a motor vehicle shaL be delivered ... in this state ..., unless coverage is provided ... for the protection of persons insured under such policy who are legally entitled to recover damages from the owner or operator of ... an underinsured motor vehicle because of bodily injury, sickness, or disease, including death resulting therefrom, caused by accident and arising out of the ownership, maintenance, or use of such ... underinsured motor vehicle....

Iowa Code § 516A.1 (1997) (emphasis added). This court has stated that “[t]he language of chapter 516A makes it clear that the statute was intended to protect persons insured under a liability policy.” Hornick v. Owners Ins. Co., 511 N.W.2d 370, 372 (Iowa 1993) (emphasis added). Accordingly, we have held that persons who are insured for Lability purposes under a policy are entitled to the protection mandated by chapter 516A, i.e., UIM coverage, unless a vahd exclusion from UIM coverage is present in the policy. Id. at 373; Kats v. Am. Family Mut. Ins. Co., 490 N.W.2d 60, 62 (Iowa 1992); accord Allied Mut. Ins. Co. v. Action Elec. Co., 256 Neb. 691, 593 N.W.2d 275, 279-80 (1999) (citing cases from other jurisdictions). ^Applying these principles here, we conclude chapter 516A requires that persons insured under the liability coverage of the Grinnell Mutual policy also be afforded coverage under the UIM provisions of the pohcy. See Pappas v. Cent. Nat’l Ins. Grp., 400 Mich. 475, 255 N.W.2d 629, 631 (1977) (holding where UM statute required that persons insured under liability coverage also be insured under UM coverage, court would extend UM coverage to person insured under liability provisions despite exclusion of such person from UM definition of insured).

Grinnell Mutual attempts to avoid this consequence by characterizing its definition of “insured person” as an exclusion designed to avoid duplication of coverage. Iowa Code section 516A.2 permits an insurer to “include terms, exclusions, limitations, conditions, and offsets which are designed to avoid duplication of insurance.” Iowa Code § 516A.2(1) (emphasis added). This court has upheld policy provisions that deny UIM coverage to persons occupying an insured vehicle even where no actual duplication is shown, provided the policy provision was designed to avoid duplication. See Miller v. Westfield Ins. Co., 606 N.W.2d 301, 306-07 (Iowa 2000). On the other hand, where the policy provision does not appear to be intended to avoid duplication of insurance, the limitation is unenforceable. See Prudential Ins. Co. v. Martinson, 589 N.W.2d 64, 66 (Iowa 1999); Veach v. Farmers Ins. Co., 460 N.W.2d 845, 847 (Iowa 1990).

We do not think Grinnell Mutual’s definition of “insured person” was designed to avoid duplication of insurance. The omission from UIM coverage of persons using the insured vehicle has no discernible connection to the duplication of coverage. Passengers may or may not own a vehicle and that vehicle may or may not be insured. In the cases where we have upheld exclusions there has been some logical nexus between the persons excluded and the potential for duplicate insurance. E.g., Homick, 511 N.W.2d at 374 (upholding provision that extended UIM coverage only to relatives of named insured “who [do] not own a car” (emphasis added)); Ciha v. Irons, 509 N.W.2d 492, 494 (Iowa 1993) (upholding “owned-but-not-insured” exclusion that applied where insured was injured in another vehicle owned by the insured but not covered under the policy); Kluiter v. State Farm Mut. Auto. Ins. Co., 417 N.W.2d 74, 76 (Iowa 1987) (also upholding “owned-but-not-insured” exclusion); cf. Martinson, 589 N.W.2d at 66 (invalidating “not-owned-but-insured” exclusion that applied where insured was injured in a vehicle not owned by the insured and not covered under the insured’s policy); Veach, 460 N.W.2d at 848 (invalidating “not-owned-but-insured” exclusion that applied where insured was injured in a vehicle not owned by the insured but covered under another policy). That nexus is lacking here and consequently the policy provision upon which Grinnell Mutual relies is not a term, limitation, or condition “designed to avoid duplication of insurance” within the meaning of section 516A.2(1). It cannot, therefore, operate to exclude persons otherwise insured under the liability provisions of the policy from coverage under the UIM provisions. Therefore, if Lee had permission to use the insured vehicle, she is insured under the Grinnell Mutual policy for damages she is legally entitled to recover from an underinsured motorist, subject to the same limits as the liability coverage extended to her pursuant to the requirements of section 321.1(24A)(a).

IV. Summary and Disposition.

Iowa’s financial liability coverage law requires that an insurer issuing an owner’s policy of liability, insurance providing coverage for a motor vehicle registered in this state must conform its liability coverage to the statutory definition of “financial liability coverage.” As applied to the present case, this requirement of chapter 321 must be treated as if it had been written into the Grinnell Mutual policy. Thus, liability coverage under the policy must be extended, in the minimum statutory amount, to “any person using an insured motor vehicle with the express or implied permission of the named insured.” Because Lee was using the Bergo vehicle insured by Grinnell Mutual at the time of her injuries, she is covered under the liability provisions of the policy, provided this use was with the consent of Rex Bergo.

Chapter 516A requires that persons insured under the liability coverage of a policy be afforded UIM coverage under the policy. Although provisions designed to avoid duplication of insurance are permitted, the policy definition of “insured person” at issue here was not designed to avoid duplication of coverage. Therefore, this definition does not prevent UIM coverage, in the minimum statutory amount, from being extended to Lee as required by chapter 516A.

We hold that the district court erred in ruling as a matter of law that Lee was not an insured person under the Grinnell Mutual policy. Therefore, we reverse the summary judgment entered in favor of Grinnell Mutual and remand the case for trial on Lee’s claim for UIM benefits.

REVERSED AND REMANDED.

      . Lee makes two additional claims that we do not address in this decision. She asserts that because she is an insured for purposes of the medical payments coverage of the Grinnell Mutual policy, she is required to be insured under the UIM coverage. In addition, Lee contends the insurer’s failure to provide UIM coverage to non-relative passengers defeats the purpose of the UIM statute and is against public policy. Because we resolve the appeal on other grounds, we need not discuss these contentions.


author: LARSON, Justice. CADY, Justice

text:
    Shirley Ann SMITH, Individually and as Parent and Next Friend of Levi Raymond Smith, a Minor, Appellant, v. Raymond Francis SMITH, Appellee.
    No. 00-1799.
    Supreme Court of Iowa.
    June 12, 2002.
    Rehearing Denied July 16, 2002.

      James C. Larew of Larew Law Office, Iowa City, for appellant.
    J. Michael Weston and Brenda K. Wall-richs of Moyer & Bergman, P.L.C., Cedar Rapids, for appellee.
   LARSON, Justice.

Shirley Smith, on behalf of her minor son, Levi Smith, sued the child’s father, defendant Raymond Smith, for negligent infliction of emotional distress when Levi witnessed the events surrounding the death of his younger brother, Eli. The child died as a result of the defendant backing over him with a van. The district court concluded it had no subject matter jurisdiction, based on parental immunity, and dismissed the case. We reverse and remand for further proceedings.

I. Facts and Prior Proceedings.

The plaintiff filed this suit against Raymond Smith and an insurer not involved in this appeal on July 31, 1997. On January 16, 1998, the court set pretrial deadlines. Pleadings were to be closed on November 30, 1998, and dispositive motions were to be filed by December 7, 1998. The plaintiff filed an amendment to her petition on June 11, 1998. The defendant filed his answer on August 6, 1998, but did not assert the- defense of parental immunity or subject matter jurisdiction, which ultimately were the bases for the court’s dismissal of the plaintiffs case. On November 18, 1998, the plaintiff filed a second amendment to her petition. The defendant answered the second amended petition on November 24, 1998. Again, the defendant did not raise the issues of subject matter jurisdiction or parental immunity.

The court held a pretrial conference on January 5, 1999, and set a trial date of January 20, 1999. All dispositive motions were to be ruled on prior to trial, but Judge Fahey said he was too busy to rule on motions not at issue here, and sua sponte continued the trial without setting a new trial date. Some of the pending motions were ruled on approximately four months later, and some were ruled on approximately nine months later. The court ordered another pretrial conference for March 15, 1999, but no trial date was set. On August 25, 1999, the court held a pretrial conference and set this aspect of the case for trial on June 27, 2000, and remaining claims for October 3, 2000.

The trial commenced on June 27, 2000, but was abruptly halted when the court ordered a mistrial based on the plaintiffs mentioning in her opening statement that there would be evidence of the defendant’s intoxication. The court reset the case for October 3, 2000. On September 29, 2000, just five days before the trial, the defendant’s attorney filed a brief in which he argued, for the first time, that the defendant was entitled to parental immunity under Wagner v. Smith, 340 N.W.2d 255 (Iowa 1983). The brief contended an earlier case, Turner v. Turner, 304 N.W.2d 786 (Iowa 1981), which had rejected parental immunity, was inapplicable as a matter of law.

The plaintiff responded:

Plaintiff objects, in the strongest possible terms, to Defendant’s attempt to file a dispositive motion on the eve of trial, well after all deadlines governing such a filing have lapsed. Such a method of proceeding denies the parties and the Court the opportunity to consider the motion carefully — if it deserves such consideration.
Plaintiff also notes the very difficult position in which Defendant’s filing places the parties, waiting until all motions in limine have been filed, heard by the Court, and ruled upon. This case had been on record for more than three years, during all of which time Defendant denied liability for his actions on October 15,1995....

On October 3, 2000, the parties arrived at the courthouse for trial. As the jury panel gathered, but before jury selection commenced, the court called the' attorneys into chambers. The discussion focused on the issues raised in the defendant’s recently filed brief. In response to the court’s concern that no motion was pending before it concerning dismissal, the defendant’s attorney orally moved that the case be dismissed. The district court granted the motion, dismissed the case, assessed costs to the plaintiff, and sent the jurors home. On October 30, 2000, Judge Fahey issued a written “Judgment of Dismissal” in which the earlier oral ruling was confirmed. The plaintiff appealed.

II. The Subject Matter Jurisdiction Argument.

’ The district court rationalized its dismissal at the time of trial on the basis it was a matter of subject matter jurisdiction, which may be raised at any time. See Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418, 428 (Iowa 1996). The only basis for characterizing the defendant’s motion as a challenge to subject matter jurisdiction was the plaintiffs passing reference to it as such in- her response to the defendant’s brief. It is clear that the defendant’s motion is not a challenge to subject matter jurisdiction. Subject matter, jurisdiction refers to the power of the court to hear and determine cases of the general class to which the proceeding in question belongs, not merely the particular case occupying the court’s attention. Cargill, Inc. v. Conley, 620 N.W.2d 496, 501 (Iowa 2000); Powell v. Khodari-Intergreen Co., 303 N.W.2d 171, 173 (Iowa 1981).

The defendant “is certainly not contending and cannot contend that the district court lacked authority to hear the type of cases to which this proceeding belongs.” Iowa Coal, 555 N.W.2d at 428. That is so because “[s]ubjeet matter jurisdiction is conferred by constitutional or statutory power,” Hutcheson v. Iowa Dist. Ct., 480 N.W.2d 260, 263 (Iowa 1992), and the defendant does not argue that tort cases by children against their parents are beyond the statutory or constitutional power of the district court to entertain. Moreover, “[s]ubject matter jurisdiction is not dependent on whether the petition has established a meritorious claim.” Powell, 303 N.W.2d at 174 The defendant’s attack on the plaintiffs claim is clearly not one concerning the power of the court to hear such a claim, and thus is not a motion challenging subject matter jurisdiction. Because it is not a matter of subject matter jurisdiction that is attacked, our procedural rules for such challenges must be observed, particularly with respect to timeliness of the filings.

III. Waiver for Failure to Plead an Affirmative Defense.

Under Iowa Rule of Civil Procedure 88 (recently renumbered as rule 1.421), “[e]very defense to a claim for relief in any pleading must be asserted in the pleading responsive thereto, or in an amendment to the answer within 20 days after service of the answer.... ” The question here is whether parental immunity is an affirmative defense that must be pled. It appears that it is, and by failing to raise the issue in his answer, the defendant has waived it.

An affirmative defense is “ ‘one resting on facts not necessary to support plaintiffs case.’ ” Bond v. Cedar Rapids Television Co., 518 N.W.2d 352, 355 (Iowa 1994) (quoting Erickson v. Wright Welding Supply, Inc., 485 N.W.2d 82, 86 (Iowa 1992)). “Thus, any defense which would avoid liability although admitting the allegations of the petition is an affirmative defense.” Erickson, 485 N.W.2d at 86. It is clear under this standard that parental immunity, as it is now applied in Iowa after Wagner, is an affirmative defense. A defendant must show the alleged negligent acts involved an exercise of either parental authority over the child or an exercise of parental discretion in providing care. See Wagner, 340 N.W.2d at 256. Furthermore, Raymond admitted his negligence here, further demonstrating his claim of parental immunity must be an affirmative defense.

While it does not appear this court has directly held parental immunity is an affirmative defense, it has held qualified immunity is. See Dickerson v. Mertz, 547 N.W.2d 208, 214-15 (Iowa 1996) (holding qualified immunity, applicable to acts of executive branch officials carried out in furtherance of their official duties, is an affirmative defense that must be pled). This court has also noted instances in which immunity has been pled as an affirmative defense. See Jain v. State, 617 N.W.2d 293, 296 (Iowa 2000) (noting State pled, as an affirmative defense, the discretionary function exemption to the State’s waiver of sovereign immunity); Kulish v. Ellsworth, 566 N.W.2d 885, 888 (Iowa 1997) (defendants amended their answer to assert the affirmative defense of governmental immunity for acts or omissions related to an emergency response under Iowa Code section 670.4(11)); Turner, 304 N.W.2d at 786 (“[Djefendánt asserted the doctrine of parental immunity as an affirmative defense.”). Other states have specifically held that a claim of parental immunity is an affirmative defense. The Ohio Supreme Court has held immunity is generally an affirmative defense and cited the following, among others, as examples of affirmative defenses: sovereign immunity, official immunity, parental immunity, policeman/fireman immunity, charitable immunity, and judicial immunity. BCL Enters., Inc. v. Ohio Dep’t of Liquor Control, 77 Ohio St.3d 467, 675 N.E.2d 1, 4 (Ohio 1997); see also McGee v. McGee, 936 S.W.2d 360, 369 (Tex.App.1996) (“Parental immunity is an affirmative defense that ordinarily must be pled to avoid-waiver.”); Elkington v. Foust, 618 P.2d 37, 40 (Utah 1980) (parental immunity is an affirmative defense that must be pleaded). But see Faul v. Dennis, 118 N.J.Super. 338, 287 A.2d 470, 472 (N.J.Super.Ct.Law Div.1972) (Parental immunity is not an affirmative defense because “surprise is fundamental to the requirement to plead certain defenses affirmatively and it is difficult to imagine a situation where a party could claim surprise to the defense of parental immunity”).

IV. Conclusion.

We conclude the court erred in sustaining the motion to dismiss on parental-immunity grounds because the defendant, having failed to plead it, has waived this affirmative defense. This case has languished in the court system for too long, and the plaintiffs complaint that the parties deserve more considerate treatment by the court system is well-justified. We reverse and remand for further proceedings before another judge.

REVERSED AND REMANDED.

All justices concur except CADY and TERNUS, JJ., who dissent.

CADY, Justice

(dissenting).

I respectfully dissent.

The majority failed to reach the disposi-tive issue in this case by misapplying the waiver doctrine and by failing to recognize the discretion of the trial court.

Even if parental immunity is an affirmative defense that must be pled, the failure of the defendant in this case to raise it until the eve of trial does not constitute a waiver of the defense. Certainly, we recognize a defendant generally waives an affirmative defense if it is not raised in a pleading. Dutcher v. Randall Foods, 546 N.W.2d 889, 893 (Iowa 1996). Yet, the rationale for this waiver rule is founded on the reason certain defenses are required to be raised as affirmative defenses, and others are not. An affirmative defense is one that rests on facts not necessary to support the plaintiffs case. Bond v. Cedar Rapids Television Co., 518 N.W.2d 352, 355 (Iowa 1994). Thus, a fair trial requires a defendant to give notice to a plaintiff of a defense to a claim not associated with proof of the claim so that the plaintiff will be able to present evidence at trial to overcome the defense. Therefore, the pleading requirement provides the essential notice and opportunity to the plaintiff to fully address the defense at trial.

Yet, the waiver requirement comes from the delay in asserting the affirmative defense until the plaintiff has tried the case, not from the procedural requirement of raising it in a pleading. This explains why the waiver rule does not apply when the underlying issue is tried by consent of the parties. Dutcher, 546 N.W.2d at 893. It is also consistent with our liberal approach to allowing amendments to pleadings, even during trial. See Rife v. D.T. Corner, Inc., 641 N.W.2d 761, 767 (Iowa 2002). The idea is that if a defendant holds back on an affirmative defense until it is too late for the plaintiff to address the defense, the defense is waived. In this case, the majority failed to apply the waiver doctrine consistent with its rationale.

In truth, the procedural background of this case is not about waiver, but the discretion of a trial court to permit a defendant to raise a dispositive issue on the eve of trial. Clearly, the trial court has broad discretion in this area, and we are not justified to interfere with such discretion absent a clear abuse of authority. See id. at 766.

In this case, although the immunity issue was presented on the eve of trial, the plaintiff did not suffer the type of prejudice that would support a finding of an abuse of discretion. The issue was solely one of law, and the plaintiffs facts were considered without dispute and in a light most favorable to the plaintiff.

The holding in this case has stripped trial courts of their discretion to consider untimely issues, and expanded the waiver doctrine far beyond its intended parameters. Clearly, the defendant in this case should have raised the untimely defense early in the proceedings. Furthermore, the plaintiff was understandably justified in feeling ambushed at trial and frustrated by the pretrial procedure employed by the defendant. Yet, as repugnant as the procedure may have been, it caused no real prejudice under the circumstances. We should address the dispositive issue raised in this appeal.

TERNUS, J., joins this dissent.