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IN THE COURT OF APPEALS OF IOWA No. 0-549 / 09-1562 Filed December 8, 2010 RICHARD A. HESSELING and JEAN M. HESSELING, Plaintiffs-Appellees, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant. ________________________________________________________________ Appeal from the Iowa District Court for Dubuque County, Monica L. Ackley, Judge.

State Farm appeals the district court`s denial of its motion for summary judgment. REVERSED AND REMANDED.

Douglas Henry, Dubuque, for appellant. Werner Hellmer of Day & Hellmer, P.C., Dubuque, for appellees.

Heard by Mansfield, P.J., and Danilson and Tabor, JJ.

2 TABOR, J. Plaintiffs Richard and Jean Hesseling suffered injuries in a two-car accident. They were insured at the time of the accident under a State Farm policy, that included uninsured motorist coverage and required them to bring suit against State Farm within two years from the date of the accident. This appeal requires us to determine whether a contractual two-year limitation period for bringing an uninsured motorist claim against an insurer is reasonable when the tortfeasors` insured status cannot be readily determined. Because an inference arises that a tortfeasor is uninsured when plaintiffs demonstrate they used all reasonable efforts in an unsuccessful attempt to ascertain a tortfeasor`s liability coverage, and because the Hesselings were not required to satisfy any preconditions before bringing suit against State Farm, we conclude the provision is reasonable and State Farm was entitled to summary judgment. I. Background Facts and Procedures On March 13, 2005, Richard and Jean Hesseling sustained injuries in a motor vehicle accident when they collided with a vehicle owned by Gregory Shumake and driven by Tyran B. Dumas. At the time of the accident, the

Hesselings were insured under a State Farm insurance policy, which included uninsured motorist coverage. Recovery under the uninsured motorist provision was subject to limitations and requirements set out in the policy. Section III detailed the process for It

obtaining benefits under the policy`s uninsured motor vehicle provision.

provided first, State Farm and the Hesselings could reach a mutual agreement

3 regarding the amount of damages to which the Hesselings were entitled; second, if the parties did not reach an agreement, they could consent to arbitrate the dispute; third, if the parties did not reach an agreement nor consent to arbitration, the policy provided the Hesselings shall file a lawsuit . . . against the owner or driver of the uninsured motor vehicle . . . and [State Farm] . The policy further established a two-year time frame within which the Hesselings were required to file suit against State Farm: There is no right of action against [State Farm] . . . under uninsured motor vehicle coverage unless such action is commenced within two years after the date of the accident. The Hesselings filed suit against Shumake and Dumas, both from Cook County, Illinois, on March 9, 2007, and obtained a default judgment, including money damages, against the two defendants. On that same date, the

Hesselings` counsel sent a letter to State Farm, explaining they were filing suit against the driver and owner of the vehicle and further stating: As a precautionary matter, we are also asserting our clients` rights under the underinsured/uninsured policy provisions of their automobile insurance policy with your company. uninsured . . . . On October 3, 2007, State Farm notified the Hesselings they could no longer assert a claim under their uninsured motorist coverage for the injuries sustained in the accident because they had not filed suit against State Farm within the two-year contractual limitations period. The Hesselings responded, on April 10, 2008, indicating they did not concur with State Farm`s assessment and It is our belief that the Defendants will likely be

4 reasserted their claim. They stated, [s]ince the named defendants appear to be judgment proof, we intend to pursue any and all administrative and judicial remedies against State Farm to seek monetary recovery under the uninsured motor vehicle provision of our client`s policy. On October 3, 2008, the

Hesselings sent a demand letter indicating the defendants appear to be judgment proof` and demanding State Farm pay damages pursuant to the Underinsured Motorist Coverage provided in the policy. State Farm responded in an October 9, 2008 letter denying the Hesselings` claim and stating: [T]here was no agreement between State Farm and the Hesselings on the entitlement to collect damages or on the amount, the Hesselings failed to meet the policy term requiring them to file suit against State Farm, and the two year time period in which to commence that suit has elapsed. Therefore, your clients` claim against State Farm is barred by the contractual period of limitations, and they may no longer assert a claim for uninsured motorist coverage. The Hesselings filed suit against State Farm on May 20, 2009, arguing the vehicle owned by Shumake and operated by Dumas was an uninsured vehicle, and contending they were entitled to benefits pursuant to the uninsured motorist provision of their insurance policy. State Farm moved for summary judgment, contending the Hesselings` action was barred by the two-year contractual period of limitations established in the policy. The Hesselings resisted, arguing the two-year period was

unreasonable and unenforceable under the facts and circumstances of this case and the motion was premature because discovery had not been completed. The district court denied State Farm`s motion for summary judgment, concluding a factual dispute exited regarding whether the insurance contract`s two-year

5 limitation was unreasonable. The court further stated an action for uninsured motorist coverage was not ripe because the Hesselings did not know the tortfeasors` financial status. On October 16, 2009, State Farm requested interlocutory review of the summary judgment ruling. Our supreme court granted State Farm`s application and transferred the case to us. The sole issue on appeal is whether the

contractual two-year limitations period for bringing an uninsured motorist claim against State Farm is reasonable. III. Standard of Review We review the district court`s denial of summary judgment for the correction of errors at law. Iowa R. App. P. 6.907; Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 777 (Iowa 2000). Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Nicodemus v. Milwaukee Mut. Ins. Co., 612 N.W.2d 785, 787 (Iowa 2000). An issue of fact is material when it may affect the outcome of the litigation. Id. IV. Analysis Uninsured motorist coverage ensures that victims receive minimum compensation when injured by uninsured motorists. Hamm, 612 N.W.2d at 779. Claims for uninsured motorist benefits are contractual in nature and the applicable statute of limitations normally provides ten years within which to bring such claims. Id.; Iowa Code

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