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IN THE COURT OF APPEALS OF IOWA No. 2-721 / 12-0126 Filed October 31, 2012 SHARON MOAD, Individually and as Personal Representative of the ESTATE OF DOUGLAS MOAD, and as Personal Representative on behalf of Travis Moad and Heather Johnson, Plaintiffs-Appellees, vs. RICHARD LIBBY, as Personal Representative of the ESTATE OF MATTHEW LIBBY, NORTHLAND INSURANCE COMPANY, and PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD, Defendants, and DAKOTA TRUCK UNDERWRITERS, RISK ADMINISTRATIVE SERVICES, INC., Intervenor-Appellant. ________________________________________________________________ Appeal from the Iowa District Court for Johnson County, Nancy A. Baumgarnter, Judge.

Intervenor appeals the district court's decision concluding Iowa law applied to extinguish its workers' compensation lien. REMANDED. Sasha L. Monthei of Scheldrup Blades Schrock Smith Aranza, P.C., Cedar Rapids, for appellants. Elizabeth J. Craig and Martin A. Diaz of Martin Diaz Law Firm, Iowa City, for appellees. Rene LaPierre of Klass Law Firm, L.L.P., Sioux City, for Northland Insurance Company. Frank Comito of Gaudineer, Comito & George, L.L.P, West Des Moines, for Property and Casualty Insurance Company of Hartford. Heard by Eisenhauer, C.J., and Vogel and Doyle, JJ. Vaitheswaran, J., takes no part. REVERSED AND

2 VOGEL, J. Douglas Moad, an over-the-road trucker, died following a motor vehicle accident that occurred while he was working in Iowa. In this appeal we review the district court's decision finding Iowa law applies to the question of whether a workers' compensation lien can be asserted against an employer's uninsured motorist policy. Dakota Truck Underwriters, Risk Administrative Services, Inc. (DTU), Moad's employer's workers' compensation carrier, asserts the district court erred in finding Iowa law applied to the question of whether DTU could recover the workers' compensation benefits provided to Moad and his family from the money received from Moad's employer's uninsured motorist carrier, Northland Insurance Company (Northland). DTU also asserts the district court erred in denying its motion to set aside the order approving the settlement of the uninsured motorist claims. Because we find the district court applied the wrong conflict of laws section, we reverse the district court's decision and remand for further proceedings. I. BACKGROUND AND PROCEEDINGS. Douglas Moad, a South Dakota resident, worked as an over-the-road truck driver for Gary Jensen Trucking Inc., which is a South Dakota corporation with its principle place of business in South Dakota. DTU issued Gary Jensen Trucking a workers' compensation insurance policy in South Dakota. DTU is also a South Dakota corporation with its principle place of business in South Dakota. Northland issued a liability insurance policy to Gary Jensen Trucking, which

3 included uninsured motorist coverage. Northland is a Minnesota corporation with its principle place of business in Minnesota. On December 1, 2008, Douglas Moad and Matthew Libby were involved in a motor vehicle accident in Iowa. Libby was killed; Douglas was severely injured and died a few months later. Libby was uninsured. DTU paid workers'

compensation benefits to Douglas and his wife Sharon Moad under its policy pursuant to South Dakota law. On February 8, 2010, Sharon Moad, individually, as personal

representative of Douglas's estate, and as personal representative on behalf of her and Douglas's children, Travis Moad and Heather Johnson (the plaintiffs), sued Libby's estate, along with Northland, and Property and Casualty Insurance Company of Hartford (Hartford), the Moads' personal automobile insurer. The plaintiffs' claims against Northland and Hartford sought uninsured motorist benefits. The plaintiffs sent DTU the original notice and petition of the lawsuit on February 25, 2011. DTU filed its notice of subrogation lien May 4, 2011. The plaintiffs eventually settled the uninsured motorist claim with both Northland and Hartford.1 As part of that settlement, the plaintiffs received $300,000 from

Northland and $2000 from Hartford. Northland agreed to contribute an additional $100,000 to the plaintiffs if DTU was permitted to recover its subrogation lien

1

The plaintiffs assert complications from the injuries sustained in the accident caused Douglas's death in February 2009. It appears this issue is still unresolved as part of the workers' compensation claim, which is currently on file in Iowa. However, for the purposes of the uninsured motorist settlement, the plaintiffs and Northland agreed the accident was solely Matthew Libby's fault and this fault "was the cause of damages sustained by the [plaintiffs]."

4 from Northland. The plaintiffs also agreed to file a motion to strike the lien to attempt to extinguish DTU's subrogation interest. The plaintiffs sought approval from the court to accept the settlement and also filed a motion to strike or extinguish DTU's lien. Because the court

approved the settlement before DTU was able to file a resistance, DTU sought to vacate the district court's approval. The court permitted DTU to intervene in the action and set DTU's motion to vacate for a hearing. After a hearing and

additional briefing, the court denied DTU's motion to vacate the order approving the settlement and granted the plaintiffs' motion to strike or extinguish the subrogation lien. These rulings were based on the court's conclusion that Iowa law, rather than South Dakota law, applied to DTU's lien. DTU appeals this order asserting South Dakota law should apply. II. SCOPE AND STANDARD OF REVIEW. Our review of the court's order denying the motion to vacate and granting the motion to strike is for the correction of errors at law. Iowa R. App. P. 6.907. The district court's findings of fact are binding on us if supported by substantial evidence. Iowa R. App. P. 6.904(3)(a). III. CONFLICT OF LAWS. The question in this case centers on whether Iowa or South Dakota law applies to the recovery rights of a workers' compensation carrier from uninsured motorist benefits paid by an employer's uninsured motorist policy. The parties agree that if South Dakota law applies, DTU is entitled to recover its lien from Northland's policy. See Kaiser v. N. River Ins. Co., 605 N.W.2d 193, 198 (S.D.

5 2000) (holding a workers' compensation carrier could recover its lien from the underinsured motorist policy of the employer). The parties also agree that if Iowa law applies, DTU has no right to assert its lien against the uninsured motorist coverage available to Moad. See Michael Eberhart Constr. v. Curtin, 674

N.W.2d 123, 129 (Iowa 2004) (holding a workers' compensation carrier could not recover its lien from the underinsured motorist policy of the employer). In order to determine which state's law applies, Iowa employs the "most significant relationship" test contained in the Restatement (Second) of Conflict of Laws (Conflict of Laws). Both parties assert the applicable section from the

Conflict of Laws is section 145, though DTU's attorney at oral argument for the first time asserted section 145 should not apply to this case.2 Section 145

applies to "[t]he rights and liabilities of the parties with respect to an issue in tort." Restatement (Second) of Conflict of Laws

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