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GREEN v. CONT. WESTERN INS. CO.1/28/2002
Continental Western Insurance Company (Continental) appeals following a trial in which the district court awarded damages to Thomas Green, his wife Sharon, and his employer T.P. Green & Sons (TPG) based on injuries Thomas sustained in an automobile accident. We hold the court erred in awarding damages to TPG, but affirm on all other issues.
I. Background Facts and Proceedings.
Plaintiff Thomas Green was injured in a two-vehicle accident on December 12, 1996, while working for TPG, a company solely owned and operated by him and his wife, Sharon Green. TPG was insured through a policy issued by Continental. TPG was a named insured on liability and workers' compensation insurance policies issued by Continental. The Greens filed a lawsuit against the other driver who had a liability insurance coverage limit of $100,000. The Greens settled their claim against the other driver for $60,000.
The Greens and TPG then filed the current lawsuit against Continental, claiming underinsured motorist coverage (UIM) and damages in excess of the insurance coverage of the tortfeasor. TPG alleged, as Thomas's employer, it had incurred expenses to hire others to replace his services and that it also was entitled to UIM payments. Following a bench trial, the court awarded Thomas $237,000 (which it reduced by five percent for Green's comparative fault), Sharon $38,000, and TPG $40,000. The court then reduced the total judgment by $100,000, the tortfeasor's insurance coverage limit. On appeal from the judgment against it, Continental contends the district court erred in (1) awarding damages to TPG; (2) failing to reduce Thomas Green's recovery by the amount of worker's compensation benefits he could have, but did not, recover; and (3) admitting certain expert testimony on the question of medical causation.
II. The Merits.
a.) TPG's claim for underinsurance benefits. Because this is an action at law, our review is for corrections of errors of law. Iowa R. App. P. 4. We are not bound by the trial court's application of legal principles or its conclusions of law. Midwest Recovery Servs. v. Wolfe, 463 N.W.2d 73, 74 (Iowa 1990).
In pertinent part, the insurance policy in question provides Continental "will pay all sums the `insured' is legally entitled to recover . . . from the . . . driver of an `uninsured motor vehicle'" and that the "damages must result from `bodily injury' caused by an `accident.'" Continental contends TPG has no cognizable claim for underinsurance benefits because it was not "legally entitled to recover" damages from the tortfeasor, and because TPG sustained no damages "resulting from bodily injury" as a result of the injury to Green. We agree with Continental and therefore reverse on this issue.
First, we conclude TPG was not "legally entitled to recover" damages from the tortfeasor. Our supreme court has made clear that employers have no claim for loss of an employee's time, expense of hiring a replacement worker, or increased workers' compensation premiums against a tortfeasor who injures an employee. Anderson Plasterers v. Meinecke, 543 N.W.2d 612, 615 (Iowa 1996) (adopting the modern prevailing view that there is no third-party liability to an employer in such a "purely commercial relationship").
In Wetherbee v. Economy Fire & Casualty Co., 508 N.W.2d 657, 658 (Iowa 1993), the supreme court interpreted the phrase "legally entitled to recover damages" in a UIM policy simply to mean that the insured must have suffered damages caused by the fault of the underinsured motorist and be entitled to receive those damages. Id. at 661. In this case, pursuant to the holding of Anderson Plasterers, TPG was not "entit
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