                     IN THE COURT OF APPEALS OF IOWA

                                     No. 14-0758
                               Filed January 28, 2015


GLENDA and STEVE LAMBERT, Individually
and As Next Friends of JESSICA L. LAMBERT,
     Plaintiffs-Appellants,

vs.

GEICO INDEMNITY COMPANY,
     Defendant-Appellee.
________________________________________________________________


       Appeal from the Iowa District Court for Polk County, Michael D. Huppert,

Judge.



       The Lamberts appeal from the district court’s ruling granting summary

judgment in favor of the Lamberts’ underinsured motorist carrier, GEICO, finding

GEICO established as a matter of law it had canceled the Lamberts’ insurance

policy prior to the date of their automobile collision.           AFFIRMED IN PART,

REVERSED IN PART, AND REMANDED.



       Jeffrey S. Carter of Jeff Carter Law Offices, P.C., Des Moines, and Ryan

J. Ellis of Ellis Law Offices, P.C., Indianola, for appellants.

       Barbara A. Hering and Rebecca E. Reif of Hopkins & Huebner, P.C., Des

Moines, for appellee.



       Considered by Danilson, C.J., and Doyle and Tabor, JJ.
                                        2


DOYLE, J.

      Following an automobile collision, Glenda and Steve Lambert, individually

and as next friends of their daughter Jessica Lambert (collectively the Lamberts),

filed suit seeking recovery of damages from the other driver and their

underinsured motorist carrier, GEICO Indemnity Co. After the Lamberts’ suit

against the other driver was settled and dismissed, GEICO filed a motion for

summary judgment, asserting that, as a matter of law, the Lamberts had no

coverage at the time of the collision because it had canceled their policy prior

thereto for nonpayment of the premium. The district court agreed, and it granted

GEICO’s motion and dismissed the Lamberts’ petition.

      The Lamberts appeal the district court’s ruling, arguing the court erred in

determining the following two issues were not questions for a jury: (1) whether

GEICO had provided adequate notice to the Lamberts to retroactively terminate

the policy subsequent to the date of the collision, and (2) whether GEICO was

estopped from claiming the policy was canceled because of its past custom and

course of performance concerning the Lamberts’ nonpayment of premiums.

Upon our review, we affirm in part, reverse in part, and remand for further

proceedings consistent with this opinion.

      I. Scope and Standards of Review.

      We review both the interpretation of insurance contracts and the grant of

summary judgment for correction of errors at law.      Boelman v. Grinnell Mut.

Reins. Co., 826 N.W.2d 494, 500-01 (Iowa 2013).          “Summary judgment is

appropriate if ‘the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no
                                        3


genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.’” Thomas v. Gavin, 838 N.W.2d 518, 521 (Iowa

2013) (quoting Iowa R. Civ. P. 1.981(3)). “An issue is ‘material’ only when the

dispute is over facts that might affect the outcome of the suit, given the

applicable governing law.” Sallee v. Stewart, 827 N.W.2d 128, 132-33 (Iowa

2013). We must: “(1) view the facts in the light most favorable to the nonmoving

party, and (2) consider on behalf of the nonmoving party every legitimate

inference reasonably deduced from the record.” Hoyt v. Gutterz Bowl & Lounge

L.L.C., 829 N.W.2d 772, 774 (Iowa 2013).

      II. Background Facts and Proceedings.

      Viewing the evidence in the light most favorable to the Lamberts, we find

the following facts.   In June 2010, the Lamberts purchased from GEICO an

insurance policy covering their vehicles, to be in effect to December 12, 2010. At

the end of the six months, the policy was to automatically renew. The Lamberts

made an initial payment, and the remaining balance of the premium was broken

into six monthly payments. The Lamberts arranged that the monthly payments

would be automatically withdrawn from their bank account; however, despite the

arrangement, the Lamberts were chronically late in their monthly premium

payments because there were insufficient funds in the bank account when the

payments became due.

      On July 12, 2010, GEICO attempted to withdraw the Lamberts’ first

monthly payment, but the request was declined by the Lamberts’ bank. Four

days later, GEICO again attempted to withdraw the Lamberts’ monthly payment,

and the payment was successfully withdrawn.
                                      4


      On August 12, GEICO attempted to withdraw the Lamberts’ monthly

payment, but the request was declined by the Lamberts’ bank. Four days later,

GEICO again attempted to withdraw the Lamberts’ monthly payment, and the

payment was declined once again. On August 18, GEICO sent the Lamberts a

cancellation notice stating their policy would be canceled on August 29 unless

the amount of the monthly premium was remitted by the cancellation date. The

Lamberts subsequently mailed a paper check to GEICO. When the check was

scanned in at its remittance center on September 1, the cancellation notice was

“automatically rescinded” by GEICO.

      On September 12, GEICO attempted to withdraw the Lamberts’ monthly

payment, but the request was declined by the Lamberts’ bank.           GEICO

resubmitted its request for payment four days later, but its request was once

again declined by the bank. On September 20, GEICO mailed a cancellation

notice to the Lamberts informing them that their policy would be canceled on

October 1 unless they made the payment by that date. The Lamberts then made

the payment by credit card on September 30.       The cancellation notice was

automatically rescinded.

      October’s automatic payment withdrawal was declined by the Lamberts’

bank on October 12. GEICO resubmitted its request for payment four days later,

but it was once again declined.   On October 18, GEICO sent a cancellation

notice to the Lamberts informing them that if a payment was not made by

October 29, the policy would be canceled on that date. On October 28, the

Lamberts made the payment by credit card, and the cancellation notice was

automatically rescinded.
                                         5


        November’s automatic payment withdrawal was declined by the Lamberts’

bank on November 12. GEICO’s request for payment was resubmitted four days

later and declined again by the bank for insufficient funds. Meanwhile, GEICO

on November 8 mailed to the Lamberts the policy renewal with an effective date

of December 12. GEICO made no further billings in November nor did it send

the Lamberts a cancellation notice for nonpayment that month.

        The automatic withdrawal of December’s payment, which apparently

included the past-due amount for November, was declined by the Lamberts’

bank.    GEICO resubmitted its request for payment four days later, and the

payment was declined again for insufficient funds.        On December 20, 2010,

GEICO sent a cancellation notice to the Lamberts stating their policy would be

canceled on December 31, 2010 due to nonpayment unless they submitted a

payment of the past-due amount prior to the cancellation date. The cancellation

notice stated that all payments were “subject to normal collection” and a partial

payment would “not void this cancellation notice.” The Lamberts understood that

the notice meant their policy would be canceled by a certain date unless the

premium was paid. The Lamberts misplaced the notice and failed to make a

payment by the December 31, 2010 cancellation date.

        On January 2, 2011, Glenda Lambert contacted GEICO by telephone to

see if it was still possible to make the past-due payment. She was told, “since it

was in the [forty-eight] hours that if [she] did an [‘eCheck’] it would be okay.” She

understood an eCheck was a check by phone. She provided GEICO with her

bank’s routing number, her checking account number, and the name appearing

on her check. The GEICO representative additionally told Glenda that she “was
                                         6


within the [forty-eight] hours and the premium was made, that the insurance was

fine.” At that time, her bank account had a negative balance.1 The Lamberts did

not look at their checking account balance prior to making the payment, believing

there were adequate funds in the account to cover the payment. The same day,

GEICO automatically rescinded its cancellation notice.

       On January 5, the Lamberts’ bank account records indicate a “Check

Reversal” with regard to the eCheck. The Lamberts “most likely” received an

email from the bank advising them the eCheck was not honored because of

insufficient funds in their account.     However, they believed GEICO would

automatically resubmit the eCheck a second time, though they admitted it would

not have cleared their account the second time either.

       On January 8, the Lamberts’ vehicle was struck by another vehicle. The

Lamberts notified GEICO of the collision the same day.

       The Lamberts’ bank records indicate another “Check Reversal” on

January 11. On January 14, GEICO’s records indicate the eCheck was returned

for insufficient funds. After receiving an email from their bank informing them that

the eCheck had not been honored, the Lamberts contacted GEICO on January

14 and made the delinquent payment by credit card. A penalty charge was also

assessed by GEICO.

       On January 17, GEICO’s records indicate “[Out of Sequence] Cancel All”

with an effective date of December 31, 2010. On January 18, 2011, GEICO sent

a letter to the Lamberts informing them that their financial institution had “not


       1
        The Lamberts’ bank statements for the relevant account show their account
was overdrawn from December 21, 2010 until January 19, 2011.
                                          7


honored the payment that [they] recently submitted on the policy.” No doubt this

was in reference to the bounced eCheck. The letter further stated: “Since this

payment was not honored, the original cancellation notice of December 20, 2010

has been reinstated.” The letter went on to state:

       Therefore, we must notify you as follows:

       THE ABOVE CAPTIONED POLICY WAS CANCELED AT 12:01
       A.M. ON December 31, 2010.

GEICO refunded the unearned premium to the Lamberts on January 19. On

January 22, the Lamberts made another premium payment by credit card.

GEICO’s records show it reissued the policy the same day, with an effective date

of January 23.

       The Lamberts filed suit against GEICO in 2012, seeking recovery under

their policy’s underinsured motorist coverage.        GEICO maintained that the

Lamberts’ policy had been canceled on December 31, 2010 for nonpayment, and

therefore, the Lamberts had no coverage at the time of the collision. GEICO

moved for summary judgment on this basis.

       The district court succinctly set forth the parties’ arguments as follows:

               [GEICO’s] position on this motion is relatively
       straightforward: there is no coverage for the January 8 accident, as
       the policy was canceled effective December 31, 2010 for lack of a
       collectible payment prior to the loss, and it properly reinstated
       coverage effective January 22. [The Lamberts] argue[] that the
       cancellation was ineffective for lack of a second notice after the first
       notice was rescinded and that [GEICO] is estopped from claiming
       the policy was canceled as a result of the prior practice of accepting
       late payments.

The court rejected the Lamberts’ argument regarding the need for a second

cancellation notice, stating:
                                           8


               The [Lamberts’] argument regarding the need for a second
       cancellation notice is premised on two theories: (1) they were
       advised that coverage would remain in place as a result of the
       January 2 and January 8 conversations with [GEICO], and
       (2) [GEICO’s] rescission of the cancellation notice reinstated
       coverage and necessitated a new cancellation notice once the
       January 2 eCheck was returned. There is no basis in fact for the
       first contention. Giving the [Lamberts] every inference in their
       favor, all that can be said from the conversation on January 2 is
       that they were advised that the eCheck would be accepted to
       maintain coverage, if there were adequate funds in the account to
       allow it to clear. The January 2 conversation did not contradict or
       invalidate the requirement contained in the cancellation notice that
       any payments tendered to avoid cancellation were “subject to
       normal collection,” and there was no reasonable basis for the
       [Lamberts’]-claimed assumption that sufficient funds were in the
       account. This unsubstantiated assumption does not generate an
       issue of material fact regarding the reinstatement of coverage as of
       January 2. Likewise, there is nothing in the present record to
       suggest that coverage was ever even addressed in the January 8
       conversation. It is of no help to the [Lamberts] in establishing the
       need for a second cancellation notice.
               A similar analysis disposes of the [Lamberts’] second
       argument regarding [GEICO’s] internal rescission of its cancellation
       notice. First, there is no indication that this event was ever
       communicated to the [Lamberts] prior to any material date in the
       chronology; the only reference to it is contained within [GEICO’s]
       records. It was noted in response to an attempt to make a payment
       shortly after the effective date of cancellation. That payment still
       needed to be collectible for it to maintain coverage; it is undisputed
       that it was not collectible, and there is no reasonable basis for this
       court to conclude that the [Lamberts] believed it would clear.
       Absent some indication that [GEICO] communicated to the
       [Lamberts] that the cancellation notice was no longer considered
       valid, it could rely upon that notice in the event the January 2
       eCheck was not collectible to cancel coverage effective December
       31, 2010. The manner in which [GEICO] internally referred to the
       cancellation notice upon receipt of a tentative premium payment
       violates neither Iowa Code chapter 515D (2011)[2] nor the terms of


       2
         Iowa Code chapter 515D is known as the “Iowa Automobile Insurance
Cancellation Control Act.” Iowa Code § 515D.1. The chapter applies to automobile
insurance policies “providing bodily injury liability, property damage liability, medical
payments, uninsured motorist coverage, physical damage coverage, or any combination
thereof.” Id. § 515D.2(1). Curiously, the section does not make reference to
underinsured motorist coverage. Nevertheless, we believe this to be the operative
chapter to the issues in this appeal. Section 515D.5 requires notice of cancellation for
                                            9


       the policy in question.       There was no need for a second
       cancellation notice after the December 20 notice prior to [GEICO’s]
       cancellation of coverage.

The district court found GEICO established as a matter of law the Lamberts’

GEICO policy was not in effect at the time of collision and dismissed the

Lamberts’ petition.

       The Lamberts now appeal.3

       III. Discussion.

       A. Policy Rescission.

       Central to this appeal from summary judgment is whether or not a fact

question was generated as to whether or not the policy cancellation was

rescinded before the collision. Or, to put it another way, whether or not the policy

was reinstated prior to the collision. The Lamberts assert “[t]he policy was clearly

in effect at the time of the collision.” GEICO counters that because it “adhered to

the cancellation procedures required by statute and the policy to cancel the

policy effective December 31, 2010 for the nonpayment of premium, the policy

was not in effect on the date of the accident and the Lamberts cannot recover

against GEICO on that policy.” The district court explicitly found there was not an

issue of material fact generated regarding the reinstatement of coverage as of

January 2, 2011. The court also found there was no genuine issue of material

fact generated concerning the effect of the December 20, 2010 cancellation

nonpayment of premium be mailed or delivered to the insured at least ten days prior to
the date of cancellation.
       3
         At the risk of sounding like a broken record, we once again note an all too
frequently observed violation of the rules of appellate procedure: failure to place a
witness’s name at the top of each appendix page where that witness’s testimony
appears. See Iowa R. App. P. 6.905(7)(c) (emphasis added). Furthermore, the
omission of transcript pages was not indicated by a set of three asterisks at the location
on the appendix page where pages were omitted. See Iowa R. App. P. 6.905(7)(e).
                                         10


notice. The court concluded: “[The Lamberts] failed to generate a genuine issue

of fact that would allow [them] to argue to a jury that [GEICO] is precluded from

canceling the coverage in question effective December 31, 2010.”             In other

words, the court concluded the policy was canceled effective December 31,

2010, and the Lamberts failed to generate an issue of material fact as to whether

the policy was reinstated before the collision. We believe the district court erred

in so concluding.

       On one hand, when Glenda Lambert contacted GEICO by telephone on

January 2, 2011 to see if it was still possible to make the past-due payment, she

was told “since it was in the [forty-eight] hours that if [she] did an eCheck it would

be okay.” She provided GEICO with information necessary to make the payment

by eCheck. The GEICO representative additionally told Glenda that she “was

within the [forty-eight] hours and the premium was made, that the insurance was

fine.” The same day, GEICO’s records show “Cancellation Notice Automatically

Rescinded.”    The GEICO representative testified at her deposition that if the

Lamberts had gone online to check the status of their GEICO account as of

January 3, 2011, it would have shown as “active,” which meant their policy was

“in effect.” Furthermore, she testified that had the Lamberts checked the status

of their account on January 8, 2011, the date of the collision, or even on January

13, 2011, the website would have shown their account as “active.” After the

eCheck bounced the second time on January 14, 2011, GEICO accepted a credit

card payment from the Lamberts for the past-due premium.                GEICO also

assessed a penalty charge at that time. Ten days after the collision, and four

days after accepting a credit card payment for the delinquent premium, GEICO
                                        11


stated in its January 18, 2011 letter to the Lamberts “the original cancellation

notice of December 20, 2010 has been reinstated.” To reinstate is “[t]o place

again in a former state or position; to restore.” Black’s Law Dictionary 1399 (9th

ed. 2009).    From GEICO’s statement that the cancellation notice had been

reinstated, a reasonable person could conclude the cancellation notice had been

rescinded at some point, for had it not been rescinded, there would be no cause

to “reinstate” the cancellation.

       On the other hand, the Lamberts were provided a clear and unequivocal

notice of cancellation in December 2010.        It stated the date and time of

cancellation and explained that cancellation would take place at that time if

payment was not received by then. It is undisputed the Lamberts received the

notice. It is undisputed the Lamberts understood the notice. The December

notice strictly complied with the requirements set forth in chapter 515D.

Nonetheless, the Lamberts made no payment to GEICO prior to the effective

date of cancellation.

       Additionally, a reasonable person could find the January 2, 2011 eCheck

was not a “payment.”        The December 20, 2010 cancellation notice to the

Lamberts specifically stated that “[a]ll payments [were] subject to normal

collection.” While the phrase is not defined in the notice or in the policy, it

commonly means that a credit to a customer for a payment before collection is

merely provisional and may be canceled if the payment is not paid by the bank.

See Jensen v. First Nat’l. Bank, 213 N.W. 854, 855 (S.D. 1927). Furthermore, a

“payment” is the “[p]erformance of an obligation by the delivery of money or

some other valuable thing accepted in partial or full discharge of the obligation.”
                                           12


Black’s Law Dictionary 1243.         It is undisputed the Lamberts did not have

sufficient funds in the bank to cover the eCheck on January 2, 2011, nor were

there sufficient funds in the account when GEICO ran it through a second time.

A reasonable person could find the eCheck did not fulfill the Lamberts’ promise to

pay the delinquent premium payment.

         With these highlighted facts in mind, we conclude the record establishes a

genuine issue of material fact as to whether or not the policy cancellation was

rescinded prior to the collision. Therefore, whether the policy was in effect at the

time of the collision was a jury question. We reverse the district court on this

issue.

         B. Notice of Cancellation for Nonpayment.

         If a jury finds the policy was reinstated prior to the collision, the question

remains as to whether the January 18, 2011 notice could retroactively cancel the

policy effective December 31, 2010. The Lamberts contend GEICO could not

retroactively cancel the policy. The Lamberts direct us to Iowa Code section

515.125(1),4 which states in relevant part:

                 Unless otherwise provided . . . , a policy or contract of
         insurance provided for in this chapter shall not be . . . canceled
         except by notice to the insured as provided in this chapter. A notice
         of cancellation is not effective unless mailed or delivered by the
         insurer to the named insured at least thirty days before the effective
         date of cancellation or, where cancellation is for nonpayment of a
         premium, assessment, or installment provided for in the
         policy, . . . at least ten days prior to the date of cancellation.



         4
         Iowa Code chapter 515 applies to insurance companies, other than life, with
certain exceptions. The language of section 515.125(1) with regard to notice of
cancellation for nonpayment of premium essentially mirrors the language of section
515D.5(1), as both require ten-days’ advance notice of cancellation. As stated earlier,
we believe section 515D.5(1) is the applicable statutory provision to the issue on appeal.
                                          13


(Emphasis added.) The Lamberts’ policy contained similar language stating it

could “cancel this policy by mailing to [the insured] . . . written notice stating when

the cancellation will be effective.” (Emphasis added.) The policy further provided

GEICO would mail this notice to the insured ten days “in advance if the proposed

cancellation is for non-payment of premium or any of its installments when due.”

The “right to notice of cancellation is a valuable right of the insured. Its purpose

is to forewarn the insured so he may seek insurance elsewhere.” Farmers Ins.

Grp. v. Merryweather, 214 N.W.2d 184, 191 (Iowa 1974) (internal citations

omitted).

       Reinstatement of a policy necessarily restores or reestablishes the policy

to its previous state or status. In such a situation, we believe the requirements of

chapter 515D, as well as the contractual provisions concerning notice of

cancellation, are applicable. If the policy is found to have been reinstated prior to

the collision, GEICO’s January 18, 2011 letter, purporting to retroactively

reinstate the cancellation effective December 31, 2010, is ineffective for it does

not comply with section 515D.5(1) or the policy’s contractual provisions that

require at least ten days’ notice prior to cancellation.

       C. Estoppel.

       Alternatively, the Lamberts assert GEICO was estopped from canceling

their policy as a result of the “custom or course of performance” that had

developed regarding the Lamberts’ payment of their premiums. They contend

because GEICO had allowed the Lamberts to make late payments and then

reinstated their policy in the past, GEICO was prohibited from “arbitrarily”

enforcing cancellation to its benefit and to the Lamberts’ detriment. The district
                                        14


court’s spot-on ruling on this issue is well-analyzed, well-reasoned, well-written,

and well worth repeating here:

              Looking at that history in a light most favorable to the
      [Lamberts], the court concludes that a custom of any sort that
      would benefit the [Lamberts] has not been established. While it is
      clear that the [Lamberts] were chronically late in their premium
      payments once the policy was initially issued, of the five months in
      question (July through November), only one month (August)
      involved a tendered payment after the effective date of cancellation;
      in July and November, no notice was given, and in September and
      October, collectible payments were received prior to the
      cancellation date.
              Unlike Laverty [v. Hawkeye Security Insurance Co., 140
      N.W.2d 83, 84-85 (Iowa 1966)], in which the history of acceptance
      of late payments stretched over several years, in this case the only
      event which is even arguably analogous to the situation posed after
      the December 20 cancellation notice was the singular occasion in
      July of 2010 when payment was received two days after the
      effective date of cancellation; in the other months, there either was
      no cancellation notice issued or payment was received before the
      cancellation date. A single instance of accepting a late payment
      cannot constitute a “custom” or “course of dealing” of such
      behavior. See, e.g., Unigard Mut. lns. Co. v. Fox, 236 S.E.2d 851,
      853 (Ga. Ct. App. 1977) (holding a single prior late payment
      insufficient as a matter of law to show course of dealing); Cont’l Ins.
      Co. of New York v. Stratton, 215 S.W. 416, 417 (Ky. Ct. App. 1919)
      (“We are of opinion that a single prior instance of accommodation
      and indulgence granted by the company to Stratton on the payment
      of a premium is not sufficient to establish a custom of accepting
      installments after they are due”); Holloman v. Jefferson Standard
      Life Ins. Co., 188 So. 500, 503 (La. Ct. App. 1939). This is
      consistent with Iowa law on the subject. See Jones v. Herrick, 118
      N.W. 444, 446 (Iowa 1908) (“Of course, a single act or transaction
      is not enough to warrant the inference that such act or transaction
      is customary.”). The [Lamberts] have failed to establish a genuine
      issue of material fact on the issue of the claimed custom of
      [GEICO] of accepting premium payments past the effective date of
      cancellation.

      We agree and affirm the district court on this issue.
                                        15


       IV. Conclusion.

       For the foregoing reasons, we affirm in part and reverse in part the district

court’s grant of summary judgment in favor of GEICO.              We remand for

reinstatement of the Lamberts’ petition and for further proceedings consistent

with this opinion.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
