Legal Memorandum: Denial of Underinsured Motorist Coverage in IA

Issue: When is an insurance company estopped to deny underinsured motorist coverage?

Area of Law: Insurance Law
Keywords: Validity of policy; Underinsured motorist coverage; Doctrine of waiver and estoppel
Jurisdiction: Federal, Iowa, South Dakota
Cited Cases: 82 N.W. 441; 43 N.W. 229; 445 N.W.2d 228; 457 S.W.2d 491; 684 P.2d 744; 141 P. 274; 43 F. Supp. 2d 1081; 779 N.W.2d 148
Cited Statutes: None
Date: 08/01/2010

If a complaint is deemed insufficient, the proper remedy is dismissal without prejudice with leave to replead.  In Adler v. D&H Indus., Inc., 2005 WI App 43, ¶ 20, 279 Wis. 2d 472, 694 N.W.2d 480, while one action was about to go to trial, one party filed a second action against the other party.  The main discussion in the case was whether the second action fell within Wisconsin’s “common-law compulsory counterclaim rule.”  The trial court also held, in the alternative, that the second complaint was legally insufficient; it was “terse” and “relatively vague.”  The case was dismissed on the merits based on the compulsory-counterclaim argument.

The court of appeals reversed, holding that the common-law compulsory counterclaim rule did not apply, because the first case had not yet resulted in a judgment.  It agreed that the complaint was insufficient, but that the Adlers should be permitted to replead.  See Adler, 2005 WI App 43, 279 Wis. 2d 472, 694 N.W.2d 480.  Dismissal on the merits was inappropriate. 


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