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Rubes v. Mega Life And Health Ins. Co., Inc.2/27/2002
to rescission.
That brings us to Rubes' claim of estoppel by acquiescence, or waiver. The theory applies where a party, knowing of an enforceable right, neglects enforcement for such a length of time that the law implies its waiver or abandonment. Westfield Ins. Cos. v. Econ. Fire & Cas. Co., 623 N.W.2d 871, 880 (Iowa 2001). Rubes essentially claimed, and the court agreed, that MEGA's retention of his premiums "until after the Plaintiff had finally obtained a transplant" estopped it from rescinding its obligations under the contract.
We agree with MEGA that the record does not factually support the court's finding that MEGA retained Rubes' premiums until after his transplant was completed. MEGA, as uncertain as Rubes about when the needed organ might become available, issued a refund check to Rubes five days in advance of the transplant surgery. It is true, however, that the check did not reach Rubes before the surgery was performed.
The only case relied upon by the court to legally support its waiver theory, Venz v. State Automobile Insurance Association, 217 Iowa 662, 251 N.W. 27 (1933), is factually distinguishable from this case. In Venz, an insurer knowingly retained an additional premium for an underage driver and then, when the driver was involved in an accident, refused to honor coverage or return the insured's premiums. Venz, 217 Iowa at 668, 251 N.W. at 29. This court held under such facts the company waived the underage condition of the driver and could not, having retained the premiums, repudiate its liability under the contract. Id. at 669, 251 N.W. at 30.
Here the parties were engaged in unresolved litigation over what the insurer knew about Rubes' history based on his application. That litigation extended for nearly nine months in advance of surgery, and MEGA had refused payment of benefits for more than a year before that. It was in Rubes' interest to keep making monthly premium payments so as not to give the company an independent ground to cancel the policy. Company officials testified that judgments about rescission are never made hastily, given their potential impact on the insured and company alike. And so although it appears in retrospect that MEGA could have made its decision more swiftly, we do not believe the equities of the situation warrant the extraordinary remedy of requiring coverage in the face of Rubes' demonstrated fraud.
We therefore reverse the judgment of the district court and remand for entry of a judgment rescinding MEGA's contract of insurance on Stephen Rubes.
REVERSED AND REMANDED.
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