Valley Boys, Inc. v. Am. Family Ins. Co.
| Decision Date | 28 August 2020 |
| Docket Number | No. S-19-528.,S-19-528. |
| Citation | 306 Neb. 928,947 N.W.2d 856 |
| Parties | VALLEY BOYS, INC., doing business as Valley Boys Roofing, assignee, appellant and cross-appellee, v. AMERICAN FAMILY INSURANCE COMPANY, appellee and cross-appellant. |
| Court | Nebraska Supreme Court |
Matthew P. Saathoff, of Saathoff Law Group, P.C., L.L.O., Omaha, and Larry E. Bache, Jr., and Michael W. Duffy, of Merlin Law Group, P.A., for appellant.
Joel D. Nelson and Joel Bacon, of Keating, O'Gara, Nedved & Peter, P.C., L.L.O., Lincoln, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
Funke, J. Valley Boys, Inc., doing business as Valley Boys Roofing (Valley Boys), appeals the order of the district court for Douglas County which granted in part judgment notwithstanding a jury verdict in favor of American Family Insurance Company (American Family). Valley Boys alleged that American Family failed to pay the full amounts due under postloss assignments of insurance proceeds. The court found that eight of Valley Boys’ nine assignments were unenforceable. We agree, and we affirm the order of the district court.
In the summer of 2014, nine homeowners sustained property damage in a hailstorm. The properties were insured under American Family's "Gold Star Special Deluxe" homeowner's insurance policy, which covered direct physical loss caused by hail. Eight of the nine policies included an endorsement entitling the homeowner insureds to proceeds for covered losses determined at actual cash value, or "the amount actually and necessarily spent" for replacement cost.1 The ninth policy had an endorsement which covered actual cash value only. In damages estimates for claims under these policies, American Family defined actual cash value as "the cost to repair or replace a damaged item with an item of like kind and quality, less depreciation," and replacement cost as "the cost to repair the damaged item with an item of like kind and quality, without deduction for depreciation."
The homeowners purportedly assigned their proceeds under the insurance policies to Valley Boys, a roofing company, which submitted the claims to American Family. American Family's catastrophe adjusters inspected the properties and prepared initial damages estimates for each property. Based on these estimates, American Family paid the homeowners the actual cash value of their losses, which the homeowners then paid to Valley Boys. Under the insurance policies issued by American Family, the replacement costs would be paid only after the work was completed and final invoices were received. The policies further required the work to be completed within 1 year of the date of the loss.
Valley Boys sought to expand the scope of work originally approved by American Family by submitting requests for acknowledgment of coverage for additional damage (RAAD's). The RAAD's listed descriptions of repair work Valley Boys recommended be done at the properties but did not provide itemized prices or a total price for such work. The cover letter to the RAAD's stated that if Valley Boys did not receive a response within 5 business days, "we will be forced to begin necessary repairs and/or replacement in order to prevent further damage to the insured's premises." American Family did not agree to the RAAD's, and Valley Boys did not complete that work.
With respect to the initial scope of work based on American Family's estimates, Valley Boys submitted invoices of work completed at the properties and demanded payment of the withheld depreciation. The invoices list descriptions of completed work and provide a total price without price itemization. American Family issued supplemental payments for some of Valley Boys’ requests, but declined to cover other requests, contending that no proceeds were due.
In April 2015, Valley Boys, as assignee, filed suit against American Family for failing to pay the full amount of repair and/or replacement costs due under the policies.
Valley Boys requested a judgment for damages in the amount of $83,746.73 and stated its damages would likely increase with further investigation. In its answer, American Family affirmatively alleged that Valley Boys lacked standing to bring the claims that it brought.
In April 2017, American Family moved for summary judgment, contending that Valley Boys is not the real party in interest, because the assignments between the homeowners and Valley Boys were invalid. American Family argued that due to a lack of agreement on key terms, such as scope of work and price, the assignment contracts were unenforceable. American Family further argued that the assignments conflicted with language in the endorsement which limits repair or replacement costs to those which are actually and necessarily spent.
Following a hearing, the court entered a written order denying American Family's motion. In its order, the court first rejected Valley Boys’ argument that American Family lacked standing to challenge the assignments pursuant to Marcuzzo v. Bank of the West .2 The court found that American Family had standing to argue the invalidity of the assignments on the theory that the assignment contracts altered American Family's obligations under the insurance policies. The court then examined the contractual language at issue and ultimately determined there were triable issues of fact.
The record indicates that Valley Boys and the homeowner insureds signed a document titled "Assignment of Insurance Claim." The assignments, which all contain the same language, incorporate a contract by reference. The assignments provide:
[I]n consideration of performing the work pursuant to the contract executed by [homeowners] and Valley Boys, as well as any change orders executed thereafter, and for other good and valuable consideration, [homeowners] hereby transfer, assign and set over onto Valley Boys, all of the right, title and interest [in] insurance claim(s) ... covering loss sustained at the property ... including but not limited to any and all insurance claims asserted thereunder and proceeds thereof.
Eight of the nine homeowner insureds contemporaneously signed a "Customer Service Agreement" (CSA). Under the terms and conditions of the CSA, the "Job Price" section states that Valley Boys will "provide material and labor services to the above described property within the scope of repairs and/or replacement to be submitted to the insurance company." That section also states, "Due to the unique nature of repairs related to insurance claims, this contract may not include an explicit price because the final scope of repairs and/or replacement arising from the Claim has not yet been agreed upon with the insurer," and "Valley Boys agrees to use customary industry pricing for the work, including general contractor markup at customary industry rates." It further states, "Valley Boys’ performance under this agreement is contingent upon Valley Boys reaching agreement with the insurance company on the scope of repairs and/or replacement."
unless otherwise stated herein." Valley Boys reserved the right to not perform the work specified in "Exhibit A" if it determined the work was not "professionally necessary and/or applicable at the time of the work." However, no "Exhibit A" was attached to any CSA herein, and there is no evidence either the homeowners or American Family ever received any documents labeled "Exhibit A."
The court found that because American Family had not fully denied any of the claims, there existed genuine issues of material fact regarding whether the parties, through subsequent conduct, established a definite agreement on scope of work and price.
Lastly, the court considered American Family's argument that the assignments materially changed its obligations under the insurance policies. Under the "Loss Value Determination" conditions of the endorsement found in eight of the policies, a section which concerns replacement costs states:
American Family argued that the undefined "actually and necessarily spent" language limits the replacement costs it must pay. The court found this argument went to the issue of the agreed-upon scope of work, raising a question of fact for the jury.
American Family then filed an offer to confess judgment in the amount of $20,000, which offer was not accepted. At trial, American Family moved for a directed verdict based on the invalidity of the assignments, which the court overruled.
Following a 4-day trial, the jury returned a verdict in favor of Valley Boys in the amount of $62,841.06.
American Family moved for judgment notwithstanding the verdict (JNOV), arguing that the assignments were indefinite, lacked consideration, and modified the insurer's obligations. The court granted the motion as to the claims based on the eight assignments which incorporated a CSA, and it entered judgment in favor of Valley Boys for $1,586.07 in damages for the remaining claim.
In its posttrial order, the court considered the language of the assignments which states that they were provided "in consideration of...
To continue reading
Request your trial
-
Sanitary & Improvement Dist. No. 67 of Sarpy Cnty. v. Neb. Dep't of Rds.
...761 (2020).10 See Western Ethanol Co. v. Midwest Renewable Energy , 305 Neb. 1, 938 N.W.2d 329 (2020).11 Valley Boys v. American Family Ins. Co. , 306 Neb. 928, 947 N.W.2d 856 (2020).12 Id.13 Western Ethanol Co., supra note 10.14 See id.15 Brief for appellant at 19.16 See Neb. Rev. Stat. § ......
-
Sanitary & Improvement Dist. No. 67 of Sarpy Cnty. v. Neb. Dep't of Roads
...10. See Western Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1, 938 N.W.2d 329 (2020). 11. Valley Boys v. American Family Ins. Co., 306 Neb. 928, 947 N.W.2d 856 (2020). 12. Id. 13. Western Ethanol Co., supra note 10. 14. See id. 15. Brief for appellant at 19. 16. See Neb. Rev. Stat. § ......
-
De Vries v. L & L Custom Builders, Inc.
...v. Manker , 263 Neb. 944, 644 N.W.2d 522 (2002).9 Jacobs Engr. Group v. ConAgra Foods, supra note 1.10 Valley Boys v. American Family Ins. Co. , 306 Neb. 928, 947 N.W.2d 856 (2020).11 City of Wahoo v. NIFCO Mech. Systems , 306 Neb. 203, 944 N.W.2d 757 (2020).12 See Wilkins v. Bergstrom , 17......
-
Malousek v. Meyer
...action has standing and is therefore the real party in interest presents a jurisdictional issue. Valley Boys v. American Family Ins. Co., 306 Neb. 928, 947 N.W.2d 856 (2020). Therefore, we consider this issue first.(a) Additional Background As noted above, Molly's children alone initiated t......