Coppi v. West American Ins. Co.

• Decision Date: 09 December 1994
• Docket Number: No. S-92-704,S-92-704
• Parties: Thomas L. COPPI, doing business as the Factory Beauty Salon, Appellant, v. WEST AMERICAN INSURANCE CO., an Insurance Corporation, Appellee.
• Court: Nebraska Supreme Court

Page 804

524 N.W.2d 804

247 Neb. 1

Thomas L. COPPI, doing business as the Factory Beauty Salon, Appellant, v. WEST AMERICAN INSURANCE CO., an Insurance Corporation, Appellee.

No. S-92-704.

Supreme Court of Nebraska.

Dec. 9, 1994.

Syllabus by the Court

1. Contracts: Insurance: Warranty. A warranty in an insurance policy serves to establish a condition precedent to an insurer's obligation to pay.

2. Contracts: Words and Phrases. A condition precedent is a condition which must be performed before the parties' agreement becomes a binding contract, or a condition which must be fulfilled before a duty to perform an existing contract arises.

3. Warranty. A warranty may be express or implied, and affirmative or promissory.

4. Warranty: Insurance: Words and Phrases. A "promissory" or "executory" warranty is one in which the insured undertakes to perform some executory stipulation, as that certain acts shall or will be done, or that certain facts shall or will continue to exist.

5. Contracts: Insurance: Warranty. A promissory warranty requires certain action or nonaction on the part of the insured after a policy has been entered into in order that its terms shall not thereafter be breached.

6. Contracts: Insurance: Warranty. Neb.Rev.Stat. § 44-358 (Reissue 1993) does not relate to a breach of the terms of a policy which could arise only after the loss has occurred.

7. Contracts: Insurance: Warranty. Neb.Rev.Stat. § 44-358 (Reissue 1993) does not deny the insurer the right to rely upon the conditions of its policy which the insured is required to perform as a condition of recovery after the loss has occurred.

8. Contracts: Insurance: Warranty. Neb.Rev.Stat. § 44-358 (Reissue 1993) relates to the question of a recoverable loss and not to the question of procedure to be followed in collecting for the loss after it has occurred.

9. Contracts: Insurance: Warranty. Neb.Rev.Stat. § 44-358 (Reissue 1993) deals with warranties which are conditions precedent to the very existence of an insurance contract, not with promissory warranties the fulfillment of which are conditions precedent to recovery under an insurance contract which has come into being.

10. Contracts: Pleadings: Trial: Proof. When the pleading of performance of a condition precedent in a contract is controverted, the party pleading the performance of such condition precedent is required to establish on the trial the facts showing such performance.

11. Breach of Contract: Pleadings. If a defendant relies upon nonperformance of a contract, the defendant must allege that fact in the answer, and in pleading nonperformance, the facts which constitute the breach must be alleged.

12. Breach of Contract: Pleadings. Where by statute a plaintiff is authorized to plead general performance of all conditions precedent, the defendant must, if relying upon the fact that any of the conditions precedent have not been performed, set out specifically the condition and the breach.

13. Contracts: Pleadings. Affirmative defenses are matters which seek to avoid a valid contract.

14. Contracts: Insurance: Words and Phrases. An exclusion in an insurance policy is a provision which eliminates coverage where, were it not for the exclusion, coverage would have existed.

15. Contracts: Insurance: Proof. Where coverage is denied, the burden of proving coverage under a policy is upon the insured.

16. Contracts: Insurance: Records: Proof. The burden is on an insured to prove that it complied with the recordkeeping provisions of a policy.

17. Supreme Court: Courts: Appeal and Error. The Nebraska Supreme Court, upon granting further review which results in the reversal of a decision of the Nebraska Court of Appeals, may consider, as it deems appropriate, some or all of the assignments of error the Court of Appeals did not reach.

18. Trial: Expert Witnesses. The admissibility of expert testimony depends on whether specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.

19. Evidence: Words and Phrases. Relevant evidence means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.

20. Trial: Expert Witnesses. It is for the trial court to make the initial decision as to whether expert testimony will assist the trier of fact; the soundness of its determination depends upon the qualifications of the witness, the nature of the issue on which the opinion is sought, the foundation laid, and the particular facts of the case.

21. Trial: Testimony. Testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.

22. Trial: Expert Witnesses. Expert testimony which may be of assistance to the trier of fact is admissible even in areas where laypersons have competence to determine the facts.

23. Trial: Expert Witnesses: Custom and Usage. Expert testimony as to the custom and practice of an industry is admissible to elucidate the meaning of ambiguous language.

24. Contracts: Intent: Expert Witnesses. When a contract term is not defined in the parties' contract and the parties dispute the intended meaning of the term, an expert witness may properly testify as to the expert's interpretation of the contract language.

25. Contracts: Words and Phrases. Ambiguity exists in an instrument when a word, phrase, or provision in the instrument has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.

26. Contracts: Parol Evidence. A written instrument is open to explanation by parol evidence when its terms are susceptible of two constructions, or where the language employed is vague or ambiguous.

27. Trial: Contracts: Evidence: Custom and Usage. Evidence of custom is admissible when there is a conflict as to the terms of the contract to explain the meaning of the words or phrases used, or where the contract is silent as to certain points which may be inherent in the nature of the contract.

28. Directed Verdict: Evidence. In order to sustain a motion for directed verdict, the trial court must resolve the controversy as a matter of law and is to do so only when the facts are such that reasonable minds can draw only one conclusion; in considering the evidence for the purposes of a directed verdict motion, the party against whom the motion is made is entitled to have the benefit of every inference which can reasonably be drawn from the evidence, and the case may not be decided as a matter of law if there is any evidence in favor of the party against whom the motion is made.

Jeffrey A. Silver, Omaha, for appellant.

Robert V. Roach and Matthew J. Buckley, of Hansen, Engles & Locher, P.C., Omaha, for appellee.

HASTINGS, C.J., CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ., and BOSLAUGH, J., Retired.

CAPORALE, Justice.

I. STATEMENT OF CASE

Pursuant to verdict, the district court dismissed the action brought by plaintiff-appellant, Thomas L. Coppi, doing business as The Factory Beauty Salon, against the defendant-appellee, West American Insurance Co., under a policy of insurance whereunder West American undertook to cover, to a maximum of $10,000, losses Coppi sustained as the result of the theft of money used in the conduct of his business, provided that Coppi maintained appropriate records from which the loss could be determined. Coppi appealed to the Nebraska Court of Appeals, asserting, in summary, that the district court erred in (1) ruling that a statute dealing with insurance warranties had no application, (2) allocating the recordkeeping burden of proof to him, (3) permitting a witness to testify as an expert, and (4) failing to determine as a matter of law that he had complied with the policy requirements. Reasoning that the district court had misallocated the burden of proof, the Court of Appeals reversed the judgment of the district court and remanded the cause for a new trial. Coppi v. West Am. Ins. Co., 2 Neb.App. 834, 516 N.W.2d 264 (1994). West American successfully petitioned this court for further review. We now reverse the judgment of the Court of Appeals and remand the cause to that court with the direction that it reinstate the judgment of the district court.

II. FACTS

Coppi's operation consisted of a number of independent contractor stylists. Typically, after a stylist performed a service, the stylist prepared a ticket which reflected the stylist's name and the amount of the service performed. The customer would then pay by either cash or check. Thereafter, the ticket was placed in a "pigeon hole" so the stylist could be given appropriate credit. At the end of the day, the salon manager would record the total value of services rendered by each stylist on a sheet of paper and place the tickets and the total sheet in the floor safe located on the premises. Each morning, the salon manager would take the tickets out of the safe and enter the totals in a weekly ledger which reflected the amount of the ticket totals for each stylist and the amount of cash and checks received.

Coppi also kept a cash reserve of between $1,000 and $1,500, from which change was made for customers. He maintained no written record of the reserve, but kept it in the safe, along with the cash received during the day, the tickets, and the total sheet. Checks were deposited in one of two banks.

The weekly ledger was kept in the back room of the salon. Stylists could dispute any discrepancy through the day following the salon manager's recording of the day's tickets in the ledger. Each Tuesday, the stylists received disbursements in cash according to the tickets recorded in the weekly ledger. The ledger was then discarded, and no other written record of the cash taken in for any particular week was maintained.

On Sunday, March 16, 1986, Coppi's business was burglarized and the...