Countryside Coop. v. The Harry A. Koch Co, S-09-896.
| Citation | 790 N.W.2d 873,280 Neb. 795 |
| Decision Date | 12 November 2010 |
| Docket Number | No. S-09-896.,S-09-896. |
| Parties | COUNTRYSIDE COOPERATIVE and Michigan Millers Mutual Insurance Company, appellees and cross-appellants, v. The HARRY A. KOCH CO., appellant and cross-appellee. |
| Court | Supreme Court of Nebraska |
280 Neb. 795
790 N.W.2d 873
COUNTRYSIDE COOPERATIVE and Michigan Millers Mutual Insurance Company, appellees and cross-appellants,
v.
The HARRY A. KOCH CO., appellant and cross-appellee.
No. S-09-896.
Supreme Court of Nebraska.
Nov. 12, 2010.
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Syllabus by the Court
1. Actions: Parties: Standing. Whether a party who commences an action has standing and is therefore the real party in interest presents a jurisdictional issue.
2. Judgments: Jurisdiction: Appeal and Error. A jurisdictional issue that does not involve a factual dispute presents a question of law, which an appellate court independently decides.
3. Insurance: Contracts. The interpretation of an insurance policy is a question of law.
4. Judgments: Appeal and Error. In reviewing questions of law, an appellate court resolves the question independently of the lower court's conclusion.
5. Summary Judgment: Appeal and Error. An appellate court will affirm a lower court's granting of summary judgment if the pleadings and admissible evidence offered at the hearing show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.
6. Actions: Parties: Statutes: Public Policy. Neb.Rev.Stat. § 25-301 (Reissue 2008) provides that every action shall be prosecuted in the name of the real party in interest. The purpose of the statute is to prevent the prosecution of actions by persons who have no right, title, or interest in the cause. The statute also
discourages harassing litigation and keeps litigation within certain bounds in the interest of sound public policy.
7. Actions: Parties: Standing. The focus of the real party in interest inquiry is whether the party has standing to sue due to some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy. The purpose of the inquiry is to determine whether the party has a legally protectable interest or right in the controversy that would benefit by the relief to be granted.
8. Insurance: Brokers: Principal and Agent. An insurance broker acts as an agent of the insured.
9. Trial: Evidence: Damages. Under the collateral source rule, the fact that the party seeking recovery has been wholly or partially indemnified for a loss by insurance or otherwise cannot be set up by the wrongdoer in mitigation of damages.
10. Appeal and Error. Errors argued but not assigned will not be considered on appeal.
11. Subrogation: Words and Phrases. Generally, subrogation is the right of one, who has paid an obligation which another should have paid, to be indemnified by the other.
12. Subrogation: Words and Phrases. Subrogation is the substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that the one who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities.
13. Subrogation: Liability. The doctrine of subrogation applies where a party is compelled to pay the debt of a third person to protect his or her own rights or interest, or to save his or her own property.
14. Subrogation: Liability. To be entitled to subrogation, one must pay a debt for which another is liable.
15. Insurance: Contracts: Subrogation: Tort-feasors. In the context of insurance, the right to subrogation is based on two premises: (1) A wrongdoer should reimburse an insurer for payments that the insurer has made to its insured, and (2) an insured should not be allowed to recover twice from the insured's insurer and the tort-feasor.
16. Insurance: Contracts: Claims: Time. A claims-made policy provides coverage only where a claim is made and reported to the insurance carrier during the policy period or a specified period thereafter.
17. Insurance: Contracts: Claims: Time. Where an insurance policy requires that a claim be made and reported during the policy period or an extended reporting period in order for the loss to be treated as falling within the coverage of the policy, failure to comply with the reporting requirement is sufficient to defeat coverage without a showing of prejudice to the insurer in the absence of a specific policy provision to the contrary.
18. Insurance: Brokers: Principal and Agent. As a general principle, it is not necessary for an insured, in order to recover from the broker or agent, to show that he or she has sued the insurance company.
19. Laches: Equity: Estoppel. In Nebraska, both laches and equitable estoppel are affirmative defenses.
20. Pleadings. An affirmative defense must be specifically pled to be considered.
21. Appeal and Error. An issue not presented to or passed on by the trial court is not appropriate for consideration on appeal.
22. Prejudgment Interest: Appeal and Error. Prejudgment interest may be awarded only as provided in Neb.Rev.Stat. § 45-103.02 (Reissue 2004), and whether prejudgment interest should be awarded is reviewed de novo on appeal.
23. Prejudgment Interest: Claims. Prejudgment interest under Neb.Rev.Stat. § 45-103.02 (Reissue 2004) is recoverable only when the claim is liquidated, that is, when there is no reasonable controversy as to either the plaintiff's right to recover or the amount of such recovery. A two-pronged inquiry is required. There must be no dispute either as to the amount due or as to the plaintiff's right to recover, or both.
Chad G. Marzen and Dan H. Ketcham, of Engles, Ketcham, Olson & Keith, P.C., and Kenneth R. Rothschild and Audrey L. Shields, of Golden, Rothschild, Spagnola, Lundell, Levitt & Boylan, P.C., for appellant.
Terry R. Wittler, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., for appellees.
HEAVICAN, C.J., CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.
STEPHAN, J.
This is a negligence action against The Harry A. Koch Co. (Koch), an insurance broker. Countryside Cooperative (Countryside) and Michigan Millers Mutual Insurance Company (Michigan Millers) allege that they sustained damages when Koch failed to timely report a personal injury claim against Countryside to the company that insured Countryside under a claims-made policy. Koch appeals from a judgment in favor of Countryside and Michigan Millers, and Countryside and Michigan Millers cross-appeal. We affirm the judgment of the district court.
In late October 2004, William Boden was working on his property in rural Lancaster County. A tank owned by Countryside and filled with anhydrous ammonia was mounted
on a trailer and parked on land adjacent to the property where Boden was working. Boden subsequently sued Countryside, alleging that the tank leaked and that he suffered extensive physical injuries as a result of his exposure to the anhydrous ammonia.
At the time of this incident, Countryside, formerly known as Firth Cooperative Co., Inc., was insured under two liability insurance policies: a commercial general liability policy issued by Michigan Millers and a commercial pollution legal liability policy issued by American International Specialty Lines Insurance Company (American International). The American International policy was a claims-made policy, and Koch was the broker for Countryside on the policy. Countryside timely notified Koch of the Boden claim, but Koch did not notify American International until several days after the reporting period in the American International policy had expired. Michigan Millers was timely notified of the Boden claim.
American International subsequently refused to defend Countryside against Boden's claim on grounds that (1) Boden's claim was not reported within the time periods specified in the policy, (2) Countryside was not an insured under the policy, (3) an underground tank exclusion in the policy applied, and (4) a “known contamination” exclusion in the policy applied. Michigan Millers defended Countryside under its policy and eventually settled Boden's claim for $900,000.
After the settlement with Boden was concluded, Countryside and Michigan Millers entered into a “Memorandum of Understanding” in which they agreed to jointly sue Koch based upon Koch's alleged negligence in failing to timely report the Boden claim to American International. Michigan Millers agreed to control the litigation and pay all attorney fees and costs, and Countryside agreed to cooperate fully in the prosecution of the action and execute any necessary documents. It was also agreed that Countryside would receive 2 percent of the net proceeds of a judgment or settlement and that Michigan Millers would receive the remaining 98 percent.
Countryside and Michigan Millers filed this action against Koch on December 12, 2006, alleging that Koch's negligence
in failing to timely report the Boden claim to American International resulted in damages because Countryside lost the benefit of the American International policy. After Koch answered, both parties filed motions for summary judgment on the issue
of Koch's liability. The district court denied both motions after an evidentiary hearing, ruling in part that genuine issues of material fact existed as to whether the American International policy would have applied to the Boden claim but for Koch's failure to give timely notice. But in its order, the district court determined that Michigan Millers sustained a loss by reason of defending and settling the Boden claim and, pursuant to the memorandum of understanding, had standing to bring the action. The court also rejected Koch's contention that Countryside had not suffered any loss because Michigan Millers had defended Boden's lawsuit and paid the settlement, noting that the memorandum of understanding and the collateral...
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