Great Plains Livestock Consulting, Inc. v. Midwest Ins. Exch., S-21-722

CourtSupreme Court of Nebraska
Writing for the CourtFUNKE, J.
Citation312 Neb. 367
PartiesGREAT PLAINS LIVESTOCK CONSULTING, INC., AND KI FANNING, APPELLANTS, v. MIDWEST INSURANCE EXCHANGE, INC., ET AL., APPELLEES.
Docket NumberS-21-722
Decision Date02 September 2022

312 Neb. 367

GREAT PLAINS LIVESTOCK CONSULTING, INC., AND KI FANNING, APPELLANTS,
v.

MIDWEST INSURANCE EXCHANGE, INC., ET AL., APPELLEES.

No. S-21-722

Supreme Court of Nebraska

September 2, 2022


1. Standing: Jurisdiction: Pleadings: Evidence: Appeal and Error. If a motion challenging a court's subject matter jurisdiction is filed after the pleadings stage, and the court holds an evidentiary hearing and reviews evidence outside the pleadings, it is considered a "factual challenge." Where the trial court's decision to dismiss for lack of subject matter jurisdiction is based on a factual challenge, the court's factual findings are reviewed under the clearly erroneous standard.

2. Jurisdiction: Appeal and Error. Aside from any factual findings, the trial court's ruling on subject matter jurisdiction is reviewed de novo, because it presents a question of law.

3. Appeal and Error. The grant or denial of a stay of proceedings is reviewed for an abuse of discretion.

4. Jurisdiction: Words and Phrases. Subject matter jurisdiction is the power of a tribunal to hear and determine a case in the general class or category to which the proceedings in question belong and to deal with the general subject matter involved.

5. Jurisdiction: Courts. Ripeness is one component of subject matter jurisdiction; its fundamental principle is that courts should avoid entangling themselves, through premature adjudication, in abstract disagreements based on contingent future events that may not occur at all or may not occur as anticipated.

6. ___:___.A determination with regard to ripeness depends upon the circumstances in a given case and is a matter of degree. 7. Actions: Jurisdiction: Appeal and Error. An appellate court uses a two-part inquiry to determine ripeness: (1) the fitness of the issues for

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[312 Neb. 368] judicial decision and (2) the hardship to the parties of withholding court consideration.

8. Negligence: Proof. To prevail in a negligence action, a plaintiff must prove the defendant's duty not to injure the plaintiff, breach of duty, proximate causation, and damages.

9. Courts: Actions. Courts inherently possess the power to stay proceedings when required by the interests of justice.

Appeal from the District Court for Cass County: Michael A. Smith, Judge.

Andrew D. Weeks, of Baylor Evnen, L.L.P., for appellants.

Brien M. Welch and David A. Blagg, of Cassem, Tierney, Adams, Gotch & Douglas, for appellee Midwest Insurance Exchange, Inc.

Sean A. Minahan and Patrick G. Vipond, of Lamson, Dugan & Murray, L.L.P., for appellees UNICO Group, Inc., and Sean Krueger.

Heavican, C.J., Miller-Lerman, Cassel, Funke, Papik, and Freudenberg, JJ., and Kozisek, District Judge.

FUNKE, J.

INTRODUCTION

Great Plains Livestock Consulting, Inc., and its president, Ki Fanning (collectively Great Plains), appeal the order of the district court for Cass County, Nebraska, which dismissed its complaint for lack of subject matter jurisdiction. Great Plains alleged that Midwest Insurance Exchange, Inc. (Midwest), as well as UNICO Group, Inc., and agent Sean Krueger (collectively UNICO), negligently failed to transfer or procure an errors and omissions insurance policy, which, had it been in place, would have covered the costs of defense and settlement or judgment for two lawsuits filed against Great Plains in another state. The district court found that Great Plains' complaint is not ripe because Midwest's and UNICO's liability and Great Plains' damages are currently unknown and

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[312 Neb. 369] because Great Plains may never be found liable in the lawsuits against it. Great Plains appeals. We reverse, and remand for further proceedings.

BACKGROUND

In early 2018, Great Plains had an errors and omissions policy underwritten by Capitol Specialty Insurance Corporation (Cap Specialty) through Midwest when it approached UNICO for assistance in procuring various insurance coverages. The record on appeal does not disclose what, if any, agreements the parties reached regarding coverage at that time, but Great Plains notified Midwest on April 18, 2018, that it was moving its errors and omissions policy. Great Plains subsequently obtained an errors and omissions policy underwritten by Lloyd's London Syndicate 2987 (Lloyd's) through UNICO on or about November 11, 2019. This policy was renewed on or about November 11, 2020.

In late 2020, Great Plains was named a third-party defendant in two lawsuits filed in the Iowa district court for Emmet County based on consulting work it had performed for Spencer Ag Center, LLC (Spencer Ag). The parties to the two lawsuits were different, but both lawsuits complained of negligence and breach of implied warranty of fitness by Spencer Ag customers. These customers named Spencer Ag a third-party defendant, and Spencer Ag, in turn, asserted third-party claims against Great Plains, alleging Great Plains had provided the feed ration formulas and feed products to the customers. As of this appeal, the Iowa lawsuits are pending.

Between early December 2020 and the end of February 2021, Great Plains submitted claims and requests for a tender of defense and indemnification related to the Iowa lawsuits to Midwest, UNICO, Cap Specialty, and Lloyd's. All claims and requests were denied.

Subsequently, on March 24, 2021, Great Plains brought a declaratory judgment action against Midwest, UNICO, Cap Specialty, and Lloyd's to ascertain whether any policy effective

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[312 Neb. 370] between Great Plains and the insurers covered the events underlying the Iowa lawsuits. It also sought recovery of the costs of the Iowa lawsuits and of its declaratory judgment action.

Great Plains filed a separate negligence lawsuit against Midwest and UNICO alleging they had a duty to transfer or procure an errors and omissions policy for it and breached this duty by failing to ensure the requested policy was in place. Great Plains further alleged that Midwest's and UNICO's breach of duty had "caused" and "will continue to cause" it damages because it had to retain counsel at its own expense to defend the Iowa lawsuits; it will also have to pay any judgment entered against it in the lawsuits. Great Plains asserted these costs would have been covered under the requested errors and omissions policy.

UNICO moved to dismiss Great Plains' negligence complaint for failure to state a claim under Neb. Ct. R. Pldg. § 6-1112(b)(6). UNICO based this motion primarily on the fact that "[Great Plains] currently do[es] not and cannot provide . . . the amount of defense cost or potential judgments against [Great Plains] in the two Iowa lawsuits." As such, UNICO argued, Great Plains' "alleged damages are speculative" and its complaint is not ripe.

Great Plains filed a statement of disputed facts in opposition to UNICO's motion to dismiss, asserting that it had already incurred attorney fees of approximately $4,000 in the Iowa lawsuits and $16,000 in its declaratory judgment and negligence actions. Great Plains also moved to stay proceedings on its negligence complaint pending the resolution of the Iowa lawsuits. In so doing, Great Plains asserted that the full extent of its damages is "contingent" on the outcome of these lawsuits, but "not speculative."

The district court held a hearing on June 21, 2021, at which the parties to the declaratory judgment action essentially agreed that Great Plains did not have errors and omissions coverage for the Iowa lawsuits. The hearing also touched on Great Plains' motion to stay, with Midwest's and UNICO's

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[312 Neb. 371] position being that Great Plains' negligence complaint is "premature" and "not ripe" and should be dismissed, not stayed. They proposed that Great Plains "bring an action in negligence or a contribution indemnity" "when and if they do have any damages in the Iowa case[s]." However, Great Plains expressed concern about dismissal with the option to refile later insofar as its claims could be seen to involve professional negligence subject to a 2-year statute of limitations, rather than ordinary negligence subject to a 4-year statute of limitations.

The district court subsequently issued an order on August 2, 2021, dismissing Great Plains' negligence complaint on ripeness grounds. In relevant part, the order stated:

The liability of [Midwest and Unico] to [Great Plains] is currently unknown as is the amount of any damages. In fact, there may not ever be a finding of liability in the Iowa litigation. As any claim of [Great Plains] is entirely dependent on the outcome of the Iowa litigation, the case is not fit for a judicial decision at this time, and there is no showing of a hardship to [Great Plains] by withholding the court's decision in the case.

The order did not address Great Plains' motion for a stay.

Midwest filed its own motion to dismiss on August 4, 2021, because it was unclear whether the earlier order applied to Midwest. In its motion, Midwest asserted Great Plains' complaint "is based on a theoretical contingency" that it may be entitled to contribution or indemnity from Midwest if judgment is entered against it in the Iowa lawsuits. Midwest further asserted that "[a]t this stage, any claims for contribution and indemnity or for damages are speculative at best."

The district court also granted this motion, "consistent with" its earlier ruling on UNICO's motion to dismiss. The language of the order was the same as that in the earlier order, and Great Plains' motion to stay was not addressed.

Great Plains appealed to the Nebraska Court of Appeals, and we moved the matter to our docket.

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[312 Neb. 372] ASSIGNMENTS OF ERROR

Great Plains assigns, restated, that the district court erred in finding that its negligence complaint is not ripe and in declining to stay proceedings pending the resolution of the Iowa lawsuits.

STANDARD OF REVIEW

If a motion challenging a court's...

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