Great Plains Livestock Consulting, Inc. v. Midwest Ins. Exch., Inc., S-21-722.
| Docket Number | S-21-722. |
| Decision Date | 02 September 2022 |
| Citation | 312 Neb. 367,979 N.W.2d 113 |
| Parties | GREAT PLAINS LIVESTOCK CONSULTING, INC., and Ki Fanning, appellants, v. MIDWEST INSURANCE EXCHANGE, INC., et al., appellees. |
| Court | Nebraska Supreme Court |
Andrew D. Weeks, of Baylor Evnen, L.L.P., for appellants.
Brien M. Welch and David A. Blagg, of Cassem, Tierney, Adams, Gotch & Douglas, Omaha, for appellee Midwest Insurance Exchange, Inc.
Sean A. Minahan and Patrick G. Vipond, of Lamson, Dugan & Murray, L.L.P., Omaha, for appellees UNICO Group, Inc., and Sean Krueger.
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 because Great Plains may never be found liable in the lawsuits against it. Great Plains appeals. We reverse, and remand for further proceedings.
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 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 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.
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.
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."1 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 But 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
The grant or denial of a stay of proceedings is reviewed for an abuse of discretion.4
Great Plains argues that in dismissing its complaint on ripeness grounds, the district court "focus[ed] only on the prospective settlements or judgments in the two Iowa cases" and ignored the costs Great Plains has already incurred in defending the Iowa lawsuits and bringing the declaratory judgment and negligence actions.5 Midwest and UNICO counter that Great Plains’ claims "currently require litigating abstract issues of future and contingent outcomes that may or may not occur or may not occur as anticipated," given that the Iowa lawsuits are ongoing and Great Plains has not yet been found liable for any act or omission.6 They also argue that Great Plains’ own motion to stay proceedings "betrays" that its negligence complaint is not ripe.7
We agree with Great Plains that the district court erred in dismissing its negligence complaint on ripeness grounds given the facts and circumstances of this case. The district court based its decision on its view that Midwest's and UNICO's "liability" and Great Plains’ "damages" are "currently unknown," and "there may not ever be a finding of liability in the Iowa litigation." The district court is correct that there are numerous unknowns regarding the claims pending against Great Plains in Iowa, including whether Great Plains will be found liable. However, despite these unknowns, the elements of Great Plains’ negligence complaint as to its attorney fees already incurred in defending the Iowa lawsuits are not conjectural or hypothetical. Our finding that Great Plains’ complaint is ripe is based upon these costs; we offer no opinion regarding the other damages alleged in the...
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