Ruwe v. Farmers Mut. United Ins. Co., Inc.

• Decision Date: 10 May 1991
• Docket Number: No. 89-049,89-049
• Citation: 238 Neb. 67,469 N.W.2d 129
• Parties: Chris J. RUWE, Appellant, v. FARMERS MUTUAL UNITED INSURANCE COMPANY, INC., Successor to Concordia Mutual Insurance Company, Appellee.
• Court: Nebraska Supreme Court

Page 129

469 N.W.2d 129

238 Neb. 67

Chris J. RUWE, Appellant, v. FARMERS MUTUAL UNITED INSURANCE COMPANY, INC., Successor to Concordia Mutual Insurance Company, Appellee.

No. 89-049.

Supreme Court of Nebraska.

May 10, 1991.

Syllabus by the Court

1. Summary Judgment. A motion for summary judgment is not intended to be a substitute for a demurrer or a motion for a judgment on the pleadings.

2. Summary Judgment. A summary judgment shall be rendered if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.

3. Trial: Pleadings: Pretrial Procedure: Summary Judgment. When it has been asserted in a summary judgment motion that an opposing party has failed to state a cause of action, as far as that issue is concerned, the motion may be treated as one in fact for a judgment on the pleadings, notwithstanding its designation as something other than that.

4. Trial: Pleadings: Pretrial Procedure. A motion for judgment on the pleadings admits the truth of all well-pleaded facts in the opposing party's pleadings, together with all reasonable inferences to be drawn therefrom, and the moving party admits, for the purpose of the motion, the untruth of the movant's allegations insofar as they have been controverted.

5. Torts: Insurance: Claims: Proof. To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the insurance policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.

6. Torts: Insurance: Claims: Pleadings. The tort of bad faith can be alleged only if the facts pleaded would, on the basis of an objective standard, show the absence of a reasonable basis for denying the claim, i.e., would a reasonable insurer under the circumstances have denied or delayed payment of the claim under the facts and circumstances?

7. Pleadings. A petition is sufficient if, from the statement of facts set forth in the petition, the law entitles a plaintiff to recover.

8. Actions: Pleadings. It is the facts well pleaded, not the theory of recovery or legal conclusions, which state a cause of action.

9. Actions: Pleadings. Pleadings frame the issues upon which a cause is to be tried and advise the adversary as to what he must meet. In actions not involving extraordinary remedies, general pleadings are to be liberally construed in favor of the pleader.

10. Insurance: Claims: Proof. Reckless indifference to the facts or to the proof submitted by an insured is shown by an insurer's failure to conduct a proper investigation and subject the results to a reasonable evaluation and review.

11. Insurance: Claims: Damages: Proximate Cause. When an insurer acts in bad faith in the settlement of a claim with its insured, the insured is entitled to recover damages for economic loss proximately caused by the insurer's actionable conduct.

12. Actions: Pleadings. The fact a party may be entitled to require a more definite statement from a petitioner does not necessarily mean that the statement as originally made was not sufficient to state a cause of action.

Lawrence H. Yost and David C. Mitchell, of Yost, Schafersman, Yost, Lamme, Hillis & Mitchell, P.C., Fremont, for appellant.

Robert T. Grimit and Michael A. England, of Baylor, Evnen, Curtiss, Grimit & Witt, Lincoln, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

FAHRNBRUCH, Justice.

Chris J. Ruwe appeals a trial court ruling that the allegations in his second amended petition did not state a cause of action when it alleged that his insurance carrier, Farmers Mutual United Insurance Company, Inc. (Farmers), acted in bad faith in settlement of Ruwe's first-party fire insurance claim.

We reverse the ruling of the district court for Washington County and remand the cause for further proceedings.

Specifically, Ruwe's three assignments of error can be combined to allege that the trial court erred in (1) failing to recognize that Ruwe stated a cause of action for an insurer's bad faith settlement of a claim with its insured and (2) admitting into evidence an affidavit of the insurer's attorney in support of its motion for summary judgment. Our decision concerning the first assignment of error obviates the necessity of reaching Ruwe's second assignment of error.

Before reciting the facts in this case, it is first necessary to determine the record to be considered on appeal. On September 23, 1988, Farmers moved for summary judgment. On December 23, 1988, the court, without explanation, sustained Farmers' motion. On January 6, 1989, Ruwe moved for reconsideration of the ruling on Farmers' summary judgment motion or, alternatively, for a new trial. In his motion, Ruwe stated,

It is not clear from the Court's ruling whether it sustained the Defendant's Motion for lack of Nebraska authorities supporting Plaintiff's Cause of Action or whether it sustained said Motion for lack of a factual basis to support a claim of Bad Faith as alleged in Plaintiff's Second Amended Petition.

Although Ruwe's motion for a new trial was not timely, see Neb.Rev.Stat. § 25-1143 (Reissue 1989) (a motion for a new trial must be made within 10 days of the decision rendered, with two exceptions not applicable here), he nonetheless filed his notice of appeal within 30 days of December 23, 1988, as required by Neb.Rev.Stat. § 25-1912 (Reissue 1989). Therefore, this court has jurisdiction of this appeal.

During a hearing on Ruwe's motion for a new trial, Farmers explained to the trial court that it moved for summary judgment on the basis that Ruwe failed to state a cause of action, but that if he did state a cause of action, there was no genuine issue of material fact for a jury to resolve. The district court entered an order on January 13, 1989, finding that the summary judgment motion was sustained on the basis that Ruwe had failed to state a cause of action. Neither party filed any motion thereafter.

A question arises because of Farmers' attempt to use a summary judgment motion to challenge whether Ruwe had stated a cause of action. A motion for summary judgment is not a proper method to challenge the sufficiency of a petition to state a cause of action. Workman v. Workman, 167 Neb. 857, 95 N.W.2d 186 (1959). This court has further held that "[a] motion for summary judgment is not intended to be a substitute for ... a demurrer, or a motion for a judgment on the pleadings. [Citation omitted.]" See Regnev, Inc. v. Shasta Beverages, 215 Neb. 230, 233, 337 N.W.2d 783, 785 (1983). The Legislature has provided that a petition may be challenged by demurrer for a failure to state a cause of action. See Neb.Rev.Stat. § 25-806 (Reissue 1989). It has further provided that a summary judgment shall be rendered if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. See Neb.Rev.Stat. § 25-1332 (Reissue 1989). However, there simply is no statutory authorization for this hybrid procedure which Farmers has created to challenge Ruwe's second amended petition. When it has been asserted in a summary judgment motion that an opposing party has failed to state a cause of action, as far as that issue is concerned, the motion may be treated as one in fact for a judgment on the pleadings, notwithstanding its designation as something other than that. Hutmacher v. City of Mead, 230 Neb. 78, 430 N.W.2d 276 (1988); Wood v. Tesch, 222 Neb. 654, 386 N.W.2d 436 (1986), overruled on other grounds, Landon v. Pettijohn, 231 Neb. 837, 438 N.W.2d 757 (1989); Mueller v. Union Pacific Railroad, 220 Neb. 742, 371 N.W.2d 732 (1985). Therefore, we consider only the pleadings to determine if Ruwe's second amended petition stated a cause of action. See Hutmacher, supra.

[A] motion for judgment on the pleadings admits the truth of all well-pleaded facts in the opposing party's pleadings, together with all reasonable inferences to be drawn therefrom, and the moving party admits, for the purpose of the motion, the untruth of the movant's allegations insofar as they have been controverted. [Citations omitted.]

Hutmacher, supra at 79-80, 430 N.W.2d at 278.

In his second amended petition, which was filed on June 18, 1987, Ruwe listed two causes of action: (1) breach of contract and (2) bad faith settlement of a first-party insurance claim. This appeal concerns only Ruwe's second cause of action.

In that regard, Ruwe alleged the following: that he is a resident of Washington County, Nebraska; that on January 1, 1986, Concordia Mutual Insurance Company (Concordia) merged into Farmers; and that by the terms of the merger Farmers assumed all liabilities of Concordia.

Ruwe further alleged in substance that Concordia issued and delivered to him its policy of insurance, insuring for a period of 3 years certain property; that a hog barn and three associated grain bins were later added to the policy; that the hog barn was insured in the amount of $37,500 and the three grain bins for $2,500; that he paid, and Concordia accepted, all premiums; and that among the casualties against which Concordia insured him was damage caused by fire.

He also alleged that on September 21, 1985, while the policy was in force and effect, the hog barn and the livestock housed therein were wholly destroyed by fire and the three grain bins were damaged; that on September 22, 1985, he notified Concordia's agent of the damage to his buildings and livestock caused by the fire; that Concordia's agents made repeated inspections of the destroyed building, but never thoroughly investigated the fire scene; that he signed a proof of loss which was timely submitted to Concordia on November 12, 1985; that on December 27,...