939 N.W.2d 69
Iowa2020Background
- March 2016 hailstorm damaged the Clausens’ home; they were insured by State Farm.
- A 33 Carpenters employee inspected the roof, solicited the job, and had the Clausens sign documents authorizing 33 Carpenters to handle claims and receive insurance proceeds.
- State Farm inspected, paid an initial amount, and 33 Carpenters received that payment and performed repairs; 33 Carpenters later submitted large supplemental estimates and sought additional payments.
- On February 22, 2017 the Clausens executed an "Assignment of Claim and Benefits" to 33 Carpenters; 33 Carpenters then sued State Farm as assignee for additional benefits.
- State Farm moved for summary judgment, arguing the assignment was void because 33 Carpenters acted as an unlicensed public adjuster in violation of Iowa Code ch. 522C and §103A.71; the district court granted summary judgment and the Iowa Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court may adjudicate and void an assignment that allegedly violates licensing statutes, or whether only the Insurance Commissioner may enforce ch. 522C | 33 Carpenters: Commissioner has exclusive authority; courts lack power to invalidate assignment under ch. 522C | State Farm: Courts can adjudicate contract validity; statute does not give commissioner exclusive power to void contracts | Court: District court may adjudicate contract validity; nothing in ch. 522C grants commissioner exclusive authority to void contracts |
| Whether 33 Carpenters acted as a "public adjuster" without a license under §522C.2(7) | 33 Carpenters: Its pre-assignment conduct was limited (attending inspection only) and later conduct was as assignee; thus not subject to licensing requirement | State Farm: 33 Carpenters solicited the job, advised the insureds to file a claim, met and negotiated with insurer, submitted estimates, and received proceeds — all public-adjuster activities | Court: Undisputed facts show 33 Carpenters performed public adjuster functions (solicitation, advising, meeting with insurer, submitting estimates) without a license; therefore it was an unlicensed public adjuster |
| Whether an assignment to an unlicensed residential contractor/public adjuster is enforceable under Iowa law | 33 Carpenters: Assignment should be enforceable absent specific direction from the Insurance Commissioner | State Farm: §103A.71(5) voids contracts made by residential contractors who act as unlicensed public adjusters | Court: §103A.71(5) renders such assignments void; assignment unenforceable |
| Preservation of issue that commissioner has sole enforcement authority | 33 Carpenters: Raised below and on appeal | State Farm: 33 Carpenters failed to preserve error because district court did not expressly rule and no motion under Iowa R. Civ. P. 1.904(2) was filed | Court: Although preservation is arguable, the court assumed minimal preservation and decided the merits anyway |
Key Cases Cited
- Bank of the West v. Kline, 782 N.W.2d 453 (Iowa 2010) (courts will not enforce contracts that contravene statutes)
- Bergantzel v. Mlynarik, 619 N.W.2d 309 (Iowa 2000) (contracts made in violation of licensing requirements unenforceable)
- Milholin v. Vorthies, 320 N.W.2d 552 (Iowa 1982) (regulatory statute may invalidate noncompliant agreements)
- Lon Smith & Assocs., Inc. v. Key, 527 S.W.3d 604 (Tex. App. 2017) (refusing to enforce unlicensed public adjuster’s contract as void)
- Zarrell v. Herb Gutenplan Assocs., Inc., 444 N.Y.S.2d 39 (Sup. Ct. 1981) (contracts by unlicensed adjusters not enforceable)