Barnes v. American Standard Ins. Co. of Wis.
297 Neb. 331
Neb.2017Background
- Jimmy R. Barnes Jr. held a motorcycle policy (with UM/UIM coverage) issued by American Standard; insurer prepared cancellation notices dated September 18, 2013, effective October 1, 2013, for nonpayment.
- American Standard produced a U.S. Postal Service Form 3877 (Certificate of Mailing) showing three items sent to Barnes on September 18, 2013; the form did not have the "Certified" box checked and omitted Barnes’ street address, but included tracking numbers and postmaster stamp.
- Barnes swore he never received any cancellation notice and believed the policy was in force when he was injured by an underinsured motorist on October 10, 2013; he recovered $100,000 from the tortfeasor’s carrier and sued American Standard for wrongful denial of UIM coverage.
- At summary judgment the insurer argued it mailed notice by certified mail in compliance with Neb. Rev. Stat. § 44-516(1); Barnes argued the insurer failed to prove certified mailing and so cancellation was ineffective.
- The district court credited the insurer’s circumstantial evidence and habit testimony, found the cancellation effective, granted insurer partial summary judgment, denied Barnes’ cross-motion, and dismissed the case with prejudice.
- The Nebraska Supreme Court reversed, holding American Standard did not meet its burden on summary judgment to prove certified mailing under § 44-516(1); material factual issues remained for the factfinder.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer mailed cancellation by registered or certified mail as required by § 44-516(1) | Barnes: no certified mailing was proved; he did not receive notice; defects in Form 3877 mean no statutory compliance | American Standard: Form 3877, tracking numbers, and routine mailing procedures establish certified mailing and statutory compliance | Reversed: insurer failed to carry burden on summary judgment; evidence insufficient to prove certified mailing as a matter of law; factual issue for trier of fact |
| Whether actual receipt of notice is required under § 44-516(1) | Barnes: argues lack of receipt supports no effective cancellation in practice | American Standard: compliance with mailing requirement suffices regardless of receipt | Held: statute does not require proof of actual receipt; only compliance with certified/registered mailing requirement is required, but insurer must prove it occurred |
| Proper evidentiary weight of Form 3877 and mail-habit evidence | Barnes: defective Form 3877 (no certified box, missing street) and affidavit speculation insufficient | American Standard: Form 3877 plus corroborating habit evidence and other notices suffice to show mailing | Held: Form 3877 alone (especially with defects) and habit evidence do not entitle insurer to summary judgment; presumption of regularity requires properly completed form or direct proof |
| Whether district court properly resolved competing inferences on summary judgment | Barnes: inferences must be drawn in favor of nonmovant; court improperly credited insurer's inferences | American Standard: court permissibly relied on circumstantial evidence to resolve compliance issue | Held: court erred by resolving factual disputes and drawing inferences for the moving party; summary judgment inappropriate |
Key Cases Cited
- Daniels v. Allstate Indem. Co., 261 Neb. 671 (discussing insurer's burden to establish effective cancellation)
- Houska v. City of Wahoo, 235 Neb. 635 (proof of mailing may be shown by customary-office-practice evidence but creates fact question)
- Sanders v. Mittlieder, 195 Neb. 232 (registered/certified mail requirement facilitates proof of receipt)
- Ragan v. Columbia Mut. Ins. Co., 183 Ill. 2d 342 (insurer must maintain recognized USPS form; statute balances insured protection and insurer burden)
- Coleman v. Comm’r, 94 T.C. 82 (properly completed Form 3877 can carry evidentiary weight but defects negate presumption)
- Horton v. Washington Cnty. Tax Claim Bureau, 623 Pa. 113 (distinguishing certificate of mailing as evidence of mailing only; certified service is distinct)