Hoffman Adjustment Incorporated v. Neal Nussbaum, Essie Nussbaum, and Illinois Farmers Insurance Company (mem. dec.)
45A03-1706-PL-1451
Ind. Ct. App.Dec 28, 2017Background
- In 2010 the Nussbaums rented a barn to the USDA; Kent asked their agent Perez to increase insurance on the barn but no appraisal or proper policy change was made.
- On May 20, 2012 lightning destroyed the barn; the Nussbaums filed claims with Illinois Farmers (Farmers). Hoffman Adjustment (public adjuster) was hired and signed a contract entitling it to 10% of "claim proceeds when adjusted, or otherwise recovered on account of such loss, regardless of who effects the adjustment or recovery."
- Hoffman prepared and submitted proof/statement of loss and valuations; Farmers paid $10,974.57 for other property (well house/debris), for which Hoffman was paid about $1,097.
- Due to coverage/classification issues (barn was commercial/rented but policy remained residential), Hoffman could not obtain payment for the barn; the Nussbaums hired counsel and later sued Farmers and Perez for negligence, settling in April 2014 for $280,000 (the policy limit).
- Hoffman claimed 10% ($28,000) of the settlement under its contract and sued the Nussbaums and Farmers; a default judgment was entered against Farmers but the trial court later vacated that default and ruled for the Nussbaums, holding the settlement arose from Perez’s negligence and not from insurance coverage so Hoffman was not entitled to its fee.
- On appeal Hoffman argued the settlement was "on account of" the barn loss and thus within the contract’s plain language; the Court of Appeals reviewed de novo and found error as to Hoffman’s breach-of-contract claim but affirmed vacatur of the default against Farmers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hoffman is entitled to 10% of the $280,000 settlement under the adjuster contract | Hoffman: contract language entitles it to 10% of any recovery "on account of" the loss, regardless who effects recovery | Nussbaums: settlement resulted from Perez’s negligence and not an insurance recovery; Hoffman didn’t effectuate the payment | Court: Reversed trial court on contract claim — contract covers recoveries "on account of" the loss, so Hoffman entitled to 10% |
| Whether default judgment against Farmers should remain | Hoffman: Farmers paid settlement so Hoffman had notice and entitlement to fee; default should stand | Trial court/Nussbaums: payment was not an insurance-policy payment, so Hoffman lacked proper notice; default vacated | Court: Affirmed vacatur — settlement not paid under the insurance policy so Farmers lacked obligation to withhold Hoffman’s fee and vacatur proper |
| Whether Hoffman can recover despite not being the party who effectuated the settlement | Hoffman: contract expressly covers recoveries "regardless of who effects the adjustment or recovery" | Nussbaums: it would be unfair; Hoffman didn’t cause the settlement | Court: Contract language controls; Hoffman may recover despite handoff to attorney |
| Remedy for fees, interest, and attorney’s fees | Hoffman: seeks $28,000 plus interest and attorney fees per contract/litigation | Nussbaums: opposed (argued no entitlement) | Court: Remanded for hearing on damages (fees, interest, attorney’s fees) |
Key Cases Cited
- Price v. Lake Cty. Bd. of Elections & Registration, 952 N.E.2d 807 (appellant must show prima facie error when appellee doesn't file brief)
- Trinity Home, LLC v. Fang, 848 N.E.2d 1065 (when appellant fails to meet burden court will affirm)
- Am. Family Mut. Ins. Co. v. Ginther, 843 N.E.2d 575 (contract interpretation aims to ascertain and enforce parties' intent; interpret contract as a whole)