Valley Boys v. American Family Ins. Co.
306 Neb. 928
| Neb. | 2020Background
- In 2014 nine homeowners suffered hail damage under American Family homeowner policies; eight policies provided replacement-cost coverage contingent on completed repairs.
- Homeowners signed "Assignment of Insurance Claim" forms assigning postloss insurance proceeds to Valley Boys; eight assignments incorporated a Customer Service Agreement (CSA) that referenced an unattached "Exhibit A."
- American Family paid actual cash value (ACV) initially; Valley Boys submitted RAADs and invoices seeking withheld depreciation/replacement-cost payments without itemized pricing or agreed scope, and much of the additional work was not completed or approved by the insurer.
- Valley Boys sued as assignee for unpaid replacement-cost proceeds; a jury awarded Valley Boys $62,841.06, but the district court granted JNOV, finding eight assignments unenforceable and awarding Valley Boys judgment on one claim.
- The district court concluded the eight CSAs left scope and price to be determined later and granted Valley Boys unilateral discretion to refuse work, rendering the assignments illusory and lacking consideration; Valley Boys appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge postloss assignments | Valley Boys: insurer (American Family) lacks standing under Marcuzzo because it is not a party to the assignments | American Family: assignments altered insurer's contractual obligations and created risk of overpayment, giving it standing | Court: American Family has standing because the assignments risked changing insurer duties and causing injury directly traceable to the assignment |
| Enforceability — scope of work | Valley Boys: subsequent conduct, RAADs, and invoices established definite scope | American Family: CSA required Exhibit A (absent); RAADs/invoices were not agreed to, sent to homeowners, or itemized | Court: scope was indefinite; CSA conferred unilateral discretion on Valley Boys; assignments unenforceable as to scope |
| Enforceability — price/consideration | Valley Boys: customary industry pricing/Xactimate estimates supplied price; assignments recited consideration | American Family: no agreed total or itemization; Xactimate varies; no mutuality of obligation | Court: no mutuality or definite price; lack of valid consideration made assignments unenforceable |
| Recovery on separate (ninth) contract | Valley Boys: one site used a StraightForward Pricing agreement with itemized scope and price | American Family: argued alternate defenses but did not contest the ninth claim's separate terms | Court: ninth claim enforceable; judgment affirmed for that claim only; other eight assignments invalid |
Key Cases Cited
- Marcuzzo v. Bank of the West, 290 Neb. 809 (2015) (a nonparty borrower generally lacks standing to challenge an assignment absent prejudice or injury directly traceable to the assignment)
- Western Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1 (2020) (debtor may challenge an assignment when assignment creates risk of paying same debt twice or similar direct injury)
- Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 295 Neb. 419 (2016) (postloss assignment of insurance proceeds is generally permitted; assignment does not increase insurer's policy obligations)
- D & S Realty v. Markel Ins. Co., 284 Neb. 1 (2012) (distinguishes actual cash value and replacement cost coverage and explains payment timing for replacement-cost benefits)
- Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38 (2018) (standards for JNOV and appellate review)