North Star Mut. Ins. Co. v. Stewart , 311 Neb. 33 ( 2022 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
03/18/2022 08:07 AM CDT
- 33 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33North Star Mutual Insurance Company,
as subrogee of Julie Blazer, appellee,
v. Travis Stewart, appellant.
___ N.W.2d ___
Filed February 25, 2022. No. S-21-485.
1. Jurisdiction: Appeal and Error. The question of jurisdiction is a
question of law, which an appellate court resolves independently of the
trial court.
2. ____: ____. It is the duty of an appellate court to determine whether
it has jurisdiction over the matter before it, irrespective of whether the
issue is raised by the parties.
3. Subrogation: Words and Phrases. Generally, subrogation is the right
of one, who has paid the obligation which another should have paid, to
be indemnified by the other.
4. Subrogation: Equity: Contracts: Statutes. A right to subrogation may
arise under principles of equity, may be contractual, or may be set out
in statute, and no single rule can be laid down which will apply to every
subrogation claim.
5. Parties. A real party in interest is one who, under the substantive law,
has a claim to the relief sought. In this way, the real party in interest
inquiry turns on the substantive law of the claim.
6. Actions: Parties. The purpose of the real party in interest statute is to
prevent the prosecution of actions by persons who have no right, title, or
interest in the cause.
7. Actions: Parties: Jurisdiction: Standing. The question whether the
party who commenced an action has standing and is therefore the real
party in interest is jurisdictional, and because the requirement of stand-
ing is fundamental to a court’s exercise of jurisdiction, either a litigant
or a court can raise the question of standing at any time.
8. Standing: Jurisdiction: Pleadings: Evidence: Affidavits: Proof:
Words and Phrases. A court’s consideration of standing will vary
depending on when the issue is raised during the progression of a
- 34 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33case. If standing is challenged at the pleadings stage, before an eviden-
tiary hearing and before any evidence outside of the pleadings is admit-
ted, it is deemed a “facial challenge.” In considering a facial challenge,
a court will typically review only the pleadings to determine whether the
plaintiff has alleged sufficient facts to establish standing. But when an
issue of standing is presented and the court holds an evidentiary hearing
and reviews evidence outside the pleadings, it is considered a “factual
challenge.” When a factual challenge is made, the party opposing the
motion must offer affidavits or other relevant evidence to support its
burden of establishing subject matter jurisdiction.
9. Records: Affidavits: Appeal and Error. An affidavit used as evidence
in the trial court cannot be considered on appeal of a cause unless it is
offered in evidence in the trial court and preserved in and made a part of
the bill of exceptions.
10. Actions: Insurance: Tort-feasors. The insured’s cause of action against
the tortfeasor cannot be split, and at all times, there is one cause of
action on the part of the insured against the tortfeasor.
11. ____: ____: ____. When the indemnity paid by the insurer covers only
part of the loss, leaving a residue to be made good to the insured by the
wrongdoer, the right of action remains in the insured for the entire loss.
12. ____: ____: ____. The rule against claim splitting is founded on the
principle that the wrongful act was single and indivisible, and gives
rise to but one liability. Upon this theory, the splitting of the causes of
action is avoided and the wrongdoer is not subjected to a multiplicity
of suits.
13. Actions: Insurance: Tort-feasors: Parties: Statutes. Under statutes
providing that every action must be prosecuted in the name of the real
party in interest, if the insurance paid by an insurer covers only a portion
of the loss, the right of action against the wrongdoer who caused the loss
remains in the insured for the entire loss, and the action must be brought
in the name of the insured.
14. Actions: Insurance. When an insurer indemnifies its insured for only
part of the loss, the insured retains the right of action for the entire loss.
15. Actions: Insurance: Subrogation: Tort-feasors: Parties. When a sub-
rogated insurer has compensated its insured for the entire loss sustained
as a result of the tortfeasor’s conduct, then the insurer, rather than the
insured, is the real party in interest in an action to recover from the
tortfeasor.
16. Actions: Insurance: Subrogation: Notice: Compromise and
Settlement: Tort-feasors. The rule against claim splitting will not
apply to prevent an insurer from filing suit in its own name to enforce
a subrogation claim when, with notice of the subrogation claim, the
- 35 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33insured settles with the tortfeasor without protecting the subroga-
tion claim.
Appeal from the District Court for Adams County, Stephen
R. Illingworth, Judge, on appeal thereto from the County
Court for Adams County, Michael P. Burns, Judge. Judgment
of District Court reversed and remanded with directions.
Jared J. Krejci, of Smith, Johnson, Allen, Connick & Hansen,
for appellant.
Brad Entwistle, of Walentine O’Toole, L.L.P., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Stacy, J.
The issue in this appeal is whether North Star Mutual
Insurance Company (North Star) violated the rule against
claim splitting when it filed a subrogation action in its own
name, without joining its insured. The county court dismissed
North Star’s complaint without prejudice on that basis, and the
district court reversed. We now reverse the judgment of the
district court and remand the matter with directions to affirm
the judgment of the county court.
BACKGROUND
On or about May 21, 2020, Julie Blazer was operating
her vehicle in Hastings, Nebraska, when she was struck by a
pickup truck being operated by Travis Stewart. At the time of
the accident, Blazer was insured with North Star. It appears
North Star paid Blazer insurance benefits as a result of the acci-
dent, but the amount of any such benefits and the coverage(s)
under which the benefits may have been paid are not clear on
this record.
County Court
On August 25, 2020, North Star filed suit against Stewart
in the county court for Adams County. North Star brought
- 36 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33the action in its own name “as subrogee of Julie Blazer,”
but did not join Blazer as a party. The complaint alleged that
Blazer and Stewart were involved in a motor vehicle accident
which was solely and proximately caused by Stewart’s negli-
gence. The complaint further alleged that North Star “issued
a policy of insurance covering” Blazer and that “as a direct
and proximate result of [Stewart’s] negligence, [North Star]
and its Insured incurred damages in the amount of $6,710.00.”
The complaint contained no allegations describing the nature
of Blazer’s damages or the nature or amount of insurance
benefits, if any, paid to Blazer by North Star. Nor is it clear
from the complaint whether North Star is claiming a right of
subrogation under the terms of the insurance policy, under a
Nebraska statute, or under some other legal theory.
Stewart moved to dismiss the complaint, alleging it failed
to state a claim on which relief could be granted 1 and failed to
join Blazer as a necessary party plaintiff. 2 The motion asserted
that Blazer, not North Star, was the real party in interest in any
negligence action against Stewart arising from the accident
and that North Star was improperly splitting Blazer’s claim by
suing separately to recover its subrogation interest.
At the hearing on the motion to dismiss, neither party
adduced evidence. North Star generally took the position that
it was allowed to file the action in its own name because
“this is just a subrogation of a property damage claim for
North Star” and the subrogation claim was “separate and dis-
tinct from any claim that . . . Blazer could have.” The court
questioned North Star’s counsel about the rule against claim
splitting, and specifically, it asked whether Blazer intended
to “forego[]” any claim against Stewart for damages related
to the accident. Counsel replied, “Your Honor, before we file
any of these for [North Star], we send a letter to the insured
asking them if they have any type of personal injury cause
1
See Neb. Ct. R. Pldg. § 6-1112(b)(6).
2
See § 6-1112(b)(7). See, also, Neb. Rev. Stat. §§ 25-301 and 25-318
(Reissue 2016).
- 37 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33of action. And then if we don’t hear back from them we
just proceed.”
The court took the matter under advisement pending addi-
tional briefing. It also advised the parties that if documentation
was provided showing that Blazer had either signed a release
in favor of Stewart or was forgoing any additional claim for
damages against him, “then I maybe . . . would entertain a
withdrawal of the motion to dismiss.”
Several days later, North Star filed an affidavit from Blazer
with the clerk of the county court. The affidavit was file
stamped by the clerk, but there is nothing in the record indicat-
ing it was offered or received into evidence. We summarize the
affidavit here, only to assist in understanding the arguments on
appeal. According to the affidavit, North Star issued Blazer a
check for property damage to her vehicle, but the affidavit did
not identify the amount of the check, the amount of the prop-
erty damage sustained, or the amount of any deductible. The
affidavit also stated that Blazer did not intend to file a lawsuit
against Stewart for “physical injury.”
In its written order granting Stewart’s motion to dismiss, the
county court stated that Blazer’s affidavit was “not dispositive”
of the claim-splitting issue. The court cited the rule against
claim splitting discussed in Krause v. State Farm Mut. Auto
Ins. Co. 3 and reasoned that despite the averments in Blazer’s
affidavit, Blazer could still sue Stewart “in a separate matter,
for damages claimed as a result of the same accident alleged in
this case.” The court therefore concluded that Blazer remained
the real party in interest for the entire action against Stewart,
and it dismissed North Star’s complaint without prejudice
for lack of standing. North Star timely appealed to the dis-
trict court.
3
Krause v. State Farm Mut. Auto Ins. Co., 184 Neb. 588, 169 N.W.2d 601(1969) (holding subrogating insurer may not split its insured’s cause of
action against tortfeasor, and when indemnity paid by insurer covers only
part of insured’s loss, right of action against tortfeasor remains in insured
for entire loss).
- 38 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33District Court
In connection with its appeal to the district court, North Star
requested preparation of a transcript and bill of exceptions, but
did not file a statement of errors. Consequently, the district
court limited its appellate review to plain error. 4 It ultimately
reversed, finding that it was plain error for the county court to
apply the rule against claim splitting and that doing so deprived
North Star of its right to pursue its subrogation claim. The dis-
trict court generally relied on Blazer’s affidavit to conclude
that North Star had compensated Blazer for property damage
to her vehicle and that Blazer was asserting no personal injury
claims related to the accident. Based on these conclusions, it
determined there was no concern that North Star was improp-
erly splitting its insured’s claim against Stewart.
Stewart filed a timely appeal, which we moved to our
docket.
ASSIGNMENTS OF ERROR
Stewart assigns, restated and consolidated, that the district
court erred in (1) reviewing the county court’s order for plain
error and finding plain error, (2) considering Blazer’s affidavit
as evidence, and (3) determining North Star’s action was not
barred by the Nebraska rule against claim splitting.
STANDARD OF REVIEW
Generally, a district court and a higher appellate court
review an appeal from the county court for errors appearing on
the record. 5 When a party appealing from county court to dis-
trict court fails to file a statement of errors, the district court’s
review is for plain error. 6 And in appeals where the district
4
See Neb. Ct. R. § 6-1518 (rev. 2022). See, also, Houser v. American
Paving Asphalt, 299 Neb. 1, 907 N.W.2d 16 (2018).
5
See Neb. Rev. Stat. § 25-2733(1) (Reissue 2016). See, also, Stuthman v.
Stuthman, 245 Neb. 846, 515 N.W.2d 781 (1994); State v. Jacobsen, 238
Neb. 511, 471 N.W.2d 427 (1991).
6
See § 6-1518. See, also, Houser, supra note 4.
- 39 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33court reviewed for plain error, a higher appellate court likewise
reviews for plain error only. 7
[1,2] But here, the sole issue presented on appeal is juris-
dictional. The question of jurisdiction is a question of law,
which an appellate court resolves independently of the trial
court. 8 Because it is the duty of an appellate court to determine
whether it has jurisdiction over the matter before it, irrespec-
tive of whether the issue is raised by the parties, 9 we will not
limit our appellate review to plain error.
ANALYSIS
North Star filed this negligence action against Stewart in its
own name, without joining its insured, seeking to recover dam-
ages in the sum of $6,710 as a result of the collision between
Stewart and Blazer. The parties describe this as a subroga-
tion action, and they frame the primary question on appeal as
whether North Star has standing to bring a subrogation action
in its own name. Before addressing that jurisdictional issue, we
question, as a threshold matter, whether this case is properly
characterized as one to enforce subrogation.
[3,4] Generally, subrogation is the right of one, who has
paid the obligation which another should have paid, to be
indemnified by the other. 10 A right to subrogation may arise
under principles of equity, may be contractual, or may be set
out in statute, 11 and no single rule can be laid down which
7
Houser, supra note 4.
8
Federal Nat. Mortgage Assn. v. Marcuzzo, 289 Neb. 301, 854 N.W.2d 774(2014).
9
Id.10
SFI Ltd. Partnership 8 v. Carroll, 288 Neb. 698, 851 N.W.2d 82 (2014);
Buckeye State Mut. Ins. Co. v. Humlicek, 284 Neb. 463, 822 N.W.2d 351(2012).
11
See Dawes v. Wittrock Sandblasting & Painting, 266 Neb. 526, 667
N.W.2d 167 (2003), disapproved on other grounds, Kimminau v. Uribe
Refuse Serv., 270 Neb. 682, 707 N.W.2d 229 (2005).
- 40 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33will apply to every subrogation claim. 12 From the parties’ brief-
ing, we understand that North Star is claiming it has a right of
subrogation against Stewart to recover sums it paid to Blazer
under the terms of her automobile insurance policy as a result
of loss or damage sustained in the accident. But no such allega-
tions appear in the operative complaint.
In the complaint, North Star describes itself “as subrogee
of ” Blazer, but does not otherwise allege any facts which
would support a right of subrogation under any recognized
legal theory. The complaint does not allege that North Star paid
insurance proceeds, in any amount, to Blazer under the policy
as a result of damages sustained in the accident. The com-
plaint’s only reference to damages states simply that “[North
Star] and its Insured incurred damages in the amount of
$6,710.00” as a result of the collision. Whether North Star is
claiming to be subrogated to some, or all, of this alleged dam-
age amount is unclear.
However, because North Star describes itself as Blazer’s
subrogee in the complaint, we will, for purposes of analyzing
whether North Star is the real party in interest only, accept the
parties’ characterization of this action as one seeking to recover
a subrogation interest.
Real Party in Interest and Standing
[5] As framed, the jurisdictional question presented here is
whether North Star is the real party in interest with standing
to prosecute this subrogation action in its own name, without
joining its insured. Nebraska’s real party in interest statute
provides that “[e]very action shall be prosecuted in the name
of the real party in interest . . . .” 13 A real party in interest is
one who, under the substantive law, has a claim to the relief
12
See Buckeye State Mut. Ins. Co., supra note 10.
13
§ 25-301.
- 41 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33sought. 14 In this way, the real party in interest inquiry turns on
the substantive law of the claim. 15
[6,7] The purpose of the real party in interest statute is to
prevent the prosecution of actions by persons who have no
right, title, or interest in the cause. 16 The question whether the
party who commenced an action has standing and is therefore
the real party in interest is jurisdictional, and because the
requirement of standing is fundamental to a court’s exercise of
jurisdiction, either a litigant or a court can raise the question of
standing at any time. 17
[8] A court’s consideration of standing will vary depending
on when the issue is raised during the progression of a case. If
standing is challenged at the pleadings stage, before an eviden-
tiary hearing and before any evidence outside of the pleadings
is admitted, it is deemed a “‘facial challenge.’” 18 In consid-
ering a facial challenge, a court will typically review only
the pleadings to determine whether the plaintiff has alleged
sufficient facts to establish standing. 19 But when an issue of
standing is presented and the court holds an evidentiary hear-
ing and reviews evidence outside the pleadings, it is considered
a “‘factual challenge.’” 20 When a factual challenge is made,
the party opposing the motion must offer affidavits or other
relevant evidence to support its burden of establishing subject
matter jurisdiction. 21
14
SID No. 67 v. State, 309 Neb. 600, 961 N.W.2d 796 (2021).
15
See id.16
See Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435(2018).
17
See id.18
Id. at 54, 917 N.W.2d at 451, quoting Citizens Opposing Indus. Livestock
v. Jefferson Cty., 274 Neb. 386, 740 N.W.2d 362 (2007).
19
See Jacobs Engr. Group, supra note 16.
20
Id. at 55, 917 N.W.2d at 452, quoting Washington v. Conley, 273 Neb. 908,
734 N.W.2d 306 (2007).
21
Jacobs Engr. Group, supra note 16.
- 42 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33The parties dispute whether this case involves a facial chal-
lenge or a factual challenge to North Star’s standing. Their dis-
agreement turns on how we address Blazer’s affidavit. Stewart
argues that Blazer’s affidavit was not received into evidence
by the county court and thus cannot be considered part of the
appellate record, while North Star generally argues that the
affidavit was considered as evidence by both lower courts and
should be considered as such by this court.
[9] We agree with Stewart that the affidavit is not properly
before us on appeal. It is a longstanding rule that an affida-
vit used as evidence in the trial court cannot be considered
on appeal of a cause “unless it is offered in evidence in the
trial court and preserved in and made a part of the bill of
exceptions.” 22 Blazer’s affidavit was filed with the clerk of the
county court, but was not received into evidence or made part
of the bill of exceptions in the trial court. We have said that if
“an affidavit is not preserved in a bill of exceptions, its exis-
tence or contents cannot be known by [an appellate] court.” 23
Because Blazer’s affidavit was not received as evidence by
the county court and does not appear in the bill of exceptions,
it cannot be considered as evidence by an appellate court. The
district court, sitting as an appellate court, should not have
relied on the affidavit, and we will not rely on it. Consequently,
there is no evidence in the appellate record related to the
motion to dismiss for lack of standing, and this appeal presents
a facial challenge to North Star’s standing, rather than a factual
challenge. We limit our analysis accordingly.
Nebraska Law Prohibits Claim Splitting
[10-12] The rule against claim splitting is well established
in Nebraska. 24 In Krause, 25 we stated that “Nebraska is in
22
T. S. McShane Co., Inc. v. Dominion Constr. Co., 203 Neb. 318, 321, 278
N.W.2d 596, 599 (1979).
23
Id.24
See Schweitz v. Robatham, 194 Neb. 668, 234 N.W.2d 834 (1975).
25
Krause, supra note 3, 184 Neb. at 591, 169 N.W.2d at 603.
- 43 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33harmony with the prevailing rule in most jurisdictions that the
insured’s cause of action against the tort-feasor cannot be split
and that at all times there is one cause of action on the part of
the insured against the tort-feasor.” We explained that “‘[w]hen
the indemnity paid by the insurer covers only part of the loss,
. . . leaving a residue to be made good to the insured by the
wrongdoer, the right of action remains in the insured for the
entire loss.’” 26 We also explained:
“In these cases the insured becomes a trustee and holds
the amount of recovery, equal to the indemnity for the
use and benefit of the insurer. The rule is founded on the
principle that the wrongful act was single and indivisible,
and gives rise to but one liability. Upon this theory[,] the
splitting of causes of action is avoided and the wrongdoer
is not subjected to a multiplicity of suits.” 27
[13,14] Krause cited various cases in support of its holding,
including Shiman Bros. & Co. v. Nebraska Nat. Hotel Co., 28
which held:
The applicable rule is: “Under statutes providing that
every action must be prosecuted in the name of the real
party in interest, it is generally held that if the insurance
paid by an insurer covers only a portion of the loss, . . .
the right of action against the wrongdoer who caused the
loss remains in the insured for the entire loss, and the
action must be brought by him in his own name.”
And recently, in Jacobs Engr. Group v. ConAgra Foods 29 we
summarized the rule against claim splitting by stating that
“when an insurer indemnifies its insured for only part of the
loss[,] the insured retains the right of action for the entire loss.”
[15,16] Nebraska cases have recognized two circum-
stances under which the rule against claim splitting will not
26
Id. at 593, 169 N.W.2d at 604.
27
Id. (emphasis omitted).
28
Shiman Bros. & Co. v. Nebraska National Hotel Co., 143 Neb. 404, 409,
9 N.W.2d 807, 811 (1943).
29
Jacobs Engr. Group, supra note 16, 301 Neb. at 57, 917 N.W.2d at 453.
- 44 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33prevent a subrogated insurer from filing suit in its own name
to enforce a subrogation interest. In Jelinek v. Nebraska Nat.
Gas. Co., 30 we held that when a subrogated insurer has com-
pensated its insured for the entire loss sustained as a result
of the tortfeasor’s conduct, then the insurer, rather than the
insured, is the real party in interest in an action to recover
from the tortfeasor. And in Milbank Ins. Co. v. Henry, 31 we
allowed an insurer to file suit in its own name to enforce its
medical payment subrogation after its insured settled with
and released the tortfeasor without protecting the subroga-
tion interest. Milbank Ins. Co. did not directly address the
rule against claim splitting, because the issue in that case was
whether the insurer’s subrogation right could survive sepa-
rately from the insured’s claim after the insured executed a
release in favor of the tortfeasor. But in concluding that the
insurer’s right of subrogation survived the insured’s settle-
ment made with notice of the unresolved subrogation claim,
we noted that settling the insured’s claim without protecting
the insurer’s subrogation claim “‘was equivalent to express
consent to a splitting of the cause of action.’” 32 In that regard,
our reasoning in Milbank Ins. Co. is consistent with the gener-
ally recognized principle that the rule against claim splitting
does not apply to prevent an insurer from filing suit in its own
name to enforce a subrogation claim when, with notice of the
subrogation claim, the insured settles with the tortfeasor with-
out protecting the subrogation. 33
30
Jelinek v. Nebraska Nat. Gas. Co., 196 Neb. 488, 243 N.W.2d 778 (1976).
31
Milbank Ins. Co. v. Henry, 232 Neb. 418, 441 N.W.2d 143 (1989).
32
Id. at 422, 441 N.W.2d at 146.
33
See, generally, 17 Lee R. Russ & Thomas F. Segalla, Couch on Insurance
3d, § 241:36 at 241-52 (2005) (noting that if subrogated insurer pays only
portion of loss sustained by insured, then insured remains real party in
interest for entire action “except where the insured has parted with all
beneficial interest in the right of action, where the insured, after settling
with the wrongdoer out of court, arbitrarily refuses to bring the action, or
where there is no real possibility of another action by the insured”).
- 45 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33With this background in mind, we consider how the rule
against claim splitting impacts determination of the real party
in interest in this action against Stewart. North Star gener-
ally relies on Blazer’s affidavit to argue that the rule against
claim splitting is not implicated because Blazer has been fully
compensated for all loss sustained in the accident. We do not
address that argument because, as already explained, the affida-
vit is not before us on appeal.
Rather, this case presents a facial challenge to standing, and
to resolve such a challenge, a court reviews the pleadings to
determine whether there are sufficient allegations to establish
standing, accepting the allegations of the complaint as true
and drawing all reasonable inferences in favor of the non­
moving party. 34
Complaint Does Not Show North Star
Is Real Party in Interest
In the complaint, North Star purports to bring the negli-
gence action against Stewart as Blazer’s “subrogee” to recover
damages caused by the accident. Under the rule against claim
splitting, and even assuming North Star has a valid subroga-
tion interest under some theory, Blazer is the real party in
interest for the entire action against Stewart, not North Star. 35
Moreover, the complaint contains no facts suggesting that any
exception to the rule against claim splitting applies here. North
Star’s complaint does not allege that it has compensated Blazer
for any of the damage or loss she sustained in the accident, let
alone fully compensated her for all sustained damage or loss. 36
Nor is there an allegation that Blazer settled with Stewart
without protecting North Star’s subrogation interest. 37 As to
34
Jacobs Engr. Group, supra note 16.
35
See, id.; Krause, supra note 3; Shiman Bros. & Co., supra note 28.
36
See Jelinek, supra note 30.
37
See, Milbank Ins. Co., supra note 31; 17 Couch on Insurance 3d, supra
note 33.
- 46 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33d­ amages, the only allegation in the complaint is that “as a direct
and proximate result of [Stewart’s] negligence, [North Star]
and its Insured incurred damages in the amount of $6,710.00.”
At best, this suggests that both the insured and the subrogated
insurer are entitled to recovery against Stewart, and under that
circumstance, the rule against claim splitting applies.
On appeal, North Star generally concedes it has not alleged
facts suggesting that its insured has been fully compensated
for all loss sustained in the accident. But it argues that other
insurers, including the insurer defending Stewart in this case,
regularly file subrogation actions in their own name without
joining the insured and without affirmatively alleging that the
insured has been fully compensated. We have no evidence of
such in our record, but even if we did, the argument that it
is commonplace to disregard the rule against claim splitting
is not one we find persuasive. The question whether a party
who commences an action has standing to bring the action is
fundamental to a court’s exercise of jurisdiction, 38 and courts
are not free to disregard the question just because the par-
ties have.
Viewed in the light most favorable to North Star, the alle-
gations of the complaint are insufficient to demonstrate that
North Star has standing to commence this action in its own
name. We therefore agree with the county court that under the
rule against claim splitting, North Star’s insured is the real
party in interest in this action. On this record, the district court
erred in concluding otherwise.
For the sake of completeness, we note that under Nebraska’s
real party in interest statute, an action “shall not be dismissed
on the ground that it is not prosecuted in the name of the
real party in interest until a reasonable time has been allowed
after objection for joinder or substitution of the real party in
interest.” 39 Here, the county court dismissed the complaint
38
See Jacobs Engr. Group, supra note 16.
39
§ 25-301.
- 47 -
Nebraska Supreme Court Advance Sheets
311 Nebraska Reports
NORTH STAR MUT. INS. CO. v. STEWART
Cite as 311 Neb. 33without prejudice, but did not expressly allow time for North
Star to file an amended complaint seeking to join or substi-
tute Blazer.
North Star has not assigned error to the dismissal procedure,
and, as a practical matter, the dismissal without prejudice does
not preclude North Star from filing a new complaint. But the
better practice would have been for the court to allow North
Star a reasonable period of time to file an amended complaint
either joining or substituting the real party in interest, before
dismissing the action on the basis it was not being prosecuted
in the name of the real party in interest.
CONCLUSION
For the foregoing reasons, we reverse the judgment of the
district court and remand the matter with directions to affirm
the judgment of the county court.
Reversed and remanded with directions.