Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co. , 295 Neb. 419 ( 2016 )

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Nebraska Supreme Court A dvance Sheets
295 Nebraska R eports
MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
Millard Gutter Company, a corporation, doing business
as M illard Roofing and Gutter, appellee, v.
Farm Bureau Property & Casualty
Insurance Company, appellant.
___ N.W.2d ___
Filed December 30, 2016. No. S-15-912.
1. Judgments: Jurisdiction: Appeal and Error. A jurisdictional question
that does not involve a factual dispute is determined by an appellate
court as a matter of law, which requires the appellate court to reach a
conclusion independent of the lower court’s decision.
2. Courts: Appeal and Error. The district court and higher appellate
courts generally review appeals from the county court for error appear-
ing on the record.
3. Judgments: Appeal and Error. When reviewing a judgment for errors
appearing on the record, the inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is neither arbitrary,
capricious, nor unreasonable.
4. ____: ____. In instances when an appellate court is required to review
cases for error appearing on the record, questions of law are nonetheless
reviewed de novo on the record.
5. Insurance: Contracts. As a general principle, a clause in an insurance
policy restricting assignment does not in any way limit the policyhold-
er’s power to make an assignment of the rights under the policy—con-
sisting of the right to receive the proceeds of the policy—after a loss
has occurred.
6. Insurance: Contracts: Parties. Parties to an insurance contract may
contract for any lawful coverage, and an insurer may limit its liability
and impose restrictions and conditions upon its obligations under the
contract if the restrictions and conditions are not inconsistent with pub-
lic policy or statute.
7. Statutes: Legislature: Public Policy. It is the function of the Legislature,
through the enactment of statutes, to declare what is the law and public
policy of the state.
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Nebraska Supreme Court A dvance Sheets
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
8. Insurance: Contracts: Damages. In the absence of a statute to the
contrary, a postloss assignment of a claim under a homeowner’s insur-
ance policy for the homeowner’s property damage casualty loss is valid,
despite a nonassignment clause.
Appeal from the District Court for Douglas County, Shelly
R. Stratman, Judge, on appeal thereto from the County Court
for Douglas County, John E. Huber, Judge. Judgment of
District Court affirmed.
Michael T. Gibbons and Aimee C. Bataillon, of Woodke &
Gibbons, P.C., L.L.O., for appellant.
Theodore R. Boecker, Jr., of Boecker Law, P.C., L.L.O., for
appellee.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
Cassel, J.
INTRODUCTION
A homeowner’s insurance policy prohibited an assignment
of “[a]ll rights and duties” without the insurer’s consent.
Nonetheless, after a storm damaged the homeowner’s roof, he
assigned his claim to the company that repaired it. The com-
pany obtained a county court judgment, which the district court
affirmed. This appeal followed. Because we conclude that a
postloss assignment of a claim under a homeowner’s insurance
policy is valid despite the nonassignment clause, we affirm the
decision of the district court.
BACKGROUND
Farm Bureau Property & Casualty Insurance Company (Farm
Bureau) issued a homeowner’s insurance policy to Howard
Hunter. The policy contained in part the following nonassign-
ment clause:
Change / Assignment of Interest
A. All rights and duties under this policy may not be
assigned without our written consent.
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
B. No change of interest in this policy is effective
unless we consent in writing.
During the policy coverage period, a storm damaged Hunter’s
home and he made a claim under his insurance policy.
Hunter retained Millard Gutter Company, a corporation
doing business as Millard Roofing and Gutter (Millard Gutter),
to repair the damage to his roof. Millard Gutter believed that
the entire roof required replacement, and its estimate showed
the cost of repairs to be $8,854.35. Farm Bureau opined that
only two slopes of the roof needed to be replaced, and it com-
puted the cost of those repairs to be $3,022.43. Millard Gutter
ultimately replaced Hunter’s entire roof.
At some point after the loss, Hunter signed an “Assignment
of Claim” presented by Millard Gutter. According to the docu-
ment, Hunter assigned to Millard Gutter “any and all claims or
moneys due or to become due” to Hunter under his insurance
policy for damages to Hunter’s property. There is no evidence
that Hunter obtained Farm Bureau’s written consent prior to
executing the assignment. Farm Bureau received a copy of
Hunter’s assignment and issued a check for $3,022.43 directly
to Millard Gutter.
Millard Gutter sued Farm Bureau, seeking judgment against
Farm Bureau of at least $5,252.66. Millard Gutter alleged that
Farm Bureau was obligated under its policy with Hunter to
pay the fair and reasonable value of Millard Gutter’s services.
Farm Bureau set forth a number of affirmative defenses. It
alleged that the complaint failed to state a cause of action
upon which relief could be granted for three reasons: (1) Farm
Bureau did not consent to the alleged assignment, (2) Millard
Gutter was not the real party in interest, and (3) Millard
Gutter lacked privity of contract with Farm Bureau. Farm
Bureau also claimed that the county court lacked subject mat-
ter jurisdiction.
Following a bench trial, the county court found in favor of
Millard Gutter in the amount of $5,252.66. The county court
later awarded Millard Gutter $11,668.34 in attorney fees.
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Nebraska Supreme Court A dvance Sheets
295 Nebraska R eports
MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
Farm Bureau appealed to the district court, which affirmed
the judgment of the county court. Farm Bureau took a further
appeal, and we granted Millard Gutter’s petition to bypass
review by the Nebraska Court of Appeals.
ASSIGNMENT OF ERROR
Farm Bureau assigns that the district court erred in affirm-
ing the county court’s exercise of subject matter jurisdic-
tion, because the purported assignment of rights by Hunter to
Millard Gutter was invalid and Millard Gutter lacked privity of
contract with Farm Bureau.
STANDARD OF REVIEW
[1] A jurisdictional question that does not involve a factual
dispute is determined by an appellate court as a matter of law,
which requires the appellate court to reach a conclusion inde-
pendent of the lower court’s decision.1
[2-4] The district court and higher appellate courts generally
review appeals from the county court for error appearing on
the record.2 When reviewing a judgment for errors appearing
on the record, the inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is neither
arbitrary, capricious, nor unreasonable.3 In instances when an
appellate court is required to review cases for error appearing
on the record, questions of law are nonetheless reviewed de
novo on the record.4
ANALYSIS
Jurisdictional A rgument Depends
Upon Assignment’s Validity
Farm Bureau raises a jurisdictional argument that turns
upon the assignment to Millard Gutter. Farm Bureau argues
1
Al-Ameen v. Frakes, 293 Neb. 248, 876 N.W.2d 635 (2016).
2
Griffith v. Drew’s LLC, 290 Neb. 508, 860 N.W.2d 749 (2015).
3
Id.
4
Id.
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
that Millard Gutter lacked standing to sue and that thus, the
county court lacked subject matter jurisdiction over the action.
Millard Gutter brought its breach of contract action against
Farm Bureau as the assignee of Hunter’s insurance claim, and
a statute provides that “[t]he assignee of a thing in action may
maintain an action thereon in the assignee’s own name and
behalf . . . .”5 Whether Millard Gutter had standing depends on
the validity of the assignment.
Farm Bureau’s argument is grounded on contract and is
quite simple. The policy provided that “[a]ll rights and duties
under this policy may not be assigned without our written
consent” and that without such consent, “[n]o change of inter-
est in this policy is effective . . . .” Thus, Farm Bureau asserts
that Hunter’s assignment to Millard Gutter was invalid because
Farm Bureau did not consent to it.
But courts have often upheld assignments despite a non-
assignment provision. The three theories typically used for
upholding such an assignment are:
(1) The parties did not intend the nonassignment provi-
sion to apply to rights to receive payments, but only to
the duties under the personal contract; (2) The reason for
the prohibition ceased because the insurer’s risks and lia-
bilities under the contract became fixed when the insured
event occurred; and (3) The public policy supported free
alienability of a chose in action.6
At least after a loss has occurred, an indemnity contract of
insurance is a chose in action because it confers a right to
bring a legal action to recover a sum of money from or out of
the contract.7
5
Neb. Rev. Stat. § 25-302 (Reissue 2016).
6
See OB-GYN v. Blue Cross, 219 Neb. 199, 205, 361 N.W.2d 550, 554
(1985).
7
See 17 Richard A. Lord, A Treatise on the Law of Contracts by Samuel
Williston § 49:119 (4th ed. 2015).
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
Nonassignment Clause Jurisprudence
in Nebraska
Over a century ago, we were faced with an assignment of a
claim in light of a contractual provision prohibiting an assign-
ment in the context of a fire insurance policy. In Star Union
Lumber Co. v. Finney,8 after a loss caused by fire, the party
who obtained insurance assigned the policy to an entity who
held a mechanic’s lien on the property. Each policy stated that
if the policy was assigned without written consent, the policy
should be void. In upholding the assignment of the claim, we
stated: “It is claimed that a policy could not be assigned with-
out the assent of the company. However this may be as to a
policy before a loss occurs, the objection does not apply as to
the assignment of a claim for a loss after it occurs.”9
More recently, we addressed the issue with reference to
a health insurance contract. In OB-GYN v. Blue Cross,10 an
insurer’s contract with its subscribers provided that benefits
payable to subscribers may not be assigned by the subscribers.
One nonparticipating provider, in an effort to collect payment
directly from the insurer for services it provided to subscribers,
took assignments of the subscribers’ benefits and submitted
them to the insurer for payment. The insurer, relying on the
nonassignment clause, refused to pay the nonparticipating pro-
vider directly and instead sent the payment to the subscribers.
We upheld the nonassignment provision, determining that it
was not void as a matter of public policy.
In OB-GYN, we discussed—but did not overrule—our deci-
sion in Star Union Lumber Co. Initially, we appeared to mini-
mize its holding:
The Star Union opinion deals with the nonassignment
issue in two sentences . . . and gives no reasoning for
such a holding. The Star Union case has never been cited
8
Star Union Lumber Co. v. Finney, 35 Neb. 214, 52 N.W. 1113 (1892).
9
Id. at 223, 52 N.W. at 1116.
10
OB-GYN v. Blue Cross, supra note 6.
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
in Nebraska on the nonassignment point. How this fleet-
ing reference in 1892 regarding a fire insurance policy
sets out the public policy of Nebraska in 1982 with regard
to a medical insurance policy is not argued.11
But we also distinguished the insurance contract in Star Union
Lumber Co. from that in OB-GYN:
[R]eading Star Union and [an Eighth Circuit case] in light
of the public policy and equity questions before those
courts, it is important to distinguish the insurance con-
tracts in those cases from that of [the insurer] in another
way. Both the insurance contracts in Star Union and [the
Eighth Circuit case] required the avoidance of the entire
contract on assignment. The [insurer’s] contract does
not avoid payment on assignment, it simply claims the
contracted right to pay the subscriber with whom it con-
tracted. Many contracts commentators have recognized
the negative weight of an avoidance penalty in the public
policy balance; that weight is not present here.12
In this respect, the contractual provision in the instant case is
more akin to that in OB-GYN—it did not void the policy, but
would invalidate an insured’s purported transfer of payment to
an unauthorized assignee.
Our other nonassignment clause cases did not involve
insurance policies. In several cases involving the sale of land,
we stated that a contractual provision requiring a seller’s con-
sent to any assignment was intended to safeguard performance
and that the provision was not enforceable when security for
the seller was not an issue, such as when performance was
rendered or was being tendered.13 But we have also held that
11
Id. at 205, 361 N.W.2d at 554.
12
Id. at 205-06, 361 N.W.2d at 555.
13
See, Obermeier v. Bennett, 230 Neb. 184, 430 N.W.2d 524 (1988);
Panwitz v. Miller Farm-Home Oil Service, 228 Neb. 220, 422 N.W.2d 63
(1988); Riffey v. Schulke, 193 Neb. 317, 227 N.W.2d 4 (1975); Wagner v.
Cheney, 16 Neb. 202, 20 N.W. 222 (1884).
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
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an assignment by a lessee of an interest in a lease which pro-
hibits such assignment without the lessor’s consent is ineffec-
tive without such consent.14 And in a case involving an action
to recover professional fees relating to several construction
projects, we determined that the nonassignment clause did
not bar the assignment of the claims, because the assignment
occurred after the contracts were breached.15 We reasoned
that “the intent of the provision against assignment of rights
under a contract, which generally is to allow the parties to
choose with whom they contract, is not affected by allow-
ing an assignment of a right to collect damages for breach
of contract.”16
A Nebraska federal court recently considered a similar
issue as that now before us.17 In that case, a roofing contrac-
tor took assignments from numerous homeowners but the
insurer refused to recognize the assignments or to pay the
contractor. After the contractor sued, the insurer moved to
dismiss and presented evidence that the homeowners’ poli-
cies each stated that “‘[a]ssignment of this policy shall not
be valid except with the written consent of [the insurer].’”18
The court observed that the homeowner’s insurance policy at
issue and the fire insurance policy in Star Union Lumber Co.
both prohibited the assignment of the policy, which was not
comparable to the clause in OB-GYN, which prohibited assign-
ment of amounts payable. The federal court determined that
assignments received by the contractor from the homeowners
14
See, American Community Stores Corp. v. Newman, 232 Neb. 434, 441
N.W.2d 154 (1989); Moritz v. S & H Shopping Centers, Inc., 197 Neb.
206, 247 N.W.2d 454 (1976).
15
See Folgers Architects v. Kerns, 262 Neb. 530, 633 N.W.2d 114 (2001).
16
Id. at 547, 633 N.W.2d at 126.
17
See Valley Boys, Inc. v. Allstate Ins. Co., 66 F. Supp. 3d 1179 (D. Neb.
2014).
18
Id. at 1181.
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MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
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were limited to “‘claims made’”19 by the insureds and that
the nonassignment clause would not prohibit the contractor
from recovering benefits due and owing to the insureds under
the policies.
Enforceability of Nonassignment
Clauses in Other Jurisdictions
[5] The majority of courts follow the rule that clauses in
insurance policies prohibiting assignments do not prevent
an assignment after the loss has occurred. The rule has been
applied to property insurance policies20 and fire insurance
policies.21 Courts have applied the rule to various types of
automobile insurance policies.22 The rule has been applied
to many types of liability insurance policies, including pol-
lution liability insurance,23 directors and officers liability
19
Id. at 1182.
20
See, Edgewood Manor Apartment Homes v. RSUI Indem. Co., 782 F.
Supp. 2d 716 (E.D. Wis. 2011) (applying Mississippi law); U.S. v. Lititz
Mut. Ins. Co., 694 F. Supp. 159 (M.D.N.C. 1988); Conrad Brothers v.
John Deere Ins. Co., 640 N.W.2d 231 (Iowa 2001).
21
See, Alabama Farm Bureau Insurance Co. v. McCurry, 336 So. 2d 1109
(Ala. 1976); Georgia Fire Asso. v. Borchardt, 123 Ga. 181, 51 S.E. 429
(1905); Roger Williams Ins. Co. v. Carrington, 43 Mich. 252, 5 N.W. 303
(1880); Ardon Constr. Corp. v. Firemen’s Ins. Co., 16 Misc. 2d 483, 185
N.Y.S.2d 723 (1959); Aetna Ins. Co. v. Aston, 123 Va. 327, 96 S.E. 772
(1918); Smith v. Buege, 182 W. Va. 204, 387 S.E.2d 109 (1989); Gimbels
Midwest v. Northwestern Nat. Ins. Co., 72 Wis. 2d 84, 240 N.W.2d 140
(1976).
22
See, Giglio v. American Economy Ins. Co., No. CV020282069, 2005 WL
1155148 (Conn. Super. Apr. 26, 2005) (unpublished opinion); Santiago v.
Safeway Ins. Co., 196 Ga. App. 480, 396 S.E.2d 506 (1990); Ginsburg v.
Bull Dog Auto Fire Ins. Ass’n, 328 Ill. 571, 160 N.E. 145 (1928); Bolz v.
State Farm Mut. Auto. Ins. Co., 274 Kan. 420, 52 P.3d 898 (2002); First-
Citizens Bank & Tr. Co. v. Universal Underwriters Ins. Co., 113 N.C. App.
792, 440 S.E.2d 304 (1994).
23
See R.L. Vallee v. American Intern. Specialty Lines, 431 F. Supp. 2d 428
(D. Vt. 2006).
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insurance,24 excess and umbrella liability insurance,25 employ-
er’s liability insurance,26 comprehensive general liability
insurance,27 and other variations of liability or indemnity
insurance.28 The rule has been applied to builder’s risk insur-
ance.29 It has been applied to industrial life insurance30 and
annuities issued pursuant to a structured settlement agree-
ment.31 And, most significantly, it has been applied to home-
owners insurance policies.32
24
See Straz v. Kansas Bankers Sur. Co., 986 F. Supp. 563 (E.D. Wis.
1997).
25
See, Viola v. Fireman’s Fund Ins. Co., 965 F. Supp. 654 (E.D. Penn.
1997); Egger v. Gulf Ins. Co., 588 Pa. 287, 903 A.2d 1219 (2006); In re
Ambassador Ins. Co., Inc., 184 Vt. 408, 965 A.2d 486 (2008); PUD 1 v.
International Insurance Co., 124 Wash. 2d 789, 881 P.2d 1020 (1994).
26
See, Southwestern Bell Tel. Co. v. Ocean Acc. & Guar. Corp., 22 F. Supp.
686 (W.D. Mo. 1938); Garetson-Greason L. Co. v. Home L. & A. Co., 131
Ark. 525, 199 S.W. 547 (1917).
27
See, Gopher Oil v. American Hardware, 588 N.W.2d 756 (Minn. App.
1999); Elat, Inc. v. Aetna Cas. and Sur. Co., 280 N.J. Super. 62, 654 A.2d
503 (1995).
28
See, Aetna Casualty & Surety Co. v. Valley National Bank, 15 Ariz. App.
13, 485 P.2d 837 (1971); Viking Pump, Inc. v. Century Indem. Co., 2 A.3d
76 (Del. Ch. 2009) (applying New York law); Illinois Tool Works, Inc.
v. Commerce & Industry Insurance Co., 2011 IL App (1st) 093084, 962
N.E.2d 1042, 357 Ill. Dec. 141 (2011); Pilkington N. Am. v. Travelers Cas.
& Sur., 112 Ohio St. 3d 482, 861 N.E.2d 121 (2006).
29
See Wehr Constructors v. Assurance Co. of Am, 384 S.W.3d 680 (Ky.
2012).
30
See Magers v. National Life & Accident Insurance Co., 329 S.W.2d 752
(Mo. 1959).
31
See Rumbin v. Utica Mut. Ins. Co., 254 Conn. 259, 757 A.2d 526 (2000).
32
See, Security First v. Office of Ins. Regulation, 177 So. 3d 627 (Fla. App.
2015); Manley v. Automobile Ins. Co. of Hartford, 169 S.W.3d 207 (Tenn.
App. 2005).
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Treatises and other authoritative texts also support the
rule.33 The reason for the rule with respect to insurance poli-
cies has been explained as follows:
Antiassignment clauses in insurance policies are
strictly enforced against attempted transfers of the policy
itself before a loss has occurred, because this type of
assignment involves a transfer of the contractual rela-
tionship and, in most cases, would materially increase
the risk to the insurer. Policy provisions that require the
company’s consent for an assignment of rights are gener-
ally enforceable only before a loss occurs, however. As
a general principle, a clause restricting assignment does
not in any way limit the policyholder’s power to make
an assignment of the rights under the policy—consisting
of the right to receive the proceeds of the policy—after
a loss has occurred. The reasoning here is that once a
loss occurs, an assignment of the policyholder’s rights
regarding that loss in no way materially increases the
risk to the insurer. After a loss occurs, the indemnity
policy is no longer an executory contract of insurance.
It is now a vested claim against the insurer and can be
freely assigned or sold like any other chose in action or
piece of property.34
Some states have a statute which weighs on the outcome.
A Louisiana law declares that “[a] right cannot be assigned
when the contract from which it arises prohibits the assignment
of that right.”35 In applying that law, the Supreme Court of
33
See, 5A John Alan Appleman & Jean Appleman, Insurance Law & Practice
§ 3458 (1970 & Cum. Supp. 2009); Robert E. Keeton & Alan I. Widiss,
Insurance Law § 4.1 (1988); 17 Lord, supra note 7, § 49:126; 3 Steven
Plitt et al., Couch on Insurance 3d § 35:8 (2011); 44 Am Jur. 2d Insurance
§§ 776 to 778 (2013).
34
17 Lord, supra note 7, § 49:126 at 130-32 (emphasis supplied).
35
La. Civ. Code Ann. art. 2653 (2008).
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Louisiana determined: “There is no public policy in Louisiana
which precludes an anti-assignment clause from applying to
post-loss assignments. However, the language of the anti-
assignment clause must clearly and unambiguously express
that it applies to post-loss assignments.”36 A California statute
“bars an insurer, ‘after a loss has happened,’ from refusing to
honor an insured’s assignment of the right to invoke the insur-
ance policy’s coverage for such a loss.”37 Numerous states
have a statute providing that a policy may be assignable or not
assignable, as provided by its terms.38 But even the existence of
such a statute has not automatically resulted in the unenforce-
ability of an assignment when the assignment occurred after
the loss.39
Public Policy
[6] This case presents two important but competing poli-
cies: the right to freedom of contract versus the free assign-
ment of a chose in action. Parties to an insurance contract may
36
In re Katrina Canal Breaches Litigation, 63 So. 3d 955, 964 (La. 2011).
37
Fluor Corp. v. Superior Court, 61 Cal. 4th 1175, 1180, 354 P.3d 302, 303,
191 Cal. Rptr. 3d 498, 501 (2015), quoting Cal. Ins. Code § 520 (West
2013).
38
See, Ala. Code § 27-14-21(a) (2014); Alaska Stat. § 21.42.270 (2004); Ariz.
Rev. Stat. Ann. § 20-1122 (2002); Ark. Code Ann. § 23-79-124(a) (2004);
Del. Code Ann. tit. 18, § 2720 (1999); Fla. Stat. Ann. § 627.422 (West
2016); Ga. Code Ann. § 33-24-17 (2005); Haw. Rev. Stat. § 431:10-228(a)
(2005); Idaho Code § 41-1826 (2003); Ky. Rev. Stat. Ann. § 304.14-250(1)
(LexisNexis 2011); Me. Rev. Stat. Ann. tit. 24-A, § 2420(1) (2000);
Mont. Code Ann. § 33-15-414(1) (2007); N.J. Stat. Ann. § 17B:24-4
(West 2006); Okla. Stat. Ann. tit. 36, § 3624 (West 2011); Or. Rev. Stat.
§ 743.043 (2007); S.D. Codified Laws § 58-11-36 (2004); Vt. Stat. Ann.
tit. 8, § 3713(a) (2015); Wyo. Stat. Ann. § 26-15-122 (2013).
39
See, e.g., Lexington Ins. v. Simkins Industries, 704 So. 2d 1384 (Fla.
1998); Santiago v. Safeway Ins. Co., supra note 22; Wehr Constructors v.
Assurance Co. of Am, supra note 29 (distinguishing between assignment
of policy and assignment of ripened claim and finding clause void as
against public policy).
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contract for any lawful coverage, and an insurer may limit its
liability and impose restrictions and conditions upon its obli-
gations under the contract if the restrictions and conditions
are not inconsistent with public policy or statute.40 “While
[the policy favoring free alienability of a chose in action] is
significant and may reflect a public policy, it is not paramount
and must be balanced against a very strong policy . . . favoring
the freedom to contract.”41 But in some situations, contractual
provisions may be void as against public policy.42 Our resolu-
tion turns on whether invalidating a postloss assignment of
insurance proceeds would be contrary to public policy.
[7] It is the function of the Legislature, through the enact-
ment of statutes, to declare what is the law and public policy
of the state.43 But we have found no statute concerning the
enforceability of a nonassignment clause in a property insur-
ance policy when the assignment is made after the loss has
been sustained. Farm Bureau does not contend that the breach-
of-condition statute44 supports its position. And the absence
of such a statute bears mentioning in light of our decisions,
recounted above, which have upheld postloss assignments
despite a nonassignment clause.
Public policy may favor enforcement of a nonassignment
clause in some situations. In OB-GYN, evidence established
that the nonassignment clause was “a valuable tool in persuad-
ing health care providers to participate in its physician’s volun-
tary cost effectiveness program and accept set fees for health
40
Mefferd v. Sieler & Co., 267 Neb. 532, 676 N.W.2d 22 (2004).
41
OB-GYN v. Blue Cross, supra note 6, 219 Neb. at 206, 361 N.W.2d at 555.
42
See, e.g., Quinn v. Godfather’s Investments, 217 Neb. 441, 348 N.W.2d
893 (1984).
43
Manon v. Orr, 289 Neb. 484, 856 N.W.2d 106 (2014).
44
Neb. Rev. Stat. § 44-358 (Reissue 2010) (“breach of . . . condition in any
contract or policy of insurance shall not avoid the policy nor avail the
insurer to avoid liability, unless such breach shall exist at the time of the
loss and contribute to the loss”).
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services, keeping health care costs down and passing that sav-
ings on to its subscribers.”45 As the district court in the instant
case noted, cases from other jurisdictions have similarly carved
out an exception to the majority rule in cases involving health
care insurance contracts where the purpose of the clause was to
control health care costs.46
The record in this case contains no similar justification for
the nonassignment clause. Farm Bureau presented no evidence
to show why it inserted the nonassignment clause in its policy
or to otherwise support its enforcement when the assignment
occurs after the loss. Nor has Farm Bureau pointed to any spe-
cific risk or burden that it may face as a result of the assign-
ment. The record simply does not demonstrate any increased
risk to Farm Bureau or other adverse consequence of the
assignment (other than this litigation, of course). On the other
hand, the record contains evidence that in the roofing and gut-
ter repair industry, it is customary for a homeowner to make an
assignment of his or her right to proceeds from an insurance
company to the contractor and for the insurer to make direct
payment to the contractor. We understand that an insurer may
wish to deal only with the person with whom it had reached a
contract, but that does not outweigh the policy favoring free
assignability of a chose in action. We further note that we are
not confronted with a direct contradiction of explicit contrac-
tual language, i.e., Farm Bureau’s policy did not expressly
prohibit assignment of a postloss claim.
We recognize that the Legislature is best suited to make
public policy determinations. In the context of a fire insurance
policy, our precedent allowed postloss assignments despite the
45
OB-GYN v. Blue Cross, supra note 6, 219 Neb. at 207, 361 N.W.2d at 556.
46
See, e.g., Kent General Hospital v. Blue Cross, Etc., 442 A.2d 1368 (Del.
1982); Abraham K. Kohl, D.C. v. Blue Cross, 955 So. 2d 1140 (Fla. App.
2007); Augusta Medical Complex, Inc. v. Blue Cross, 230 Kan. 361, 634
P.2d 1123 (1981); Somerset Ortho. v. Horizon BC & BS, 345 N.J. Super.
410, 785 A.2d 457 (2001).
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Nebraska Supreme Court A dvance Sheets
295 Nebraska R eports
MILLARD GUTTER CO. v. FARM BUREAU PROP. & CAS. INS. CO.
Cite as 295 Neb. 419
presence of a nonassignment clause in the contract. Regarding
a health insurance policy, other public policy considerations
dictated a different result. The Legislature has not acted to
affect either result. Here, the claim for storm damage under a
homeowner’s insurance policy seems comparable to our fire
loss precedent and distinguishable from the health claims case.
If postloss assignments of storm damage claims are having a
deleterious effect on insurers, they should present their con-
cerns to the Legislature.
[8] We conclude that in the absence of a statute to the con-
trary, a postloss assignment of a claim under a homeowner’s
insurance policy for the homeowner’s property damage casu-
alty loss is valid, despite a nonassignment clause. Because the
assignment in this case was valid, Millard Gutter had standing
to bring its breach of contract claim and the county court did
not lack subject matter jurisdiction over the action.
CONCLUSION
Under the circumstances of this case, we conclude that the
postloss assignment of a claim under a homeowner’s insurance
policy was valid even though the policy stated any assign-
ment made without the insurer’s consent would be invalid. In
Millard Gutter’s brief, it requests an award of further attorney
fees for services on appeal. Because we have found in Millard
Gutter’s favor, it will be awarded attorney fees in connection
with this appeal upon a proper and timely application.47
A ffirmed.
47
See Neb. Ct. R. App. P. § 2-109(F) (rev. 2014).