R.A.D. Services LLC v. State Farm Fire & Casualty Co.

United States Court of Appeals
For the Eighth Circuit
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No. 21-3263
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R.A.D. Services LLC, a Nebraska limited liability company, Assignee; Brokram,
Inc., Elite Exteriors, a Nebraska Corporation Assignee, doing business as Elite
Exteriors
Plaintiffs - Appellants
v.
State Farm Fire & Casualty Company
Defendant - Appellee
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No. 21-3264
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Millard Gutter Company, a Corporation, doing business as Millard Roofing and
Gutter
Plaintiff - Appellant
v.
State Farm Fire & Casualty Company
Defendant - Appellee
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: November 16, 2022
Filed: February 10, 2023
[Published]
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Before BENTON, KELLY, and ERICKSON, Circuit Judges.
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PER CURIAM.
Several homeowners hired contractors to repair damage to their homes. The
homeowners assigned to the contractors their rights under their insurance policies
with State Farm & Casualty Co. State Farm refused to pay. The contractors sued.
State Farm moved for summary judgment, arguing the assignments were invalid
under Nebraska law. The district court 1 granted the motion. Having jurisdiction
under 28 U.S.C. § 1291, this court affirms.
I.
In 2013, a storm damaged 13 homes insured by State Farm. To repair the
damage, the homeowners hired Millard Gutter Co. About three years later, seven
other policyholders hired Brokram, Inc. (doing business as Elite Exteriors) to repair
their homes. State Farm’s policy provides two payments: (1) “until actual repair or
replacement is completed, [State Farm] will pay only the actual cash value at the
time of the loss of the damaged part of the property. . .” and (2) “when the repair or
replacement is actually completed [State Farm] will pay the covered additional
amount [the policyholder] actually and necessarily spend[s] to repair or replace the
damaged part of the property . . . .” Before any repairs, State Farm made the category
(1) payments for the actual cash value at the time of the loss.
1
The Honorable Brian C. Buescher, United States District Judge for the
District of Nebraska.
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Each homeowner assigned to their contractor their rights to payment under
the insurance policy and to pursue a claim against State Farm. Elite then assigned
its rights to R.A.D. Services, LLC. After the repairs, the contractors sought payment
from State Farm. State Farm refused. R.A.D. and Millard separately sued State
Farm for breach of contract. Elite joined R.A.D.’s claim, asserting its own breach-
of-contract claim.
Millard’s assignment form stated, in part:
In partial consideration for the services rendered by
Millard Roofing Company (hereinafter “Contractor”),
[homeowner] agrees to assign to Contractor any benefit,
claim and/or the right to proceeds from a claim against any
insurance policy that may be available to provide payment
or reimbursement of expenses associated with services
rendered by Contractor on the property located at
[homeowner’s address] . . . In lieu of direct payment and
as inducement to contractor to proceed forward to recover
reasonable charges, [the homeowner] agree to execute the
Assignment so that the Contractor may seek payment
directly from any potentially liable insurance company,
including State Farm.
Elite’s assignment form stated:
For value received, the Assignor hereby sells and transfers
to the Assignee and its successors, assigns and personal
representatives, any and all claims, demands, and cause or
causes of action of any kind whatsoever which the
undersigned has or may have against State Farm, arising
from the following claim [homeowner’s claim number].
The district court granted summary judgment to State Farm based on the
summary judgment record. The contractors appeal.
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II.
Millard claims that State Farm acted in bad faith by refusing to pay for the
repairs. In Nebraska, an assignee does not have standing to assert a first-party bad
faith claim against the insurer based on a breach of an insurance policy. Millard
Gutter Co. v. Shelter Mut. Ins. Co., 980 N.W.2d 420, 434 (Neb. 2022); Millard
Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 980 N.W.2d 437, 447-48 (Neb.
2022). Millard lacks standing to assert a bad faith claim against State Farm. The
district court properly entered summary judgment on this claim.
III.
Each of the 13 homeowners executed an “Authorization” form, giving Millard
the right “to proceed with the insurance repair work [as] listed” on the form. The
form included a series of check boxes to indicate the “materials damaged” on the
house: roofing, gutters, windows, doors, garage doors, siding, or paint. It also
authorized Millard to seek payment from the insurance company and negotiate the
terms of those payments. Millard argues that the Authorization forms assigned it the
right to enforce the insurance policy.
This Authorization form is insufficient to assign a right to pursue a claim
against an insurer based on an insurance policy. Millard Gutter v. Continental Cas.
Co., 9 F.4th 711, 713 (8th Cir. 2021). Analyzing the same Authorization form as
present here, this court there held it was “clear” that the form did not assign the right
to pursue a post-loss insurance claim. Id.IV.
When the contractors filed their opposition to summary judgment, they did
not attach their exhibits. After the contractors eventually filed all their exhibits—
two days after State Farm filed its reply brief—the district court struck them, ruling
that the contractors’ failure to meet deadlines was “inexcusable.” The district court
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concluded State Farm was prejudiced by having to respond without reviewing the
contractors’ exhibits. The district court also noted that it would have stricken the
evidence on its own as a clear violation of Local Rule 7.1(b)(2)(A).
The untimely filing of the contractors’ exhibits—almost one month after their
opposition brief—violated the district court’s local rules. The party opposing
summary judgment must file and serve its brief within 21 days after the service of
the motion and supporting brief. NECivR 7.1(b)(1)(B). “When filing the opposing
brief, the opposing party must also file and serve supporting evidentiary material not
previously filed.” NECivR 7.1(b)(2)(A). “Properly referenced material facts in the
movant’s statement are considered admitted unless controverted in the opposing
party’s response.” NECivR 56.1(b)(1). This court reviews “for abuse of discretion
the district court’s application of its local rules.” Libel v. Adventure Lands of
America, Inc., 482 F.3d 1028, 1032 (8th Cir. 2007).
“The district court has considerable discretion in applying its local rules.”
Buffets, Inc. v. Leischow, 732 F.3d 889, 895 (8th Cir. 2013). The district court here
did not abuse its discretion by striking the exhibits filed in violation of the local rules.
See, e.g., id. (determining the district court did not abuse its discretion by rejecting
evidence not timely filed under the local rules).2 Without the contractors’ exhibits,
the district court properly accepted State Farm’s facts as admitted, in accordance
with local rules. See generally Jetton v. McDonnell Douglas Corp., 121 F.3d 423,
426 (8th Cir. 1997) (“A local rule of a district court has the force of law . . . and the
parties are charged with knowledge of [those] rules . . . .”).
2
The contractors claim the district court erred in ruling on the motion to strike
within three days, before their 14-day response period expired. See NECivR
7.1(b)(1)(B) (“A brief opposing any other motion must be filed and served within
14 days after the motion and supporting brief are filed and served.”). This objection
was not raised in the district court. “Absent exceptional circumstances,” not present
here, “we cannot consider issues not raised in the district court.” Shanklin v.
Fitzgerald, 397 F.3d 596, 601 (8th Cir. 2005).
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V.
Summary judgment is proper if “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
“The nonmovant ‘must do more than simply show that there is some metaphysical
doubt as to the material facts,’ and must come forward with ‘specific facts showing
that there is a genuine issue for trial.’” Torgerson v. City of Rochester, 643 F.3d
1031, 1042 (8th Cir. 2011) (en banc), quoting Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87 (1986). “Where the record taken as a whole
could not lead a rational trier of fact to find for the non-moving party, there is no
‘genuine issue for trial.’” Matsushita, 475 U.S. at 587, quoting First Nat. Bank of
Ariz. v. Cities Service Co., 391 U.S. 253, 288 (1968).
Essential to the contractors’ arguments is that they actually reached an
agreement with the insured homeowners—namely, they agreed to “repair” any
“storm damage” found at each homeowner’s property (i.e., the scope of work) in
exchange for a payment equaling the homeowner’s insurance deductible, plus an
assignment of the homeowner’s insurance claim (i.e., the price). The contractors
maintain they “agreed to make” the repairs “irrespective of whether or not State
Farm” approved them.
The contractors mostly rely on Millard Gutter Co. v. Farm Bureau Property
& Casualty Insurance Co., 889 N.W.2d 596 (Neb. 2016). However, that decision
addressed a different issue. The Farm Bureau case determined whether an
assignment was valid when a homeowner assigned his rights under an insurance
policy that prohibited an assignment unless the insurer consented. Farm Bureau
Prop. & Cas. Ins., 889 N.W.2d at 599. The court concluded that absent a statute to
the contrary, a post-loss assignment of a claim under a homeowner’s policy was
valid, “even though the policy stated any assignment made without the insurer’s
consent would be invalid.” Id. at 605. The Farm Bureau decision addressed only
the validity of a policy’s prohibition on assignments, not whether the language of
the assignment was sufficient enough to be binding.
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“An assignment is a contract between the assignor and the assignee, and is
interpreted or construed according to the rules of contract construction.” Valley Boys
v. American Family Insurance Co., 947 N.W.2d 856, 865 (Neb. 2020). “[I]n order
to be binding, an agreement must be definite and certain as to the terms and
requirements.” Id. at 867. “An agreement which depends upon the wish, will, or
pleasure of one of the parties is illusory and does not constitute an enforceable
promise.” Id. An assignment of rights to proceeds under an insurance policy must
contain a definite agreement about the price and scope of work to be completed. Id.
at 868.
A.
The parties do not dispute the written terms of the assignments to Millard and
Elite. They disagree whether these terms are sufficient to create a valid assignment
of rights. The Nebraska Supreme Court explained the language required for an
enforceable assignment in Valley Boys v. American Family Insurance Co., 947
N.W.2d 856 (Neb. 2020). In Valley Boys, homeowners hired Valley Boys, Inc. to
repair their roof. Id. at 861. In exchange, they executed an assignment transferring
their right to pursue a claim under the insurance policy to Valley Boys. Id. at 862.
At the time of the assignment, eight of the nine homeowners also signed a “Customer
Service Agreement” (CSA) stating:
Due to the unique nature of repairs related to insurance
claims, this contract may not include an explicit price
because the final scope of repairs and/or replacement
arising from the Claim has not yet been agreed upon with
the insurer . . . Valley Boys agrees to use customary
industry pricing for the work . . . Valley Boys’
performance under this agreement is contingent upon
Valley Boys reaching agreement with the insurance
company on the scope of repairs and/or replacement.
Id. (emphasis added).
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In Valley Boys, the Nebraska Supreme Court ruled that the assignments were
invalid because the contractor’s obligation to perform work was expressly
“conditioned upon” the homeowners’ insurance company approving the precise
scope of the repairs. Id. at 868-69. The contractor never reached an agreement with
the homeowner, meaning in turn that it never “reach[ed] an agreement with the
homeowners regarding the scope of work” to be completed. Id. Without an agreed-
upon scope of work, no agreement on a price “ever came to fruition” either. Id. at
869. Because the scope and price of the repair work to be performed were left to
be determined in the future, the assignments between the contractor and the
homeowners were, according to the Nebraska Supreme Court, too indefinite to be
enforceable as a matter of law. See id.The language in Millard’s and Elite’s written assignments, standing alone, is
too indefinite to create a valid assignment. Millard’s assignment described the scope
of work “for the services rendered” while Elite’s simply lists “for value received.”
The price terms are also too indefinite. Millard’s Assignment form describes the
price as “reasonable charges” and Elite’s assignment form does not have a price
term. The contractors try to distinguish their assignments from Valley Boys,
emphasizing that the performance terms there were even more indefinite, giving
Valley Boys the right to decide whether to perform work. But the Valley Boys
opinion held that the assignment there left the scope of work “to be determined in
the future” and thus “no binding agreement had been reached.” Id. at 868. Equally
here, without a description of the services to be provided and a definite price, these
terms are left “to be determined in the future,” and thus there is no mutuality of
obligation.
B.
Although the written language is insufficient to create an enforceable
assignment, this conclusion, by itself, does not resolve this case. The contractors
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argue that their oral arrangements cure any deficiencies that may exist in the written
agreements.
In Nebraska, the terms of a contract can be “supplied by parol evidence” if a
written instrument is too indefinite to be binding. Aurora Tech., Inc. v. Labedz, 964
N.W.2d 474, 479 (Neb. Ct. App. 2021); see Neb. Nutrients, Inc. v. Shepherd, 626
N.W.2d 472, 500–01 (Neb. 2001) (observing that contracting parties can “cure” an
indefinite contract “by later verbal clarification”), abrogated in part on other
grounds by Kremer v. Rural Cmty. Ins. Co., 788 N.W.2d 538 (Neb. 2010).
Here, the contractors contend that they made additional oral arrangements
with homeowners about the repairs to be performed and the estimated price, which
“spell[ed] out the essential commitments” made by the contracting parties more
definitively. Acklie v. Greater Omaha Packing Co., 944 N.W.2d 297, 306 (Neb.
2020); see MBH, Inc. v. John Otte Oil & Propane, Inc., 727 N.W.2d 238, 249 (Neb.
Ct. App. 2007) (“[A]n unenforceable agreement to agree may become enforceable
when the missing term is subsequently supplied by the parties.”); see also Aurora
Tech., 964 N.W.2d at 480 (recognizing that contracts can be “partly oral and partly
written”).
Under Nebraska law, as to the precise scope of the repair work to be
performed by the contractors, a contract can be sufficiently definite “so long as the
parties can tell when it has been performed” and “there is in existence some standard
by which performance can be tested.” Neb. Nutrients, 626 N.W.2d at 499 (quoting
Davco Realty Co. v. Picnic Foods, Inc., 252 N.W.2d 142, 146 (Neb. 1977)). A court
can sometimes “ascertain the meaning” of a contract “by referring to the parties’
course of dealing with each other” or even a “general reasonableness standard.” City
of Scottsbluff v. Waste Connections of Neb., Inc., 809 N.W.2d 725, 740 (Neb. 2011);
see MBH, Inc., 727 N.W.2d at 249 (concluding that indefinite contract terms
“became defined by the parties’ subsequent actions that indicated their interpretation
of the terms”).
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This court cannot conclude that the assignments here are invalid as a matter
of law simply because the written “vital terms” were not as definite as they could
have been. Valley Boys, 947 N.W.2d at 868; see City of Scottsbluff, 809 N.W.2d at
740 (“In limited circumstances, the parties’ failure to specify an essential term does
not prevent the formation of a contract.”); Davco Realty, 252 N.W.2d at 146 (stating
that the terms of an agreement need not be ascertainable with “[a]bsolute certainty”
to be valid).
The contractors’ chief problem in this case is evidentiary. Whether they made
binding oral arrangements with the insured homeowners is a question of fact. See
Ralston Inv. Grp., Inc. v. Wenck, 933 N.W.2d 903, 910 (Neb. Ct. App. 2019).
Whether the parties intended to contract in the first place is also a question of fact.
See City of Scottsbluff, 809 N.W.2d at 740. Because the district court properly struck
the contractors’ exhibits, there is almost nothing in the summary judgment record
about what they discussed with the homeowners, whether there was a meeting of the
minds, and what the homeowners understood as the terms of their respective
assignments.3 See Fed. R. Civ. P. 56(c)(1)(A) (“A party asserting that a fact . . . is
genuinely disputed must support the assertion by . . . citing to particular parts of
materials in the record . . . .”). Without that vital evidence, the assignments are too
indefinite to be enforceable. See Valley Boys, 947 N.W.2d at 869.4
3
The contractors do invoke State Farm’s exhibits that summarize statements
that the contractors made to homeowners about the assignment. These statements
do not create an enforceable assignment of rights under Nebraska law because they
do not make the scope of work reasonably definite. See Valley Boys, 947 N.W.2d at
868. For example, as to the scope of work, Elite’s representatives tell homeowners
that it will “complete all the storm damage related work,” which is insufficient under
Nebraska law. See id.
4
R.A.D., Elite’s assignee, thus cannot pursue a claim against State Farm for
breach of contract. See Valley Boys, 947 N.W.2d at 865 (“The assignee of a chose
in action acquires no greater rights than those of the assignor. . . .”).
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The contractors failed to meet their summary judgment burden to establish a
genuine dispute of material fact whether their assignments with the homeowners
were sufficiently “definite and certain as to the[ir] terms and requirements” to be
enforceable. 5 Id. at 867. State Farm is entitled to summary judgment.
*******
The judgment is affirmed.
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5
This court therefore need not address the contractors’ claim that the district
court erred in not ruling on the admissibility of evidence from two of State Farm’s
witnesses about its estimates and payments.
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