33 Carpenters Construction, Inc. v. State Farm Fire and Casualty Company ( 2020 )

IN THE SUPREME COURT OF IOWA
No. 18–1354
Filed February 14, 2020
33 CARPENTERS CONSTRUCTION, INC.,
Appellant,
vs.
STATE FARM LIFE AND CASUALTY COMPANY,
Appellee.
Appeal from the Iowa District Court for Scott County, Henry W.
Latham II, Judge.
Residential contractor lacking public adjuster license appeals
summary judgment dismissing its breach of contract claim against
homeowners’ insurer. AFFIRMED.
Edward F. Noethe, Kyle J. McGinn, and Emily A. Weiss (until
withdrawal) of McGinn, Springer & Noethe PLC, Council Bluffs, for
appellant.
Brenda K. Wallrichs and Mark J. Parmenter of Lederer Weston Craig
PLC, Cedar Rapids, for appellee.
2
WATERMAN, Justice.
This appeal is one of three 1 we decide today concerning whether a
residential contractor acting as an unlicensed public adjuster can enforce
its postloss contractual assignment of insurance benefits against the
homeowners’ insurer. A controlling statute, Iowa Code section 103A.71(5)
(2016), declares “void” contracts entered into by residential contractors
who perform public adjuster services without the license required under
section 522C.4. Those laws were enacted to protect homeowners and
insurers against exploitation by unlicensed contractors after hailstorms,
tornadoes, and other natural disasters.
The plaintiff-contractor in this case represented the homeowners as
an assignee of their insurance claim for hail damage. The defendant-
insurer paid what it determined was owed, and the plaintiff-contractor
sued for much more. The district court granted the defendant-insurer’s
motion for summary judgment on grounds that the plaintiff-contractor’s
contractual assignment was unenforceable. We retained the plaintiff-
contractor’s appeal.
On our review, we apply section 103A.71(5) to hold the assignment
contract void. We reject the plaintiff’s argument that courts must honor
these “void” contracts unless specifically directed otherwise by the Iowa
Insurance Commissioner. For the reasons explained below, we affirm the
summary judgment.
I. Background Facts and Proceedings.
On March 15, 2016, a hailstorm struck Bettendorf and damaged the
roof and siding of a home owned by Brant and Sarah Clausen. The
1The related cases filed today are 33 Carpenters Construction, Inc. v. Cincinnati
Insurance, No. 17–1979, ___ N.W.2d ___ (Iowa 2020), and 33 Carpenters Construction, Inc.
v. IMT Insurance, No. 19–0678, ___ N.W.2d ___ (Iowa 2020).
3
Clausens initially were unaware of any storm damage to their property.
Their home was insured through State Farm Fire and Casualty Company
(State Farm). On June 29, Matt Shepherd, an employee of 33 Carpenters
Construction, Inc. (33 Carpenters), approached the Clausens at their
home and asked if he could inspect their roof for hail damage. The
Clausens agreed to permit his inspection. Shepherd found hail damage to
the roof and siding, which was news to the Clausens.
Shepherd presented, and the parties signed, two documents, labeled
“Agreement” and “Insurance Contingency,” whereby 33 Carpenters agreed
to repair the storm damage in exchange for the Clausens’ insurance
proceeds. The documents also purportedly authorized 33 Carpenters to
act on behalf of the Clausens regarding the submission, adjustment, and
payment of an insurance claim for the hail damage to their roof.
Insurance/Mortgage Company Authorization: I
authorize and direct my insurers and mortgagees to
communicate directly with 33 Carpenters Construction to
include discussions regarding scope of work and payment. I
also authorize and direct my insurers and Mortgagees to
include 33 Carpenters Construction as a joint payee on all
checks.
The Insurance Contingency authorized 33 Carpenters to “meet with and
discuss hail and wind damage” of the Clausen property with their
insurance company, State Farm, and it required the Clausens to
acknowledge that “33 Carpenters Construction will act as their General
Contractor to obtain appropriate property damage adjustments.”
That same day, the Clausens made a property damage claim to State
Farm. About two weeks later, State Farm representatives visited the
Clausen home to inspect the storm damage. Shepherd attended the
inspection without the Clausens. After this meeting, State Farm
formulated an initial estimate calculating the replacement cost value, or
4
total repair costs, of $30,607. After subtracting depreciation and the
Clausens’ deductible, State Farm paid the Clausens $22,198. The
Clausens transferred this payment to 33 Carpenters, and it began
repairing the roof and siding.
Subsequently, 33 Carpenters prepared an undated 2 “Supplement”
to the insurance claim, claiming $15,087 in additional repair costs, $645
in tax, and $9137 in overhead and profit for a new claim of $24,869 above
State Farm’s initial determination of the total repair cost, amounting to an
increase of 81.3%. State Farm’s adjuster returned to the Clausen home
to assess the new claims.
On February 22, 2017, the Clausens signed another document that
purportedly assigned their insurance claim with State Farm to
33 Carpenters. This “Assignment of Claim and Benefits” stated,
FOR VALUE RECEIVED, the Assignor [Brant Clausen]
hereby sells and transfers to the Assignee [33 Carpenters] and
its successors, assigns and personal representatives, any and
all claims, payment drafts, demands, and cause or causes of
action of any kind whatsoever which the Assignee [33
Carpenters] has or may have against State Farm (insurance
company), arising from the following claim [for hail and wind
damage.]
This document further stated that “all future payments or settlements for
the above referenced claim” should be made directly to 33 Carpenters.
On March 10, 33 Carpenters filed this civil action against State
Farm. 33 Carpenters alleged that it is the assignee of the Clausens’ rights
and that State Farm had breached its insurance policy by failing to pay
33 Carpenters “all benefits due and owing under the policy.” State Farm
filed an answer denying those allegations.
233Carpenters asserted in its brief that the Supplement was prepared before the
February 22 assignment.
5
Later that month, State Farm prepared a substituted estimate in
response to the 33 Carpenters Supplement. The substituted estimate
increased the replacement cost value to $40,953 to reflect the need to
replace all of the siding on the Clausen home since the original siding
became unavailable during the interim between the initial estimate and
the repair work. In recognition of this increase, State Farm paid an
additional $15,681 directly to 33 Carpenters and the Clausens’ mortgage
company, and 33 Carpenters deposited the payment.
Next, on August 21, after State Farm had made the second payment
and after 33 Carpenters had completed the repairs, 33 Carpenters
submitted yet another cost estimate, claiming $64,973 for the cost of
repairs and $12,994 in overhead and profit, increasing the total claim to
$77,968, a 90.4% increase from State Farm’s substituted estimate of the
total replacement cost value. State Farm refused to pay the additional
sums. Two months later, 33 Carpenters filed a motion to compel appraisal
of the loss. The district court denied the motion.
State Farm filed a motion for summary judgment on May 15, 2018,
claiming that the contract between 33 Carpenters and the Clausens was
unenforceable because 33 Carpenters was not a licensed public adjuster,
as required under Iowa Code chapter 522C. State Farm supported its
motion with the contractual documents and other evidence showing that
33 Carpenters acted as a public adjuster for the Clausens. The summary
judgment record included a printout of 33 Carpenters’ public webpage that
outlined its six-step process for a common insurance claim:
STEP 1
Contact 33 Carpenters Construction
(http://33carpentersconstruction.com/contact) for a free
comprehensive storm damage evaluation and assessment.
[phone numbers of the various 33 Carpenters locations]
6
STEP 2
Contact your insurance company to file a claim.
Inform your insurance company that your home was impacted
by recent severe storms and your home was inspected by a
licensed general contractor and areas of your home are
damaged.
STEP 3
Inform us when the insurance adjuster will be coming out
to assess the damage on your home or property.
We will meet personally with your insurance adjuster, as an
ADVOCATE on YOUR behalf, and discuss the work that needs
to be completed to repair your home to its original beauty and
value. Your insurance adjuster will submit a report that will
list the work that needs to be completed and a copy will be
sent to you.
STEP 4
Send us a copy of the summary report put together by
your insurance company.
Included in the summary report will be the itemized costs of
the work that needs to be performed. We will work directly
with your insurance company to ensure that all damaged
areas of your home will be included on the report.
STEP 5
We will meet with you to make product selections.
Our entire team has a vast and comprehensive knowledge
about all home exterior products and we are happy to help
you in the decision making process regarding product
selection and color options. We will work with your schedule
to determine the best day to start the necessary repairs to
your home.
STEP 6
Payment.
We will provide you and your insurance company with a copy
of the invoice when the work is completed. You may be
required to get your mortgage company to endorse the check
from the insurance company before payment can be
submitted to us for the work completed to your home. You
are only responsible for your insurance deductible and any
agreed upon upgrades.
33 Carpenters resisted summary judgment by arguing that the Iowa
Insurance Commissioner has the sole authority to enforce the provisions
of Iowa Code chapter 522C such that State Farm cannot use the statute
to invalidate the assignment agreement. Alternatively, 33 Carpenters
argued its conduct did not violate Iowa Code chapter 522C or 507A.
33 Carpenters asserted that the only relevant event before the February 22
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assignment was the evaluation of the claim attended by State Farm
representatives and Shepherd, and it stated this was not improper because
Shepherd did not negotiate or advocate for the Clausens during that
meeting. The other events, 33 Carpenters claimed, occurred after the
Clausens assigned the claim to 33 Carpenters, which it stated it wholly
owned and could negotiate without a public adjuster license.
The district court granted the motion for summary judgment, ruling
that the Clausens’ assignment of their claim to 33 Carpenters was invalid
under Iowa law because 33 Carpenters acted as an unlicensed public
adjuster as defined in Iowa Code section 522C.2. The district court
considered the undisputed facts that the Clausens were unaware of any
storm damage and had made no insurance claim before they were
approached by 33 Carpenters, their agreement authorized 33 Carpenters
to communicate with State Farm, 33 Carpenters’ representative Shepherd
attended the roof inspection with State Farm without the Clausens, and
33 Carpenters received the proceeds of the checks State Farm issued to
the Clausens for the claim. The district court determined that,
by undertaking these actions, 33 Carpenters was acting as a
public adjuster as defined in Iowa Code section 522C.2.
33 Carpenters did so without the requisite license. Because
33 Carpenters was acting as an unlicensed public adjuster
prior to the assignment, the assignment is invalid under Iowa
law.
The district court ruled that 33 Carpenters could not recover from State
Farm and granted State Farm’s motion for summary judgment. The
district court did not reach the question of whether the Iowa Insurance
Commissioner has the sole authority to enforce the provisions of Iowa Code
chapter 522C, and 33 Carpenters filed no motion to seek a ruling on that
issue. See Iowa R. Civ. P. 1.904(2). 33 Carpenters appealed, and we
retained the appeal.
8
II. Standard of Review.
We review an order granting summary judgment for correction of
errors at law. City of West Liberty v. Emp’rs Mut. Cas. Co., 922 N.W.2d
876, 879 (Iowa 2019). Summary judgment is appropriate when the moving
party establishes there is no genuine issue of material fact and it is entitled
to judgment as a matter of law. Id. A matter can be resolved on summary
judgment when the dispute is over the legal consequences of undisputed
facts. Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 501 (Iowa
2013). “[W]e examine the record in the light most favorable to the
nonmoving party.” Id.
III. The District Court’s Authority to Adjudicate the Contract’s
Validity.
A. Error Preservation. 33 Carpenters argued in district court and
argues on appeal that the district court erred in applying Iowa Code
section 522C.4 to invalidate the assignment because the Iowa Insurance
Commissioner has the sole authority to enforce that statute. State Farm
responds that 33 Carpenters failed to preserve error on this issue because
the district court never ruled on it and 33 Carpenters did not move under
Iowa Rule of Civil Procedure 1.904(2) for an amended judgment deciding
that issue.
“It is a fundamental doctrine of appellate review that issues must
ordinarily be both raised and decided by the district court before we will
decide them on appeal.” Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa
2002). To preserve error for appeal after the district court fails to rule on
the party’s properly raised issue, the party must file a motion requesting
a ruling. Id. The party must “call to the attention of the district court its
failure to decide the issue.” Id. at 540.
 9
The claim or issue raised does not actually need to be used as
the basis for the decision to be preserved, but the record must
at least reveal the court was aware of the claim or issue and
litigated it.
Id.
We routinely hold that when an issue is raised in a motion but not
decided in the district court ruling, the issue is not preserved for review.
See, e.g., UE Local 893/IUP v. State, 928 N.W.2d 51, 61 (Iowa 2019)
(holding that error was not preserved on a ground raised in a motion to
dismiss that the court denied on other grounds, and the party failed to
raise the issue again in district court); Bank of Am., N.A. v. Schulte, 843
N.W.2d 876, 884 (Iowa 2014) (holding that error was not preserved for
appellate review when the district court did not address the issue in its
ruling and the parties failed to file a rule 1.904 motion on the issue); Meier,
641 N.W.2d at 540–41 (holding that the issue raised as one of two grounds
in a motion to dismiss was not preserved for appellate review when the
district court denied the motion on the other ground alone). In Meier, we
determined that the issue raised in a motion to dismiss was waived when
it was not decided in the district court ruling and the party did not file a
motion requesting a ruling or do anything to call the district court’s
attention to the unaddressed issue. Id. at 540–41. 33 Carpenters
arguably should meet the same fate for the same reason.
The district court granted summary judgment without expressly
deciding whether the Iowa Insurance Commissioner has the sole authority
to enforce Iowa Code chapter 522C. 33 Carpenters never filed a rule
1.904(2) motion requesting a ruling on that issue. We are a court of
review, and we do not generally decide an issue that the district court did
not decide first. UE Local 893/IUP, 928 N.W.2d at 60. But the district
court must have implicitly rejected the argument when it granted summary
10
judgment based on Iowa Code chapter 522C. See Meier, 641 N.W.2d at
539 (“[W]e assume the district court rejected each defense to a claim on its
merits, even though the district court did not address each defense in its
ruling.”). This is a recurring issue, and this argument was rejected by the
district court and court of appeals in a companion case, 33 Carpenters v.
Cincinnati Insurance Company, No. 17–1979, 2019 WL 478254, at *5 (Iowa
Ct. App. Feb. 6, 2019). We assume without deciding that error was
minimally preserved here and elect to reach the merits in this opinion.
B. The District Court’s Power to Declare the Contract Void.
33 Carpenters filed this civil action, and State Farm raised the defense
that 33 Carpenters’ assignment contract is void under Iowa Code chapter
522C. We have never held that Iowa courts lack the authority to
adjudicate contractual assignments of insurance claims. To the contrary,
“Iowa courts routinely adjudicate contract-formation and contract-
enforcement issues.” UE Local 893/IUP, 928 N.W.2d at 64. That case is
instructive. There, we rejected a similar argument that the agency charged
with enforcing a regulatory statute had primary jurisdiction over a contract
enforcement action. Id. at 65. We noted that the agency had various
enforcement powers, including imposing monetary penalties for violations,
but the agency lacked statutory authorization to enforce the contract or
declare the contract void. Id. Accordingly, we held the district court had
the power to adjudicate the contract dispute without any requirement that
the parties first exhaust administrative remedies. Id. at 65–66. Similarly,
the insurance commissioner has the authority to impose penalties on a
person acting as a public adjuster without a license, but nothing in the
chapter authorizes the insurance commissioner to enforce contractual
assignments or declare such contracts void. See Iowa Code ch. 522C; Iowa
Code § 522C.6. We hold that the district court had the authority to
11
adjudicate the validity of 33 Carpenters’ contractual assignment claims.
See also Bank of the W. v. Kline, 782 N.W.2d 453, 462 (Iowa 2010) (“It is
well-established Iowa law that contracts made in contravention of a statute
are void, and Iowa courts will not enforce such contracts.”).
IV. The Invalidity of the Contract.
We must decide whether the district court erred by granting State
Farm’s motion for summary judgment. We conclude that undisputed facts
establish that 33 Carpenters, a residential contractor, was acting as an
unlicensed public adjuster representing the Clausens on their hail damage
claim against State Farm. 33 Carpenters’ contractual assignment is
therefore void under Iowa Code section 103A.71(5), and State Farm was
entitled to summary judgment. 3
Our analysis turns on two statutes the Iowa legislature enacted in
2007 and 2012—Iowa Code chapter 522C, governing licensing of public
adjusters, and Iowa Code section 103A.71, governing residential
contractors. See 2007 Iowa Acts ch. 137, § 24–29 (codified at Iowa Code
ch. 522C (Supp. 2007)); 2012 Iowa Acts ch. 1116, § 1 (codified at Iowa
Code § 103A.71 (2013)). We begin with an overview of this legislation.
3The Iowa legislature recently enacted the Insured Homeowner’s Protection Act,
which now voids postloss assignment contracts between an insured and a residential
contractor unless specified conditions are met. 2019 Iowa Acts ch. 49, § 1 (codified at
Iowa Code § 515.137A(3), (5)(a) (2019)). This enactment became effective July 1, 2019.
Id. State Farm does not argue this new legislation applies retroactively, and we conclude
the enactment is inapplicable to the 2016 transactions at issue in this appeal.
Other states have recently enacted similar statutes regulating the insureds’
postloss assignments to residential contractors of rights or benefits under homeowners
insurance policies. See, e.g., Neb. Rev. Stat. Ann. § 44-8605 (West, Westlaw current
through 1st Reg. Sess. 106th Leg. (2019)); N.D. Cent. Code Ann. § 26.1-39.2-04 (West,
Westlaw current through Jan. 1, 2020); see also Fla. Stat. Ann. § 627.7153 (West,
Westlaw current through 2019 1st Reg. Sess.) (allowing insurers to restrict the ability of
an insured to execute an assignment contract in its policies if certain enumerated
conditions are met).
12
Iowa is one of forty-five states with statutes requiring licensure of
public adjusters. See Thomson Reuters, Public Adjusters: Licensing and
Education Requirements, 0110 Surveys 78 (Dec. 2018). The goal of the
licensing statutes is to “curtail unethical and abusive practices” by public
adjusters who “present[] danger to the public by ‘chasing fires’ and
soliciting clients under conditions of duress.” Bldg. Permit Consultants,
Inc. v. Mazur, 19 Cal. Rptr. 3d 562, 570 (Ct. App. 2004). The unethical
practices include “price gouging[,] . . . collusion[,] . . . high-pressure sales
tactics, fraud, and incompetence.” Id. at 571. Homeowners and their
insurers are especially vulnerable to exploitation “in the wake of
earthquakes, fires, floods, and similar catastrophes.” Id. A recent report
by the Insurance Information Institute concluded,
In Florida, abuse of [assignment of benefits contracts (AOBs)]
has fueled an insurance crisis. The state’s legal environment
has encouraged vendors and their attorneys to solicit
unwarranted AOBs from tens of thousands of Floridians,
conduct unnecessary or unnecessarily expensive work, then
file tens of thousands of lawsuits against insurance
companies that deny or dispute the claims. This mini-
industry has cost consumers billions of dollars as they are
forced to pay higher premiums to cover needless repairs and
excessive legal fees. And consumers often do not even know
that their claims are driving these cost increases.
The abuse therefore acts somewhat like a hidden tax on
consumers, helping to increase what are already some of the
highest insurance premiums in the country.
James Lynch & Lucian McMahon, Ins. Info. Inst., Florida’s Assignment of
Benefits Crisis: Runaway Litigation Is Spreading, and Consumers Are
Paying the Price 2 (March 2019).
State Farm argues such abuse is present here. After receiving the
initial insurance payment for the repairs, 33 Carpenters prepared a
supplement with an 81.3% increase in the total repair cost. Due to delays
attributable to 33 Carpenters, all siding required replacement because
13
matching materials were no longer available. To reflect that, State Farm
responded with its own substituted estimate and paid an additional sum
to 33 Carpenters. Then, 33 Carpenters prepared yet another cost estimate
for a 90.4% increase from State Farm’s substituted estimate. State Farm
refused to pay any additional sums.
The Iowa legislature specifically chose to regulate contracts “to
repair damage [to homes] resulting from a naturally occurring catastrophe
including but not limited to a fire, earthquake, tornado, windstorm, flood
or hail storm.” Iowa Code § 103A.71(4)(a) (2016). The Iowa Insurance
Division has determined that requiring public adjusters to be licensed is
in the public interest, necessary for the protection of policyholders, and
consistent with the purposes of Iowa Code chapter 507A. See In re Glaze
Roofing & Remodeling, Iowa Sec. Bureau Ins. Div., 2010 WL 2324606, at
*2 (June 1, 2010). Iowa Code chapter 522C’s purpose is “to govern the
qualifications and procedures for licensing public adjusters in this state,
and to specify the duties of and restrictions on public adjusters, including
limitation of such licensure to assisting insureds only with first-party
claims.” Iowa Code § 522C.1.
Other courts have held that contracts entered into by an unlicensed
public adjuster are void. See, e.g., Zarrell v. Herb Gutenplan Assocs., Inc.,
444 N.Y.S.2d 39, 40 (Sup. Ct. 1981) (“Section 123 of the Insurance Law
provides that no person shall act as an adjustor (independent or public)
unless licensed by the Superintendent of Insurance. . . . Accordingly, the
court declares that . . . the plain language of Sec. 123 prohibits the
defendant’s entitlement to a fee for adjusting a burglary loss . . . .”);
James R. Beneke, Inc. v. Aon Risk Servs., Inc. of Ga., A-05-CA-927 RP, 2007
WL 9701564, at *6 (W.D. Tex. Nov. 15, 2007) (“Because Jim Beneke was
not licensed in Florida at the time of the solicitation, his conduct was
14
clearly prohibited under Florida law. The undersigned thus concludes the
Agreement was void ab initio as violative of Florida law.” (Footnote
omitted.)); Lon Smith & Assocs., Inc. v. Key, 527 S.W.3d 604, 618, 619 (Tex.
App. 2017) (refusing to enforce an unlicensed public adjuster’s contract
because “a contract to fulfill an obligation that cannot be performed
without violating the law contravenes public policy and is void”).
Against this backdrop, we turn to the operative statutory language.
Subchapter V of the state building code, Iowa Code chapter 103A, is
entitled, “Residential Contractors—Repairs and Insurance—Prohibited
Practices.” A “residential contractor” is defined as
a person in the business of contracting to repair or replace
residential roof systems or perform any other exterior repair,
exterior replacement, or exterior reconstruction work
resulting from a catastrophe on residential real estate or a
person offering to contract with an owner or possessor of real
estate to carry out such work.
Iowa Code § 103A.71(1)(b). “A contract entered into with a residential
contractor is void if the residential contractor violates subsection 2, 3, or
4.” Id. § 103A.71(5).
Section 103A.71(3) declares that
[a] residential contractor shall not represent or negotiate on
behalf of, or offer or advertise to represent or negotiate on
behalf of, an owner or possessor of residential real estate on
any insurance claim in connection with the repair or
replacement of roof systems, or the performance of any other
exterior repair, exterior replacement, or exterior
reconstruction work on the residential real estate.
Id. § 103A.71(3). Violating section 103A.71(3) subjects the violator “to the
penalties and remedies prescribed by this chapter” and amounts to “an
unlawful practice pursuant to section 714.16.” Id. § 103A.71(6)(a)–(b).
A “public adjuster” is defined in Iowa Code section 522C.2(7) as
any person who for compensation or any other thing of value
acts on behalf of an insured by doing any of the following:
15
a. Acting for or aiding an insured in negotiating for or
effecting the settlement of a first-party claim for loss or
damage to real or personal property of the insured.
b. Advertising for employment as a public adjuster of
first-party insurance claims or otherwise soliciting business
or representing to the public that the person is a public
adjuster of first-party insurance claims for loss or damage to
real or personal property of an insured.
c. Directly or indirectly soliciting business investigating
or adjusting losses, or advising an insured about first-party
claims for loss or damage to real or personal property of the
insured.
Id. § 522C.2(7). A “person” can be an individual or business entity. Id.
§ 522C.2(6). Without a license issued by the commissioner in accordance
with chapter 522C, “[a] person shall not operate as or represent that the
person is a public adjuster in this state . . . .” Id. § 522C.4. A person
acting as a public adjuster without a valid license commits a serious
misdemeanor and is subject to civil penalties. Id. § 522C.6.
If we compare the language of section 103A.71(3), which lists
activities that a residential contractor is forbidden from doing, with the
definition of a public adjuster in section 522C.2(7), it is apparent that
section 103A.71(3) prohibits residential contractors from acting as public
adjusters.
Iowa Code § 103A.71(3). Iowa Code § 522C.2(7).
A residential contractor shall not “Public adjuster” means any person
represent or negotiate on behalf of, who for compensation or any other
or offer or advertise to represent or thing of value acts on behalf of an
negotiate on behalf of, an owner or insured by doing any of the
possessor of residential real estate following:
on any insurance claim in a. Acting for or aiding an
connection with the repair or insured in negotiating for or
replacement of roof systems, or the effecting the settlement of a first-
performance of any other exterior party claim for loss or damage to
repair, exterior replacement, or real or personal property of the
exterior reconstruction work on the insured.
residential real estate. b. Advertising for employment
as a public adjuster of first-party
insurance claims or otherwise
soliciting business or representing
16
to the public that the person is a
public adjuster of first-party
insurance claims for loss or
damage to real or personal
property of an insured.
c. Directly or indirectly
soliciting business investigating or
adjusting losses, or advising an
insured about first-party claims for
loss or damage to real or personal
property of the insured.
(Emphasis added.) These statutes regulate the same conduct, including
representing or negotiating for the insured on insurance claims for the
costs to repair storm damage. The conduct prohibited in section
103A.71(3) governing residential contractors describes what public
adjusters are licensed to perform pursuant to section 522C.2(7). We
interpret these provisions together to hold that contracts entered into by a
residential contractor acting as an unlicensed public adjuster are void
under section 103A.71(5). See Kline, 782 N.W.2d at 462 (collecting cases
holding courts will not enforce contracts that contravene statutes); Milholin
v. Vorthies, 320 N.W.2d 552, 554 (Iowa 1982) (en banc) (upholding
regulatory law invalidating a noncompliant real estate listing agreement).
It is undisputed that neither 33 Carpenters nor its employees held
a public adjuster license. We next address whether 33 Carpenters acted
as a public adjuster as defined in chapter 522C. Iowa Code section
522C.2(7) defines a “public adjuster” as a “person who for compensation
or any other thing of value acts on behalf of an insured by doing any of
the [three listed actions.]” (Emphasis added.) We consider each
subsection in turn.
Section 522C.2(7)(a) states a person is a public adjuster when
“[a]cting for or aiding an insured in negotiating for or effecting the
settlement of a first-party claim for loss or damage to real or personal
17
(property of the insured.” Iowa Code § 522C.2(7)(a). 33 Carpenters
representative Shepherd directed the Clausens to file a claim with State
Farm, which they promptly did that same day, and Shepherd attended the
inspection of the Clausen property with the State Farm representatives in
place of the Clausens. Shepherd’s conduct aligned with 33 Carpenters’
representations on its website, which advertised to homeowners that it
would “meet personally with your insurance adjuster, as an ADVOCATE
on YOUR behalf, and discuss the work that needs to be completed to repair
your home to its original beauty and value.” Additionally, 33 Carpenters
submitted the first estimate to State Farm before the Clausens assigned
their claim. 33 Carpenters thereby acted on behalf of the Clausens in
negotiating their claim. Altogether, these activities demonstrate that 33
Carpenters was acting for and aiding the insureds, the Clausens, in
effecting the settlement of their claim with State Farm for damage to their
real property within the meaning of section 522C.2(7)(a).
Section 522C.2(7)(b) states a person is a public adjuster when acting
on behalf of an insured for a thing of value by
[a]dvertising for employment as a public adjuster of first-party
insurance claims or otherwise soliciting business or
representing to the public that the person is a public adjuster
of first-party insurance claims for loss or damage to real or
personal property of an insured.
Id. § 522C.2(7)(b). Section 522C.2(7)(c) states a person is a public adjuster
when acting on behalf of an insured for a thing of value by “[d]irectly or
indirectly soliciting business investigating or adjusting losses, or advising
an insured about first-party claims for loss or damage to real or personal
property of the insured.” Id. § 522C.2(7)(c). Shepherd, as 33 Carpenters’
representative, undisputedly approached the Clausens uninvited and
offered to inspect their home for hail damage, and he directly solicited
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business for 33 Carpenters after finding damage on the roof and siding.
The same day, Shepherd advised the Clausens to file a claim for that
damage and had them sign documents agreeing to pay 33 Carpenters with
their insurance proceeds in exchange for the company agreeing to repair
the storm damage. This constitutes advising an insured about first-party
claims for damage to the insured’s real property. 33 Carpenters’ six-step
process on its website additionally exemplifies solicitation of business
investigating losses and advising insureds regarding claims with promises
to “ADVOCATE on YOUR behalf” and work directly with the insurance
company to ensure all damaged areas are included in the report, among
other things. Such conduct directly aligns with that of a public adjuster
within the meaning of sections 522C.2(7)(b) and (c).
Based on the undisputed facts in the summary judgment record, the
district court correctly ruled that 33 Carpenters acted as an unlicensed
public adjuster under section 522C.2(7), and the court correctly
determined that the assignment contract was unenforceable under the
governing statutes. We hold the assignment contract is void under Iowa
Code section 103A.71(5).
This outcome is consistent with our precedent holding contracts
entered into by parties lacking a required license are void as against public
policy. See, e.g., Bergantzel v. Mlynarik, 619 N.W.2d 309, 318 (Iowa 2000)
(en banc) (holding a contract entered into in violation of attorney license
requirements was unenforceable); Mincks Agri Ctr., Inc. v. Bell Farms, Inc.,
611 N.W.2d 270, 271 (Iowa 2000) (en banc) (holding that contracts entered
into by unlicensed grain dealer were unenforceable); Keith Furnace Co. v.
Mac Vicar, 225 Iowa 246, 250, 280 N.W. 496, 498 (1938) (“If a statute or
city ordinance prohibits the practice of a profession or the carrying on of
a business without first procuring a license and a fine is imposed for
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violating the law, recovery can not be had for services rendered in such
occupation.”); Hoxsey v. Baker, 216 Iowa 85, 88–89, 246 N.W. 653, 655
(1933) (stating it is “well settled” that a person cannot recover for services
performed without a license as required by law); see also Food Mgmt., Inc.
v. Blue Ribbon Beef Pack, Inc., 413 F.2d 716, 725 (8th Cir. 1969) (applying
Iowa law to hold contracts entered into in violation of Iowa registration
requirements are unenforceable); Davis, Brody, Wisniewski v. Barrett, 253
Iowa 1178, 1181–82, 115 N.W.2d 839, 841 (1962) (“The general rule
appears to be that a contract made in the course of a business or
occupation for which a license is required by one who has not complied
with such requirement is unenforceable where the statute expressly so
provides, or where it expressly or impliedly, as a police regulation,
prohibits the conduct of such business without compliance.”). The
legislature has codified its expression of public policy in Iowa Code section
103A.71(5), and we rely on that statute to affirm the summary judgment.
IV. Disposition.
For the foregoing reasons, we affirm the district court’s summary
judgment against 33 Carpenters.
AFFIRMED.