Hoffman Adjustment Incorporated v. Neal Nussbaum, Essie Nussbaum, and Illinois Farmers Insurance Company (mem. dec.) ( 2017 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any
Dec 28 2017, 6:44 am
court except for the purpose of establishing
the defense of res judicata, collateral CLERK
Indiana Supreme Court
estoppel, or the law of the case. Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT
William H. Walden
Munster, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Hoffman Adjustment December 28, 2017
Incorporated, Court of Appeals Case No.
Appellant-Plaintiff, 45A03-1706-PL-1451
Appeal from the Lake Superior
v. Court
The Honorable John R. Pera,
Neal Nussbaum, Essie Judge
Nussbaum, and Illinois Farmers Trial Court Cause No.
Insurance Company, 45D10-1408-PL-00092
Appellees-Defendants
Vaidik, Chief Judge.
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Case Summary
[1] Hoffman Adjustment Incorporated appeals the trial court’s judgment in favor of
Essie Nussbaum and her sons Kent and Neal1 on its breach-of-contract claim.
Hoffman Adjustment also appeals the trial court’s order vacating the default
judgment against Illinois Farmers Insurance Company (Farmers). The
appellees did not file briefs in this case, and Hoffman Adjustment has made a
prima facie case that the trial court erred on its breach-of-contract claim.
Hoffman Adjustment, however, has not made such a case on its default-
judgment claim. Accordingly, we affirm in part, reverse in part, and remand.
Facts and Procedural History
[2] Sometime in 2010, a barn located on the Nussbaums’ residential property in
Remington was rented to the United States Department of Agriculture (USDA)
for poultry research. After signing the lease with the USDA, Kent called Ruben
Perez, the Nussbaums’ insurance agent, to “[r]aise the insurance policy” on the
barn and notified Perez that the barn was being rented by a third party. Tr. Vol.
II p. 113. On May 20, 2012, lightning struck the barn, and it burned down. A
well house located on the Nussbaums’ property also sustained some damage
1
The record is unclear as to which of the Nussbaums are still defendants in this case. During the trial-court
proceedings, Essie died. Nevertheless, she still appears on documents in the record. For example, the CCS
lists all three Nussbaums as defendants, Appellant’s App. Vol. II p. 2, while the trial court’s judgment lists
only Neal and Essie, id. at 13. Because it is unclear which Nussbaums are currently parties to this matter, we
refer to all of them.
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during the storm. The Nussbaums contacted Farmers and filed a claim for the
barn, well house, and debris clean up.
[3] Two weeks after the storm, the Nussbaums contracted with Hoffman
Adjustment “to assist in the adjustment of my (our) loss[.]” Pl. Ex. 2. The
contract also stated, “[We] agree to pay [Hoffman Adjustment] a fee of 10% of
claim proceeds when adjusted, or otherwise recovered on account of such loss,
regardless of who effects the adjustment or recovery.” Id. The Nussbaums also
agreed to pay Hoffman Adjustment for “legal fees and collection costs
regarding the pecuniary interest” Hoffman Adjustment had in their claim. Id.
In addition to signing the contract, the Nussbaums also signed a notice to
Farmers that Hoffman Adjustment was assisting with their claim. This notice
was included on the same page as the contract. See id.
[4] Joseph Hoffman, a public adjuster and the sole incorporator of Hoffman
Adjustment, immediately began working on the Nussbaums’ claims. He
prepared and sent Farmers multiple documents: proof of loss, statement of loss,
building loss evaluation, and inventory of lost goods. Hoffman calculated the
replacement cost of the Nussbaums’ barn to be $878,383. The Nussbaums’
insurance policy had a limit of $280,000 for structures that were not the main
residence, like the barn.
[5] A few weeks after beginning work, Hoffman ran into complications with
Farmers. Multiple coverage issues were discovered with the Nussbaums’
policy. First, Perez never physically appraised the barn after Kent asked for the
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policy limit to be increased. Because no appraisal was done, Perez assigned an
arbitrary replacement value of $280,000 to the barn. Additionally, Perez made
no other changes to the policy despite knowing that the barn was being rented
to a third party and was classified as a commercial property by Farmers. The
Nussbaums’ policy continued to provide coverage to residential property only.
Because of these issues, Hoffman was unable to move forward with Farmers
regarding the damage to the barn and suggested that the Nussbaums hire an
attorney. Hoffman, however, was able to continue processing the claims for the
well house and debris clean up, and Farmers paid the Nussbaums a total of
$10,974.57 for these claims. Pl. Ex. 6. The Nussbaums, in turn, paid Hoffman
Adjustment $1097.06 for its services. Def. Ex. 4.
[6] While Hoffman was working on the well-house and debris claims, the
Nussbaums followed his advice and hired an attorney to look into the problems
with the barn’s insurance coverage. Hoffman provided the attorney with a copy
of the documents he had amassed while attempting to process the barn claim
and agreed to serve as a factual witness. In October 2012, the Nussbaums filed
suit against Farmers and Perez, claiming damages in excess of $800,000. The
Nussbaums alleged that Farmers and Perez were negligent in failing to provide
an insurance policy that properly covered their property. In April 2014, the
Nussbaums, Farmers, and Perez reached an out-of-court settlement for
$280,000—the exact amount the Nussbaums would have received had Farmers
paid out their barn claim.
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[7] After learning about the settlement, Hoffman Adjustment informed the
Nussbaums that it was entitled to 10%—$28,000—for its services. The
Nussbaums denied Hoffman Adjustment’s request for payment, claiming that
the company was “off the case” and that payment was “based on errors and
omissions of Ruben Perez [and] had nothing to do with the policy[.]” Tr. Vol.
II pp. 135, 156. In August 2014, Hoffman Adjustment filed suit against the
Nussbaums and Farmers for recovery of its fee, interest, and attorney’s fees, for
a total of $46,048.43 ($28,000 in actual damages, $6720 in interest, and
$11,328.43 in attorney’s fees). Farmers did not respond to the suit, and a
default judgment was entered against it, but the court delayed entering a
damages award until after the trial between Hoffman Adjustment and the
Nussbaums.
[8] In May 2017, a trial was held on Hoffman Adjustment’s complaint. During the
trial, Hoffman Adjustment argued that the settlement payment that the
Nussbaums received for $280,000 was really an insurance payment for the loss
of the barn and that the payment was covered under the contract it had with the
Nussbaums. Hoffman Adjustment also noted that the settlement amount
matched the insurance-policy limit. The Nussbaums, on the other hand, argued
that the settlement payment was not effectuated by any work that Hoffman
Adjustment did and contended that the settlement was not a recovery under
their insurance policy because the policy did not cover commercial property.
They claimed that the settlement was due to negligence on the part of Perez.
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[9] The trial court ruled in favor of the Nussbaums and vacated the default
judgment against Farmers. The court emphasized that it had to give effect to
the plain language of the contract but then quoted the notice provision sent to
Farmers, believing it to be part of the contract: “[The contract] does have a
provision in there and it says: The insured makes claim for all coverages
granted by the insurance policy.” Id. at 206. The court concluded that the
settlement payment had nothing to do with the work Hoffman Adjustment
performed but, rather, was a result of Perez’s negligence and was not pursuant
to coverage granted by the insurance policy.
[10] Hoffman Adjustment appeals.
Discussion and Decision
[11] We first note that neither the Nussbaums nor Farmers filed an appellee’s brief.
When appellees fail to submit briefs, we will not undertake the burden of
developing arguments for them. Price v. Lake Cty. Bd. of Elections & Registration,
952 N.E.2d 807, 809 (Ind. Ct. App. 2011). We may reverse the trial court’s
decision “if the appellant can establish prima facie error.” Id. Prima facie
error, in this context, is defined as “at first sight, on first appearance, or on the
face of it.” Id. If the appellant is unable to meet this burden, we will affirm.
Trinity Home, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).
[12] Hoffman Adjustment contends that the trial court erred when it ruled that the
settlement payment the Nussbaums received from Farmers and Perez was
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outside the scope of the contract because it was based on Perez’s negligence and
was not a payment under the insurance policy. When an issue of contract
interpretation arises, we interpret the contract with the goal of “ascertaining and
enforcing the parties’ intent” as revealed by the contract. Am. Family Mut. Ins.
Co. v. Ginther, 843 N.E.2d 575, 578 (Ind. Ct. App. 2006). To do this, we must
construe the contract as a whole. Id. Contract interpretation is a question of
law, which we review de novo. Id.
[13] The Nussbaums agreed that Hoffman Adjustment would “assist in the
adjustment of my (our) loss” in exchange for “a fee of 10% of claim proceeds
when adjusted, or otherwise recovered on account of such loss, regardless of
who effects the adjustment or recovery.” Id. (emphasis added). The contract
plainly states that Hoffman Adjustment is owed 10% of any claim proceeds
recovered “on account of” the loss of the Nussbaums’ barn. It does not limit
Hoffman Adjustment’s payment to recovery under only the insurance claim.
The settlement payment was “on account of” the burning of the barn.
Accordingly, under its contract with the Nussbaums, Hoffman Adjustment is
entitled to recover 10% of the settlement amount.2
2
Although the trial court reached a different conclusion, we understand why it might have done so. First,
the Nussbaums signed a notice that Hoffman Adjustment was assisting with their claims. That notice was
included on the same page as the contract and said, “The insured makes claim for all coverages granted by
the insurance policy.” Pl. Ex. 2 (emphasis added). The contract and notice were separated by only
signature and date lines and neither had a heading/title. See id. And second, during closing arguments, the
Nussbaums’ attorney incorrectly represented the notice as part of the contract, stating, “And he says, right in
his contract, where it says this at the bottom: the insured makes claim for all coverages granted by the
insurance policy.” Tr. Vol. II p. 196. The trial court then requoted this language in its holding. The
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[14] Furthermore, the court also stressed that Hoffman Adjustment was not able to
effectuate the $280,000 payment and that it would be “patently unfair” for
Hoffman Adjustment to recover its fee. Tr. Vol. II p. 206. The contract,
however, explicitly stated that Hoffman Adjustment was to recover its fee
“regardless of who effects the adjustment or recovery.” Pl. Ex. 2. Hoffman, as
an employee of Hoffman Adjustment, did everything he could to assist in the
adjustment of the Nussbaums’ barn claim. He submitted multiple documents to
Farmers, including proof of loss, statement of loss, and inventory of lost goods,
and calculated the total replacement value of the barn. It is not uncommon for
a public adjuster to have to hand over a claim to an attorney to effectuate
payment. But in this case, the hand off does not prevent Hoffman Adjustment
from recovering its 10% fee. Denying Hoffman Adjustment its fee ignores the
plain language of the contract. Hoffman Adjustment has established a prima
facie case that the trial court erred and that it is entitled to recovery under its
contract with the Nussbaums.
[15] Hoffman Adjustment also argues that the trial court erred when it vacated the
default judgment against Farmers. The trial court found that the settlement
payment was not made under the insurance policy but was due to Perez’s
negligence. However, the notice that Hoffman Adjustment sent Farmers was
for the “claim for all coverages granted by the insurance policy.” Pl. Ex. 2.
misunderstanding of what language was in the contract likely caused the trial court to narrow the scope of the
contract to payments made under the insurance policy instead of payments “on account of” the barn burning.
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Because Farmers’ payment to the Nussbaums was not made under the
insurance policy, Farmers did not have proper notice to withhold Hoffman
Adjustment’s 10% fee. Hoffman Adjustment has failed to establish a prima
facie case of error. Accordingly, we affirm the trial court’s order vacating the
default judgment against Farmers.
[16] As for the additional claims for attorney’s fees and interest, we remand to the
trial court for a hearing on damages to determine what amount Hoffman
Adjustment is owed.
[17] Affirmed in part, reversed in part, and remanded.
May, J., and Altice, J., concur.
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