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Inc v. The Cincinnati Insurance Co

Court of Appeals of Iowa

February 6, 2019

33 CARPENTERS CONSTRUCTION, INC., Plaintiff-Appellant/Cross-Appellee,
THE CINCINNATI INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant.

          Appeal from the Iowa District Court for Scott County, Henry W. Latham II, Judge.

         Assignee of a casualty insurance policy appeals a summary judgment ruling finding it was acting as an unlicensed public adjuster. AFFIRMED.

          Kyle J. McGinn of McGinn, Springer & Noethe PLC, Council Bluffs, for appellant.

          Catherine M. Lucas and Sean M. O'Brien of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellee.

          Heard by Tabor, P.J., and Mullins and Bower, JJ.

          MULLINS, JUDGE

         The Cincinnati Insurance Company (Cincinnati) insured a home that was damaged by a storm. The homeowner granted a post-loss assignment of his insurance claim to 33 Carpenters Construction, Inc. (33 Carpenters). 33 Carpenters sued Cincinnati claiming breach of the insurance contract and demanded use of the expedited civil action (ECA) procedures. Cincinnati counterclaimed for a declaratory judgment that 33 Carpenters was an unlicensed public adjuster and sought removal from the ECA procedures. The district court granted summary judgment in favor of Cincinnati on the public-adjuster claim but denied removal from the ECA procedures. 33 Carpenters appeals and Cincinnati cross-appeals.

         I. Background Facts and Proceedings

         In March 2016, a hail and wind storm damaged the home of Gregg Whigham. Cincinnati insures Whigham's house. At some unknown point in time, Whigham and 33 Carpenters, a home-repair contractor, entered into an agreement for the repair of Whigham's house. In exchange for repairing the house, 33 Carpenters would receive any proceeds paid by Cincinnati on Whigham's home-insurance policy. No copy of this agreement appears in the record. On October 6, Whigham and Tony McClanahan, a representative of 33 Carpenters, phoned Cincinnati to report the storm damage. McClanahan advised Cincinnati that 33 Carpenters was Whigham's contractor and would attend the insurance inspection.

         On October 10, Whigham and McClanahan signed an "Assignment of Claim and Benefits" form in which Whigham agreed to sell and transfer his claim and any cause of action he might have against Cincinnati for the storm damage. The form indicates the type of claim is storm damage and the date of the loss was October 10, 2016. The form allows 33 Carpenters, "in its own name and for its own benefit [to] prosecute, collect, settle, compromise and grant releases on said claim as it, in its sole discretion, deems advisable."

         Cincinnati assigned an adjuster who reviewed the claim and prepared an estimate of the repair costs, and Cincinnati made payment according to that estimate. In February 2017, 33 Carpenters emailed Cincinnati to request an estimate for further repairs on the house, including siding and gutters. Cincinnati responded that it would address any further issues only with Whigham and scheduled a construction consultant to re-inspect Whigham's house. 33 Carpenters was in contact with Whigham about the need for further repairs and attempted numerous times to communicate directly with Cincinnati, including sending pictures. However, Cincinnati only addressed its communications to Whigham. 33 Carpenters communicated with Whigham that it needed to determine "how Cincinnati intends to make you whole," and it made suggestions on what it determined were necessary repairs. In its last email exchange, 33 Carpenters sent Cincinnati comparison photos in response to Cincinnati's stated intent to have a construction consultant do the same task.

         A few days later, 33 Carpenters filed suit against Cincinnati for breach of contract, alleging Cincinnati failed to pay 33 Carpenters all benefits due and owing under the Whigham insurance policy. Further, it contended it was entitled to recover from Cincinnati because of its post-loss assignment of Whigham's claim under his insurance policy. 33 Carpenters also filed an election to bring the suit as an ECA under Iowa Rule of Civil Procedure 1.281.

         Cincinnati denied the claims and filed affirmative defenses, including that in obtaining the assignment from Whigham, 33 Carpenters acted as a public adjuster without a license, in violation of Iowa Code chapter 522C (2017), which rendered the assignment unenforceable. It also claimed 33 Carpenters did not possess an insurable interest in the insured premises. Cincinnati brought a counterclaim for declaratory relief, asking the court to determine and declare the legal effect of the assignment. 33 Carpenters resisted the counterclaim, and the court scheduled a jury trial.

         Cincinnati filed an application to terminate the ECA procedures, pursuant to Iowa Rule of Civil Procedure 1.281(1)(g), arguing the rule allows claims to proceed as an ECA only if the sole relief is a money judgment. It contended that due to its compulsory counterclaim requesting declaratory relief, the action could not proceed under rule 1.281. 33 Carpenters resisted, arguing the language of the rule itself allows Cincinnati's claim to proceed as an ECA. After a telephonic hearing, the court denied Cincinnati's request to terminate the ECA procedures, finding that the relief ...

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