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Cite as 313 Neb. 479

Avis Rent A Car System, Inc., appellee, 

v. Roynetta McDavid, appellant.

___ N.W.2d ___

Filed February 10, 2023. No. S-22-147.

1. Summary Judgment: Appeal and Error. An appellate court reviews 

the district court’s grant of summary judgment de novo, viewing the 

record in the light most favorable to the nonmoving party and drawing 

all reasonable inferences in that party’s favor.

2. Summary Judgment: Jurisdiction: Appeal and Error. When reviewing cross-motions for summary judgment, an appellate court acquires 

jurisdiction over both motions and may determine the controversy that 

is the subject of those motions; an appellate court may also specify the 

issues as to which questions of fact remain and direct further proceedings as the court deems necessary.

3. Contracts. The interpretation of a contract and whether the contract is 

ambiguous are questions of law.

4. Judgments: Appeal and Error. An appellate court independently 

reviews questions of law decided by a lower court.

5. Contracts. The court must accord clear terms their plain and ordinary 

meaning as an ordinary or reasonable person would understand them.

6. ____. The fact that the parties have suggested opposite meanings of a 

disputed instrument does not necessarily compel the conclusion that the 

instrument is ambiguous.

7. Appeal and Error. An appellate court is not obligated to engage in an 

analysis that is not necessary to adjudicate the case and controversy 

before it.

Appeal from the District Court for Douglas County: W. 

Russell Bowie III, Judge. Reversed and remanded with 

directions.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

02/10/2023 09:07 AM CST
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Sean P. Rensch, of Rensch & Rensch Law, P.C., L.L.O., for 

appellant.

Joel M. Carney and Andrew J. McElmeel, of Goosmann 

Law Firm, P.L.C., for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Papik, J.

Roynetta McDavid rented a car from Avis Rent A Car 

System, Inc. (Avis), in Nebraska to take a trip to Tennessee 

with her mother and sister. The rental did not go as planned. 

The trouble started after the traveling party reached Tennessee, 

where McDavid’s sister, despite McDavid’s admonition to the 

contrary, drove the car and was involved in a collision in 

which passengers in another car were injured. Things got more 

complicated for McDavid when Avis paid the injured parties 

just over $40,000 and began demanding that McDavid reimburse it, contending that an indemnification provision in her 

rental agreement required her to do so. After McDavid failed 

to pay, Avis filed a lawsuit and obtained summary judgment 

against McDavid. In this appeal filed by McDavid, however, 

we find that the district court erred and that it is McDavid who 

is entitled to summary judgment. Accordingly, we reverse the 

judgment and remand the cause with directions to enter summary judgment in favor of McDavid.

BACKGROUND

Factual History.

McDavid rented a car from Avis pursuant to a car rental 

agreement. Under the agreement, McDavid was the only 

authorized driver of the car. McDavid, a Nebraska resident, 

planned to drive with her mother and sister to visit another 

sister who lived in Tennessee. According to McDavid, she 

communicated to her traveling companions that they could not 

drive the car.
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Cite as 313 Neb. 479

Despite McDavid’s instructions, while in Tennessee and 

while McDavid was asleep, McDavid’s sister drove the car 

to a friend’s house. During her return, McDavid’s sister was 

involved in an accident with another vehicle. Three passengers 

in the other vehicle were injured in the collision.

The parties injured in the accident filed a lawsuit against 

McDavid’s sister in Tennessee state court. Avis was not named 

as a defendant, but it paid the injured parties a total of $40,100. 

The injured parties executed a release of their claims against 

Avis, McDavid, and McDavid’s sister.

Sedgwick, an entity that provides “claims administration 

services” for Avis, subsequently sent letters to McDavid 

demanding that she pay Avis $40,100. The letters stated that 

Sedgwick had determined that the car McDavid rented was 

“involved in an at fault accident”; that Avis had paid the 

injured parties; and that under the rental agreement, McDavid 

was responsible for reimbursing Avis. When McDavid did not 

pay, Avis sued her.

Procedural History.

Avis’ lawsuit alleged that by failing to pay Avis $40,100, 

McDavid breached the rental agreement’s indemnification provision. As relevant here, the rental agreement provided:

You shall defend, indemnify, and hold [Avis], our parent 

and affiliated companies harmless from all losses, liabilities, damages, injuries, claims, demands, awards, costs, 

attorney fees, and other expenses incurred by [Avis] in 

any manner from this rental transaction or from the use 

of the car by you or any person, including claims of, or 

liabilities to, third parties.

Avis asserted that under this language, McDavid was responsible for reimbursing it for “bodily injury payments” that Avis 

had made.

Both Avis and McDavid eventually moved for summary 

judgment. The summary judgment evidence was consist

ent with the factual history recited above. Avis offered no 
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evidence that the injured parties had ever sued or made any 

demand against it or that otherwise explained why it paid 

the injured parties. At the summary judgment hearing, Avis 

acknowledged that it was not seeking payment for damages to 

its rental car.

The district court granted summary judgment to Avis and 

entered judgment against McDavid for $40,100. McDavid 

timely appealed, and we moved the case to our docket.

ASSIGNMENTS OF ERROR

McDavid assigns, condensed and restated, that the district 

court erred in two ways when it denied summary judgment 

to her and granted summary judgment to Avis. She contends 

that the district court erred (1) by finding that she was obligated to indemnify Avis under the rental agreement and (2) 

by rejecting her argument that, to the extent the rental agreement required McDavid to indemnify Avis, it was void against 

public policy.

STANDARD OF REVIEW

[1] An appellate court reviews the district court’s grant of 

summary judgment de novo, viewing the record in the light 

most favorable to the nonmoving party and drawing all reasonable inferences in that party’s favor. Heist v. Nebraska Dept. of 

Corr. Servs., 312 Neb. 480, 979 N.W.2d 772 (2022).

[2] When reviewing cross-motions for summary judgment, 

an appellate court acquires jurisdiction over both motions and 

may determine the controversy that is the subject of those 

motions; an appellate court may also specify the issues as to 

which questions of fact remain and direct further proceedings 

as the court deems necessary. Johnson v. Nelson, 290 Neb. 703, 

861 N.W.2d 705 (2015).

[3,4] The interpretation of a contract and whether the contract is ambiguous are questions of law. Timberlake v. Douglas 

County, 291 Neb. 387, 865 N.W.2d 788 (2015). An appellate 

court independently reviews questions of law decided by a 

lower court. Id.
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Cite as 313 Neb. 479

ANALYSIS

McDavid’s primary argument on appeal is that Avis cannot 

show that the indemnification provision of the rental agreement required her to reimburse Avis for the amounts it paid the 

parties injured in the car accident. She contends that the rental 

agreement obligated her to indemnify Avis only if Avis was 

legally obligated to pay the injured parties, but that Avis has 

not shown that it was liable. We consider this argument below, 

but first review general principles regarding indemnification 

that are relevant to this case.

General Principles Regarding Indemnification.

Indemnification involves the complete shifting of the cost of 

an injury from one party to another. See Kuhn v. Wells Fargo 

Bank of Neb., 278 Neb. 428, 771 N.W.2d 103 (2009). An obligation to indemnify may arise by law or by contractual agreement. See id.

An obligation to indemnify arises by operation of law when 

one party is compelled to pay money which in justice another 

ought to pay. See Jacobs Engr. Group v. ConAgra Foods, 301 

Neb. 38, 917 N.W.2d 435 (2018). So, for example, we have 

recognized that a party has a claim for indemnification if it 

pays a common liability that, as between itself and another 

party, is altogether the responsibility of the other party. See 

United Gen. Title Ins. Co. v. Malone, 289 Neb. 1006, 858 

N.W.2d 196 (2015). See, also, Hiway 20 Terminal, Inc. v. 

Tri-County Agri-Supply, Inc., 232 Neb. 763, 770, 443 N.W.2d 

872, 877 (1989) (“[i]ndemnity will be allowed where the 

indemnitee has incurred liability to a third person because of 

negligent reliance upon the care that the indemnitor should 

have exercised”).

As the foregoing discussion illustrates, whether the party 

seeking indemnity paid a third party under legal obligation is 

a central question in determining if an obligation to indemnify arises by operation of law. This has obvious ramifications when a party claims a right to indemnity by operation 
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of law after settling a claim with a third party. In that circumstance, a party seeking indemnity must generally prove that it 

was actually liable for the underlying claim. See, e.g., Pennant 

Service Co., Inc. v. True Oil Co., 249 P.3d 698, 704 (Wyo. 

2011) (“the indemnitee must not be a mere volunteer who has 

settled the underlying claim when there was no exposure to 

legal liability that obligated him or her to do so”); Grinnell 

Mut. Co. v. Center Mut. Ins. Co., 658 N.W.2d 363, 378 (N.D. 

2003) (“[g]enerally, an indemnitee who settles a claim before 

judgment must prove that it was not a volunteer, but was 

actually liable, in order to recover indemnity”); McNally & 

Nimergood v. Neumann-Kiewit, 648 N.W.2d 564, 574 (Iowa 

2002) (“if an indemnitee had no liability for the loss in the 

inception, then any payment made by the indemnitee is considered purely voluntary and not subject to indemnification”). 

See, also, 42 C.J.S. Indemnity § 47 at 194 (2017) (“[a]n indemnitee who settles a claim before judgment generally must prove 

actual liability in order to recover indemnity . . .”).

Many courts have recognized an exception to the general 

rule that a settling party must show actual liability in order to 

be entitled to common-law indemnity. This exception applies 

in cases in which the would-be indemnitor is provided notice 

of the underlying claim against the indemnitee and declines an 

opportunity to assume the defense. See, Pennant Service Co., 

Inc., supra; Grinnell Mut. Co., supra; Valloric v. Dravo Corp., 

178 W. Va. 14, 357 S.E.2d 207 (1987) (collecting cases). But 

in order for this exception to apply, the party seeking indemnity must still show that it was potentially liable and that the 

settlement amount was reasonable in light of that potential 

liability. See, Pennant Service Co., Inc., supra; Grinnell Mut. 

Co., supra; Valloric, supra. See, also, 42 C.J.S., supra.

While these rules govern indemnification obligations 

imposed by law, parties are free to create separate or additional indemnification obligations by agreement. See Kuhn 

v. Wells Fargo Bank of Neb., 278 Neb. 428, 771 N.W.2d 103 

(2009). So, for example, parties can, by contract, “alter the 
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common law rules on indemnity by calling for indemnification 

in the absence of underlying liability between the indemnitee 

and the injured party.” McNally & Nimergood, 648 N.W.2d at 

575. Avis appears to take the position that the parties did so 

in the rental agreement at issue in this case. We turn to that 

question now.

The Rental Agreement.

The parties take divergent positions on whether the indemnification provision in the rental agreement modifies the 

common-law rule that would generally require Avis to establish its liability to the injured parties in order to receive 

indemnity from McDavid. Although its position is not entirely 

spelled out, Avis seems to contend that under the rental agreement, it is entitled to indemnification for any amounts it chose 

to pay third parties related to McDavid’s rental of its vehicle 

without regard to whether Avis was actually, or even potentially, liable to make such payments. Indeed, at oral argument, 

counsel for Avis claimed that Avis would not only be entitled 

to be indemnified for payments Avis voluntarily made to others arising out of McDavid’s rental, but also that it would be 

entitled to indemnification even if those payments were made 

by mistake. As for McDavid, she contends that Avis must 

show that it was liable to the injured parties in order to be 

entitled to recovery under the indemnification provision of the 

rental agreement.

[5,6] We interpret contractual indemnification provisions in the same fashion we interpret other contracts. See 

Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 66, 

917 N.W.2d 435, 458 (2018) (“[a]n indemnity agreement is a 

contract to be construed according to the principles generally 

applied in construction or interpretation of other contracts”). 

Accordingly, we briefly recount some general principles of 

contractual interpretation we will apply here. A contract written in clear and unambiguous language must be enforced 

according to its terms. See Benjamin v. Bierman, 305 Neb. 
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879, 943 N.W.2d 283 (2020). The court must accord clear 

terms their plain and ordinary meaning as an ordinary or 

reasonable person would understand them. Id. The fact that 

the parties have suggested opposite meanings of a disputed 

instrument does not necessarily compel the conclusion that 

the instrument is ambiguous. Id.

Avis does not point to any language in the rental agreement showing that McDavid agreed to indemnify it for any 

amounts it voluntarily chose to pay others related to her rental, 

irrespective of whether Avis faced liability. Neither do we 

discern any such language. McDavid’s position, on the other 

hand, finds support in the indemnification provision’s use of 

the word “incurred.” Recall that the indemnification provision quoted above obligates McDavid to indemnify Avis for 

“expenses incurred by [Avis] in any manner from this rental 

transaction or from the use of the car by you or any person.” 

(Emphasis supplied.)

There is ample authority supporting the proposition that one 

“incurs” an expense only when there is a legal obligation to pay 

it. Both legal and lay dictionaries’ definitions of “incur” reference concepts of liability or obligation. Black’s Law Dictionary 

defines “incur” as “[t]o suffer or bring on oneself (a liability 

or expense).” Black’s Law Dictionary 917 (11th ed. 2019). A 

lay dictionary offers a similar meaning: to “become liable or 

subject to.” Webster’s Third New International Dictionary of 

the English Language, Unabridged 1146 (1993).

Cases interpreting the word “incur” are consistent with 

these dictionary definitions. This court, in interpreting a contract almost 50 years ago, observed that “[o]rdinarily the term 

‘incurred’ is construed to mean that one has become obligated 

or liable for the expense involved.” Hollister v. Government 

Emp. Ins. Co., 192 Neb. 687, 689, 224 N.W.2d 164, 165 

(1974). Another court was “impressed with the unreality of 

the position that [a party] has incurred any expense” when the 

payment made was not “ever demanded, insisted upon or even 

expected.” Hoffman v. Travelers Indem. Co. of America, 144 
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So. 3d 993, 999 (La. 2014), (internal quotation marks omitted). Multiple federal courts have noted, in interpreting federal 

tax laws, that “‘expenses are not incurred unless there has 

arisen a legal obligation to pay them.’” Stern-Slegman-Prins 

Co. v. Commissioner of Int. Rev., 79 F.2d 289, 291 (8th Cir. 

1935), quoting Bauer Bros. Co. v. Commissioner of Internal 

Revenue, 46 F.2d 874 (6th Cir. 1931). Similar interpretations 

of the word “incur” in other contexts are not difficult to find. 

See, e.g., Musaelian v. Adams, 45 Cal. 4th 512, 517, 198 P.3d 

560, 562, 87 Cal. Rptr. 3d 475, 478 (2009) (“the ordinary 

and usual meaning of the word ‘incur’ is to ‘become liable,’” 

quoting Trope v. Katz, 11 Cal. 4th 274, 902 P.2d 259, 45 Cal. 

Rptr. 2d 241 (1995)); Nagy v. Lumbermens Mutual Casualty 

Company, 100 R.I. 734, 737, 219 A.2d 396, 399 (1966) (“[t]he 

word ‘incurred’ means to become liable for and it connotes an 

assumption of an obligation to pay”). Perhaps most pertinent 

for our purposes, a federal district court concluded, in a case 

that involved a car rental indemnity agreement nearly identical 

to the one at issue here, that “incurred” “refer[s] to obligations that [the car rental company] became liable for or subject 

to as a consequence of its rental of the motor vehicle and not 

to include voluntary payments.” Enterprise Rent-A-Car Co. of 

Boston, LLC v. Maynard, No. 2:11-cv-00047-JAW, 2012 WL 

1681970, at *7 n.4 (D. Me. May 14, 2012).

Because the word “incurred” carries with it notions of 

liability and obligation, we find that the indemnity provision 

in the rental agreement cannot reasonably be interpreted in 

the manner Avis suggests. Instead, we find that the agreement required Avis to demonstrate, at a minimum, that it was 

potentially liable to the injured parties. We therefore proceed 

to consider whether Avis demonstrated that it was actually or 

potentially liable to the injured parties.

Avis’ Liability.

In some cases, a court might begin its assessment of the 

actual or potential liability of a party seeking indemnity by 
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evaluating whether there was evidence to support theories of 

recovery asserted by the party or parties with whom a settlement was reached. See, e.g., Chicago Ins. Co. v. Archdiocese 

of St. Louis, 740 F.3d 1197 (8th Cir. 2014). In this case, however, we have no evidence that the injured parties sued or 

even made a demand of Avis, much less that they asserted any 

specific theory of Avis’ liability. Neither has Avis identified a 

legal theory upon which it could have been found liable to the 

injured parties. Avis’ brief did not mention any basis for liability, and its counsel admitted at oral argument that he could not 

identify any theory under which Avis could possibly have been 

liable to the injured parties.

To be sure, there is evidence that Avis owned a car that 

was involved in the accident that injured three people in 

Tennessee. But even if it is assumed that the driver of a car 

owned by Avis, McDavid’s sister, was at fault for the accident 

and resulting injuries, that alone could not result in liability 

to Avis. Because the injuries at issue occurred in Tennessee, 

Tennessee tort law governs claims arising from that event. 

See O’Brien v. Cessna Aircraft Co., 298 Neb. 109, 140, 903 

N.W.2d 432, 459 (2017) (“‘[i]n an action for a personal 

injury, the local law of the state where the injury occurred 

determines the rights and liabilities of the parties . . .’”), 

quoting Restatement (Second) of Conflict of Laws § 146 

(1971). The Tennessee Supreme Court has explained, however, that there is “no Tennessee statute or reported appellate 

decision imposing vicarious liability on a car rental company 

arising out of the operation of its vehicles by a rental customer.” Martin v. Powers, 505 S.W.3d 512, 523 (Tenn. 2016). 

And even if Tennessee law imposed vicarious liability, the 

Tennessee Supreme Court, like many other courts, has recognized that a federal statute known as the Graves Amendment, 

see 49 U.S.C. § 30106 (2018), would preempt any state law 

holding a car rental company like Avis vicariously liable for 

the actions of those driving its car. See Martin, supra. See, 

also, Carton v. General Motor Acceptance Corp., 611 F.3d 
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451 (8th Cir. 2010); Puerini v. LaPierre, 208 A.3d 1157 (R.I. 

2019) (collecting cases).

We find additional support for our conclusion that Avis 

cannot demonstrate liability in Enterprise Rent-A-Car Co. of 

Boston, LLC v. Maynard, No. 2:11-cv-00047-JAW, 2012 WL 

1681970 (D. Me. May 14, 2012), a federal district court case 

we discussed above. In that case, much like this one, the court 

found that a car rental company that was seeking indemnity 

for payments it made to a party injured in an accident involving one of its vehicles was not entitled to indemnity, because 

the car rental company could not show that it was liable to the 

party with whom it settled.

Even assuming that Avis could establish a right to indemnity 

by showing that it was potentially liable to the injured parties, 

it would fare no better. In the absence of any viable theory 

of liability, there is no basis to find that Avis was potentially 

liable to the injured parties in any amount. See, e.g., Chicago 

Ins. Co., supra (holding that party seeking indemnification 

could not show potential liability where governing law did not 

permit claimant’s recovery). And even if there were a viable 

theory of liability, there is no evidence that would allow for a 

determination that the amount of the settlement was reasonable 

in light of Avis’ potential liability.

Resolution.

To summarize, we find that the contractual indemnification 

provision was unambiguous in requiring that Avis demonstrate, 

at the very least, potential liability to the injured parties. We 

find no evidence in the record, however, by which a reasonable 

trier of fact could find that Avis was actually or potentially 

liable. Accordingly, we find that the district court erred in 

granting summary judgment to Avis and in denying summary 

judgment to McDavid.

[7] Because we find that McDavid was entitled to summary judgment on the grounds that Avis failed to demonstrate 

a right to indemnity under the rental agreement, we need not 
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and do not address McDavid’s alternative assignment of error 

contending that to the extent the rental agreement required 

her to indemnify Avis, it was void against public policy. An 

appellate court is not obligated to engage in an analysis that is 

not necessary to adjudicate the case and controversy before it. 

Cain v. Lymber, 306 Neb. 820, 947 N.W.2d 541 (2020).

CONCLUSION

Because the district court erred in granting summary judgment to Avis and in denying summary judgment to McDavid, 

we reverse the judgment and remand the cause with directions 

to enter summary judgment in favor of McDavid.

Reversed and remanded with directions.