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306 Nebraska Reports

VALLEY BOYS v. AMERICAN FAMILY INS. CO.

Cite as 306 Neb. 928

Valley Boys, Inc., doing business as Valley Boys 

Roofing, assignee, appellant and cross-appellee, 

v. American Family Insurance Company, 

appellee and cross-appellant.

___ N.W.2d ___

Filed August 28, 2020. No. S-19-528.

1. Actions: Parties: Standing. Whether a party who commences an action 

has standing and is therefore the real party in interest presents a jurisdictional issue.

2. Judgments: Jurisdiction: Appeal and Error. When a jurisdictional 

question does not involve a factual dispute, determination of a jurisdictional issue is a matter of law which requires an appellate court to 

reach a conclusion independent from the trial court’s; however, when 

a determination rests on factual findings, a trial court’s decision on the 

issue will be upheld unless the factual findings concerning jurisdiction 

are clearly incorrect.

3. Judgments: Verdicts: Appeal and Error. Review of a ruling on a 

motion for judgment notwithstanding the verdict is de novo on the 

record.

4. Judgments: Verdicts. To sustain a motion for judgment notwithstanding the verdict, the court resolves the controversy as a matter of law and 

may do so only when the facts are such that reasonable minds can draw 

but one conclusion.

5. ____: ____. On a motion for judgment notwithstanding the verdict, the 

moving party is deemed to have admitted as true all the relevant evidence admitted that is favorable to the party against whom the motion 

is directed, and, further, the party against whom the motion is directed 

is entitled to the benefit of all proper inferences deducible from the relevant evidence.

6. Contracts: Appeal and Error. The construction of a contract is a matter of law, in connection with which an appellate court has an obligation 

Nebraska Supreme Court Online Library

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

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to reach an independent, correct conclusion irrespective of the determinations made by the court below.

7. Contracts: Assignments. An assignment is a contract between the 

assignor and the assignee, and is interpreted or construed according to 

the rules of contract construction.

8. Assignments: Debtors and Creditors: Standing. A debtor has standing to challenge an assignment if it can show actual prejudice by the 

improper assignment, an injury that is directly traceable to the assignment, such as being at risk for paying the same debt twice, or by otherwise showing that the assignment is invalid, ineffective, or void.

9. Assignments: Parties. If there has been a valid and complete assignment of rights, then the assignee is the real party in interest.

10. ____: ____. If an assignment is invalid, then the purported assignor 

remains the real party in interest.

11. Actions: Parties: Standing: Jurisdiction. The question of whether a 

party who commences an action has standing and is therefore the real 

party in interest is jurisdictional.

12. Judgments: Jurisdiction: Appeal and Error. Aside from any factual findings, the trial court’s ruling on subject matter jurisdiction is 

reviewed de novo, because it presents a question of law.

13. Contracts. A contract written in clear and unambiguous language is not 

subject to interpretation or construction and must be enforced according 

to its terms.

14. ____. The court must accord clear terms their plain and ordinary meaning as an ordinary or reasonable person would understand them.

15. ____. Instruments made in reference to and as part of the same transaction are to be considered and construed together.

16. Contracts: Proof. A party seeking to enforce a contract has the burden 

of establishing the existence of a valid, legally enforceable contract.

17. Contracts. It is a fundamental rule that in order to be binding, an agreement must be definite and certain as to the terms and requirements.

18. ____. Generally, mutuality of obligation is an essential element of every 

enforceable contract and consists in the obligation on each party to do, 

or permit something to be done, in consideration of the act or promise 

of the other.

19. ____. An agreement which depends upon the wish, will, or pleasure 

of one of the parties is illusory and does not constitute an enforceable promise.

20. ____. Where the promisor retains an unlimited right to decide later the 

nature or extent of his or her performance, the promise is too indefinite 

for legal enforcement.
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VALLEY BOYS v. AMERICAN FAMILY INS. CO.

Cite as 306 Neb. 928

21. Assignments: Consideration. An assignment is effective only when 

supported by valid consideration.

22. Contracts: Consideration. Without a mutuality of obligation, the 

agreement lacks consideration and, accordingly, does not constitute an 

enforceable agreement.

Appeal from the District Court for Douglas County: Shelly 

R. Stratman, Judge. Affirmed.

Matthew P. Saathoff, of Saathoff Law Group, P.C., L.L.O., 

and Larry E. Bache, Jr., and Michael W. Duffy, of Merlin Law 

Group, P.A., for appellant.

Joel D. Nelson and Joel Bacon, of Keating, O’Gara, Nedved 

& Peter, P.C., L.L.O., for appellee.

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

Papik, and Freudenberg, JJ.

Funke, J.

Valley Boys, Inc., doing business as Valley Boys Roofing 

(Valley Boys), appeals the order of the district court for Douglas 

County which granted in part judgment notwithstanding a 

jury verdict in favor of American Family Insurance Company 

(American Family). Valley Boys alleged that American Family 

failed to pay the full amounts due under postloss assignments 

of insurance proceeds. The court found that eight of Valley 

Boys’ nine assignments were unenforceable. We agree, and we 

affirm the order of the district court.

BACKGROUND

In the summer of 2014, nine homeowners sustained property damage in a hailstorm. The properties were insured under 

American Family’s “Gold Star Special Deluxe” homeowner’s 

insurance policy, which covered direct physical loss caused by 

hail. Eight of the nine policies included an endorsement entitling the homeowner insureds to proceeds for covered losses 

determined at actual cash value, or “the amount actually and 
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Cite as 306 Neb. 928

necessarily spent” for replacement cost. 1 The ninth policy 

had an endorsement which covered actual cash value only. In 

damages estimates for claims under these policies, American 

Family defined actual cash value as “the cost to repair or 

replace a damaged item with an item of like kind and quality, 

less depreciation,” and replacement cost as “the cost to repair 

the damaged item with an item of like kind and quality, without 

deduction for depreciation.”

The homeowners purportedly assigned their proceeds under 

the insurance policies to Valley Boys, a roofing company, 

which submitted the claims to American Family. American 

Family’s catastrophe adjusters inspected the properties and 

prepared initial damages estimates for each property. Based 

on these estimates, American Family paid the homeowners the 

actual cash value of their losses, which the homeowners then 

paid to Valley Boys. Under the insurance policies issued by 

American Family, the replacement costs would be paid only 

after the work was completed and final invoices were received. 

The policies further required the work to be completed within 

1 year of the date of the loss.

Valley Boys sought to expand the scope of work originally approved by American Family by submitting requests for 

acknowledgment of coverage for additional damage (RAAD’s). 

The RAAD’s listed descriptions of repair work Valley Boys 

recommended be done at the properties but did not provide 

itemized prices or a total price for such work. The cover letter to the RAAD’s stated that if Valley Boys did not receive a 

response within 5 business days, “we will be forced to begin 

necessary repairs and/or replacement in order to prevent further damage to the insured’s premises.” American Family did 

not agree to the RAAD’s, and Valley Boys did not complete 

that work.

With respect to the initial scope of work based on American 

Family’s estimates, Valley Boys submitted invoices of work 

1 See D & S Realty v. Markel Ins. Co., 284 Neb. 1, 816 N.W.2d 1 (2012) 

(discussing actual cash value and replacement cost coverage).
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completed at the properties and demanded payment of the 

withheld depreciation. The invoices list descriptions of completed work and provide a total price without price itemization. 

American Family issued supplemental payments for some of 

Valley Boys’ requests, but declined to cover other requests, 

contending that no proceeds were due.

In April 2015, Valley Boys, as assignee, filed suit against 

American Family for failing to pay the full amount of repair 

and/or replacement costs due under the policies. Valley Boys 

requested a judgment for damages in the amount of $83,746.73 

and stated its damages would likely increase with further 

investigation. In its answer, American Family affirmatively 

alleged that Valley Boys lacked standing to bring the claims 

that it brought.

In April 2017, American Family moved for summary judgment, contending that Valley Boys is not the real party in 

interest, because the assignments between the homeowners 

and Valley Boys were invalid. American Family argued that 

due to a lack of agreement on key terms, such as scope of 

work and price, the assignment contracts were unenforceable. 

American Family further argued that the assignments conflicted with language in the endorsement which limits repair 

or replacement costs to those which are actually and necessarily spent.

Following a hearing, the court entered a written order denying American Family’s motion. In its order, the court first 

rejected Valley Boys’ argument that American Family lacked 

standing to challenge the assignments pursuant to Marcuzzo 

v. Bank of the West.

 2 The court found that American Family 

had standing to argue the invalidity of the assignments on the 

theory that the assignment contracts altered American Family’s 

obligations under the insurance policies. The court then examined the contractual language at issue and ultimately determined there were triable issues of fact.

2 Marcuzzo v. Bank of the West, 290 Neb. 809, 862 N.W.2d 281 (2015).
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VALLEY BOYS v. AMERICAN FAMILY INS. CO.

Cite as 306 Neb. 928

The record indicates that Valley Boys and the homeowner 

insureds signed a document titled “Assignment of Insurance 

Claim.” The assignments, which all contain the same language, 

incorporate a contract by reference. The assignments provide:

[I]n consideration of performing the work pursuant to 

the contract executed by [homeowners] and Valley Boys, 

as well as any change orders executed thereafter, and 

for other good and valuable consideration, [homeowners] 

hereby transfer, assign and set over onto Valley Boys, all 

of the right, title and interest [in] insurance claim(s) . . . 

covering loss sustained at the property . . . including but 

not limited to any and all insurance claims asserted thereunder and proceeds thereof.

Eight of the nine homeowner insureds contemporaneously 

signed a “Customer Service Agreement” (CSA). Under the 

terms and conditions of the CSA, the “Job Price” section states 

that Valley Boys will “provide material and labor services to 

the above described property within the scope of repairs and/or 

replacement to be submitted to the insurance company.” That 

section also states, “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,” and “Valley Boys agrees to use customary industry 

pricing for the work, including general contractor markup at 

customary industry rates.” It further states, “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.”

The “Scope of Work” provision of the CSA provides that 

“Valley Boys shall provide Customer with roofing and general 

contracting services, including labor and materials, as outlined 

in Exhibit A (the “Services”). Exhibit A sets forth the Services 

that Valley Boys shall provide Customer under Customer’s 

insurance claim(s).” (Emphasis supplied.) The provision also 

states, “Valley Boys will not perform and is not liable to 

perform any Services except those identified in Exhibit A, 
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unless otherwise stated herein.” Valley Boys reserved the right 

to not perform the work specified in “Exhibit A” if it determined the work was not “professionally necessary and/or applicable at the time of the work.” However, no “Exhibit A” was 

attached to any CSA herein, and there is no evidence either the 

homeowners or American Family ever received any documents 

labeled “Exhibit A.”

The court found that because American Family had not 

fully denied any of the claims, there existed genuine issues of 

material fact regarding whether the parties, through subsequent 

conduct, established a definite agreement on scope of work 

and price.

Lastly, the court considered American Family’s argument 

that the assignments materially changed its obligations under 

the insurance policies. Under the “Loss Value Determination” 

conditions of the endorsement found in eight of the policies, a 

section which concerns replacement costs states:

Buildings insured at 100% of replacement cost will be 

settled at replacement cost, subject to the following:

. . . .

. . . [W]e will pay the cost to repair the damaged portion or replace the damaged building, provided repairs 

to the damaged portion or replacement of the damaged 

building are completed, but not exceeding . . . .

. . . .

. . . the amount actually and necessarily spent for repair 

of the damaged portion or replacement of the damaged 

building[.]

American Family argued that the undefined “actually and 

necessarily spent” language limits the replacement costs it 

must pay. The court found this argument went to the issue of 

the agreed-upon scope of work, raising a question of fact for 

the jury.

American Family then filed an offer to confess judgment 

in the amount of $20,000, which offer was not accepted. At 

trial, American Family moved for a directed verdict based on 

the invalidity of the assignments, which the court overruled. 
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VALLEY BOYS v. AMERICAN FAMILY INS. CO.

Cite as 306 Neb. 928

Following a 4-day trial, the jury returned a verdict in favor of 

Valley Boys in the amount of $62,841.06.

American Family moved for judgment notwithstanding the 

verdict (JNOV), arguing that the assignments were indefinite, 

lacked consideration, and modified the insurer’s obligations. 

The court granted the motion as to the claims based on the 

eight assignments which incorporated a CSA, and it entered 

judgment in favor of Valley Boys for $1,586.07 in damages for 

the remaining claim.

In its posttrial order, the court considered the language 

of the assignments which states that they were provided “in 

consideration of performing the work pursuant to the contract 

executed by [homeowners] and Valley Boys.” The court found 

that each assignment incorporated a CSA by reference and 

read each assignment and CSA together as a whole. The court 

returned to the CSA language which states that “Exhibit A” 

defines the scope of work. The court noted that the owner of 

Valley Boys acknowledged in his trial testimony that no CSA 

herein contained an “Exhibit A.” He testified that “Exhibit A” 

refers to RAAD’s and invoices, but conceded that these documents are not titled “Exhibit A.”

The court found that the record showed no agreement on 

scope of work or price and that as a result, the assignments 

were unenforceable due to lack of consideration. The court also 

found that even if Valley Boys and the homeowners had agreed 

upon an “Exhibit A” outlining the scope of work, under the 

CSA, Valley Boys retained the option to unilaterally determine 

that it would not perform any item in the agreed-upon scope 

of work. Consequently, the court ruled that each assignment 

and CSA was illusory and entered JNOV in favor of American 

Family with respect to eight of the claims.

The court entered judgment in favor of Valley Boys on the 

ninth claim, because that claim was based on a “StraightForward 

Pricing” agreement rather than a CSA. The pricing agreement included an agreed-upon scope of work regarding completed shingle replacement work, with itemized pricing and 

a total price of $2,828. The court found Valley Boys should 
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Cite as 306 Neb. 928

recover for the work listed in the pricing agreement. The court 

subtracted the amount paid by American Family based on its 

estimate, $1,241.93, and awarded Valley Boys $1,241.93 for 

the ninth claim. Valley Boys appealed, and American Family 

cross-appealed. We moved this case to our docket on our 

own motion.

ASSIGNMENTS OF ERROR

Valley Boys assigns, restated, that the district court erred 

in (1) finding that American Family had standing to challenge the assignments and (2) concluding that the assignments 

were invalid.

American Family filed a cross-appeal which argues that if 

we reverse based on the reasoning of the district court, we 

should affirm on alternate grounds, because the assignments 

altered American Family’s duties under the insurance policies.

STANDARD OF REVIEW

[1,2] Whether a party who commences an action has standing and is therefore the real party in interest presents a jurisdictional issue. 3 When a jurisdictional question does not involve 

a factual dispute, determination of a jurisdictional issue is a 

matter of law which requires an appellate court to reach a conclusion independent from the trial court’s; however, when a 

determination rests on factual findings, a trial court’s decision 

on the issue will be upheld unless the factual findings concerning jurisdiction are clearly incorrect. 4

[3-5] Review of a ruling on a motion for JNOV is de 

novo on the record. 5 To sustain a motion for JNOV, the court 

resolves the controversy as a matter of law and may do so only 

3 Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435 

(2018), citing Countryside Co-op v. Harry A. Koch Co., 280 Neb. 795, 790 

N.W.2d 873 (2010), disapproved on other grounds, Weyh v. Gottsch, 303 

Neb. 280, 929 N.W.2d 40 (2019).

4 Western Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1, 938 

N.W.2d 329 (2020).

5 LeRette v. Howard, 300 Neb. 128, 912 N.W.2d 706 (2018).
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when the facts are such that reasonable minds can draw but 

one conclusion. 6 On a motion for JNOV, the moving party 

is deemed to have admitted as true all the relevant evidence 

admitted that is favorable to the party against whom the motion 

is directed, and, further, the party against whom the motion 

is directed is entitled to the benefit of all proper inferences 

deducible from the relevant evidence. 7

[6] The construction of a contract is a matter of law, in 

connection with which an appellate court has an obligation to 

reach an independent, correct conclusion irrespective of the 

determinations made by the court below. 8

ANALYSIS

American Family Had Standing 

to Challenge Assignments

Valley Boys argues that under our holding in Marcuzzo,

 9

American Family lacks standing to challenge the validity of 

the assignments, because American Family is not a party to 

the assignments. In contrast, American Family argues that the 

terms of the assignments altered its obligations under the insurance policies and that as a result, it has standing to challenge 

the validity of the assignments.

[7] An assignment is a contract between the assignor and the 

assignee, and is interpreted or construed according to the rules 

of contract construction. 10 Nebraska law states that only a party 

(actual or alleged) to a contract can challenge its validity. 11

In Marcuzzo, in the context of a mortgage assignment, 

we held that a borrower who alleges that an assignment is 

6 Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist., 298 Neb. 777, 906 

N.W.2d 1 (2018).

7 Id.

8 Acklie v. Greater Omaha Packing Co., ante p. 108, 944 N.W.2d 297 

(2020).

9 Marcuzzo, supra note 2.

10 Western Ethanol Co., supra note 4.

11 Id.
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voidable, and who is not a party to a mortgage assignment or 

a third-party beneficiary of the assignment, lacks standing to 

challenge the assignment. 12 In that case, the borrower asserted 

that the wrong entity signed the assignment paperwork, an 

issue which we determined would not affect the validity of the 

assignment but would merely make the assignment voidable at 

the election of a party to the assignment. 13

[8] Recently, however, this court discussed the recognized 

exception to the rule in Marcuzzo.

 14 A debtor has standing to 

challenge an assignment if it can show actual prejudice by the 

improper assignment, an injury that is directly traceable to the 

assignment, such as being at risk for paying the same debt 

twice, or by otherwise showing that the assignment is invalid, 

ineffective, or void. 15 In Western Ethanol Co. v. Midwest 

Renewable Energy,

 16 we held that a debtor had standing to 

challenge the assignment of a judgment based on the contention that the debtor was at risk of paying the same debt twice. 

Here, American Family contends that it can show an injury that 

is directly traceable to the assignment.

Generally, all contract rights may be assigned, unless the 

assignment would materially change the duty of the obligor 

or materially increase the obligor’s burden or risk under the 

contract. 17 An assignment does not affect or change any of 

the provisions of the contract. 18 The assignee of a chose in 

action acquires no greater rights than those of the assignor, 

and takes it subject to all the defenses existent at the time. 19 A 

12 See Marcuzzo, supra note 2.

13 See id.

14 See Western Ethanol Co., supra note 4.

15 Id.

16 Id.

17 29 Richard A. Lord, A Treatise on the Law of Contracts by Samuel 

Williston § 74:10 (4th ed. 2003 & Supp. 2020); 3 Restatement (Second) of 

Contracts § 317(2) (1981).

18 Kasel v. Union Pacific RR. Co., 291 Neb. 226, 865 N.W.2d 734 (2015).

19 Western Ethanol Co., supra note 4.
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postloss assignment of insurance proceeds is allowed because 

it is essentially an assignment of a chose in action against the 

insurer; but such an assignment neither increases nor changes 

the insurer’s obligations under the policy. 20

Although not controlling here, subsequent to the events in 

this case, the Legislature enacted Neb. Rev. Stat. § 44-8605 

(Cum. Supp. 2018), which sets forth requirements for postloss 

assignments of rights under insurance policies.

Under the policies in this case, American Family acknowledges that it had an obligation to pay the replacement costs to 

repair the hail damage due upon the completion of the work 

and the receipt of invoices for the work. However, under the 

assignments, Valley Boys demanded payment for work that 

either was not agreed to by the parties or was not completed. As 

a result, the assignments altered American Family’s obligations 

and created the risk that American Family would pay more 

than what it was obligated to pay, resulting in an injury that 

is directly traceable to the assignment. Therefore, American 

Family has standing to challenge the assignments.

The district court correctly found that American Family has 

standing to argue that the assignments between the homeowners and Valley Boys are invalid.

Valley Boys Not Real 

Party in Interest

Valley Boys argues the district court erred in determining 

that eight of the assignments were invalid and that Valley 

Boys is not the real party in interest with respect to the claims 

based on those assignments. Valley Boys further argues that 

the district court erred in not finding that the terms of the 

assignments, the repair work, and the handling of the insurance 

claims provide sufficient consideration.

[9,10] Nebraska’s real party in interest statute provides that 

“[e]very action shall be prosecuted in the name of the real 

20 See Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 295 Neb. 

419, 889 N.W.2d 596 (2016).
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party in interest . . . .” 21 The purpose of that section is to prevent the prosecution of actions by persons who have no right, 

title, or interest in the cause. 22 The focus of the real party in 

interest inquiry is whether the party has standing to sue due to 

some real interest in the cause of action, or a legal or equitable 

right, title, or interest in the subject matter of controversy. 23 If 

there has been a valid and complete assignment of rights, then 

the assignee is the real party in interest. 24 If an assignment 

is invalid, then the purported assignor remains the real party 

in interest. 25

[11,12] The question of whether a party who commences 

an action has standing and is therefore the real party in interest is jurisdictional. 26 If a motion challenging a court’s subject 

matter jurisdiction is filed after the pleadings stage, and the 

court holds an evidentiary hearing and reviews evidence outside the pleadings, it is considered a “factual challenge.” 27 The 

party opposing the motion must then offer affidavits or other 

relevant evidence to support its burden of establishing subject 

matter jurisdiction. 28 Where the trial court’s decision on subject 

matter jurisdiction is based on a factual challenge, the court’s 

factual findings are reviewed under the clearly erroneous standard. 29 But aside from any factual findings, the trial court’s 

21 Neb. Rev. Stat. § 25-301 (Reissue 2016).

22 Jacobs Engr. Group, supra note 3.

23 Id.

24 See, Western Ethanol Co., supra note 4; Millard Gutter Co., supra note 

20; Archer v. Musick, 147 Neb. 1018, 25 N.W.2d 908 (1947); John P. 

Lenich, Nebraska Civil Procedure § 6:4 (2020).

25 See, Earth Science Labs. v. Adkins & Wondra, P.C., 246 Neb. 798, 523 

N.W.2d 254 (1994); Lenich, supra note 24.

26 Jacobs Engr. Group, supra note 3.

27 Id., citing Washington v. Conley, 273 Neb. 908, 734 N.W.2d 306 (2007).

28 Id.

29 Western Ethanol Co., supra note 4.
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ruling on subject matter jurisdiction is reviewed de novo, 

because it presents a question of law. 30

Here, American Family challenged Valley Boys’ standing in 

its answer, motion for summary judgment, motion for directed 

verdict, and motion for JNOV. In considering American 

Family’s motion for JNOV, the court received the entire trial 

record and determined that Valley Boys lacked standing with 

respect to eight of the assignments.

Valley Boys contends that the district court erred, because 

postloss assignments are a well-entrenched principle of 

Nebraska law and therefore Valley Boys was the real party in 

interest. In Millard Gutter Co. v. Farm Bureau Prop. & Cas. 

Ins. Co.,

 31 we held that as a general principle, a clause in an 

insurance policy restricting assignment does not in any way 

limit the policyholder’s power to make an assignment of the 

rights under the policy—consisting of the right to receive the 

proceeds of the policy—after a loss has occurred. However, 

American Family has not argued that the insurance policies or 

Nebraska law prohibits the homeowner insureds from assigning 

their postloss insurance proceeds. Rather, American Family’s 

challenge to the assignments concerns general contract principles. American Family contends, as the district court found, 

that the assignments are invalid because they are indefinite and 

lack consideration.

[13-15] A contract written in clear and unambiguous language is not subject to interpretation or construction and must 

be enforced according to its terms. 32 The court must accord 

clear terms their plain and ordinary meaning as an ordinary 

or reasonable person would understand them. 33 Instruments 

30 Id.

31 Millard Gutter Co., supra note 20.

32 City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147, 917 

N.W.2d 826 (2018).

33 Ray Anderson, Inc. v. Buck’s, Inc., 300 Neb. 434, 915 N.W.2d 36 (2018).
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made in reference to and as part of the same transaction are to 

be considered and construed together. 34

[16-19] A party seeking to enforce a contract has the burden 

of establishing the existence of a valid, legally enforceable 

contract. 35 It is a fundamental rule that in order to be binding, an agreement must be definite and certain as to the terms 

and requirements. 36 Generally, mutuality of obligation is an 

essential element of every enforceable contract and consists in 

the obligation on each party to do, or permit something to be 

done, in consideration of the act or promise of the other. 37 An 

agreement which depends upon the wish, will, or pleasure of 

one of the parties is illusory and does not constitute an enforceable promise. 38

In its order disposing of American Family’s motion for 

summary judgment, the district court found that each assignment which incorporated a CSA contained no definite agreement on scope of work or price. Nevertheless, the court 

overruled the motion to give Valley Boys the opportunity to 

present evidence at trial that the parties through their subsequent actions came to an enforceable agreement. 39 After 

reviewing American Family’s motion for JNOV with the benefit of all of the evidence admitted at trial, the court found 

the evidence showed that each assignment and CSA left scope 

34 Id.

35 Houghton v. Big Red Keno, 254 Neb. 81, 574 N.W.2d 494 (1998).

36 Davco Realty Co. v. Picnic Foods, Inc., 198 Neb. 193, 252 N.W.2d 142 

(1977).

37 Johnson Lakes Dev. v. Central Neb. Pub. Power, 254 Neb. 418, 576 

N.W.2d 806 (1998).

38 Acklie, supra note 8.

39 See, Nebraska Nutrients v. Shepherd, 261 Neb. 723, 626 N.W.2d 472 

(2001), abrogated in part on other grounds, Sutton v. Killham, 285 Neb. 1, 

825 N.W.2d 188 (2013); MBH v. John Otte Oil & Propane, 15 Neb. App. 

341, 727 N.W.2d 238 (2007) (unenforceable agreement may then become 

enforceable when missing term is subsequently supplied by parties).
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of work and price to be determined in the future and that no 

binding agreement had been reached.

A review of the framework of insurance coverage in this 

case shows that “scope of work” and “price” are vital terms. 

The primary dispute was the amount of replacement costs due. 

Actual cash value is the value of the property in its depreciated condition. 40 The purpose of actual cash value coverage is 

indemnification to make the insured whole, not to benefit the 

insured because the loss occurred. 41 Unlike standard indemnity, 

replacement cost coverage places the insured in a better position than he or she was in before the loss. In essence, replacement cost coverage insures against the expected depreciation 

of the property. 42

Here, the homeowner policies required work to be completed prior to recovery of replacement costs and within 1 year 

from the date of loss. If the insured repairs or replaces the 

property within the time period stated in the policy, the insured 

will then be entitled to an additional payment for the amount 

by which the cost of the repair or replacement exceeded the 

actual cash value payment. 43

However, under the assignment contracts, scope of work and 

price were left to be determined in the future, and no agreement 

ultimately was reached. As set forth in the CSA, Valley Boys’ 

promise to perform was conditioned upon “reaching agreement 

with the insurance company on the scope of repairs and/or 

replacement.” However, Valley Boys never reached an agreement with American Family regarding the scope of repairs and 

replacement and therefore could not reach an agreement with 

the homeowners regarding the scope of work.

As pointed out, the CSA required Valley Boys’ scope of 

work to be set forth in an “Exhibit A” but no “Exhibit A” can 

be found in our record. Valley Boys asserted that the RAAD’s 

40 D & S Realty, supra note 1.

41 Id.

42 Id.

43 Id.
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and invoices constituted the scope of work and resolved the 

insufficiencies of the assignment contracts. However, the 

record does not show that the RAAD’s and invoices were 

ever sent to the homeowners. Additionally, there is no proof 

that Valley Boys agreed to perform the work described in the 

RAAD’s or that the homeowners agreed to pay for any such 

work. In addition, the RAAD’s included no itemized prices 

for work or materials, and no total price, making the RAAD’s 

vague and unenforceable.

Moreover, even if there were an “Exhibit A,” the “Scope 

of Work” provision granted Valley Boys the unilateral right 

to decline to perform work specified in “Exhibit A” which it 

deemed unnecessary. The record indicates that the contract 

was drafted in a manner to protect Valley Boys from insurance 

company coverage denials or price disagreements.

[20] Where the promisor retains an unlimited right to decide 

later the nature or extent of his or her performance, the promise 

is too indefinite for legal enforcement. 44 As such, the assignments which incorporated a CSA failed to set forth a sufficient 

scope of work, permitting Valley Boys unlimited discretion as 

to what work to perform, and are therefore unenforceable as a 

matter of law.

With respect to price, Valley Boys argues the assignments 

themselves mutually acknowledged the receipt and sufficiency 

of good and valuable consideration. Nonetheless, the CSA 

makes clear that at the time of its execution, it did “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.” The record at trial showed no subsequent agreement as to price ever came to fruition.

[21,22] An assignment is effective only when supported 

by valid consideration. 45 “‘[A] mere pretense of bargain does 

not suffice, as where there is a false recital of consideration 

or where the purported consideration is merely nominal. In 

44 Acklie, supra note 8.

45 Ehlers v. Perry, 242 Neb. 208, 494 N.W.2d 325 (1993).
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such cases there is no consideration . . . .’” 46 Mutual promises 

may constitute consideration if they are given in exchange 

for each other and are equally obligatory on the parties so 

that each may have an action thereon. 47 Mutuality is absent 

when only one of the contracting parties is bound to perform, 

and the rights of the parties exist at the option of one only. 48

Without a mutuality of obligation, the agreement lacks consideration and, accordingly, does not constitute an enforceable agreement. 49

Valley Boys claimed that the issue of price was satisfied 

by Valley Boys’ obligation to use customary industry pricing. 

Additionally, Valley Boys contends that when it provided estimates in the invoices using “Xactimate,” a computer software 

which estimates the scope of loss, pricing was established.

A supervisor of catastrophe adjusters for American Family 

testified that Xactimate is one tool that American Family 

uses to estimate loss, in addition to industry guidelines and 

an adjuster’s experience. She testified that without itemized 

pricing, she could not interpret Valley Boys’ requests in the 

invoices. Valley Boys’ expert witness admitted that if two 

experienced adjusters looked at the same house and used 

Xactimate, they would come up with different numbers due to 

the human input that goes into estimates.

The record before us makes clear that Valley Boys never 

reached an agreement with American Family regarding the 

scope of repairs and replacement and that therefore, Valley 

Boys never reached an agreement with the homeowners as 

to price. As such, the assignments which incorporated a CSA 

failed to set forth a sufficient price and are therefore unenforceable as a matter of law.

46 Irwin v. West Gate Bank, 288 Neb. 353, 360, 848 N.W.2d 605, 610 (2014), 

quoting Restatement (Second) of Contracts § 71, comment b. (1981).

47 See De Los Santos v. Great Western Sugar Co., 217 Neb. 282, 348 N.W.2d 

842 (1984).

48 Johnson Lakes Dev., supra note 37.

49 Acklie, supra note 8.
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Pursuant to our obligation to reach an independent correct 

conclusion irrespective of the determinations made by the court 

below, when the language of each assignment and CSA is construed together as a whole, and considered in the context of the 

evidence presented at trial, we conclude that there was no definite, mutual agreement between the homeowner insureds and 

Valley Boys. As a result, no right to collect postloss insurance 

proceeds passed to Valley Boys under the assignments and 

Valley Boys is not the real party in interest for those claims.

Because we determine that the assignments are unenforceable under general contract principles, and because American 

Family’s cross-appeal asserts only an alternative basis for 

affirming and does not challenge the ninth claim, we need not 

address American Family’s cross-appeal.

CONCLUSION

For the foregoing reasons, the judgment of the district court 

is affirmed.

Affirmed.