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Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

MILLARD GUTTER CO. V. SHELTER MUT. INS. CO.

Cite as 312 Neb. 606

Millard Gutter Company, a corporation 

doing business as Millard Roofing and 

Gutter, appellant, v. Shelter Mutual 

Insurance Company, appellee.

___ N.W.2d ___

Filed October 14, 2022. No. S-20-907.

1. Motions to Dismiss: Pleadings: Appeal and Error. A district court’s 

grant of a motion to dismiss on the pleadings is reviewed de novo by 

an appellate court, accepting the factual allegations in the complaint as 

true and drawing all reasonable inferences of law and fact in favor of the 

nonmoving party.

2. Actions: Parties: Standing: Judgments: Jurisdiction: Appeal and 

Error. Whether a party who commences an action has standing and is 

therefore the real party in interest presents a jurisdictional issue. When a 

jurisdictional question does not involve a factual dispute, determination 

of the issue is a matter of law which requires an appellate court to reach 

a conclusion independent from the trial court.

3. Pleadings: Judges: Words and Phrases: Appeal and Error. An order 

of the district court requiring a complaint to be made more definite and 

certain will be sustained on appeal unless it clearly appears that the 

court abused its discretion. A judicial abuse of discretion exists when the 

reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters 

submitted for disposition.

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

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

5. Actions: Parties. The purpose of Nebraska’s real party in interest 

statute, Neb. Rev. Stat. § 25-301 (Reissue 2016), is to prevent the 

prosecution of actions by persons who have no right, title, or interest in 

the cause.

Nebraska Supreme Court Online Library

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

12/09/2022 09:05 AM CST
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Cite as 312 Neb. 606

6. Actions: Parties: Standing. 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.

7. Standing. The focus of a court’s standing inquiry is not on whether 

the claim being advanced has merit; it is on whether the plaintiff is the 

proper party to assert the claim.

8. Assignments: Parties. Generally, if there has been a valid and complete 

assignment of rights, then the assignee is the real party in interest, but 

if the assignment is invalid, then the purported assignor remains the real 

party in interest.

9. Assignments: Words and Phrases. An assignment is the transfer of 

some identifiable property, claim, or right from the assignor to the 

assignee.

10. Assignments. Fundamental to the law of assignments is the concept 

that an assignee takes nothing more by an assignment than the assignor 

had; an assignor cannot assign any rights greater than that which he or 

she held.

11. Assignments: Intent. The intention of the assignor must be to transfer a 

present interest in a debt or fund or subject matter.

12. Insurance: Breach of Contract: Assignments: Standing. In the 

absence of a statute to the contrary, an insured may validly assign a 

postloss breach of contract claim for insurance proceeds due under a 

homeowner’s policy, and the assignee of such a claim has standing to 

bring the breach of contract claim in its own name.

13. Standing: Pleadings: Evidence: Words and Phrases. When standing 

is challenged at the pleadings stage, before an evidentiary hearing and 

before any evidence outside of the pleadings is admitted, it is deemed a 

facial challenge.

14. Standing: Pleadings: Proof. When considering a facial challenge to 

standing, the trial court will typically review only the pleadings to 

determine whether the plaintiff has alleged sufficient facts to establish 

standing.

15. Torts: Insurance: Contracts. The general theory underlying the tort of 

bad faith is that the law implies a covenant of good faith and fair dealing as a result of the contractual relationship between the insurer and 

the insured.

16. Torts: Insurance: Claims: Proof. To establish a claim of first-party bad 

faith, a policyholder must show both an absence of a reasonable basis 

for denying benefits of the insurance policy and the insurer’s knowledge or reckless disregard of the lack of a reasonable basis for denying 

the claim.

17. Torts: Intent. An action for first-party bad faith is an intentional tort.
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MILLARD GUTTER CO. V. SHELTER MUT. INS. CO.

Cite as 312 Neb. 606

18. Actions: Insurance: Contracts. A cause of action for insurer bad faith 

is separate from, and not dependent on, a cause of action for breach of 

the insurance policy, although the two may share facts in common.

19. Claims: Torts: Insurance: Damages: Proximate Cause. Because 

claims of bad faith are grounded in tort, traditional tort damages, including damages for mental distress and for economic loss, are recoverable when they are proximately caused by the insurer’s tortious bad 

faith conduct.

20. Torts: Insurance: Claims. Only (1) an injured policyholder who is also 

a covered person or (2) a policyholder who is also a beneficiary may 

bring a cause of action in tort against the policyholder’s insurer for failure to settle the policyholder’s insurance claim.

21. Torts: Claims: Assignments: Death: Abatement, Survival, and 

Revival. The common-law rule is that a right of action is not assignable 

where the tort causes a strictly personal injury and does not survive the 

death of the person injured.

22. Torts: Assignments: Statutes. Where only the proceeds of personal 

injury tort litigation, and not control of the litigation, have been assigned, 

such assignments are valid and enforceable under Nebraska law unless 

there is a statute prohibiting such assignment.

23. Torts: Insurance: Claims: Assignments. A policyholder cannot validly assign the right to prosecute or control a tort action for first-party 

bad faith.

24. Torts: Insurance: Assignments. A policyholder’s postloss assignment 

of insurance proceeds neither increases nor changes the insurer’s obligations under the insurance policy.

25. Pleadings. Motions to make more definite and certain are addressed to 

the sound discretion of the trial court.

26. Pleadings: Time: Dismissal and Nonsuit. A plaintiff’s failure to file 

an amended pleading within the time specified by the court’s order is a 

basis for dismissing the action without prejudice under Neb. Rev. Stat. 

§ 25-601(5) (Reissue 2016).

27. Courts: Dismissal and Nonsuit. In addition to the statutory authority 

under Neb. Rev. Stat. § 25-601 (Reissue 2016), courts have inherent 

authority to dismiss an action for violation of a court order. And pursuant to their inherent authority, courts can dismiss the action with or 

without prejudice.

Appeal from the District Court for Douglas County: Shelly 

R. Stratman, Judge. Affirmed.

Theodore R. Boecker, Jr., of Boecker Law, P.C., L.L.O., for 

appellant.
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MILLARD GUTTER CO. V. SHELTER MUT. INS. CO.

Cite as 312 Neb. 606

Michael T. Gibbons, Raymond E. Walden, and Christopher 

D. Jerram, of Woodke & Gibbons, P.C., L.L.O., for appellee.

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

Papik, and Freudenberg, JJ.

Stacy, J.

In connection with a 2013 storm, Millard Gutter Company 

(Millard Gutter) obtained assignments from various policyholders of Shelter Mutual Insurance Company (Shelter). 

Millard Gutter then filed suit against Shelter in its own name, 

as assignee, seeking to recover damages for breach of the 

insurance contracts and for first-party bad faith in failing to 

settle the claims. The district court dismissed the action, and 

Millard Gutter appeals. The primary question on appeal is 

whether Millard Gutter has standing to assert first-party bad 

faith claims against Shelter. We affirm the judgment of the 

district court.

I. BACKGROUND

1. Complaint

On April 9, 2018, Millard Gutter filed a complaint against 

Shelter in the district court for Douglas County. Millard Gutter 

brought the action in its own name as “the assignee of various insured property owners” who purchased insurance from 

Shelter and whose property “sustained loss due to a storm 

occurring in 2013.” The assignments were not attached to the 

complaint, but were described therein as “valid assignments 

of the right to proceeds under an insurance policy issued 

by Shelter.”

The complaint alleged that Millard Gutter provided Shelter 

with copies of the assignments and made claims for storm damage to the insured properties. The complaint broadly alleged 

that all of the Shelter policies were in full force and effect, the 

storm damage was covered, and all conditions precedent under 

the policies had been met. The complaint did not identify the 

addresses or locations of the insured properties, the dates of 
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MILLARD GUTTER CO. V. SHELTER MUT. INS. CO.

Cite as 312 Neb. 606

the alleged storm damage, or the dates the assignments were 

made. Millard Gutter alleged that Shelter breached the policies 

when it “failed to make direct payment to [Millard Gutter]” 

and failed to include Millard Gutter “as a payee on any checks 

or other payments for the loss.” The complaint also alleged 

that Shelter’s failure to pay Millard Gutter amounted to “bad 

faith and constitutes a separate violation of the implied covenant of good faith and fair dealing owed under the insurance 

contracts.” The complaint prayed for unspecified general and 

special damages in an amount to be determined at trial.

2. Preanswer Motions

Shelter moved to dismiss the bad faith claims pursuant to 

Neb. Ct. R. Pldg. § 6-1112(b)(6), arguing the complaint failed 

to state a claim because Millard Gutter lacked standing to 

assert a first-party bad faith claim. Additionally, Shelter moved 

for a more definite statement under § 6-1112(e), arguing that 

without more detail identifying the insured properties and the 

nature and scope of the alleged assignments, Shelter could 

not reasonably form a responsive pleading. More specifically, 

Shelter argued that it could not discern, from the allegations of 

the complaint, which claims the policyholders had purportedly 

assigned, where the insured properties were located, whether 

all named insureds had executed the assignments, or whether 

the assignments were made preloss or postloss.

In an order entered March 26, 2019, the district court sustained the motion for a more definite statement, finding the 

original complaint was “insufficient to identify the homeowners and put [Shelter] on notice of each individual homeowner’s 

claim.” Millard Gutter was ordered to file, within 14 days, an 

amended complaint which identified the pertinent policy numbers and attached the assignments upon which it relied. Millard 

Gutter never filed an amended complaint.

In a separate order entered April 8, 2019, the court granted 

Shelter’s motion to dismiss the bad faith claims for lack of 

standing. The court recited the rule from Braesch v. Union Ins. 
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Co.

 1 that only a policyholder who is also a covered person or 

beneficiary under the policy has standing to bring a tort action 

against an insurer for first-party bad faith. The court then reasoned that Millard Gutter, a nonpolicyholder, lacked standing 

under Braesch to assert claims for first-party bad faith in its 

own name.

The court also considered, and rejected, Millard Gutter’s 

argument that it had standing to assert the bad faith claims 

by virtue of the alleged assignments. First, the court recited 

the general rule that only a present interest may be validly 

assigned, 2 and it noted that the complaint contained no factual allegations suggesting that any Shelter policyholder had 

an existing bad faith claim at the time the assignments were 

made. Additionally, the court reasoned that even if the assignments purported to include an existing claim for first-party bad 

faith, allowing Millard Gutter to bring such claims in its own 

name would violate the rule announced in Mutual of Omaha 

Bank v. Kassebaum,

 3 which held that the proceeds of personal 

injury tort litigation may be validly assigned, but control of 

the litigation may not. The court therefore concluded that 

Millard Gutter’s complaint did not contain sufficient factual 

allegations to establish standing to assert claims of first-party 

bad faith.

3. Show Cause and Dismissal 

With Prejudice

After the court ruled on the preanswer motions, the case 

remained pending with no apparent activity for about 17 

months. Then, in August 2020, the court sua sponte issued an 

1 Braesch v. Union Ins. Co., 237 Neb. 44, 464 N.W.2d 769 (1991), disapproved on other grounds, Wortman v. Unger, 254 Neb. 544, 578 N.W.2d 

413 (1998).

2 Krohn v. Gardner, 248 Neb. 210, 533 N.W.2d 95 (1995) (holding assignment must transfer present interest in debt, fund, or subject matter).

3 Mutual of Omaha Bank v. Kassebaum, 283 Neb. 952, 814 N.W.2d 731 

(2012).
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order for the parties to appear and show cause why the action 

should not be dismissed for lack of progression.

Our bill of exceptions does not include the show cause hearing, so it is not clear what, if any, evidence or argument was 

offered by Millard Gutter. But other portions of the record 

reflect that during the hearing, Millard Gutter advised the court 

it would not be filing an amended complaint despite the court’s 

prior rulings. In response, Shelter moved to dismiss the entire 

action with prejudice.

After a hearing on Shelter’s motion, the court entered an 

order dismissing the entire action with prejudice. The court 

recited the procedural history of the case, including the basis 

for the court’s prior rulings dismissing the bad faith claims 

and ordering that Millard Gutter file an amended complaint on 

the remaining breach of contract claims. The dismissal order 

also stated:

[Millard Gutter] has not at any time filed an Amended 

Complaint in this case. Nor has [it] filed anything else 

in this case, despite the Court’s Order on August 10, 

2020 directing that the parties appear at a hearing on 

September 1, 2020 and show cause why the action should 

not be dismissed for lack of prosecution. At that hearing, 

[Millard Gutter’s] counsel advised that [Millard Gutter] is 

standing on its original Complaint.

. . . The court agrees with [Shelter] that it is necessary 

under the circumstances to go beyond dismissal for lack 

of prosecution and dismiss the action on the basis that 

[Millard Gutter] failed to comply with the Court’s specific 

Order to file an Amended Complaint by April 24, 2019, 

and has instead chosen to stand on the Complaint that the 

Court found to be insufficient without a more definite 

statement[,] and on the bad faith claims that the Court 

also found to be insufficient.

. . . The Court determines that it is appropriate to dismiss the breach of contract claims as a sanction for noncompliance with that Order . . . .
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. . . The Court also finds that without the assignments 

and specific identifying information about the alleged 

homeowners executing the assignments, the Court cannot 

determine that [Millard Gutter] has standing to assert the 

claims of homeowners alleged to be insured by [Shelter] 

and therefore finds that the Court lacks subject matter 

jurisdiction over this action.

. . . The Court also reaffirms its dismissal of the bad 

faith claims, which were not included in the leave to 

amend.

Millard Gutter timely moved to alter or amend the order 

of dismissal, arguing that under Neb. Rev. Stat. § 25-601 

(Reissue 2016), the dismissal should have been without prejudice. After a hearing, the court entered a slightly modified 

order of dismissal, which generally recited the same rationale 

for dismissal and, once again, dismissed the entire action with 

prejudice.

Millard Gutter filed a timely notice of appeal. We moved the 

appeal to our docket on our motion. 4

II. ASSIGNMENTS OF ERROR

Millard Gutter assigns, restated and consolidated, that the 

district court erred in (1) granting the motion to dismiss the 

bad faith claims for lack of standing, (2) granting the motion 

to make more definite as to the breach of contract claims and 

ordering Millard Gutter to file an amended complaint identifying the policies and attaching the assignments, and (3) dismissing the entire action with prejudice once Millard Gutter elected 

to stand on its original complaint.

III. STANDARD OF REVIEW

[1] A district court’s grant of a motion to dismiss on the 

pleadings is reviewed de novo by an appellate court, accepting 

4 See, Neb. Rev. Stat. § 24-1106(3) (Cum. Supp. 2020); Neb. Ct. R. App. 

Prac. § 2-102(C) (rev. 2022).
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the factual allegations in the complaint as true and drawing all 

reasonable inferences of law and fact in favor of the nonmoving party. 5

[2] Whether a party who commences an action has standing 

and is therefore the real party in interest presents a jurisdictional issue. 6 When a jurisdictional question does not involve 

a factual dispute, determination of the issue is a matter of law 

which requires an appellate court to reach a conclusion independent from the trial court. 7

[3] An order of the district court requiring a complaint to 

be made more definite and certain will be sustained on appeal 

unless it clearly appears that the court abused its discretion. 8

A judicial abuse of discretion exists when the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a 

litigant of a substantial right and denying just results in matters 

submitted for disposition. 9

IV. ANALYSIS

1. Standing to Assert Claim 

of First-Party Bad Faith

[4] In Millard Gutter’s first assignment of error, it argues 

the district court erroneously concluded that Millard Gutter 

did not have standing to assert claims of first-party bad faith 

against Shelter. Whether a party who commences an action has 

standing, and is therefore the real party in interest, presents a 

jurisdictional issue. 10

5 SID No. 67 v. State, 309 Neb. 600, 961 N.W.2d 796 (2021).

6 Valley Boys v. American Family Ins. Co., 306 Neb. 928, 947 N.W.2d 856 

(2020).

7 Id.

8 See Christianson v. Educational Serv. Unit No. 16, 243 Neb. 553, 501 

N.W.2d 281 (1993).

9 George Clift Enters. v. Oshkosh Feedyard Corp., 306 Neb. 775, 947 

N.W.2d 510 (2020).

10 Valley Boys, supra note 6.
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[5-7] Nebraska’s real party in interest statute provides in 

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

real party in interest.” 11 The purpose of that section is to prevent the prosecution of actions by persons who have no right, 

title, or interest in the cause. 12 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. 13

The focus of our standing inquiry is not on whether the claim 

being advanced has merit; it is on whether Millard Gutter is the 

proper party to assert the claim. 14

(a) Assignee as Real Party in Interest

[8-11] As a general proposition, we have recognized that if 

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

the assignee is the real party in interest, but if the assignment 

is invalid, then the purported assignor remains the real party 

in interest. 15 An assignment is the transfer of some identifiable 

property, claim, or right from the assignor to the assignee. 16

Fundamental to the law of assignments is the concept that 

an assignee takes nothing more by an assignment than the 

assignor had; 17 an assignor cannot assign any rights greater 

than that which he or she held. 18 The intention of the assignor 

must be to transfer a present interest in a debt or fund or subject matter. 19

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

12 Valley Boys, supra note 6.

13 Id.

14 See Egan v. County of Lancaster, 308 Neb. 48, 952 N.W.2d 664 (2020).

15 See Valley Boys, supra note 6.

16 6A C.J.S. Assignments § 2 (2016).

17 Id., § 91.

18 Id.

19 See, Krohn, supra note 2; Craig v. Farmers Mut. Ins. Co., 239 Neb. 271, 

476 N.W.2d 529 (1991).
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[12] In Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. 

Co.,

 20 we held that in the absence of a statute to the contrary, 

an insured may validly assign a postloss breach of contract 

claim for insurance proceeds due under a homeowner’s policy. 

We also held that the assignee of such a claim has standing to 

bring the breach of contract claim in its own name. Notably, 

Millard Gutter limited its holding to assignments made after 

the occurrence of a loss, reasoning that “‘[a]fter a loss occurs, 

the indemnity policy is no longer an executory contract of 

insurance [but rather] a vested claim against the insurer and 

can be freely assigned or sold like any other chose in action . . 

. .’” 21 After concluding that postloss assignments of property 

damage claims were valid and enforceable, Millard Gutter suggested that “[i]f postloss assignments of storm damage claims 

are having a deleterious effect on insurers, they should present 

their concerns to the Legislature.” 22

In 2018, the Legislature responded by amending the Insured 

Homeowner’s Protection Act, 23 to add specific provisions governing the validity of postloss assignments of benefits under 

property and casualty insurance policies covering residential 

real estate. Postloss assignments that do not comply with all 

the provisions of the act are deemed void. 24 However, because 

the events which gave rise to this action occurred before the 

effective date of such amendments, we leave for another day 

a detailed discussion of the act’s provisions governing postloss assignments.

(b) Facial Challenge to Standing

[13,14] In this case, Shelter’s challenge to Millard Gutter’s 

standing was raised and resolved at the pleadings stage. When 

20 Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 295 Neb. 419, 

889 N.W.2d 596 (2016).

21 Id. at 429, 889 N.W.2d at 603.

22 Id. at 433, 889 N.W.2d. at 605.

23 See Neb. Rev. Stat. §§ 44-8605 to 44-8608 (Cum. Supp. 2020).

24 See § 44-8608.
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standing is challenged at the pleadings stage, before an evidentiary hearing and before any evidence outside of the pleadings is admitted, it is deemed a “‘facial challenge.’” 25 When 

considering a facial challenge to standing, the trial court will 

typically review only the pleadings to determine whether the 

plaintiff has alleged sufficient facts to establish standing. 26

The complaint alleged that Millard Gutter “obtained valid 

assignments of rights under the policies issued by Shelter” and 

specifically described the nature of the rights assigned as “the 

right to proceeds under an insurance policy issued by Shelter.” 

On appeal, Millard Gutter argues these allegations were sufficient to establish its standing, as an assignee, to assert not only 

breach of contract claims for insurance proceeds, 27 but also to 

assert tort claims for first-party bad faith against Shelter.

Regarding the claims of first-party bad faith, we understand 

Millard Gutter to advance two separate standing theories. First, 

Millard Gutter argues it has standing, as assignee, to assert any 

existing bad faith claims that Shelter’s policyholders had when 

the assignments were made. Alternatively, Millard Gutter relies 

on the assignments to argue it can assert its own claims for 

first-party bad faith based on Shelter’s postassignment conduct. 

We address each standing argument in turn.

(c) Assignability of First-Party 

Bad Faith Claims

Millard Gutter broadly argues that the policyholders’ existing first-party bad faith claims are assignable because there is 

“not a single Nebraska appellate court decision, which states 

that an assignee of a post-casualty loss claim cannot state a 

claim for bad faith.” 28 Millard Gutter is correct that we have 

not previously addressed whether a policyholder can validly 

25 SID No. 67, supra note 5, 309 Neb. at 606, 961 N.W.2d at 802.

26 Id.

27 See, Millard Gutter Co., supra note 20; Valley Boys, supra note 6.

28 Brief for appellant at 18.
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assign an existing tort claim of first-party bad faith. We do so 

now, and begin by reviewing the relevant principles from our 

first-party bad faith cases.

(i) First-Party Bad Faith

This court judicially recognized the tort of third-party bad 

faith in the 1962 case of Olson v. Union Fire Ins. Co. 29 and 

recognized the tort of first-party bad faith almost 30 years later 

in Braesch. 30 In Braesch, the court described the difference 

between the two torts as follows:

[A] first-party bad faith cause of action is based upon allegations that the insurer, in bad faith, refuses to settle with 

its own policyholder insured, who thereby suffers some 

type of direct loss. . . . In contrast, a traditional third-party 

bad faith claim arises when an insurer wrongfully fails to 

settle a claim by a third party against an insured. 31

[15] In Braesch, we said the general theory underlying the 

tort of bad faith is that the law implies a covenant of good 

faith and fair dealing as a result of the contractual relationship between the insurer and the insured. 32 In a later case, 

we emphasized that it is the breach of the covenant of good 

faith and fair dealing from which the insurer’s tort liability 

springs, and we said the tort of first-party bad faith “embraces 

any number of bad faith settlement tactics, such as inadequate 

investigation, delays in settlement, false accusations, and so 

forth.” 33

[16,17] To establish a claim of first-party bad faith, a policyholder must show both an absence of a reasonable basis for 

denying benefits of the insurance policy and the insurer’s 

knowledge or reckless disregard of the lack of a reasonable 

29 Olson v. Union Fire Ins. Co., 174 Neb. 375, 118 N.W.2d 318 (1962).

30 Braesch, supra note 1.

31 Id. at 54-55, 464 N.W.2d at 776.

32 See Braesch, supra note 1.

33 Ruwe v. Farmers Mut. United Ins. Co., 238 Neb. 67, 74, 469 N.W.2d 129, 

135 (1991).
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basis for denying the claim. 34 Based on these elements, we 

have characterized first-party bad faith as an intentional 

tort, reasoning that “‘“[b]ad faith” by definition cannot be 

unintentional.’” 35

[18,19] We have explained that a cause of action for insurer 

bad faith is separate from, and not dependent on, a cause of 

action for breach of the insurance policy, although the two 

may share facts in common. 36 The damages recoverable for 

bad faith differ too; because claims of bad faith are grounded 

in tort, 37 traditional tort damages, including damages for mental distress 38 and for economic loss, 39 are recoverable when 

they are proximately caused by the insurer’s tortious bad faith 

conduct. 40 Indeed, one of the justifications for recognizing 

the intentional tort of bad faith was concern that recoverable 

damages for breach of the insurance contract are inadequate 

to compensate policyholders for personal injuries suffered as a 

result of an insurer’s tortious bad faith. 41

[20] In Nebraska, only a policyholder has standing to bring 

a first-party bad faith claim against an insurer. 42 More specifically, “only (1) an injured policyholder who is also a ‘covered 

person’ or (2) a policyholder who is also a beneficiary may 

bring a cause of action in tort against the policyholder’s insurer 

for failure to settle the policyholder’s insurance claim.” 43 In this 

case, Millard Gutter does not allege or argue that it is a Shelter 

policyholder. Instead, Millard Gutter argues that, by virtue of 

34 See Ruwe, supra note 33.

35 Braesch, supra note 1, 237 Neb. at 57, 464 N.W.2d at 777.

36 See Braesch, supra note 1.

37 See id.

38 Id.

39 See Ruwe, supra note 33.

40 See, Braesch, supra note 1; Ruwe, supra note 33.

41 See, e.g., id.

42 Braesch, supra note 1.

43 Id. at 56, 464 N.W.2d at 776.
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the postloss assignments from Shelter’s policyholders, it has 

standing to bring any existing claims for first-party bad faith 

the policyholders had when they executed the assignments.

It is a question of first impression whether a policyholder 

can validly assign, to a nonpolicyholder, a cause of action 

for the tort of first-party bad faith. At oral argument, Millard 

Gutter suggested the question could be answered by applying 

the reasoning from Millard Gutter Co. v. Farm Bureau Prop. 

& Cas. Ins. Co.,

 44 but that case answered a different question, 

and our analysis was limited to the assignability of postloss 

breach of contract claims. To determine whether a policyholder 

can validly assign a tort claim for first-party bad faith, we 

must examine our jurisprudence governing the assignability of 

tort actions.

(ii) Assignability of Tort Actions

Not all tort claims are assignable under Nebraska law. A 

wrongful death cause of action cannot be assigned because it 

is authorized by statute, and “[t]he plain language of the statute allows only the personal representative to bring the action 

and only the widow, widower, or next of kin to benefit.” 45

Moreover, although the law generally supports the assignability of rights, it does not permit assignments for matters 

of personal trust or confidence, or for personal services. 46

Applying this rule, we have held that claims for legal malpractice cannot be validly assigned in Nebraska because of public 

policy considerations concerning the personal nature and confidentiality of the attorney-client relationship. 47 And we have 

explained that if an assignment “grants both the proceeds of 

44 Millard Gutter Co., supra note 20.

45 Spradlin v. Dairyland Ins. Co., 263 Neb. 688, 692, 641 N.W.2d 634, 637 

(2002). See Neb. Rev. Stat. § 30-810 (Reissue 2016).

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

N.W.2d 254 (1994).

47 Id. Accord, Community First State Bank v. Olsen, 255 Neb. 617, 587 

N.W.2d 364 (1998).
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[a legal malpractice] action and the right to prosecute it, it is 

an assignment of the cause of action” which is void as against 

public policy. 48

[21] In Kassebaum, we considered whether an assignment 

of the unliquidated proceeds from a personal injury action was 

valid and enforceable under Nebraska law. 49 We described this 

as an issue of first impression and began our analysis by reciting the common-law rule that a right of action is not assignable 

where the tort causes a strictly personal injury and does not 

survive the death of the person injured. 50 We said this prohibition is grounded on two principles: (1) that prior to more recent 

statutory amendments, personal claims did not survive the 

death of the victim, and (2) that prohibiting the assignment of 

tort claims prevents champerty and maintenance. 51

[22] In Kassebaum, we observed there was a split of authority in other jurisdictions regarding whether a party could assign 

the proceeds of personal injury litigation without violating this 

common-law prohibition. And after discussing the reasons in 

favor of and against allowing such assignments, we determined 

“the cases holding that an assignment of proceeds is enforceable to be the better reasoned position.” 52 We thus adopted the 

rule that “[w]here only the proceeds of [tort] litigation, and not 

control of the litigation, have been assigned,” such assignments 

are valid and enforceable under Nebraska law. 53 In other words, 

absent a statute to the contrary, Nebraska law generally allows 

a party to assign the proceeds from personal injury actions, but 

it does not allow assignment of the right to prosecute or control 

such actions.

48 Community First State Bank, supra note 47, 255 Neb. at 622-23, 587 

N.W.2d at 368.

49 Kassebaum, supra note 3.

50 Id. See, also, Earth Science Labs., supra note 46.

51 Kassebaum, supra note 3.

52 Id. at 959, 814 N.W.2d at 737.

53 See id.
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Here, the district court held that tort actions for first-party 

bad faith are subject to the assignability rule for personal injury 

actions announced in Kassebaum, and we agree. Actions for 

first-party bad faith are intentional torts, and plaintiffs in such 

actions are entitled to seek and recover traditional personal 

injury damages. 54 We conclude it is appropriate to apply the 

same assignability rules to actions for first-party bad faith as 

are applied to other strictly personal torts. And under that rule, 

the proceeds from such an action are assignable absent a statute 

to the contrary, but the right to prosecute or control such an 

action cannot be validly assigned. 55

[23] As such, even assuming without deciding that the proceeds from first-party bad faith actions can be validly assigned 

under Nebraska law, we hold that a policyholder cannot validly assign the right to prosecute or control such an action. 

So, regardless of the validity for other purposes, the postloss 

assignments from Shelter’s policyholders could not, as a matter of law, give Millard Gutter standing to prosecute the policyholders’ tort actions for first-party bad faith against Shelter. 

Millard Gutter’s arguments to the contrary are without merit.

(d) Argument Based on Implied

Covenant of Good Faith

Millard Gutter’s alternative standing theory appears to be 

that it is asserting its own claim for first-party bad faith against 

Shelter. More specifically, Millard Gutter argues that once it 

obtained postloss assignments from Shelter’s policyholders, 

it “stood in the shoes of each of the insureds.” 56 And, as the 

assignee of the policyholders’ rights to proceeds under the 

Shelter policies, Millard Gutter argues that Shelter owed it the 

same covenant of good faith and fair dealing that it owed its 

policyholders. Thus, according to Millard Gutter, it can assert 

a claim for first-party bad faith based on Shelter’s failure “to 

54 See, Ruwe, supra note 33; Braesch, supra note 1.

55 See Kassebaum, supra note 3.

56 Brief for appellant at 14.
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adjust the claim[s] in good faith and make prompt payment to 

Millard Gutter.” 57

There is no merit to Millard Gutter’s alternative standing 

theory, because there is no legal basis for its contention that 

Shelter owed Millard Gutter any obligation of good faith and 

fair dealing. The implied covenant of good faith and fair dealing that Nebraska law imposes on insurers “is dependent upon 

a contractual relationship between the [policyholder] and the 

insurer.” 58 There is no contractual relationship between Shelter 

and Millard Gutter, and the postloss assignments did not create one.

[24] Moreover, we soundly reject any suggestion that a 

policyholder’s postloss assignment of insurance proceeds to 

a nonpolicyholder can somehow alter or expand the insurer’s 

implied covenant of good faith and fair dealing under the policy, or create any contractual relationship between the insurer 

and the assignee. Our cases allowing postloss assignment 

of insurance proceeds plainly hold that “such an assignment 

neither increases nor changes the insurer’s obligations under 

the policy.” 59

Here, the postloss assignments could not alter Shelter’s 

obligations under the insurance policy or change the fact that 

Millard Gutter has no contractual relationship with Shelter. 

Consequently, there is no doctrinal basis for Millard Gutter 

to claim that Shelter owes it a covenant of good faith and fair 

dealing. And absent such a duty, there is no legal basis on 

which Millard Gutter can assert its own claim of first-party 

bad faith against Shelter. As we explained in Braesch, the tort 

of first-party bad faith does not extend to nonpolicyholder 

beneficiaries—even those who claim to have been harmed by 

57 Id.

58 Braesch, supra note 1, 237 Neb. at 55, 464 N.W.2d at 776.

59 Valley Boys, supra note 6, 306 Neb. at 939, 947 N.W.2d at 865 (emphasis 

supplied). Accord, Kasel v. Union Pacific RR. Co., 291 Neb. 226, 231, 865 

N.W.2d 734, 738 (2015) (“[a]n assignment does not affect or change any 

of the provisions of the contract”).
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an insurer’s failure to settle with them—because nonpolicyholders lack a contractual relationship with the insurer. 60 As 

a nonpolicyholder, Millard Gutter lacks standing to bring an 

action for first-party bad faith against Shelter.

In sum, both of Millard Gutter’s standing theories fail as 

a matter of law. The district court correctly concluded that 

the allegations of Millard Gutter’s complaint, even accepted 

as true, failed to establish that Millard Gutter has standing to 

assert first-party bad faith claims against Shelter.

For the sake of completeness, we note that under Nebraska’s 

real party in interest statute, an action “shall not be dismissed 

on the ground that it is not prosecuted in the name of the 

real party in interest until a reasonable time has been allowed 

after objection for joinder or substitution of the real party in 

interest.” 61 But here, Millard Gutter has not assigned or argued 

that the district court erred by failing to allow Millard Gutter a 

reasonable opportunity to file an amended complaint joining or 

substituting the Shelter policyholders as plaintiffs for purposes 

of the first-party bad faith claims. And on this record, we can 

find no plain error related to § 25-301, particularly where, as 

we discuss later, it is apparent that Millard Gutter would have 

refused to file an amended complaint if allowed to do so.

2. No Abuse of Discretion in Ordering 

More Definite Statement

In its second assignment of error, Millard Gutter argues the 

court erred in granting Shelter’s motion to provide a more definite statement. According to § 6-1112(e) of the pleading rules:

If a pleading to which a responsive pleading is permitted 

is so vague or ambiguous that a party cannot reasonably 

60 See Braesch, supra note 1.

61 § 25-301. See, also, North Star Mut. Ins. Co. v. Stewart, 311 Neb. 33, 

47, 970 N.W.2d 461, 471 (2022) (holding when plaintiff is not real 

party in interest with standing to sue, “better practice” is to allow 

plaintiff reasonable period of time to amend complaint by either joining or 

substituting real party in interest before dismissing action).
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be required to frame a responsive pleading, the party 

may move for a more definite statement before interposing a responsive pleading. The motion shall point out 

the defects complained of and the details desired. If the 

motion is granted and the order of the court is not obeyed 

within 10 days or within such time as the court may fix, 

the court may strike the pleading or make such order as 

it deems just.

[25] Motions to make more definite and certain are addressed 

to the sound discretion of the trial court. 62 Rule 6-1112(e) 

requires the movant to identify the alleged deficiencies in the 

pleading and to specify the details that are reasonably needed 

to draft a responsive pleading. Shelter argued it could not tell 

from the complaint which claims had been assigned, whether 

the assignments were made preloss or postloss, whether all 

named insureds had executed the assignments, or whether the 

insured properties were located in the county where suit had 

been filed. It asserted that without knowing these details, it 

was unable to draft a responsive pleading or identify available 

policy defenses.

The district court granted the motion, but did not require 

all of the additional details requested by Shelter. Instead, the 

court ordered Millard Gutter to amend the complaint within 

14 days to “include policy numbers and attach the assignment 

associated with each homeowner.” This additional detail would 

presumably allow Shelter to identify the insured properties, the 

named insureds, and the assignors so it could draft a responsive pleading. On this record, we find no abuse of discretion in 

granting the motion to make more definite.

3. No Error in Dismissal With Prejudice

In its final assignment of error, Millard Gutter argues it 

was error to dismiss the entire action with prejudice. Millard 

62 See Vodehnal v. Grand Island Daily Independent, 191 Neb. 836, 218 

N.W.2d 220 (1974).
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Gutter argues that, pursuant to § 25-601, the dismissal should 

have been without prejudice. Section 25-601 provides in relevant part:

An action may be dismissed without prejudice to a 

future action . . . (3) by the court for want of necessary 

parties; . . . (5) by the court for disobedience by the plaintiff of an order concerning the proceedings in the action. 

In all other cases on the trial of the action the decision 

must be upon the merits.

[26,27] We have said the plaintiff’s failure to file an 

amended pleading within the time specified by the court’s 

order is a basis for dismissing the action without prejudice 

under § 25-601(5). 63 But in addition to the statutory authority under § 25-601, we have long recognized that courts have 

inherent authority to dismiss an action for violation of a court 

order. 64 And pursuant to their inherent authority, courts have 

discretion to dismiss the action with or without prejudice. 65

Additionally, § 6-1112(e) of the pleading rules authorizes a 

trial court to “strike the pleading or make such order as it 

deems just” if an order to make more definite is not obeyed 

within the time fixed by the court. Dismissal with prejudice is 

63 See Bert Cattle Co. v. Warren, 238 Neb. 638, 471 N.W.2d 764 (1991).

64 Id. at 641-42, 471 N.W.2d at 767 (internal quotation marks omitted) 

(explaining “[i]t has almost universally been held or recognized that courts 

have the inherent power to dismiss an action for disobedience of a court 

order. . . . Without this right, a court could not control its dockets; business 

before it would become congested; its functions would be impaired; and 

speedy justice to litigants would largely be denied”).

65 See, Scudder v. Haug, 197 Neb. 638, 250 N.W.2d 611 (1977) (finding no 

error in dismissing cross-claim with prejudice where defendant was given 

repeated opportunities to comply with court’s order to bring pleading 

into proper form, yet failed to do so); Ferson v. Armour & Co., 109 

Neb. 648, 651, 192 N.W. 125, 127 (1923) (finding no error in dismissing 

action with prejudice after four pleadings were stricken for failure to 

comply with pleading rules, though such dismissal “should be sparingly 

exercised”).
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generally considered an available sanction under such a provision and is reviewed for an abuse of discretion. 66

Moreover, the inherent authority of a trial court to dismiss 

an action with prejudice for failure to prosecute is also well 

established:

The authority of a . . . trial court to dismiss a plaintiff’s 

action with prejudice because of [a] failure to prosecute 

cannot seriously be doubted. The power to invoke this 

sanction is necessary in order to prevent undue delays in 

the disposition of pending cases and to avoid congestion 

in the calendars of the District Courts. The power is of 

ancient origin, having its roots in judgments of nonsuit 

and non prosequitur entered at common law, e. g., 3 

Blackstone, Commentaries (1768), 295-296, and dismissals for want of prosecution of bills in equity . . . . 67

Our record shows that Millard Gutter’s failure to comply 

with the order to make more definite was intentional, not inadvertent. Then, when the case showed no activity for a period of 

almost 17 months and the court sua sponte issued an order to 

show cause why the case should not be dismissed for failure to 

prosecute, Millard Gutter offered no explanation, and instead, 

it advised the court for the first time that it was going to stand 

on its original complaint despite the court’s prior orders. After 

the show cause hearing, the district court granted Shelter’s 

motion to dismiss the entire action with prejudice, finding that 

Millard Gutter’s delay “entirely stalled the case for nearly [a] 

year and a half at the initial pleading stage” and that Millard 

Gutter had no intention of filing an amended complaint to 

remedy the deficiencies the court had identified in the original complaint.

66 See, e.g., Nystrom v. Melcher, 262 Mont. 151, 864 P.2d 754 (1993); Clay 

v. City of Margate, 546 So. 2d 434 (Fla. App. 1989); Medved v. Baird, 58 

Wis. 2d 563, 207 N.W.2d 70 (1973).

67 Link v. Wabash Railroad Co., 370 U.S. 626, 629-30, 82 S. Ct. 1386, 8 L. 

Ed. 2d 734 (1962) (emphasis omitted).
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Although dismissal with prejudice pursuant to a court’s 

inherent authority is a severe sanction which should be exercised sparingly, 68 we cannot say on this record that it was 

an abuse of discretion. The record in this case supports the 

trial court’s determination that Millard Gutter deliberately disobeyed the order to make more definite, stalled progression of 

the case by waiting almost 17 months to advise the court of its 

decision to stand on the original complaint, and failed to show 

good cause for the resulting failure to prosecute. We find no 

merit to any of Millard Gutter’s arguments that it was an abuse 

of discretion to dismiss the case with prejudice.

V. CONCLUSION

For the foregoing reasons, the judgment of the district court 

is affirmed.

Affirmed.

68 See Ferson, supra note 65.