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U.S. SPECIALTY INS. CO. v. D S AVIONICS

Cite as 301 Neb. 388

U.S. Specialty Insurance 

a corporation, appellee, v

DS Avionics Un

LLC, appella

___ N.W.2d ___

Filed October 19, 2018. No. S-17-1101.

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

affirm a lower court’s grant of summary judgment if the pleadings 

and admitted evidence show that there is no genuine issue as to any 

material facts or as to the ultimate inferences that may be drawn from 

those facts and that the moving party is entitled to judgment as a matter 

of law.

2. Declaratory Judgments. Whether to entertain an action for declaratory 

judgment is within the discretion of the trial court.

3. Declaratory Judgments: Justiciable Issues. The existence of a justiciable issue is a fundamental requirement to a court’s exercise of its 

discretion to grant declaratory relief.

4. Declaratory Judgments: Justiciable Issues: Words and Phrases. A 

“justiciable issue” needed for declaratory judgment requires a present 

substantial controversy between parties having adverse legal interests 

susceptible to immediate resolution and capable of present judicial 

enforcement.

5. Actions: Declaratory Judgments: Parties: Judges: Jurisdiction. A 

declaratory judgment action will not be entertained if there is pending, 

at the time of the commencement of the declaratory action, another 

action or proceeding to which the same persons are parties, in which 

are involved and may be adjudicated the same identical issues that are 

involved in the declaratory action. A court abuses its discretion when 

it entertains jurisdiction over a declaratory judgment action in such 

a situation.

6. Summary Judgment. Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose no genuine issue 

Nebraska Supreme Court Online Library

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

11/16/2018 09:11 AM CST
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regarding any material fact or the ultimate inferences that may be drawn 

from those facts and the moving party is entitled to judgment as a matter of law.

7. Summary Judgment: Appeal and Error. In reviewing a summary 

judgment, an appellate court views the evidence in the light most 

favorable to the party against whom the judgment is granted and gives 

such party the benefit of all reasonable inferences deducible from 

the evidence.

8. Declaratory Judgments. Declaratory judgment cannot be used to 

decide the legal effect of a state of facts which are future, contingent, or 

uncertain.

9. ____. A declaratory judgment action cannot be used to adjudicate hypothetical or speculative situations which may never come to pass.

Appeal from the District Court for Douglas County: Shell

R. Stratman, Judge. Revers

Thomas M. Locher, of Locher, Pavelka, Dostal, Braddy & 

Hammes, L.L.C., for appellant.

Robert E. O’Connor, Jr., for appellee.

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

Papik, JJ., and Johnson, District Jud

Johnson, District Judg

D S Avionics Unlimited LLC (DSA) presented a theft claim 

under the physical damage coverage of an aircraft policy. The 

insurer denied coverage, then filed a declaratory judgment 

action seeking a determination that DSA’s theft claim was not 

covered under the policy. The district court granted summary 

judgment in favor of the insurer, and DSA appeals. Because 

we conclude the district court abused its discretion in issuing 

declaratory relief on this record, we reverse.

BACKGROUND

At all relevant times, U.S. Specialty Insurance Company 

(USSIC) insured a 1964 Piper PA-30 aircraft owned by DSA. 

The agreed-upon value of the insured aircraft is $50,000. In 

November 2014, George Babcock, an authorized agent of 
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DSA, delivered the aircraft to Trey M. O’Daniel, a mechanic, 

for maintenance. O’Daniel operated his business from an airport hangar in Omaha, Nebraska, rented from the airport’s 

owner, Keith B. Edquist.

In late November 2014, O’Daniel was notified that the 

hangar would no longer be available to him as of December 1. 

O’Daniel removed his belongings from the hangar, but DSA’s 

aircraft remained in the hangar after December 1.

On December 2, 2014, O’Daniel returned to the hangar 

to remove DSA’s aircraft and discovered the lock had been 

changed. With the help of an adjacent property owner, O’Daniel 

was able to access the hangar and move the aircraft onto the 

tarmac. Because O’Daniel was not authorized to fly the aircraft, he left it parked on the tarmac and advised Babcock 

where the aircraft could be found.

According to the record, DSA did not attempt to recover the 

aircraft until December 11, 2014. On that day, Babcock told 

O’Daniel to prepare the aircraft for flight on December 12. 

When O’Daniel went to the airport to verify the airworthiness 

of the aircraft, he discovered Edquist’s plow truck was parked 

in front of the aircraft, blocking it. Edquist told O’Daniel he 

would not allow the airplane to be moved unless O’Daniel 

paid him a specified sum of money. It is clear that parking the 

truck in front of the aircraft was done intentionally to block 

its removal.

On December 12, 2014, after learning the aircraft was 

blocked by Edquist’s truck and could not be flown away, 

Babcock met with a deputy from the Douglas County sheriff’s 

office. The deputy told Babcock it would be lawful to hire 

a tow truck to move Edquist’s truck, but advised that doing 

so might create the potential for a “violent breach of peace.” 

Babcock decided not to hire a tow truck, and left the aircraft 

on the tarmac blocked by Edquist’s truck. At some point 

between December 12 and 17, Edquist moved the aircraft from 

the tarmac into a hangar at the Omaha airport. Babcock was 

advised of this.
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On December 17, 2014, Babcock reported the aircraft stolen. The same day, Babcock sent a letter to Edquist demanding that the aircraft be released. When contacted by law 

enforcement, Edquist said the aircraft would be released only 

if he was paid $1,750. Babcock refused to pay. Later that 

day, Edquist’s attorney told law enforcement and Babcock 

that Edquist would release the aircraft if paid $340, which 

he claimed pursuant to Neb. Rev. Stat. § 52-601.01 (Reissue 

2010). That statute applies to persons who “shall perform 

work or labor, or exert care or diligence, or who shall advance 

money or material upon personal property under a contract, 

expressed or implied.”1 After reviewing § 52-601.01, Babcock 

refused to make payment.

On December 18, 2014, law enforcement concluded no crime 

had been committed and advised Babcock the issues involving the aircraft were “civil” in nature. Later that day, Edquist 

told O’Daniel he would release the aircraft if paid $1,760. On 

December 20, Edquist again told Babcock the aircraft would 

be released if an unspecified amount of money were paid. On 

January 12, 2015, Edquist told O’Daniel he would release the 

aircraft for a $500 storage fee if paid by January 13 and for a 

$600 storage fee if paid at a later date.

On February 12, 2015, Edquist told Babcock the aircraft 

was being moved from the hangar and would be placed outside. Edquist demanded a sum of money, which Babcock 

refused to pay. On February 14, Edquist made another demand 

for payment of the “storage” bill, and Babcock again refused 

to pay.

USSIC Denies

On February 18, 2015, on DSA’s behalf, Babcock submitted 

a sworn “Proof of Loss” to USSIC, reporting that “[a] theft 

loss occurred on or about the 11th day of December, 2014.” 

1 § 52-601.01.
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Babcock claimed the loss was caused by the “unlawful seizure, 

distraint, conversion, and theft of the aircraft.” He claimed 

the amount of the loss was $50,000—the full insured value of 

the aircraft.

USSIC investigated DSA’s theft claim and, in a letter dated 

April 21, 2015, denied coverage, explaining:

You know where the plane is, who has it, and why they 

have it. There has been no damage to the aircraft, it sits 

in a hanger [sic]. Apparently law enforcement in Douglas 

County has determined that it is a civil matter. Yet, you 

have taken no action against O’Daniel.

The facts as you have described them in your claim 

and claim summary, are not covered by your policy of 

insurance. Specifically your policy contains the following 

provisions applicable to your claim:

1. What We Cover

a. Coverage F covers direct physical loss of or damage 

to your aircraft caused by an accident while the aircraft is 

not in motion.

l. Accident means a sudden event during the policy period, neither expected nor intended by you, that 

involves your aircraft and causes physical damage to or 

loss of the aircraft during the policy period.

. . . .

4. What We Will Not Pay

We will not pay for physical loss of or damage to your 

aircraft:

. . . .

h. Embezzlement, Conversion or Secretion

If anyone to whom you relinquish possession of the 

aircraft embezzles, converts or secretes [sic] the aircraft.

We also will not pay for depreciation, loss of use, loss 

of profits, loss of guaranty or warranty, or any other economic or consequential damage of any kind.

(Emphasis omitted.)
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USSIC Files Decla

Judgment Ac

In August 2015, USSIC filed a declaratory judgment 

action against DSA in the district court for Douglas County, 

Nebraska, seeking a declaration of noncoverage. DSA counterclaimed, seeking a declaration of coverage and alleging breach 

of contract and bad faith. Both parties moved for summary 

judgment.

A hearing was held, and during the presentation of evidence and argument, the court reserved ruling on objections to 

numerous exhibits. After the hearing, the court entered an order 

granting summary judgment in favor of USSIC on the coverage question and denying DSA’s summary judgment motion. 

Summarized, the district court concluded DSA’s claim was not 

covered under the physical damage coverage of the applicable 

policy. The court found that the undisputed evidence showed 

the aircraft was “being held by . . . Edquist under demand of 

payment” and that thus, there had been no “accident” within 

the meaning of the policy. The court also found the conversion 

exclusion applied.

Thereafter, DSA filed a motion to alter or amend the judgment. DSA asked the court to include in the judgment its rulings on exhibits on which the court previously had reserved 

ruling. DSA also asked the court to reverse its decision and 

instead enter summary judgment in favor of DSA. The district 

court granted DSA’s first request and made express evidentiary 

rulings on the exhibits, but denied DSA’s request to reverse the 

summary judgment rulings.

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

on our own motion.2

ASSIGNMENTS OF ERROR

DSA assigns, combined and restated, that the district court 

erred in (1) sustaining USSIC’s motion for summary judgment, 

2 See Neb. Rev. Stat. § 24-1106(3) (Supp. 2017).
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(2) overruling DSA’s motion for summary judgment, and (3) 

admitting and excluding certain evidence and argument at the 

summary judgment hearing.

STANDARD OF REVIEW

[1] An appellate court will affirm a lower court’s grant of 

summary judgment if the pleadings and admitted evidence 

show that there is no genuine issue as to any material facts 

or as to the ultimate inferences that may be drawn from those 

facts and that the moving party is entitled to judgment as a 

matter of law.3

[2] Whether to entertain an action for declaratory judgment 

is within the discretion of the trial court.4

ANALYSIS

The procedural posture of this case affects the resolution 

of the appeal. Here, the district court (1) entertained USSIC’s 

action for declaratory relief and (2) granted summary judgment 

in favor of USSIC.

[3,4] The existence of a justiciable issue is a fundamental 

requirement to a court’s exercise of its discretion to grant 

declaratory relief.5 A “justiciable issue” needed for declaratory 

judgment requires a present substantial controversy between 

parties having adverse legal interests susceptible to immediate 

resolution and capable of present judicial enforcement.6

[5] A declaratory judgment action will not be entertained 

if there is pending, at the time of the commencement of the 

declaratory action, another action or proceeding to which the 

same persons are parties, in which are involved and may be 

adjudicated the same identical issues that are involved in the 

3 Freeman v. Hoffman-La Roche, Inc., 300 Neb. 47, 911 N.W.2d 591 (2018).

4 Mansuetta v. Mansuetta, 295 Neb. 667, 890 N.W.2d 485 (2017).

5 City of Fremont v. Kotas, 279 Neb. 720, 781 N.W.2d 456 (2010), abrogated 

on other grounds, City of North Platte v. Tilgner, 282 Neb. 328, 803 

N.W.2d 469 (2011).

6 See id.
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declaratory action.7 A court abuses its discretion when it entertains jurisdiction over a declaratory judgment action in such 

a situation.8

[6,7] Summary judgment is proper when the pleadings and 

evidence admitted at the hearing disclose no genuine issue 

regarding any material fact or the ultimate inferences that may 

be drawn from those facts and the moving party is entitled to 

judgment as a matter of law.9 In reviewing a summary judgment, an appellate court views the evidence in the light most 

favorable to the party against whom the judgment is granted 

and gives such party the benefit of all reasonable inferences 

deducible from the evidence.10

Much of the parties’ briefing is devoted to arguing whether 

Edquist’s conditional detention of the aircraft pending payment 

of a storage fee amounts to theft or tortious conversion, or at 

least whether a genuine issue of material fact exists on that 

issue. As we explain below, this record does not permit that 

question to be answered at this time in a declaratory judgment 

action. We conclude the district court abused its discretion in 

entertaining the declaratory action and express no opinion on 

the propriety of the summary judgment ruling.

Relevant Policy Prov

Some additional background is necessary in order to frame 

the analysis. The aircraft policy’s physical damage coverage 

provides in pertinent part:

1. What We Cover

a. Coverage F covers direct physical loss of or damage 

to your aircraft caused by an accident while the aircraft

is not In motion.

7 See Mansuetta, supra note 4.

8 Id.

9 Jordan v. LSF8 Master Participation Trust, 300 Neb. 523, 915 N.W.2d 399 

(2018).

10 Id.
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. . . .

2. What You Must Pay or Bear (Deductible)

When we pay for loss of or damage to your aircraft, 

you must first pay or bear one of the following amounts 

unless no deductible applies:

. . . .

c. No Deductible

We will not subtract either deductible amount if the 

loss or damage is caused by:

(1) Fire, lightning, explosion, theft or vandalism;

. . . .

3. What We Will Pay (Less Deductible)

a. Destroyed Aircraft

If the cost of repair when added to the value of the 

aircraft after it is damaged and prior to repairs equals or 

exceeds the agreed value it is a destroyed aircraft.

If your aircraft is destroyed, we will pay the agreed 

value of the aircraft less the applicable deductible. We

will take the destroyed aircraft.

b. Damaged Aircraft

If your aircraft is damaged and not destroyed, we

will pay the reasonable cost of repair after the aircraft is 

repaired, but we will not pay more than the agreed value

less the applicable deductible.

. . . .

If the estimated cost of repair . . . is more than the 

agreed value of the aircraft, we will pay the agreed 

value less the applicable deductible and we will take the 

damaged aircraft.

. . . .

4. What We Will Not Pay

We will not pay for physical loss or damage to your 

aircraft:

. . . .
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h. Embezzlement, Conversion or Secretion

If anyone to whom you relinquish possession of the 

aircraft embezzles, converts or secretes [sic] the aircraft.

We also will not pay for depreciation, loss of use, loss 

of profits, loss of guaranty or warranty, or any other economic or consequential damage of any kind.

. . . .

7. Theft

If your aircraft or any part of it is stolen and recovered before we have paid for it, we may return it to you

along with payment for any physical damage to it.

“Accident” is defined in the policy as a “sudden event 

during the policy period, neither expected nor intended by 

[the insured], that involves [the aircraft] and causes physical 

damage to or loss of the aircraft during the policy period.” 

(Emphasis omitted.)

Parties’ Coverag

Argumen

The policy’s physical damage coverage “covers direct physical loss of or damage to [the aircraft] caused by an accident 

while the aircraft is not [i]n motion.” (Emphasis omitted.) DSA 

makes no claim that the aircraft sustained any physical damage while in the possession of either Edquist or O’Daniel. The 

threshold coverage question thus turns on whether the undisputed evidence shows there has been no “direct physical loss” 

of the aircraft.

DSA argues there has been a “‘direct physical loss’” of the 

aircraft because Edquist has either stolen the aircraft or converted 

it.11 DSA claims that after it delivered the aircraft to O’Daniel, 

Edquist exercised “self-help” to unlawfully evict O’Daniel and 

seize the aircraft.12 DSA claims that because Edquist has “no 

11 Reply brief for appellant at 26 (emphasis omitted).

12 Id. at 13.
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lien or right to withhold the plane,” his continued possession 

of the aircraft pending payment of storage fees is unlawful and 

amounts to either theft or tortious conversion.13

USSIC responds that Edquist’s detention of the aircraft is 

lawful. USSIC contends that after O’Daniel was evicted from 

the hangar, the aircraft was made available to be flown away, 

but DSA left the aircraft on the tarmac for more than a week 

before attempting to fly it away. USSIC argues that Edquist 

is therefore entitled to storage fees and is lawfully refusing to 

release the aircraft until such fees are paid.

Assuming, without deciding, that proof of either a theft 

or a conversion of the aircraft would be sufficient under the 

policy to demonstrate “direct physical loss of or damage to 

[the aircraft] caused by an accident while the aircraft is not 

[i]n motion” (emphasis omitted), we must nevertheless conclude that a judicial determination of noncoverage, premised 

on such a theory, is not possible on this record.

Declaratory Judgm

Was Prematur

Here, determination of the coverage dispute turns, in large 

part, on whether Edquist’s possession of the aircraft is lawful 

(as USSIC claims) or whether Edquist has stolen or converted 

the aircraft (as DSA claims). The evidence on lawfulness is 

controverted and lies at the center of what appears, from the 

record, to be an ongoing and unresolved civil dispute between 

Edquist, O’Daniel, and DSA. Although USSIC and DSA in this 

declaratory judgment action seek a judicial determination on 

the legality of Edquist’s conditional possession of the aircraft 

pending payment of storage fees, neither Edquist nor O’Daniel 

were made parties to this action.14

13 Brief for appellant at 15.

14 See Neb. Rev. Stat. § 25-21,159 (Reissue 2016) (when declaratory relief is 

sought, “all persons shall be made parties who have or claim any interest 

which would be affected by the declaration”).
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It is unclear from the record whether DSA has pursued 

direct legal action against either Edquist or O’Daniel. The 

briefs and motions filed with this court do conclusively show, 

however, that there is ongoing civil litigation between Edquist 

and O’Daniel, in which DSA has intervened. Importantly, the 

district court was aware of this litigation (although not of 

the intervention) at the time the declaratory judgment action 

was filed, as the lawsuit was clearly referenced in documents 

attached to USSIC’s pleadings. It is a settled principle of law 

that relief via declaratory judgment should not be entertained 

if there is pending, at the commencement of the declaratory judgment action, another action or proceeding to which 

the same persons are parties and in which are involved, and 

may be adjudicated, the same issues involved in the declaratory action.15

[8,9] Further, the existence of a justiciable issue is a fundamental requirement to a court’s exercise of its discretion 

to grant declaratory relief.16 This court has long held that 

declaratory judgment cannot be used to decide the legal effect 

of a state of facts which are future, contingent, or uncertain.17

Nor is a declaratory judgment action to be used to adjudicate 

hypothetical or speculative situations which may never come 

to pass.18

We conclude the unresolved civil dispute between Edquist, 

O’Daniel, and DSA over the legality of the aircraft’s continued 

detention and Edquist’s demand for storage fees renders the 

district court’s declaration regarding the availability of insurance coverage premised on theft or conversion premature and 

thus an abuse of discretion.

15 Polk Cty. Rec. Assn. v. Susquehanna Patriot Leasing, 273 Neb. 1026, 734 

N.W.2d 750 (2007).

16 Kotas, supra note 5.

17 See Allstate Ins. Co. v. Novak, 210 Neb. 184, 313 N.W.2d 636 (1981).

18 Ryder Truck Rental v. Rollins, 246 Neb. 250, 518 N.W.2d 124 (1994).
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We reach this conclusion because there are too many facts 

and issues that remain contingent and uncertain to enter a 

declaratory judgment regarding insurance coverage. There has 

been no determination of whether the aircraft is being lawfully 

detained, and the parties did not present the trial court with 

sufficient evidence, or the necessary parties, to allow for such 

a determination. The record also indicates that issues involved 

in this determination are being litigated in another forum and 

are thus not properly addressed in a declaratory action. And we 

cannot ignore the possibility that once the legality of Edquist’s 

possession is determined, the aircraft may be returned to 

DSA, an outcome which could conceivably affect the coverage analysis.

We therefore conclude that the district court’s order decided 

the legal effect of a state of facts which are future, contingent, 

or uncertain19 and resulted in a declaratory judgment adjudicating hypothetical or speculative situations which may never 

come to pass.20 As such, the court abused its discretion in 

entering declaratory relief, and we must reverse.

CONCLUSION

For the reasons set forth above, we reverse the district 

court’s order granting declaratory relief.

Reversed

19 See Novak, supra note 17.

20 See Rollins, supra note 18.