Court Opinion

ID: 4233013
Source: CourtListenerOpinion
Date Created: 2017-12-28 16:10:33.216865+00
Date Added: 2024-06-11T14:43:16.745741
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                         FILED
regarded as precedent or cited before any
                                                                          Dec 28 2017, 6:44 am
court except for the purpose of establishing
the defense of res judicata, collateral                                       CLERK
                                                                          Indiana Supreme Court
estoppel, or the law of the case.                                            Court of Appeals
                                                                               and Tax Court

ATTORNEY FOR APPELLANT
William H. Walden
Munster, Indiana

                                          IN THE
    COURT OF APPEALS OF INDIANA

Hoffman Adjustment                                       December 28, 2017
Incorporated,                                            Court of Appeals Case No.
Appellant-Plaintiff,                                     45A03-1706-PL-1451
                                                         Appeal from the Lake Superior
        v.                                               Court
                                                         The Honorable John R. Pera,
Neal Nussbaum, Essie                                     Judge
Nussbaum, and Illinois Farmers                           Trial Court Cause No.
Insurance Company,                                       45D10-1408-PL-00092
Appellees-Defendants

Vaidik, Chief Judge.

Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017          Page 1 of 9
                                             Case Summary
[1]   Hoffman Adjustment Incorporated appeals the trial court’s judgment in favor of

      Essie Nussbaum and her sons Kent and Neal1 on its breach-of-contract claim.

      Hoffman Adjustment also appeals the trial court’s order vacating the default

      judgment against Illinois Farmers Insurance Company (Farmers). The

      appellees did not file briefs in this case, and Hoffman Adjustment has made a

      prima facie case that the trial court erred on its breach-of-contract claim.

      Hoffman Adjustment, however, has not made such a case on its default-

      judgment claim. Accordingly, we affirm in part, reverse in part, and remand.

                              Facts and Procedural History
[2]   Sometime in 2010, a barn located on the Nussbaums’ residential property in

      Remington was rented to the United States Department of Agriculture (USDA)

      for poultry research. After signing the lease with the USDA, Kent called Ruben

      Perez, the Nussbaums’ insurance agent, to “[r]aise the insurance policy” on the

      barn and notified Perez that the barn was being rented by a third party. Tr. Vol.

      II p. 113. On May 20, 2012, lightning struck the barn, and it burned down. A

      well house located on the Nussbaums’ property also sustained some damage

      1
        The record is unclear as to which of the Nussbaums are still defendants in this case. During the trial-court
      proceedings, Essie died. Nevertheless, she still appears on documents in the record. For example, the CCS
      lists all three Nussbaums as defendants, Appellant’s App. Vol. II p. 2, while the trial court’s judgment lists
      only Neal and Essie, id. at 13. Because it is unclear which Nussbaums are currently parties to this matter, we
      refer to all of them.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017           Page 2 of 9
      during the storm. The Nussbaums contacted Farmers and filed a claim for the

      barn, well house, and debris clean up.

[3]   Two weeks after the storm, the Nussbaums contracted with Hoffman

      Adjustment “to assist in the adjustment of my (our) loss[.]” Pl. Ex. 2. The

      contract also stated, “[We] agree to pay [Hoffman Adjustment] a fee of 10% of

      claim proceeds when adjusted, or otherwise recovered on account of such loss,

      regardless of who effects the adjustment or recovery.” Id. The Nussbaums also

      agreed to pay Hoffman Adjustment for “legal fees and collection costs

      regarding the pecuniary interest” Hoffman Adjustment had in their claim. Id.

      In addition to signing the contract, the Nussbaums also signed a notice to

      Farmers that Hoffman Adjustment was assisting with their claim. This notice

      was included on the same page as the contract. See id.

[4]   Joseph Hoffman, a public adjuster and the sole incorporator of Hoffman

      Adjustment, immediately began working on the Nussbaums’ claims. He

      prepared and sent Farmers multiple documents: proof of loss, statement of loss,

      building loss evaluation, and inventory of lost goods. Hoffman calculated the

      replacement cost of the Nussbaums’ barn to be $878,383. The Nussbaums’

      insurance policy had a limit of $280,000 for structures that were not the main

      residence, like the barn.

[5]   A few weeks after beginning work, Hoffman ran into complications with

      Farmers. Multiple coverage issues were discovered with the Nussbaums’

      policy. First, Perez never physically appraised the barn after Kent asked for the

      Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017   Page 3 of 9
      policy limit to be increased. Because no appraisal was done, Perez assigned an

      arbitrary replacement value of $280,000 to the barn. Additionally, Perez made

      no other changes to the policy despite knowing that the barn was being rented

      to a third party and was classified as a commercial property by Farmers. The

      Nussbaums’ policy continued to provide coverage to residential property only.

      Because of these issues, Hoffman was unable to move forward with Farmers

      regarding the damage to the barn and suggested that the Nussbaums hire an

      attorney. Hoffman, however, was able to continue processing the claims for the

      well house and debris clean up, and Farmers paid the Nussbaums a total of

      $10,974.57 for these claims. Pl. Ex. 6. The Nussbaums, in turn, paid Hoffman

      Adjustment $1097.06 for its services. Def. Ex. 4.

[6]   While Hoffman was working on the well-house and debris claims, the

      Nussbaums followed his advice and hired an attorney to look into the problems

      with the barn’s insurance coverage. Hoffman provided the attorney with a copy

      of the documents he had amassed while attempting to process the barn claim

      and agreed to serve as a factual witness. In October 2012, the Nussbaums filed

      suit against Farmers and Perez, claiming damages in excess of $800,000. The

      Nussbaums alleged that Farmers and Perez were negligent in failing to provide

      an insurance policy that properly covered their property. In April 2014, the

      Nussbaums, Farmers, and Perez reached an out-of-court settlement for

      $280,000—the exact amount the Nussbaums would have received had Farmers

      paid out their barn claim.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017   Page 4 of 9
[7]   After learning about the settlement, Hoffman Adjustment informed the

      Nussbaums that it was entitled to 10%—$28,000—for its services. The

      Nussbaums denied Hoffman Adjustment’s request for payment, claiming that

      the company was “off the case” and that payment was “based on errors and

      omissions of Ruben Perez [and] had nothing to do with the policy[.]” Tr. Vol.

      II pp. 135, 156. In August 2014, Hoffman Adjustment filed suit against the

      Nussbaums and Farmers for recovery of its fee, interest, and attorney’s fees, for

      a total of $46,048.43 ($28,000 in actual damages, $6720 in interest, and

      $11,328.43 in attorney’s fees). Farmers did not respond to the suit, and a

      default judgment was entered against it, but the court delayed entering a

      damages award until after the trial between Hoffman Adjustment and the

      Nussbaums.

[8]   In May 2017, a trial was held on Hoffman Adjustment’s complaint. During the

      trial, Hoffman Adjustment argued that the settlement payment that the

      Nussbaums received for $280,000 was really an insurance payment for the loss

      of the barn and that the payment was covered under the contract it had with the

      Nussbaums. Hoffman Adjustment also noted that the settlement amount

      matched the insurance-policy limit. The Nussbaums, on the other hand, argued

      that the settlement payment was not effectuated by any work that Hoffman

      Adjustment did and contended that the settlement was not a recovery under

      their insurance policy because the policy did not cover commercial property.

      They claimed that the settlement was due to negligence on the part of Perez.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017   Page 5 of 9
[9]    The trial court ruled in favor of the Nussbaums and vacated the default

       judgment against Farmers. The court emphasized that it had to give effect to

       the plain language of the contract but then quoted the notice provision sent to

       Farmers, believing it to be part of the contract: “[The contract] does have a

       provision in there and it says: The insured makes claim for all coverages

       granted by the insurance policy.” Id. at 206. The court concluded that the

       settlement payment had nothing to do with the work Hoffman Adjustment

       performed but, rather, was a result of Perez’s negligence and was not pursuant

       to coverage granted by the insurance policy.

[10]   Hoffman Adjustment appeals.

                                 Discussion and Decision
[11]   We first note that neither the Nussbaums nor Farmers filed an appellee’s brief.

       When appellees fail to submit briefs, we will not undertake the burden of

       developing arguments for them. Price v. Lake Cty. Bd. of Elections & Registration,

       952 N.E.2d 807, 809 (Ind. Ct. App. 2011). We may reverse the trial court’s

       decision “if the appellant can establish prima facie error.” Id. Prima facie

       error, in this context, is defined as “at first sight, on first appearance, or on the

       face of it.” Id. If the appellant is unable to meet this burden, we will affirm.

       Trinity Home, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).

[12]   Hoffman Adjustment contends that the trial court erred when it ruled that the

       settlement payment the Nussbaums received from Farmers and Perez was

       Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017   Page 6 of 9
       outside the scope of the contract because it was based on Perez’s negligence and

       was not a payment under the insurance policy. When an issue of contract

       interpretation arises, we interpret the contract with the goal of “ascertaining and

       enforcing the parties’ intent” as revealed by the contract. Am. Family Mut. Ins.

       Co. v. Ginther, 843 N.E.2d 575, 578 (Ind. Ct. App. 2006). To do this, we must

       construe the contract as a whole. Id. Contract interpretation is a question of

       law, which we review de novo. Id.

[13]   The Nussbaums agreed that Hoffman Adjustment would “assist in the

       adjustment of my (our) loss” in exchange for “a fee of 10% of claim proceeds

       when adjusted, or otherwise recovered on account of such loss, regardless of

       who effects the adjustment or recovery.” Id. (emphasis added). The contract

       plainly states that Hoffman Adjustment is owed 10% of any claim proceeds

       recovered “on account of” the loss of the Nussbaums’ barn. It does not limit

       Hoffman Adjustment’s payment to recovery under only the insurance claim.

       The settlement payment was “on account of” the burning of the barn.

       Accordingly, under its contract with the Nussbaums, Hoffman Adjustment is

       entitled to recover 10% of the settlement amount.2

       2
         Although the trial court reached a different conclusion, we understand why it might have done so. First,
       the Nussbaums signed a notice that Hoffman Adjustment was assisting with their claims. That notice was
       included on the same page as the contract and said, “The insured makes claim for all coverages granted by
       the insurance policy.” Pl. Ex. 2 (emphasis added). The contract and notice were separated by only
       signature and date lines and neither had a heading/title. See id. And second, during closing arguments, the
       Nussbaums’ attorney incorrectly represented the notice as part of the contract, stating, “And he says, right in
       his contract, where it says this at the bottom: the insured makes claim for all coverages granted by the
       insurance policy.” Tr. Vol. II p. 196. The trial court then requoted this language in its holding. The

       Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017            Page 7 of 9
[14]   Furthermore, the court also stressed that Hoffman Adjustment was not able to

       effectuate the $280,000 payment and that it would be “patently unfair” for

       Hoffman Adjustment to recover its fee. Tr. Vol. II p. 206. The contract,

       however, explicitly stated that Hoffman Adjustment was to recover its fee

       “regardless of who effects the adjustment or recovery.” Pl. Ex. 2. Hoffman, as

       an employee of Hoffman Adjustment, did everything he could to assist in the

       adjustment of the Nussbaums’ barn claim. He submitted multiple documents to

       Farmers, including proof of loss, statement of loss, and inventory of lost goods,

       and calculated the total replacement value of the barn. It is not uncommon for

       a public adjuster to have to hand over a claim to an attorney to effectuate

       payment. But in this case, the hand off does not prevent Hoffman Adjustment

       from recovering its 10% fee. Denying Hoffman Adjustment its fee ignores the

       plain language of the contract. Hoffman Adjustment has established a prima

       facie case that the trial court erred and that it is entitled to recovery under its

       contract with the Nussbaums.

[15]   Hoffman Adjustment also argues that the trial court erred when it vacated the

       default judgment against Farmers. The trial court found that the settlement

       payment was not made under the insurance policy but was due to Perez’s

       negligence. However, the notice that Hoffman Adjustment sent Farmers was

       for the “claim for all coverages granted by the insurance policy.” Pl. Ex. 2.

       misunderstanding of what language was in the contract likely caused the trial court to narrow the scope of the
       contract to payments made under the insurance policy instead of payments “on account of” the barn burning.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017          Page 8 of 9
       Because Farmers’ payment to the Nussbaums was not made under the

       insurance policy, Farmers did not have proper notice to withhold Hoffman

       Adjustment’s 10% fee. Hoffman Adjustment has failed to establish a prima

       facie case of error. Accordingly, we affirm the trial court’s order vacating the

       default judgment against Farmers.

[16]   As for the additional claims for attorney’s fees and interest, we remand to the

       trial court for a hearing on damages to determine what amount Hoffman

       Adjustment is owed.

[17]   Affirmed in part, reversed in part, and remanded.

       May, J., and Altice, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1706-PL-1451 | December 28, 2017   Page 9 of 9