Hoffman Adjustment Incorporated v. Neal Nussbaum, Essie Nussbaum, and Illinois Farmers Insurance Company (mem. dec.)

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.

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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

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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

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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.

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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.

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