33 Carpenters Construction, Inc. v. The Cincinnati Insurance Company

• Court: Supreme Court of Iowa
• Decided: February 14, 2020
• Docket: 17-1979
• Status: Published

Opinion

IN THE SUPREME COURT OF IOWA No. 17–1979

Filed February 14, 2020

33 CARPENTERS CONSTRUCTION, INC.,

Appellant,

vs.

THE CINCINNATI INSURANCE COMPANY,

Appellee.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Scott County, Henry W.

Latham II, Judge.

Residential contractor lacking public adjuster license seeks further

review of court of appeals decision affirming summary judgment that

dismissed its breach of contract claim against homeowners’ insurer.

DECISION OF COURT OF APPEALS AND JUDGMENT OF DISTRICT

COURT AFFIRMED.

Kyle J. McGinn and Edward F. Noethe of McGinn, Springer & Noethe

PLC, Council Bluffs, for appellant.

Sean O’Brien and Catherine Lucas (until withdrawal) of Bradshaw,

Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellee. 2

PER CURIAM.

On March 15, 2016, a hailstorm and windstorm damaged Gregg

Whigham’s residence in Bettendorf. Whigham had a homeowners’

insurance policy with the Cincinnati Insurance Company (Cincinnati).

Whigham and 33 Carpenters Construction, Inc. (33 Carpenters) entered

into an agreement under which 33 Carpenters would repair the storm

damage to Whigham’s home in exchange for Whigham’s insurance

proceeds.

On October 6, a 33 Carpenters representative, Tony McClanahan,

and Whigham called Cincinnati to report the storm damage to the siding

and roof of Whigham’s home. During this call, McClanahan informed

Cincinnati that he was Whigham’s contractor and would attend

Cincinnati’s inspection of Whigham’s home. Four days later, Whigham

and McClanahan signed an “Assignment of Claim and Benefits,” which

stated,

FOR VALUE RECEIVED, Assignor [Gregg Whigham] hereby sells and transfers to the Assignee [33 Carpenters] and its successors, assigns and personal representatives, any and all claims, payment drafts, demands, and cause or causes of action of any kind whatsoever which the Assignee [33 Carpenters] has or may have against Cincinnati Insurance (insurance company), arising from the following claim [for storm damage.]

This document further stated that 33 Carpenters “may in its own name

and for its own benefit prosecute, collect, settle, compromise and grant

releases on said claim as it, in is sole discretion, deems advisable” and

that “all future payments or settlements for the above referenced claim”

should be made directly to 33 Carpenters. The same day, Whigham

submitted an insurance claim for damage to his residence. Cincinnati

investigated the claim, prepared an estimate for the cost of repairing the

damage, and made a payment to Whigham that autumn. 3

In February 2017, 33 Carpenters contacted Cincinnati to dispute

the insurer’s estimate of the repair cost and requested a new estimate that

would include the cost of replacing all of the home’s siding and gutters.

Cincinnati responded that it would address any differences directly with

its insured, Whigham, rather than 33 Carpenters. On March 13,

33 Carpenters filed this civil action against Cincinnati claiming the insurer

breached Whigham’s insurance policy by “failing to pay ‘33 Carpenters’ all

benefits due and owing under the policy” that had been assigned to it.

33 Carpenters elected to bring the suit as an expedited civil action under

Iowa Rule of Civil Procedure 1.281. Whigham was unaware of this lawsuit.

Cincinnati’s answer denied the claims and raised affirmative

defenses. On April 5, Cincinnati filed a counterclaim for declaratory

judgment against 33 Carpenters, arguing the assignment was invalid

because it effectively allowed 33 Carpenters to act as an unlicensed public

adjuster in violation of Iowa Code chapter 522C (2016).

On August 3, Cincinnati filed a motion for summary judgment.

Cincinnati noted that 33 Carpenters’ website outlined its six-step process

that described the work of a public adjuster, that its actions aligned with

that of a public adjuster, and that 33 Carpenters maintained a contractor

license while neither it nor its employees had a public adjuster’s license.

Cincinnati argued summary judgment was appropriate given that the

assignment contract at issue was invalid because 33 Carpenters violated

Iowa Code sections 507A.3, 507A.5, and 522C.4 by acting as an

unlicensed public adjuster. 33 Carpenters countered that only the Iowa

Insurance Commissioner could enforce chapter 522C and that the

assignment contract was a valid postloss assignment.

On October 30, 33 Carpenters filed a motion to compel appraisal.

Cincinnati disputed the need for an appraisal given that the homeowner 4

had accepted its scope of repairs. On November 28, the district court

granted summary judgment, concluding “[t]he purported assignment of

Whigham’s insurance claim to 33 Carpenters must be deemed invalid

because it violates Iowa’s licensure requirement for public adjusters.” In

doing so, the district court found that 33 Carpenters’ website included

advertisements to advocate on an insured’s behalf, 33 Carpenters

attempted to aid Whigham in negotiations with Cincinnati, and

33 Carpenters demanded to be present for Cincinnati’s investigation of

Whigham’s home and conducted its own investigation. The district court

determined the assignment must be invalid because otherwise it effectively

allowed 33 Carpenters to act as a public adjuster without the required

license. Therefore, the court entered summary judgment for Cincinnati.

33 Carpenters appealed, and we transferred the case to the court of

appeals. The court of appeals rejected 33 Carpenters’ argument that the

dispute must be heard by the Iowa Insurance Commissioner and

concluded, “[T]he statutes do not limit our authority to apply the law to

the facts before us in order to resolve the legal dispute presented to us as

a result of the lawsuit filed by 33 Carpenters.” The court of appeals found

that “there is no genuine issue of fact that 33 Carpenters was acting for

and aiding Whigham in negotiating for and attempting to effect a

settlement of Whigham’s first-party insurance claim for loss to his home

insured by Cincinnati.” Therefore, it determined that 33 Carpenters was

operating as an unlicensed public adjuster in violation of Iowa Code

section 522C.4, and the assignment contract was unenforceable. The

court of appeals affirmed the summary judgment in favor of Cincinnati.

We adjudicated the validity of such an assignment in a decision we

also file today, 33 Carpenters Construction, Inc. v. State Farm Life &

Casualty Co., ___ N.W.2d ___, ___ (Iowa 2020). There, we held that an 5

assignment contract entered into by a residential contractor acting as an

unlicensed public adjuster was void under Iowa Code section 103A.71(5).

For the reasons set forth in that opinion, we hold that Whigham’s

assignment to 33 Carpenters is void and unenforceable under section

103A.71(5), and we reject the argument that the Iowa Insurance

Commissioner has sole authority to enforce the licensing requirements for

public adjusters. We affirm the decision of the court of appeals and district

court.

DECISION OF COURT OF APPEALS AND JUDGMENT OF

DISTRICT COURT AFFIRMED.

All justices concur except McDonald, J., who takes no part.

This opinion shall be published.