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Valley Boys, Inc. v. State Farm Fire and Casualty Co.

United States District Court, D. Nebraska

February 6, 2015

VALLEY BOYS, INC., Plaintiff,
v.
STATE FARM FIRE AND CASUALTY COMPANY; Defendant.

MEMORANDUM AND ORDER

JOSEPH F. BATAILLON, District Judge.

This matter is before the court on defendant State Farm Fire and Casualty Company's ("State Farm's") motion to reconsider, Filing No. 21, the Court's October 22, 2014, Memorandum and Order, Filing No. 20, denying State Farm's motion to dismiss the plaintiff's bad faith claim, Filing No. 11. State Farm submits additional authority showing that Douglas County, Nebraska, District Courts have recently dismissed bad faith claims in similar cases brought by assignees against Nebraska insurers. See Filing No. 22, Index of Evid., Ex. 1; Filing No. 27, Index of Evid., Exs. 1-3. State Farm also urges the court to address the anti-assignment provision in the policy as it relates to the validity of the assignments at issue. Filing No. 21, Motion at 2.

The court has reviewed the parties' submissions and finds the court's earlier order should stand. In four similar cases, Douglas County, Nebraska, District Courts found no contractual relationship exists between Valley Boys and insurers and found that "a bad faith claim is not a right under the policy and may not be assigned." Filing No. 27, Index of Evid., Ex. 3, Valley Boys, Inc. v. United Servs. Automobile Assoc., et al., No. CI 14-3139, Order at 9-10; see also Filing No. 22, Index of Evid., Ex. 1, Valley Boys, Inc. v. Travelers Commercial Ins. Co., et al., No. 14-3078, Order at 3; Filing No. 27, Index of Evid., Ex. 1, Valley Boys, Inc. v. Auto-Owners Ins. Co., No. CI 14-2443, Order at 12; Filing No. 27, Index of Evid., Ex. 2, Valley Boys, Inc. v. Farm Bur. Prop. & Cas. Co., No. CI 14-2375, Order at 7. This court is not persuaded by the State Courts' analysis of the issue.[1] The court finds the cases cited by the State district courts are inapposite and do not support the proposition that bad faith claims cannot be assigned as a matter of law. See Braesch v. Union Ins. Co., 464 N.W.2d 769, 776 (Neb. 1991)(holding "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, " but not addressing the issue of assignment by a policyholder/beneficiary), disapproved on other grounds, Wortman v. Unger, 578 N.W.2d 413, 417 (Neb. 1998); Mutual of Omaha Bank v. Kassebaum, 814 N.W.2d 731, 737 (Neb. 2012)(finding an assignment of unliquidated proceeds from a personal injury claim valid and enforceable). The great weight of authority indicates bad faith claims are assignable. See, e.g., Transit Cas. Co. v. Smith, 410 F.2d 210, 212 (5th Cir. 1969); Olmstead v. Allstate Ins. Co., 320 F.Supp. 1076, 1077-78 (D. Colo. 1971)(applying Colorado law); Liberty Mut. Ins. Co. v. Davis, 412 F.2d 475, 484 (5th Cir. 1969) (applying Florida law); Steedly v. London & Lancashire Ins. Co. 416 F.2d 259, 262 (6th Cir. 1969) (applying Kentucky law); Crabb v. National Indem. Co., 205 N.W.2d 633, 232 (S.D. 1973); Moutsopoulos v. American Mut. Ins. Co., 607 F.2d 1185, 1189 (7th Cir. 1979) (applying Wisconsin law).

The court agrees, however, with the State Courts' determination that the antiassignment provision does not bar the plaintiffs' breach of contract claim. See, e.g., Filing No. 27, Index of Evid., Ex. 3, Valley Boys, Inc. v. United Servs. Automobile Assoc., et al., No. CI 14-3139, Order at 6-7 (stating "the court finds that the Policies' non-assignment clause applies to pre-loss assignments only and does not render the Insureds' post-loss assignments invalid.") Under Nebraska law, post-loss claims are assignable. See Folgers Architects Ltd. v. Kerns, 633 N.W.2d 114, 126-27 (Neb. 2001) (noting distinction between an interest in the performance of an executory contract and a claim for damages for breach of a fully executed contract). In other words, the antiassignment provision prohibits assignment of the policy, but not assignment of claims under the policy. See 3 Couch on Insurance ยง 35:8 (3d ed. 2014); accord Windey v. North Star Farmers Mut. Ins. Co., 43 N.W.2d 99, 102 (Minn. 1950) (stating "[a]ssignment, after loss, of proceeds of insurance does not constitute an assignment of the policy, but only of a claim or right of action thereon"); Valley Boys, Inc. v. Allstate Ins. Co., No. 14cv3148, Filing No. 18, Memorandum and Order at 4. Accordingly, the court finds the defendant's motion for reconsideration should be denied.

IT IS HEREBY ORDERED that defendant's motion for reconsideration (Filing No. 21) is denied.


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