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Wahoo Locker, LLC v. Farm Bureau Property and Casualty Insurance Co.

Court of Appeals of Nebraska

June 28, 2016

Wahoo Locker, LLC, appellant,
v.
Farm Bureau Property and Casualty Insurance Company, appellee.

         1. Contracts: Reformation: Equity. An action to reform a contract sounds in equity.

         2. Equity: Appeal and Error. In an appeal of an equitable action, an appellate court tries factual questions de novo on the record, provided that where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.

         3. Reformation: Intent. Reformation may be granted to correct an erroneous instrument to express the true intent of the parties to the instrument.

         4. ___: ___. The right to reformation depends on whether the instrument to be reformed reflects the intent of the parties.

         5. Reformation: Presumptions: Intent: Evidence. To overcome the presumption that an agreement correctly expresses the parties' intent and therefore should be reformed, the party seeking reformation must offer clear, convincing, and satisfactory evidence.

         6. Evidence: Words and Phrases. Clear and convincing evidence means that amount of evidence which produces in the trier of fact a firm belief or conviction about the existence of the fact to be proved.

         7. Reformation: Fraud. A court may reform an agreement when there has been either a mutual mistake or a unilateral mistake caused by fraud or inequitable conduct on the part of the party against whom reformation is sought.

         8. Reformation: Intent: Words and Phrases. A mutual mistake is a belief shared by the parties, which is not in accord with the facts. A mutual mistake is one common to both parties in reference to the instrument to [24 Neb.App. 145] be reformed, each party laboring under the same misconception about their instrument. A mutual mistake exists where there has been a meeting of the minds of the parties and an agreement actually entered into, but the agreement in its written form does not express what was really intended by the parties.

         9. Contracts: Reformation. The fact that one of the parties to a contract denies that a mistake was made does not prevent a finding of mutual mistake or prevent reformation.

         10. Insurance: Contracts. The reasonable expectations of an insured are not assessed unless the language of the insurance policy is found to be ambiguous.

         Appeal from the District Court for Saunders County: Mary C. Gilbride, Judge.

          Dean F. Suing and Milton A. Katskee, of Katskee, Suing & Maxell, PC, L.L.O., for appellant.

          Gary J. Nedved, of Keating, O'Gara, Nedved & Peter, P.C., L.L.O., for appellee.

          Pirtle and Riedmann, Judges.

          PER CURIAM.

         INTRODUCTION

         Wahoo Locker, LLC, sought reformation of an insurance policy issued by Farm Bureau Property and Casualty Insurance Company (Farm Bureau) providing replacement coverage for the Wahoo Locker building in Wahoo, Nebraska. The district court for Saunders County found that Wahoo Locker was entitled to coverage as set forth in the policy and that Wahoo Locker was not entitled to reformation based upon a mutual mistake regarding the terms of the policy. Wahoo Locker appeals the order of the district court, and for the reasons that follow, we affirm.

         BACKGROUND

         In 1997, Charlie Emswiler bought Wahoo Locker, a meat processing facility, for approximately $75, 000 to $85, 000. [24 Neb.App. 146] In 2009, Emswiler and his wife were the sole owners of Wahoo Locker. Through the years, the Emswilers purchased several insurance policies on behalf of Wahoo Locker. Wahoo Locker was insured by Iowa Mutual Insurance Company (Iowa Mutual) from 2006 until June 14, 2009. Wahoo Locker was insured by Midwest Family Mutual Insurance Company (Midwest Family Mutual) from June 14 to September 14, 2009.

         On September 14, 2009, Farm Bureau issued a policy insuring Wahoo Locker for $491, 000. The policy was renewed annually, and the limit of insurance did not change from year to year. The policy was in effect on May 8, 2013, the day of a grease fire which caused catastrophic loss to the Wahoo Locker building. At the time of the fire, the Emswilers were the majority owners of the business. The insurance policy in effect on that day contained the following provisions:

         4. Loss Payment

a. In the event of loss or damage covered by this Coverage Form, at [Farm Bureau's] option, [Farm Bureau] will either:
(1) Pay the value of lost or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property, ...

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