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2020 WL 739074Only the Westlaw citation is currently available.

Supreme Court of Iowa.

33 CARPENTERS CONSTRUCTION, INC., Appellant,v.

STATE FARM LIFE AND CASUALTY COMPANY, Appellee.

No. 18-1354|

Filed February 14, 2020

SynopsisBackground: Residential contractor, as assignee of insureds, filed suit against insurer, after insurer refused to make paymentfor additional costs and expenses allegedly incurred by contractor in repair of insureds' roof and siding following hail storm. TheDistrict Court, Scott County, Henry W. Latham, J., granted insurer's motion for summary judgment, and contractor appealed.

Holdings: The Supreme Court, Waterman, J., held that:

contractor preserved for appellate review claim that Insurance Commissioner had exclusive authority to enforce statutesrequiring persons acting as public adjusters to be licensed;

district court had jurisdiction to adjudicate and declare void, as violation of public policy, insureds' contractual assignment toresidential contractor of claim for property damage to home caused by storm; and

insureds' contractual assignment of insurance claim to residential contractor was void.

Affirmed.

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

Residential contractor lacking public adjuster license appeals summary judgment dismissing its breach of contract claim againsthomeowners’ insurer. AFFIRMED.

Attorneys and Law Firms

Edward F. Noethe, Kyle J. McGinn, and Emily A. Weiss (until withdrawal) of McGinn, Springer & Noethe PLC, CouncilBluffs, for appellant.

Brenda K. Wallrichs and Mark J. Parmenter of Lederer Weston Craig PLC, Cedar Rapids, for appellee.

Opinion

WATERMAN, Justice.

*1 This appeal is one of three 1 we decide today concerning whether a residential contractor acting as an unlicensed publicadjuster can enforce its postloss contractual assignment of insurance benefits against the homeowners’ insurer. A controlling

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statute, Iowa Code section 103A.71(5) (2016), declares “void” contracts entered into by residential contractors who performpublic adjuster services without the license required under section 522C.4. Those laws were enacted to protect homeownersand insurers against exploitation by unlicensed contractors after hailstorms, tornadoes, and other natural disasters.

The plaintiff-contractor in this case represented the homeowners as an assignee of their insurance claim for hail damage. Thedefendant-insurer paid what it determined was owed, and the plaintiff-contractor sued for much more. The district court grantedthe defendant-insurer’s motion for summary judgment on grounds that the plaintiff-contractor’s contractual assignment wasunenforceable. We retained the plaintiff-contractor’s appeal.

On our review, we apply section 103A.71(5) to hold the assignment contract void. We reject the plaintiff’s argument that courtsmust honor these “void” contracts unless specifically directed otherwise by the Iowa Insurance Commissioner. For the reasonsexplained below, we affirm the summary judgment.

I. Background Facts and Proceedings.On March 15, 2016, a hailstorm struck Bettendorf and damaged the roof and siding of a home owned by Brant and SarahClausen. The Clausens initially were unaware of any storm damage to their property. Their home was insured through StateFarm Fire and Casualty Company (State Farm). On June 29, Matt Shepherd, an employee of 33 Carpenters Construction, Inc.(33 Carpenters), approached the Clausens at their home and asked if he could inspect their roof for hail damage. The Clausensagreed to permit his inspection. Shepherd found hail damage to the roof and siding, which was news to the Clausens.

Shepherd presented, and the parties signed, two documents, labeled “Agreement” and “Insurance Contingency,” whereby 33Carpenters agreed to repair the storm damage in exchange for the Clausens’ insurance proceeds. The documents also purportedlyauthorized 33 Carpenters to act on behalf of the Clausens regarding the submission, adjustment, and payment of an insuranceclaim for the hail damage to their roof.

Insurance/Mortgage Company Authorization: I authorize and direct my insurers and mortgageesto communicate directly with 33 Carpenters Construction to include discussions regarding scope ofwork and payment. I also authorize and direct my insurers and Mortgagees to include 33 CarpentersConstruction as a joint payee on all checks.

The Insurance Contingency authorized 33 Carpenters to “meet with and discuss hail and wind damage” of the Clausen propertywith their insurance company, State Farm, and it required the Clausens to acknowledge that “33 Carpenters Construction willact as their General Contractor to obtain appropriate property damage adjustments.”

*2 That same day, the Clausens made a property damage claim to State Farm. About two weeks later, State Farm representativesvisited the Clausen home to inspect the storm damage. Shepherd attended the inspection without the Clausens. After thismeeting, State Farm formulated an initial estimate calculating the replacement cost value, or total repair costs, of $30,607. Aftersubtracting depreciation and the Clausens’ deductible, State Farm paid the Clausens $22,198. The Clausens transferred thispayment to 33 Carpenters, and it began repairing the roof and siding.

Subsequently, 33 Carpenters prepared an undated 2 “Supplement” to the insurance claim, claiming $15,087 in additional repaircosts, $645 in tax, and $9137 in overhead and profit for a new claim of $24,869 above State Farm’s initial determination of thetotal repair cost, amounting to an increase of 81.3%. State Farm’s adjuster returned to the Clausen home to assess the new claims.

On February 22, 2017, the Clausens signed another document that purportedly assigned their insurance claim with State Farmto 33 Carpenters. This “Assignment of Claim and Benefits” stated,

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FOR VALUE RECEIVED, the Assignor [Brant Clausen] hereby sells and transfers to the Assignee [33Carpenters] 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] hasor may have against State Farm (insurance company), arising from the following claim [for hail andwind damage.]

This document further stated that “all future payments or settlements for the above referenced claim” should be made directlyto 33 Carpenters.

On March 10, 33 Carpenters filed this civil action against State Farm. 33 Carpenters alleged that it is the assignee of the Clausens’rights and that State Farm had breached its insurance policy by failing to pay 33 Carpenters “all benefits due and owing underthe policy.” State Farm filed an answer denying those allegations.

Later that month, State Farm prepared a substituted estimate in response to the 33 Carpenters Supplement. The substitutedestimate increased the replacement cost value to $40,953 to reflect the need to replace all of the siding on the Clausen homesince the original siding became unavailable during the interim between the initial estimate and the repair work. In recognitionof this increase, State Farm paid an additional $15,681 directly to 33 Carpenters and the Clausens’ mortgage company, and 33Carpenters deposited the payment.

Next, on August 21, after State Farm had made the second payment and after 33 Carpenters had completed the repairs, 33Carpenters submitted yet another cost estimate, claiming $64,973 for the cost of repairs and $12,994 in overhead and profit,increasing the total claim to $77,968, a 90.4% increase from State Farm’s substituted estimate of the total replacement costvalue. State Farm refused to pay the additional sums. Two months later, 33 Carpenters filed a motion to compel appraisal ofthe loss. The district court denied the motion.

State Farm filed a motion for summary judgment on May 15, 2018, claiming that the contract between 33 Carpenters and theClausens was unenforceable because 33 Carpenters was not a licensed public adjuster, as required under Iowa Code chapter522C. State Farm supported its motion with the contractual documents and other evidence showing that 33 Carpenters actedas a public adjuster for the Clausens. The summary judgment record included a printout of 33 Carpenters’ public webpage thatoutlined its six-step process for a common insurance claim:

*3 STEP 1

Contact 33 Carpenters Construction (http://33carpentersconstruction.com/contact) for a free comprehensive stormdamage evaluation and assessment.

[phone numbers of the various 33 Carpenters locations]

STEP 2

Contact your insurance company to file a claim.

Inform your insurance company that your home was impacted by recent severe storms and your home was inspected by alicensed general contractor and areas of your home are damaged.

STEP 3

Inform us when the insurance adjuster will be coming out to assess the damage on your home or property.

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We will meet personally with your insurance adjuster, as an ADVOCATE on YOUR behalf, and discuss the work that needsto be completed to repair your home to its original beauty and value. Your insurance adjuster will submit a report that willlist the work that needs to be completed and a copy will be sent to you.

STEP 4

Send us a copy of the summary report put together by your insurance company.

Included in the summary report will be the itemized costs of the work that needs to be performed. We will work directly withyour insurance company to ensure that all damaged areas of your home will be included on the report.

STEP 5

We will meet with you to make product selections.

Our entire team has a vast and comprehensive knowledge about all home exterior products and we are happy to help you inthe decision making process regarding product selection and color options. We will work with your schedule to determinethe best day to start the necessary repairs to your home.

STEP 6

Payment.

We will provide you and your insurance company with a copy of the invoice when the work is completed. You may be requiredto get your mortgage company to endorse the check from the insurance company before payment can be submitted to us forthe work completed to your home. You are only responsible for your insurance deductible and any agreed upon upgrades.

33 Carpenters resisted summary judgment by arguing that the Iowa Insurance Commissioner has the sole authority to enforcethe provisions of Iowa Code chapter 522C such that State Farm cannot use the statute to invalidate the assignment agreement.Alternatively, 33 Carpenters argued its conduct did not violate Iowa Code chapter 522C or 507A. 33 Carpenters asserted that theonly relevant event before the February 22 assignment was the evaluation of the claim attended by State Farm representativesand Shepherd, and it stated this was not improper because Shepherd did not negotiate or advocate for the Clausens during thatmeeting. The other events, 33 Carpenters claimed, occurred after the Clausens assigned the claim to 33 Carpenters, which itstated it wholly owned and could negotiate without a public adjuster license.

The district court granted the motion for summary judgment, ruling that the Clausens’ assignment of their claim to 33 Carpenterswas invalid under Iowa law because 33 Carpenters acted as an unlicensed public adjuster as defined in Iowa Code section522C.2. The district court considered the undisputed facts that the Clausens were unaware of any storm damage and had made noinsurance claim before they were approached by 33 Carpenters, their agreement authorized 33 Carpenters to communicate withState Farm, 33 Carpenters’ representative Shepherd attended the roof inspection with State Farm without the Clausens, and 33Carpenters received the proceeds of the checks State Farm issued to the Clausens for the claim. The district court determined that,

*4 by undertaking these actions, 33 Carpenters was acting as a public adjuster as defined in Iowa Codesection 522C.2. 33 Carpenters did so without the requisite license. Because 33 Carpenters was acting asan unlicensed public adjuster prior to the assignment, the assignment is invalid under Iowa law.

The district court ruled that 33 Carpenters could not recover from State Farm and granted State Farm’s motion for summaryjudgment. The district court did not reach the question of whether the Iowa Insurance Commissioner has the sole authority to

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enforce the provisions of Iowa Code chapter 522C, and 33 Carpenters filed no motion to seek a ruling on that issue. See IowaR. Civ. P. 1.904(2). 33 Carpenters appealed, and we retained the appeal.

II. Standard of Review.We review an order granting summary judgment for correction of errors at law. City of West Liberty v. Emp'rs Mut. Cas. Co.,922 N.W.2d 876, 879 (Iowa 2019). Summary judgment is appropriate when the moving party establishes there is no genuineissue of material fact and it is entitled to judgment as a matter of law. Id. A matter can be resolved on summary judgment whenthe dispute is over the legal consequences of undisputed facts. Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 501 (Iowa2013). “[W]e examine the record in the light most favorable to the nonmoving party.” Id.

III. The District Court’s Authority to Adjudicate the Contract’s Validity.A. Error Preservation. 33 Carpenters argued in district court and argues on appeal that the district court erred in applying IowaCode section 522C.4 to invalidate the assignment because the Iowa Insurance Commissioner has the sole authority to enforcethat statute. State Farm responds that 33 Carpenters failed to preserve error on this issue because the district court never ruled onit and 33 Carpenters did not move under Iowa Rule of Civil Procedure 1.904(2) for an amended judgment deciding that issue.

“It is a fundamental doctrine of appellate review that issues must ordinarily be both raised and decided by the district courtbefore we will decide them on appeal.” Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002). To preserve error for appeal afterthe district court fails to rule on the party’s properly raised issue, the party must file a motion requesting a ruling. Id. The partymust “call to the attention of the district court its failure to decide the issue.” Id. at 540.

The claim or issue raised does not actually need to be used as the basis for the decision to be preserved,but the record must at least reveal the court was aware of the claim or issue and litigated it.

Id.

We routinely hold that when an issue is raised in a motion but not decided in the district court ruling, the issue is not preservedfor review. See, e.g., UE Local 893/IUP v. State, 928 N.W.2d 51, 61 (Iowa 2019) (holding that error was not preserved on aground raised in a motion to dismiss that the court denied on other grounds, and the party failed to raise the issue again in districtcourt); Bank of Am., N.A. v. Schulte, 843 N.W.2d 876, 884 (Iowa 2014) (holding that error was not preserved for appellatereview when the district court did not address the issue in its ruling and the parties failed to file a rule 1.904 motion on the issue);Meier, 641 N.W.2d at 540–41 (holding that the issue raised as one of two grounds in a motion to dismiss was not preserved forappellate review when the district court denied the motion on the other ground alone). In Meier, we determined that the issueraised in a motion to dismiss was waived when it was not decided in the district court ruling and the party did not file a motionrequesting a ruling or do anything to call the district court’s attention to the unaddressed issue. Id. at 540–41. 33 Carpentersarguably should meet the same fate for the same reason.

*5 The district court granted summary judgment without expressly deciding whether the Iowa Insurance Commissioner hasthe sole authority to enforce Iowa Code chapter 522C. 33 Carpenters never filed a rule 1.904(2) motion requesting a ruling onthat issue. We are a court of review, and we do not generally decide an issue that the district court did not decide first. UE Local893/IUP, 928 N.W.2d at 60. But the district court must have implicitly rejected the argument when it granted summary judgmentbased on Iowa Code chapter 522C. See Meier, 641 N.W.2d at 539 (“[W]e assume the district court rejected each defense to aclaim on its merits, even though the district court did not address each defense in its ruling.”). This is a recurring issue, and thisargument was rejected by the district court and court of appeals in a companion case, 33 Carpenters v. Cincinnati Insurance

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Company, No. 17-1979, 2019 WL 478254, at *5 (Iowa Ct. App. Feb. 6, 2019). We assume without deciding that error wasminimally preserved here and elect to reach the merits in this opinion.

B. The District Court’s Power to Declare the Contract Void. 33 Carpenters filed this civil action, and State Farm raised thedefense that 33 Carpenters’ assignment contract is void under Iowa Code chapter 522C. We have never held that Iowa courtslack the authority to adjudicate contractual assignments of insurance claims. To the contrary, “Iowa courts routinely adjudicatecontract-formation and contract-enforcement issues.” UE Local 893/IUP, 928 N.W.2d at 64. That case is instructive. There,we rejected a similar argument that the agency charged with enforcing a regulatory statute had primary jurisdiction over acontract enforcement action. Id. at 65. We noted that the agency had various enforcement powers, including imposing monetarypenalties for violations, but the agency lacked statutory authorization to enforce the contract or declare the contract void. Id.Accordingly, we held the district court had the power to adjudicate the contract dispute without any requirement that the partiesfirst exhaust administrative remedies. Id. at 65–66. Similarly, the insurance commissioner has the authority to impose penaltieson a person acting as a public adjuster without a license, but nothing in the chapter authorizes the insurance commissioner toenforce contractual assignments or declare such contracts void. See Iowa Code ch. 522C; Iowa Code § 522C.6. We hold thatthe district court had the authority to adjudicate the validity of 33 Carpenters’ contractual assignment claims. See also Bank ofthe W. v. Kline, 782 N.W.2d 453, 462 (Iowa 2010) (“It is well-established Iowa law that contracts made in contravention of astatute are void, and Iowa courts will not enforce such contracts.”).

IV. The Invalidity of the Contract.We must decide whether the district court erred by granting State Farm’s motion for summary judgment. We conclude thatundisputed facts establish that 33 Carpenters, a residential contractor, was acting as an unlicensed public adjuster representingthe Clausens on their hail damage claim against State Farm. 33 Carpenters’ contractual assignment is therefore void under Iowa

Code section 103A.71(5), and State Farm was entitled to summary judgment. 3

*6 Our analysis turns on two statutes the Iowa legislature enacted in 2007 and 2012—Iowa Code chapter 522C, governinglicensing of public adjusters, and Iowa Code section 103A.71, governing residential contractors. See 2007 Iowa Acts ch. 137, §24–29 (codified at Iowa Code ch. 522C (Supp. 2007)); 2012 Iowa Acts ch. 1116, § 1 (codified at Iowa Code § 103A.71 (2013)).We begin with an overview of this legislation.

Iowa is one of forty-five states with statutes requiring licensure of public adjusters. See Thomson Reuters, Public Adjusters:Licensing and Education Requirements, 0110 Surveys 78 (Dec. 2018). The goal of the licensing statutes is to “curtail unethicaland abusive practices” by public adjusters who “present[ ] danger to the public by ‘chasing fires’ and soliciting clients underconditions of duress.” Bldg. Permit Consultants, Inc. v. Mazur, 122 Cal.App.4th 1400, 19 Cal. Rptr. 3d 562, 570 (2004). Theunethical practices include “price gouging[,] ... collusion[,] ... high-pressure sales tactics, fraud, and incompetence.” Id. at 571.Homeowners and their insurers are especially vulnerable to exploitation “in the wake of earthquakes, fires, floods, and similarcatastrophes.” Id. A recent report by the Insurance Information Institute concluded,

In Florida, abuse of [assignment of benefits contracts (AOBs) ] has fueled an insurance crisis. The state’s legal environmenthas encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conductunnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that denyor dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums tocover needless repairs and excessive legal fees. And consumers often do not even know that their claims are driving thesecost increases.

The abuse therefore acts somewhat like a hidden tax on consumers, helping to increase what are already some of the highestinsurance premiums in the country.

James Lynch & Lucian McMahon, Ins. Info. Inst., Florida’s Assignment of Benefits Crisis: Runaway Litigation Is Spreading,and Consumers Are Paying the Price 2 (March 2019).

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State Farm argues such abuse is present here. After receiving the initial insurance payment for the repairs, 33 Carpenters prepareda supplement with an 81.3% increase in the total repair cost. Due to delays attributable to 33 Carpenters, all siding requiredreplacement because matching materials were no longer available. To reflect that, State Farm responded with its own substitutedestimate and paid an additional sum to 33 Carpenters. Then, 33 Carpenters prepared yet another cost estimate for a 90.4%increase from State Farm’s substituted estimate. State Farm refused to pay any additional sums.

The Iowa legislature specifically chose to regulate contracts “to repair damage [to homes] resulting from a naturally occurringcatastrophe including but not limited to a fire, earthquake, tornado, windstorm, flood or hail storm.” Iowa Code § 103A.71(4)(a) (2016). The Iowa Insurance Division has determined that requiring public adjusters to be licensed is in the public interest,necessary for the protection of policyholders, and consistent with the purposes of Iowa Code chapter 507A. See In re GlazeRoofing & Remodeling, Iowa Sec. Bureau Ins. Div., 2010 WL 2324606, at *2 (June 1, 2010). Iowa Code chapter 522C’s purposeis “to govern the qualifications and procedures for licensing public adjusters in this state, and to specify the duties of andrestrictions on public adjusters, including limitation of such licensure to assisting insureds only with first-party claims.” IowaCode § 522C.1.

*7 Other courts have held that contracts entered into by an unlicensed public adjuster are void. See, e.g., Zarrell v. HerbGutenplan Assocs., Inc., 111 Misc.2d 340, 444 N.Y.S.2d 39, 40 (Sup. Ct. 1981) (“Section 123 of the Insurance Law provides thatno person shall act as an adjustor (independent or public) unless licensed by the Superintendent of Insurance.... Accordingly,the court declares that ... the plain language of Sec. 123 prohibits the defendant’s entitlement to a fee for adjusting a burglaryloss ....”); James R. Beneke, Inc. v. Aon Risk Servs., Inc. of Ga., A-05-CA-927 RP, 2007 WL 9701564, at *6 (W.D. Tex. Nov. 15,2007) (“Because Jim Beneke was not licensed in Florida at the time of the solicitation, his conduct was clearly prohibited underFlorida law. The undersigned thus concludes the Agreement was void ab initio as violative of Florida law.” (Footnote omitted.));Lon Smith & Assocs., Inc. v. Key, 527 S.W.3d 604, 618, 619 (Tex. App. 2017) (refusing to enforce an unlicensed public adjuster’scontract because “a contract to fulfill an obligation that cannot be performed without violating the law contravenes public policyand is void”).

Against this backdrop, we turn to the operative statutory language. Subchapter V of the state building code, Iowa Code chapter103A, is entitled, “Residential Contractors—Repairs and Insurance—Prohibited Practices.” A “residential contractor” is definedas

a person in the business of contracting to repair or replace residential roof systems or perform any otherexterior repair, exterior replacement, or exterior reconstruction work resulting from a catastrophe onresidential real estate or a person offering to contract with an owner or possessor of real estate to carryout such work.

Iowa Code § 103A.71(1)(b). “A contract entered into with a residential contractor is void if the residential contractor violatessubsection 2, 3, or 4.” Id. § 103A.71(5).

Section 103A.71(3) declares that

[a] residential contractor shall not represent or negotiate on behalf of, or offer or advertise to representor negotiate on behalf of, an owner or possessor of residential real estate on any insurance claim in

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connection with the repair or replacement of roof systems, or the performance of any other exterior repair,exterior replacement, or exterior reconstruction work on the residential real estate.

Id. § 103A.71(3). Violating section 103A.71(3) subjects the violator “to the penalties and remedies prescribed by this chapter”and amounts to “an unlawful practice pursuant to section 714.16.” Id. § 103A.71(6)(a)–(b).

A “public adjuster” is defined in Iowa Code section 522C.2(7) as

any person who for compensation or any other thing of value acts on behalf of an insured by doing any of the following:

a. Acting for or aiding an insured in negotiating for or effecting the settlement of a first-party claim for loss or damage toreal or personal property of the insured.

b. Advertising for employment as a public adjuster of first-party insurance claims or otherwise soliciting business orrepresenting to the public that the person is a public adjuster of first-party insurance claims for loss or damage to real orpersonal property of an insured.

c. Directly or indirectly soliciting business investigating or adjusting losses, or advising an insured about first-party claimsfor loss or damage to real or personal property of the insured.

Id. § 522C.2(7). A “person” can be an individual or business entity. Id. § 522C.2(6). Without a license issued by the commissionerin accordance with chapter 522C, “[a] person shall not operate as or represent that the person is a public adjuster in this state ....”Id. § 522C.4. A person acting as a public adjuster without a valid license commits a serious misdemeanor and is subject tocivil penalties. Id. § 522C.6.

*8 If we compare the language of section 103A.71(3), which lists activities that a residential contractor is forbidden fromdoing, with the definition of a public adjuster in section 522C.2(7), it is apparent that section 103A.71(3) prohibits residentialcontractors from acting as public adjusters.

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(Emphasis added.) These statutes regulate the same conduct, including representing or negotiating for the insured on insuranceclaims for the costs to repair storm damage. The conduct prohibited in section 103A.71(3) governing residential contractorsdescribes what public adjusters are licensed to perform pursuant to section 522C.2(7). We interpret these provisions togetherto hold that contracts entered into by a residential contractor acting as an unlicensed public adjuster are void under section103A.71(5). See Kline, 782 N.W.2d at 462 (collecting cases holding courts will not enforce contracts that contravene statutes);Milholin v. Vorhies, 320 N.W.2d 552, 554 (Iowa 1982) (en banc) (upholding regulatory law invalidating a noncompliant realestate listing agreement).It is undisputed that neither 33 Carpenters nor its employees held a public adjuster license. We next address whether 33Carpenters acted as a public adjuster as defined in chapter 522C. Iowa Code section 522C.2(7) defines a “public adjuster”as a “person who for compensation or any other thing of value acts on behalf of an insured by doing any of the [three listedactions.]” (Emphasis added.) We consider each subsection in turn.

Section 522C.2(7)(a) states a person is a public adjuster when “[a]cting for or aiding an insured in negotiating for or effectingthe settlement of a first-party claim for loss or damage to real or personal (property of the insured.” Iowa Code § 522C.2(7)(a).33 Carpenters representative Shepherd directed the Clausens to file a claim with State Farm, which they promptly did that sameday, and Shepherd attended the inspection of the Clausen property with the State Farm representatives in place of the Clausens.Shepherd’s conduct aligned with 33 Carpenters’ representations on its website, which advertised to homeowners that it would

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“meet personally with your insurance adjuster, as an ADVOCATE on YOUR behalf, and discuss the work that needs to becompleted to repair your home to its original beauty and value.” Additionally, 33 Carpenters submitted the first estimate to StateFarm before the Clausens assigned their claim. 33 Carpenters thereby acted on behalf of the Clausens in negotiating their claim.Altogether, these activities demonstrate that 33 Carpenters was acting for and aiding the insureds, the Clausens, in effecting thesettlement of their claim with State Farm for damage to their real property within the meaning of section 522C.2(7)(a).

*9 Section 522C.2(7)(b) states a person is a public adjuster when acting on behalf of an insured for a thing of value by

[a]dvertising for employment as a public adjuster of first-party insurance claims or otherwise solicitingbusiness or representing to the public that the person is a public adjuster of first-party insurance claimsfor loss or damage to real or personal property of an insured.

Id. § 522C.2(7)(b). Section 522C.2(7)(c) states a person is a public adjuster when acting on behalf of an insured for a thingof value by “[d]irectly or indirectly soliciting business investigating or adjusting losses, or advising an insured about first-party claims for loss or damage to real or personal property of the insured.” Id. § 522C.2(7)(c). Shepherd, as 33 Carpenters’representative, undisputedly approached the Clausens uninvited and offered to inspect their home for hail damage, and hedirectly solicited business for 33 Carpenters after finding damage on the roof and siding. The same day, Shepherd advisedthe Clausens to file a claim for that damage and had them sign documents agreeing to pay 33 Carpenters with their insuranceproceeds in exchange for the company agreeing to repair the storm damage. This constitutes advising an insured about first-party claims for damage to the insured’s real property. 33 Carpenters’ six-step process on its website additionally exemplifiessolicitation of business investigating losses and advising insureds regarding claims with promises to “ADVOCATE on YOURbehalf” and work directly with the insurance company to ensure all damaged areas are included in the report, among otherthings. Such conduct directly aligns with that of a public adjuster within the meaning of sections 522C.2(7)(b) and (c).

Based on the undisputed facts in the summary judgment record, the district court correctly ruled that 33 Carpenters acted asan unlicensed public adjuster under section 522C.2(7), and the court correctly determined that the assignment contract wasunenforceable under the governing statutes. We hold the assignment contract is void under Iowa Code section 103A.71(5).

This outcome is consistent with our precedent holding contracts entered into by parties lacking a required license are void asagainst public policy. See, e.g., Bergantzel v. Mlynarik, 619 N.W.2d 309, 318 (Iowa 2000) (en banc) (holding a contract enteredinto in violation of attorney license requirements was unenforceable); Mincks Agri Ctr., Inc. v. Bell Farms, Inc., 611 N.W.2d270, 271 (Iowa 2000) (en banc) (holding that contracts entered into by unlicensed grain dealer were unenforceable); KeithFurnace Co. v. Mac Vicar, 225 Iowa 246, 250, 280 N.W. 496, 498 (1938) (“If a statute or city ordinance prohibits the practiceof a profession or the carrying on of a business without first procuring a license and a fine is imposed for violating the law,recovery can not be had for services rendered in such occupation.”); Hoxsey v. Baker, 216 Iowa 85, 88–89, 246 N.W. 653, 655(1933) (stating it is “well settled” that a person cannot recover for services performed without a license as required by law); seealso Food Mgmt., Inc. v. Blue Ribbon Beef Pack, Inc., 413 F.2d 716, 725 (8th Cir. 1969) (applying Iowa law to hold contractsentered into in violation of Iowa registration requirements are unenforceable); Davis, Brody, Wisniewski v. Barrett, 253 Iowa1178, 1181–82, 115 N.W.2d 839, 841 (1962) (“The general rule appears to be that a contract made in the course of a businessor occupation for which a license is required by one who has not complied with such requirement is unenforceable where thestatute expressly so provides, or where it expressly or impliedly, as a police regulation, prohibits the conduct of such businesswithout compliance.”). The legislature has codified its expression of public policy in Iowa Code section 103A.71(5), and werely on that statute to affirm the summary judgment.

V. Disposition.*10 For the foregoing reasons, we affirm the district court’s summary judgment against 33 Carpenters.

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AFFIRMED.

All Citations

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Footnotes1 The related cases filed today are 33 Carpenters Construction, Inc. v. Cincinnati Insurance, No. 17-1979, ––– N.W.2d ––––, 2020

WL 739076 (Iowa 2020), and 33 Carpenters Construction, Inc. v. IMT Insurance, No. 19-0678, ––– N.W.2d ––––, 2020 WL 739088(Iowa 2020).

2 33 Carpenters asserted in its brief that the Supplement was prepared before the February 22 assignment.3 The Iowa legislature recently enacted the Insured Homeowner’s Protection Act, which now voids postloss assignment contracts

between an insured and a residential contractor unless specified conditions are met. 2019 Iowa Acts ch. 49, § 1 (codified at IowaCode § 515.137A(3), (5)(a) (2019)). This enactment became effective July 1, 2019. Id. State Farm does not argue this new legislationapplies retroactively, and we conclude the enactment is inapplicable to the 2016 transactions at issue in this appeal.Other states have recently enacted similar statutes regulating the insureds’ postloss assignments to residential contractors of rightsor benefits under homeowners insurance policies. See, e.g., Neb. Rev. Stat. Ann. § 44-8605 (West, Westlaw current through 1st Reg.Sess. 106th Leg. (2019)); N.D. Cent. Code Ann. § 26.1-39.2-04 (West, Westlaw current through Jan. 1, 2020); see also Fla. Stat. Ann.§ 627.7153 (West, Westlaw current through 2019 1st Reg. Sess.) (allowing insurers to restrict the ability of an insured to execute anassignment contract in its policies if certain enumerated conditions are met).

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33 Carpenters Construction, Inc. v. Cincinnati Insurance Company, --- N.W.2d ---- (2020)

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2020 WL 739076Only the Westlaw citation is currently available.

Supreme Court of Iowa.

33 CARPENTERS CONSTRUCTION, INC., Appellant,v.

The CINCINNATI INSURANCE COMPANY, Appellee.

No. 17-1979|

Filed February 14, 2020

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 summaryjudgment that dismissed its breach of contract claim against homeowners’ insurer. DECISION OF COURT OF APPEALSAND JUDGMENT OF DISTRICT COURT AFFIRMED.

Attorneys and Law Firms

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.

Opinion

PER CURIAM.

*1 On March 15, 2016, a hailstorm and windstorm damaged Gregg Whigham’s residence in Bettendorf. Whigham had ahomeowners’ 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 homein exchange for Whigham’s insurance proceeds.

On October 6, a 33 Carpenters representative, Tony McClanahan, and Whigham called Cincinnati to report the storm damageto the siding and roof of Whigham’s home. During this call, McClanahan informed Cincinnati that he was Whigham’scontractor and would attend Cincinnati’s inspection of Whigham’s home. Four days later, Whigham and McClanahan signedan “Assignment of Claim and Benefits,” which stated,

FOR VALUE RECEIVED, Assignor [Gregg Whigham] hereby sells and transfers to the Assignee [33Carpenters] 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] hasor may have against Cincinnati Insurance (insurance company), arising from the following claim [forstorm 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

33 Carpenters Construction, Inc. v. Cincinnati Insurance Company, --- N.W.2d ---- (2020)

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settlements for the above referenced claim” should be made directly to 33 Carpenters. The same day, Whigham submitted aninsurance claim for damage to his residence. Cincinnati investigated the claim, prepared an estimate for the cost of repairingthe damage, and made a payment to Whigham that autumn.

In February 2017, 33 Carpenters contacted Cincinnati to dispute the insurer’s estimate of the repair cost and requested a newestimate that would include the cost of replacing all of the home’s siding and gutters. Cincinnati responded that it would addressany differences directly with its insured, Whigham, rather than 33 Carpenters. On March 13, 33 Carpenters filed this civil actionagainst Cincinnati claiming the insurer breached Whigham’s insurance policy by “failing to pay ‘33 Carpenters’ all benefitsdue and owing under the policy” that had been assigned to it. 33 Carpenters elected to bring the suit as an expedited civil actionunder 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 declaratoryjudgment against 33 Carpenters, arguing the assignment was invalid because it effectively allowed 33 Carpenters to act as anunlicensed 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-stepprocess that described the work of a public adjuster, that its actions aligned with that of a public adjuster, and that 33 Carpentersmaintained a contractor license while neither it nor its employees had a public adjuster’s license. Cincinnati argued summaryjudgment was appropriate given that the assignment contract at issue was invalid because 33 Carpenters violated Iowa Codesections 507A.3, 507A.5, and 522C.4 by acting as an unlicensed public adjuster. 33 Carpenters countered that only the IowaInsurance Commissioner could enforce chapter 522C and that the assignment contract was a valid postloss assignment.

*2 On October 30, 33 Carpenters filed a motion to compel appraisal. Cincinnati disputed the need for an appraisal given thatthe homeowner 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 violatesIowa’s licensure requirement for public adjusters.” In doing so, the district court found that 33 Carpenters’ website includedadvertisements to advocate on an insured’s behalf, 33 Carpenters attempted to aid Whigham in negotiations with Cincinnati, and33 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 apublic 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 ourauthority to apply the law to the facts before us in order to resolve the legal dispute presented to us as a result of the lawsuitfiled by 33 Carpenters.” The court of appeals found that “there is no genuine issue of fact that 33 Carpenters was acting forand aiding Whigham in negotiating for and attempting to effect a settlement of Whigham’s first-party insurance claim for lossto his home insured by Cincinnati.” Therefore, it determined that 33 Carpenters was operating as an unlicensed public adjusterin violation of Iowa Code section 522C.4, and the assignment contract was unenforceable. The court of appeals affirmed thesummary 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. StateFarm Life & Casualty Co., ––– N.W.2d ––––, ––––, 2020 WL 739074 (Iowa 2020). There, we held that an assignment contractentered 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 undersection 103A.71(5), and we reject the argument that the Iowa Insurance Commissioner has sole authority to enforce the licensingrequirements 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.

33 Carpenters Construction, Inc. v. Cincinnati Insurance Company, --- N.W.2d ---- (2020)

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

All Citations

--- N.W.2d ----, 2020 WL 739076

End of Document © 2020 Thomson Reuters. No claim to original U.S. Government Works.

33 Carpenters Construction, Inc. v. IMT Insurance Company, --- N.W.2d ---- (2020)

© 2020 Thomson Reuters. No claim to original U.S. Government Works. 1

2020 WL 739088Only the Westlaw citation is currently available.

Supreme Court of Iowa.

33 CARPENTERS CONSTRUCTION, INC., Appellant,v.

IMT INSURANCE COMPANY, Appellee.

No. 19-0678|

Filed February 14, 2020

SynopsisBackground: Residential contractor, as insured's assignee, filed suit against insurer for breach of homeowner's policy, afterinsurer denied claim submitted by contractor for cost to repair damage to roof caused by storm. The District Court, Scott County,Mary E. Howes, J., granted insurer's motion for summary judgment, and contractor appealed.

Holdings: The Supreme Court held that:

insured's assignment to contractor of any claims and causes of action arising out of claim under homeowners policy for propertydamage to roof as result of wind and hail storm was void, and

Iowa Insurance Commissioner did not have exclusive authority to enforce statutory scheme governing licensing of publicadjusters.

Affirmed.

Appeal from the Iowa District Court for Scott County, Mary E. Howes, Judge.

Residential contractor lacking public adjuster license appeals summary judgment dismissing its breach of contract claim againsthomeowners’ insurer. AFFIRMED.

Attorneys and Law Firms

Edward F. Noethe of McGinn, Springer & Noethe PLC, Council Bluffs, for appellant.

William H. Larson of Klass Law Firm, L.L.P., Sioux City, for appellee.

Opinion

PER CURIAM.

*1 On March 6, 2017, a windstorm and hailstorm hit Brandon Gordon’s home in Davenport. Gordon had a homeowners’insurance policy with IMT Insurance Company (IMT). On March 20, Gordon reported to IMT that roof shingles suffered stormdamage. After inspecting the roof, IMT responded a few weeks later with a repair estimate of $2362.67, and after subtractingGordon’s deductible, enclosed a check for $1362.67.

33 Carpenters Construction, Inc. v. IMT Insurance Company, --- N.W.2d ---- (2020)

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On May 1, Gordon and a representative from 33 Carpenters Construction, Inc. (33 Carpenters), Dustin Murphy, signed

documents titled “Insurance Contingency,” 1 “Agreement,” and “Assignment of Claim and Benefits.” Under these documents,33 Carpenters agreed to repair the storm damage in exchange for Gordon’s insurance proceeds. The Insurance Contingencyauthorized 33 Carpenters to “meet with and discuss hail and wind damage” to Gordon’s property with IMT and requiredGordon to acknowledge that “33 Carpenters Construction will act as their General Contractor to obtain appropriate propertydamage adjustments.” The Agreement stated Gordon retained 33 Carpenters to “settle [his] claim and complete the repairs.”The “Assignment of Claim and Benefits” specified,

FOR VALUE RECEIVED, the Assignor [Brandon Gordon] hereby sells and transfers to the Assignee [33Carpenters] 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] hasor may have against IMT (insurance company), arising from the following claim [for storm (wind andhail) damage.]

This document further stated that “all future payments or settlements for the above referenced claim” should be made directlyto 33 Carpenters.

On February 28, 2018, IMT retained Cullen Claims to reevaluate the claim. Cullen Claims estimated $7475.24 as thereplacement cost value for the dwelling and $4560.50 as the actual cash value. It determined the net claim was $6475.24 afterthe deductible, and the net claim for the separate garage was $1249.48. On April 9, Gordon signed another document authorizing33 Carpenters to “speak with [his] mortgage company, release claim information, request inspections, and work directly within connection with all aspects of processing of the claim, including disbursement of claim funds.” The next day, 33 Carpentersissued a “roof production form” that listed the cost of repair as $13,016.72. IMT denied the claim.

On May 24, 33 Carpenters, claiming rights by Gordon’s assignment, filed this civil action alleging IMT breached Gordon’sinsurance policy by “failing to pay ‘33 Carpenters’ all benefits due and owing under the policy.” On June 21, IMT filed ananswer denying the allegations and raising affirmative defenses.

On February 12, 2019, IMT filed a motion for summary judgment. IMT asserted the assignment contract was void because33 Carpenters violated Iowa Code sections 507A.3, 507A.5, and 522C.4 (2017) by acting as an unlicensed public adjuster. 33Carpenters responded by asserting the Iowa Insurance Commissioner has the sole authority to enforce the provisions of IowaCode chapter 522C such that IMT cannot offensively use the statute to invalidate the assignment. Alternatively, 33 Carpentersargued its conduct did not violate Iowa Code chapters 522C or 507A.

*2 On April 4, the district court granted IMT’s motion for summary judgment. The district court, quoting section 522C.2(7)(a), concluded that

it is clear 33 Carpenters was acting as an unlicensed public adjuster by “acting for or aiding [Gordon] in negotiating for oreffecting the settlement [with IMT] of a first-party claim for loss or damage to real ... property of [Gordon].”

The district court rejected 33 Carpenters’ argument that the Iowa Insurance Commissioner is solely authorized to considerwhether it was operating as an unlicensed public adjuster. The district court relied on the court of appeals decision in 33Carpenters Construction, Inc. v. Cincinnati Insurance Company in rejecting the same argument and holding an equivalentassignment to 33 Carpenters is unenforceable. No. 17-1979, 2019 WL 478254 (Iowa Ct. App. Feb. 6, 2019). 33 Carpentersappealed, and we retained the appeal.

33 Carpenters Construction, Inc. v. IMT Insurance Company, --- N.W.2d ---- (2020)

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We adjudicated the validity of such an assignment in a decision we also file today, 33 Carpenters Construction, Inc. v. StateFarm Life & Casualty Co., ––– N.W.2d ––––, ––––, 2020 WL 739074 (Iowa 2020). There, we held that an assignment contractentered 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 the assignment contract at issue here is void and unenforceable undersection 103A.71(5), and we reject the argument that the Iowa Insurance Commissioner has sole authority to enforce the licensingrequirements for public adjusters. Therefore, we affirm the district court’s summary judgment.

AFFIRMED.

All Citations

--- N.W.2d ----, 2020 WL 739088

Footnotes1 Only Gordon signed the Insurance Contingency document.

End of Document © 2020 Thomson Reuters. No claim to original U.S. Government Works.