Broad v. Randy Bauer Ins. Agency

788 	275 Nebraska reports
CoNCLUsIoN
[8] In a malpractice action involving professional negli-
gence, the burden of proof is upon the plaintiff to demonstrate
the generally recognized medical standard of care, that there
was a deviation from that standard by the defendant, and that
the deviation was the proximate cause of the plaintiff’s alleged
injuries. Karel v. Nebraska Health Sys., 274 Neb. 175, 738
N.W.2d 831 (2007). We view the evidence in the light most
favorable to rankin and give her the benefit of all reasonable
inferences deducible from the evidence. see Neiman v. Tri R
Angus, 274 Neb. 252, 739 N.W.2d 182 (2007).
the issue presented was whether rankin had produced com-
petent expert testimony showing that any actions or inactions
of the defendants were a proximate cause of her injury. Gross’
opinion that early surgical decompression would more likely
than not have led to an improved outcome for rankin was
sufficient to establish an issue of fact concerning causation.
since there remains a material issue of fact in dispute, the dis-
trict court erred in granting summary judgment. therefore, we
reverse the judgment of the district court and remand the cause
for further proceedings.
R eveRsed and Remanded foR
fuRtheR pRoceedings .
maRy e. BRoad , successoR peRsonal R epResentative of
the estate of david d. schekall , deceased , appellant ,
v . R andy B aueR insuRance agency , inc .,
and R andy s. B aueR, appellees .
749 N.W.2d 478
Filed May 30, 2008. 	No. s-06-844.
1. Summary Judgment. summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue regarding any material
fact or the ultimate inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
appellate court views the evidence in the light most favorable to the party against
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www.nebraska.gov/apps-courts-epub/
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whom the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
3. Complaints: Appeal and Error. Whether a complaint states a cause of action is a
question of law, which requires an appellate court to reach a conclusion indepen-
dent of the trial court.
4. Insurance: Brokers: Principal and Agent. Whether an insurance intermediary is
an agent of the insured or the insurer is generally a question of fact.
5. Contracts: Principal and Agent: Liability. When a party contracts with a known
agent acting within the scope of his or her authority for a disclosed principal, the
contract is that of the principal only and the agent cannot be held personally liable
thereon, unless the agent purports to bind himself or herself, or has otherwise
bound himself or herself, to performance of the contract.
6. Breach of Contract: Insurance: Principal and Agent: Liability. an action for
breach of contract to procure insurance is inappropriate when brought against an
insurer’s agent who, within the scope of his or her authority, contracted on behalf
of the disclosed principal and did not bind himself or herself personally.
7. Actions: Breach of Contract: Insurance: Brokers. a claim against a broker for
breach of contract to procure insurance is a valid cause of action.
appeal from the District Court for scotts bluff County:
BRian c. silveRman, Judge. reversed and remanded for further
proceedings.
John F. simmons and steven W. olsen, of simmons olsen
Law Firm, p.C., for appellant.
Michael J. Javoronok, of Michael J. Javoronok Law Firm, for
appellees.
heavican , 	c.J., 	WRight , 	connolly , 	geRRaRd , 	stephan ,
mccoRmack , and milleR-leRman , JJ.
connolly , J.
sUMMarY
the personal representative of David D. schekall’s estate
appeals the district court’s order granting the appellees’ motion
for summary judgment. David and a passenger were killed in
an automobile accident. the personal representative sued randy
s. bauer and the randy bauer Insurance agency, Inc. (collec-
tively bauer), for breach of an agreement to procure insurance
coverage for David. the personal representative alleged bauer
failed to obtain the insurance he had agreed to procure and, as
broaD v. raNDY baUer INs. aGeNCY 	789
Cite as 275 Neb. 788

790 	275 Nebraska reports
a result, David’s estate had to pay $165,000 to settle a suit by
the passenger’s estate.
the district court granted bauer’s motion for summary judg-
ment. the court concluded David should have read his policies.
according to the court, either David read the policies and was
satisfied with their coverage or he did not read them. the court
reasoned that bauer was insulated from liability if David failed
to read the policies.
We conclude that the threshold issue of law is whether the
personal representative has stated a valid cause of action. We
recognize a breach of contract action for “failure to procure” for
claims against a broker acting on behalf of an insured, but not
against an agent acting solely on behalf of a disclosed insurer.
We also conclude there are genuine issues of material fact
whether bauer was a broker or an agent. We therefore decline
to decide whether an insured’s failure to read a policy insulates
an insurance broker from contract liability for failure to procure
requested coverage. We reverse, and remand.
baCkGroUND
David’s parents, Jim and Donna schekall, had a 9-year insur-
ance relationship with bauer. on December 31, 2002, Jim and
Donna met with bauer to review their insurance coverage. David
also attended the meeting. David had recently moved back to
Hemingford, Nebraska, to start his own farming operation. He
had obtained land and cattle and needed insurance coverage.
according to Jim’s affidavit, the parties agreed at the meet-
ing that bauer would obtain the same coverage and policies for
David that he had obtained for Jim and Donna—except Jim and
Donna would have $3 million in personal liability umbrella cov-
erage and David would have $1 million in the same coverage.
according to bauer’s affidavit, Jim and Donna told him
that David needed a farm and ranch premises/personal liabil-
ity policy. bauer’s affidavit also states that David told him he
had homeowners and automobile insurance with an indepen-
dent insurance agent. bauer’s affidavit claims David “never
requested [bauer’s] advice on the adequacy of that insurance,
on umbrella policies, or the adequacy of any other insurance
that he had, nor did [bauer] give such advi[c]e.”

bauer issued David a farm and ranch premises/personal
liability policy, which was effective on December 31, 2002.
on July 10, 2003, bauer issued a separate “farm/ranch” policy
to David because David had mortgaged farm equipment that
required a different type of coverage than a farm and ranch
premises/personal liability policy.
David and his passenger were killed in an automobile acci-
dent in august 2003. the passenger’s estate sued David’s
estate. Neither the December 31, 2002, policy nor the July 10,
2003, policy provided personal liability umbrella coverage. the
only available coverage was an allied Insurance policy that
provided a maximum $100,000 liability coverage. this amount
was inadequate to settle the claims made by the passenger’s
estate. David’s estate paid an additional $165,000 to settle
the claim.
the December 31, 2002, and July 10, 2003, policies were
attached to bauer’s affidavit. the December 31, 2002, policy
expressly excludes from personal liability coverage any bodily
injury arising out of the operation of a motor vehicle. the
July 10, 2003, policy contains a similar exclusion from liabil-
ity coverage. the parties do not know whether David read
these policies.
the personal representative of David’s estate sued bauer. the
amended complaint alleged bauer “breached [an] agreement
with plaintiff to provide personal liability coverage that would
have provided coverage in the case of an automobile accident.”
bauer moved for summary judgment. the trial court found
that the policies were not ambiguous and that they did not pro-
vide coverage for automobiles or any umbrella protection. the
court determined David had an obligation to read the policies
and stated, “He either read the same and was satisfied with
the coverage or did not, in which case his failure insulates the
insurance agent and the agency from liability.” the court granted
bauer’s motion for summary judgment.
assIGNMeNts oF error
the personal representative of David’s estate assigns, restated,
that the court erred in (1) determining there was no genuine
issue of material fact, (2) determining that David’s opportunity
broaD v. raNDY baUer INs. aGeNCY 	791
Cite as 275 Neb. 788

792 	275 Nebraska reports
to read the policy insulated bauer from liability, and (3) granting
bauer’s motion for summary judgment.
staNDarD oF reVIeW
[1,2] summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue
regarding any material fact or the ultimate inferences that may
be drawn from those facts and that the moving party is entitled
to judgment as a matter of law.1 In reviewing a summary judg-
ment, we view the evidence in the light most favorable to the
party against whom the judgment is granted and give such
party the benefit of all reasonable inferences deducible from
the evidence.2
[3] Whether a complaint states a cause of action is a question
of law, which requires us to reach a conclusion independent of
the trial court.3
aNaLYsIs
as presented by the parties, the issue on appeal is whether
an insured’s failure to read an issued policy insulates an insur-
ance agent from liability for failure to “provide” the requested
coverage. but we do not reach that issue. Instead, we reverse the
district court’s summary judgment to resolve a factual issue.
We first identify the cause of action alleged by the personal
representative: breach of contract for failure to procure insur-
ance. We then review agency principles to determine the proper
context in which a party may bring an action for breach of
contract to procure insurance. We conclude that an issue of
material fact exists about whether the personal representative
properly stated a breach of contract claim against bauer.
the peRsonal R epResentative asseRts a claim foR
BReach of contRact to pRocuRe insuRance
our first question concerns the personal representative’s
claim: the personal representative alleges bauer’s breach of
1 Erickson v. U-Haul Internat., 274 Neb. 236, 738 N.W.2d 453 (2007).
2 Id.
3 see Trosper v. Bag ’N Save, 273 Neb. 855, 734 N.W.2d 704 (2007).

contract, but what was the contract bauer allegedly breached?
the amended complaint alleges that bauer breached an agree-
ment “to provide personal liability coverage that would have
provided coverage in the case of an automobile accident, and
would have provided additional coverage to pay the wrong-
ful death claim.” (emphasis supplied.) We do not read this as
an allegation that bauer promised David he was immediately
insured for automobile accident liability, i.e., that the agree-
ment was an oral contract of insurance.4 Instead, we read the
personal representative’s complaint to allege a breach of a
contract to procure the allegedly requested personal liability
coverage. the personal representative specifically states in her
brief that this “is an action at law against an insurance agent for
failure to procure the insurance it had promised to procure.”5
We now consider whether this is a proper cause of action.
an action foR BReach of contRact to pRocuRe insuRance
is an appRopRiate cause of action W hen
BRought against a BRokeR
We have recognized a negligence action for an insurance
agent’s failure to obtain insurance coverage: “an insurance agent
who agrees to obtain insurance for another but negligently fails
to do so is liable for the damage proximately caused by such
negligence; the measure of damages is the amount that would
have been due under the policy if it had been obtained by the
agent.”6 the personal representative directs us to two cases
that she claims “implicitly recognize a claim for breach of a
contract to procure insurance.”7 Yet, the personal representative
4 see, Continental Cas. Co. v. Calinger, 265 Neb. 557, 657 N.W.2d 925
(2003); Rodine v. Iowa Home Mutual Cas. Co., 171 Neb. 263, 106 N.W.2d
391 (1960); Whitehall v. Commonwealth Casualty Co., 125 Neb. 16, 248
N.W. 692 (1933).
5 brief for appellant at 1.
6 Dahlke v. John F. Zimmer Ins. Agency, 245 Neb. 800, 803, 515 N.W.2d 767,
770 (1994). accord Flamme v. Wolf Ins. Agency, 239 Neb. 465, 476 N.W.2d
802 (1991).
7 brief for appellant at 11. see, Hobbs v. Midwest Ins., Inc., 253 Neb. 278,
570 N.W.2d 525 (1997); Moore v. Hartford Fire Ins. Co., 240 Neb. 195, 481
N.W.2d 196 (1992).
broaD v. raNDY baUer INs. aGeNCY 	793
Cite as 275 Neb. 788

794 	275 Nebraska reports
does not direct us to any cases, nor has our research uncovered
any cases, in which we expressly recognized a cause of action
for breach of contract to procure insurance.
one commentator has explained, “In most jurisdictions, the
cause of action for an insurance agent’s failure to procure insur-
ance may be either in contract or in tort.”8 We believe, however,
that we must qualify the general rule that a plaintiff may bring
an action in contract for an insurance agent’s failure to procure
insurance. to provide context for our qualification, we first
digress and address agency principles.
[4] We have often used the term “insurance agent” loosely.
and other courts often do the same. but because the term
invokes agency principles, we must identify the principal for
whom the insurance intermediary is an agent. “a party who
negotiates an insurance contract to cover someone else’s risk
is acting as an agent for either the insured or the insurer.”9
Depending on whose interests the “insurance agent” is repre-
senting, he or she may be a “broker” or an “agent.” a critical
distinction exists:
a representative of the insured is known as an “insur-
ance broker.” a broker represents the insured by acting
as a middleman between the insured and the insurer,
soliciting insurance from the public under no employment
from any special company, and, upon securing an order,
places it with a company selected by the insured, or if the
insured has no preference, with a company selected by
the broker. In contrast, an “insurance agent” represents an
insurer under an exclusive employment agreement by the
insurance company.10
Whether an insurance intermediary is an agent of the insured or
the insurer is generally a question of fact.11
8 12 eric Mills Holmes, Holmes’ appleman on Insurance 2d § 83.4 at 125
(1999). see, also, 43 am. Jur. 2d Insurance § 163 (2003).
9 3 Lee r. russ & thomas F. segalla, Couch on Insurance 3d § 45:1 at 45-2
(2007).
10 Id. at 45-2 to 45-3. see, also, Moore, supra note 7 (quoting 3 George J.
Couch, Cyclopedia of Insurance Law § 25:93 (rev. 2d ed. 1984)).
11 Moore, supra note 7.

Having 	recognized 	the 	distinction 	between 	a 	“broker”
(the insured’s agent) and an “agent” (the insurer’s agent),
we consider how agency principles affect the intermediary’s
contract liability.
[5-7] When a party contracts with a known agent acting
within the scope of his or her authority for a disclosed princi-
pal, the contract is that of the principal only and the agent can-
not be held personally liable thereon, unless the agent purports
to bind himself or herself, or has otherwise bound himself or
herself, to performance of the contract.12 Commentators have
recognized this principle in the insurance context:
In the absence of an express undertaking of a broader
duty, an agent of the insurer who acts in an authorized,
lawful manner is not personally liable to the insured for
his or her acts or for any contracts which the agent makes
on behalf of his or her disclosed principal . . . .13
We conclude that an action for breach of contract to procure
insurance is inappropriate when brought against an insurer’s
agent who, within the scope of his or her authority, contracted
on behalf of the disclosed principal and did not bind himself
or herself personally. specifically, an insurance agent’s mere
promise to procure requested coverage through his sole princi-
pal is insufficient to create the agent’s personal liability because
that promise is clearly within the scope of the agent’s author-
ity.14 However, we will recognize a cause of action against a
broker for breach of contract to procure insurance because the
broker is the insured’s agent.
12 see, Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88 (1991); Coffey
v. Mann, 7 Neb. app. 805, 585 N.W.2d 518 (1998).
13 4 Lee r. russ & thomas F. segalla, Couch on Insurance 3d § 55:1 at 55-3
(2005). see, also, 7 eric Mills Holmes, Holmes’ appleman on Insurance 2d
§ 44.7 (1998).
14 see Gieseke v. Hardware Dealers Mut. Fire Ins. Co., 46 Ill. app. 2d 131,
195 N.e.2d 32 (1963).
broaD v. raNDY baUer INs. aGeNCY 	795
Cite as 275 Neb. 788

796 	275 Nebraska reports
a Q uestion of fact R emains R egaRding W hetheR the
peRsonal R epResentative ’ s claim Was
a valid claim against B aueR
In 	her 	amended 	complaint, 	the 	personal 	representative
alleges that bauer’s “business is to market, advise, recom-
mend, and sell policies of insurance and coverages through
state Farm Insurance Company.” this statement may sug-
gest that bauer was an agent solely for state Farm Insurance
Company, acting within the scope of his authority, when he
allegedly agreed to procure personal liability coverage for
David. If true, the personal representative’s breach of contract
claim against bauer does not state a valid cause of action. the
pleadings fail to show that bauer expressly agreed to undertake
a broader duty that would have rendered him personally liable
on that agreement.15 the personal representative’s statement
in the complaint, however, is the extent of information in the
record regarding bauer’s relationship to an insurer. an issue of
material fact remains regarding whether bauer was solely the
insurer’s agent or an independent broker. as such, we cannot
determine whether the personal representative properly stated a
claim against bauer.
R eveRse and R emand to R esolve this factual issue
If bauer was an agent solely for state Farm Insurance
Company, and was acting within the scope of his authority
when he allegedly contracted with David, the personal repre-
sentative’s breach of contract action against bauer would fail
for that reason alone. because this threshold issue of fact has
not been resolved, we decline to decide whether an insured’s
failure to read a policy would be a valid defense in a contract
action for a broker’s failure to procure requested coverage. We
reverse the district court’s summary judgment and remand the
cause to resolve this factual issue. If the facts show bauer was
acting as a broker, the parties can present arguments to the
district court regarding the effects of David’s alleged failure to
read the policy.
15 see id.

CoNCLUsIoN
We decline to recognize a cause of action for an insured’s
allegations against an insurance agent acting solely on behalf
of a disclosed insurer that the agent breached an agreement
to procure the insured’s requested coverage. We do, however,
recognize such a claim against an insurance broker acting on
behalf of the insured.
We also decline to decide whether an insured’s failure to
read a policy is a valid defense in a contract action against a
broker for failure to procure requested insurance coverage. a
threshold factual issue regarding the agency relationship has
not been resolved. therefore, we reverse the district court’s
summary judgment and remand the cause for further proceed-
ings consistent with this opinion.
R eveRsed and Remanded foR
fuRtheR pRoceedings .
JcB enteRpRises , inc ., doing Business as B ill ’ s liQuoR
W est , appellant , v . neBRaska liQuoR contRol
commission , appellee .
749 N.W.2d 873
Filed May 30, 2008. 	No. s-06-1373.
1. Administrative Law: Judgments: Appeal and Error. a judgment or final order
rendered by a district court in a judicial review pursuant to the administrative
procedure act may be reversed, vacated, or modified by an appellate court for
errors appearing on the record.
2. ____: ____: ____. When reviewing an order of a district court under the
administrative procedure act for errors appearing on the record, the inquiry is
whether the decision conforms to the law, is supported by competent evidence,
and is neither arbitrary, capricious, nor unreasonable.
3. Administrative Law: Presumptions. administrative adjudicators serve with a
presumption of honesty and integrity.
4. Administrative Law. administrative adjudicators must avoid an appearance
of impropriety.
5. Administrative Law: Liquor Licenses: Evidence. the Nebraska Liquor Control
Commission’s decisions in contested cases are to be decided on the evidence
adduced during the proceedings involving those contested cases.
6. Administrative Law: Liquor Licenses: Public Meetings: Due Process. the
Nebraska Liquor Control Commission should conduct its proceedings in such a
JCb eNters. v. Nebraska LIq. CoNt. CoMM. 	797
Cite as 275 Neb. 797