Countryside Co-op v. Harry A. Koch Co.

of similar ordinance were conflict preempted whereas hous-
ing provisions were field preempted). I agree with the opinion
that an issue of preemption is no doubt present in the federal
cases, and poses federal questions, and that the resolution of
the preemption issue, in the absence of a state law claim, may
well resolve the entire federal controversy. I would not assume
the preemption outcome to be the same with respect to the
distinct issues regarding housing and employment and would
not assume for certification purposes that construction of state
law necessarily lacks relevance in equal measure as to housing
and employment.
Because the showing in this request lacks specificity regard-
ing the nature of the challenge in the federal consolidated case
and the question does not direct us to the specific state law at
issue, I agree with the opinion which declines this request.
C ountryside C ooperative and M iChigan M illers Mutual
insuranCe C oMpany, appellees and Cross -appellants , v.
the harry a. KoCh C o., appellant and Cross -appellee .
790 N.W.2d 873
Filed November 12, 2010. 	No. S-09-896.
1. Actions: Parties: Standing. Whether a party who commences an action has
standing and is therefore the real party in interest presents a jurisdictional issue.
2. Judgments: Jurisdiction: Appeal and Error. A jurisdictional issue that does
not involve a factual dispute presents a question of law, which an appellate court
independently decides.
3. Insurance: Contracts. The interpretation of an insurance policy is a question
of law.
4. Judgments: Appeal and Error. In reviewing questions of law, an appellate court
resolves the question independently of the lower court’s conclusion.
5. Summary Judgment: Appeal and Error. An appellate court will affirm a lower
court’s granting of summary judgment if the pleadings and admissible evidence
offered at the hearing show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.
6. Actions: Parties: Statutes: Public Policy. Neb. Rev. Stat. § 25-301 (Reissue
2008) provides that every action shall be prosecuted in the name of the real party
in interest. The purpose of the statute is to prevent the prosecution of actions
by persons who have no right, title, or interest in the cause. The statute also
couNTRySIde co-op v. hARRy A. koch co. 	795
cite as 280 Neb. 795
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:47 AM CST

discourages harassing litigation and keeps litigation within certain bounds in the
interest of sound public policy.
7. Actions: Parties: Standing. The focus of the real party in interest inquiry is
whether the party has standing to sue due to some real interest in the cause of
action, or a legal or equitable right, title, or interest in the subject matter of the
controversy. The purpose of the inquiry is to determine whether the party has a
legally protectable interest or right in the controversy that would benefit by the
relief to be granted.
8. Insurance: Brokers: Principal and Agent. An insurance broker acts as an agent
of the insured.
9. Trial: Evidence: Damages. under the collateral source rule, the fact that the
party seeking recovery has been wholly or partially indemnified for a loss
by insurance or otherwise cannot be set up by the wrongdoer in mitigation
of damages.
10. Appeal and Error. errors argued but not assigned will not be considered
on appeal.
11. Subrogation: Words and Phrases. Generally, subrogation is the right of one,
who has paid an obligation which another should have paid, to be indemnified by
the other.
12. ____: ____. Subrogation is the substitution of one person in the place of another
with reference to a lawful claim, demand, or right, so that the one who is substi-
tuted succeeds to the rights of the other in relation to the debt or claim, and its
rights, remedies, or securities.
13. Subrogation: Liability. The doctrine of subrogation applies where a party is
compelled to pay the debt of a third person to protect his or her own rights or
interest, or to save his or her own property.
14. ____: ____. To be entitled to subrogation, one must pay a debt for which another
is liable.
15. Insurance: Contracts: Subrogation: Tort-feasors. In the context of insurance,
the right to subrogation is based on two premises: (1) A wrongdoer should reim-
burse an insurer for payments that the insurer has made to its insured, and (2)
an insured should not be allowed to recover twice from the insured’s insurer and
the tort-feasor.
16. Insurance: Contracts: Claims: Time. A claims-made policy provides coverage
only where a claim is made and reported to the insurance carrier during the policy
period or a specified period thereafter.
17. ____: ____: ____: ____. Where an insurance policy requires that a claim be made
and reported during the policy period or an extended reporting period in order
for the loss to be treated as falling within the coverage of the policy, failure to
comply with the reporting requirement is sufficient to defeat coverage without a
showing of prejudice to the insurer in the absence of a specific policy provision
to the contrary.
18. Insurance: Brokers: Principal and Agent. As a general principle, it is not nec-
essary for an insured, in order to recover from the broker or agent, to show that
he or she has sued the insurance company.
19. Laches: Equity: Estoppel. In Nebraska, both laches and equitable estoppel are
affirmative defenses.
796 	280 NeBRASkA RepoRTS

20. Pleadings. An affirmative defense must be specifically pled to be considered.
21. Appeal and Error. An issue not presented to or passed on by the trial court is not
appropriate for consideration on appeal.
22. Prejudgment Interest: Appeal and Error. prejudgment interest may be awarded
only as provided in Neb. Rev. Stat. § 45-103.02 (Reissue 2004), and whether
prejudgment interest should be awarded is reviewed de novo on appeal.
23. Prejudgment Interest: Claims. prejudgment interest under Neb. Rev. Stat.
§ 45-103.02 (Reissue 2004) is recoverable only when the claim is liquidated, that
is, when there is no reasonable controversy as to either the plaintiff’s right to
recover or the amount of such recovery. A two-pronged inquiry is required. There
must be no dispute either as to the amount due or as to the plaintiff’s right to
recover, or both.
Appeal from the district court for Lancaster county: Jeffre
C heuvront, Judge. Affirmed.
chad G. Marzen and dan h. ketcham, of engles, ketcham,
olson & keith, p.c., and kenneth R. Rothschild and Audrey
L. Shields, of Golden, Rothschild, Spagnola, Lundell, Levitt &
Boylan, p.c., for appellant.
Terry R. Wittler, of cline, Williams, Wright, Johnson &
oldfather, L.L.p., for appellees.
heaviCan, C.J., C onnolly, gerrard, stephan, MCC orMaCK,
and M iller-lerMan, JJ.
stephan, J.
This is a negligence action against The harry A. koch
co. (koch), an insurance broker. countryside cooperative
(countryside) and Michigan Millers Mutual Insurance company
(Michigan Millers) allege that they sustained damages when
koch failed to timely report a personal injury claim against
countryside to the company that insured countryside under
a claims-made policy. koch appeals from a judgment in favor
of countryside and Michigan Millers, and countryside and
Michigan Millers cross-appeal. We affirm the judgment of the
district court.
I. BAckGRouNd
In late october 2004, William Boden was working on
his property in rural Lancaster county. A tank owned by
countryside and filled with anhydrous ammonia was mounted
couNTRySIde co-op v. hARRy A. koch co. 	797
cite as 280 Neb. 795

on a trailer and parked on land adjacent to the property where
Boden was working. Boden subsequently sued countryside,
alleging that the tank leaked and that he suffered extensive
physical injuries as a result of his exposure to the anhy-
drous ammonia.
At the time of this incident, countryside, formerly known
as Firth cooperative co., Inc., was insured under two liabil-
ity insurance policies: a commercial general liability policy
issued by Michigan Millers and a commercial pollution legal
liability policy issued by American International Specialty
Lines 	Insurance 	company 	(American 	International). 	The
American International policy was a claims-made policy,
and koch was the broker for countryside on the policy.
countryside timely notified koch of the Boden claim, but
koch did not notify American International until several
days after the reporting period in the American International
policy had expired. Michigan Millers was timely notified of
the Boden claim.
American 	International 	subsequently 	refused 	to 	defend
countryside against Boden’s claim on grounds that (1) Boden’s
claim was not reported within the time periods specified in the
policy, (2) countryside was not an insured under the policy,
(3) an underground tank exclusion in the policy applied, and
(4) a “known contamination” exclusion in the policy applied.
Michigan Millers defended countryside under its policy and
eventually settled Boden’s claim for $900,000.
After the settlement with Boden was concluded, countryside
and 	Michigan 	Millers 	entered 	into 	a 	“Memorandum 	of
understanding” in which they agreed to jointly sue koch based
upon koch’s alleged negligence in failing to timely report
the Boden claim to American International. Michigan Millers
agreed to control the litigation and pay all attorney fees and
costs, and countryside agreed to cooperate fully in the pros-
ecution of the action and execute any necessary documents. It
was also agreed that countryside would receive 2 percent of
the net proceeds of a judgment or settlement and that Michigan
Millers would receive the remaining 98 percent.
countryside and Michigan Millers filed this action against
koch on december 12, 2006, alleging that koch’s negligence
798 	280 NeBRASkA RepoRTS

in failing to timely report the Boden claim to American
International resulted in damages because countryside lost
the benefit of the American International policy. After koch
answered, both parties filed motions for summary judgment
on the issue of koch’s liability. The district court denied both
motions after an evidentiary hearing, ruling in part that gen-
uine issues of material fact existed as to whether the American
International policy would have applied to the Boden claim
but for koch’s failure to give timely notice. But in its order,
the district court determined that Michigan Millers sustained
a loss by reason of defending and settling the Boden claim
and, pursuant to the memorandum of understanding, had
standing to bring the action. The court also rejected koch’s
contention that countryside had not suffered any loss because
Michigan Millers had defended Boden’s lawsuit and paid the
settlement, noting that the memorandum of understanding and
the collateral source rule refuted this contention. The court
also determined that because the action was brought under a
negligence theory, American International was not a neces-
sary party.
The parties subsequently filed renewed motions for sum-
mary judgment. After reviewing the previously submitted
evidence and receiving one additional exhibit, the district
court determined (1) that no genuine issues of material fact
existed, (2) that countryside was a named insured under the
American International policy, (3) that none of the policy
exclusions applied, (4) that countryside’s right to cover-
age under the American International policy “was lost due
to koch’s failure to notify [American International] within
the policy period or extended reporting period,” and (5) that
American International would have been obligated to defend
countryside on the Boden claim if proper notice had been
given by koch. The court reiterated its previous determina-
tions regarding the standing of countryside and Michigan
Millers to maintain the action.
The parties then waived a jury trial and submitted the issue
of damages to the court on a stipulation of facts. The court
determined that both the Michigan Millers and the American
International policies included “other insurance” clauses which
couNTRySIde co-op v. hARRy A. koch co. 	799
cite as 280 Neb. 795

provided that if each policy was primary, then the loss would
be shared equally up to the policy limits. The court held that
both policies were primary, and therefore awarded countryside
and Michigan Millers one-half of the $900,000 settlement
amount, one-half of the $37,445.49 incurred by Michigan
Millers defending the Boden claim, and attorney fees incurred
by countryside in the amount of $9,514.39, for a total judg-
ment against koch of $478,237.14. After koch’s motion for
new trial or to reconsider was overruled, it filed this timely
appeal. We granted a petition to bypass filed by countryside
and Michigan Millers.
II. ASSIGNMeNTS oF eRRoR
koch assigns that the district court erred in entering judg-
ment 	for 	countryside 	and 	Michigan 	Millers, 	because 	(1)
there was no valid assignment of rights from countryside to
Michigan Millers, (2) koch did not owe any duty to Michigan
Millers, (3) countryside did not sustain a loss, (4) the American
International policy was a windfall policy to Michigan Millers
and therefore Michigan Millers had no right to assert coverage
or receive the benefit of the American International policy, and
(5) Michigan Millers failed to pursue American International’s
denial of the Boden claim.
on cross-appeal, countryside and Michigan Millers assign
that the district court erred in failing to award as damages the
full amount of the Boden settlement and in failing to award
prejudgment interest.
III. STANdARd oF ReVIeW
[1,2] Whether a party who commences an action has stand-
ing and is therefore the real party in interest presents a juris-
dictional issue.1 A jurisdictional issue that does not involve a
factual dispute presents a question of law, which we indepen-
dently decide.2
1 In re Estate of Hedke, 278 Neb. 727, 775 N.W.2d 13 (2009); Burnison v.
Johnston, 277 Neb. 622, 764 N.W.2d 96 (2009).
2 Id.
800 	280 NeBRASkA RepoRTS

[3,4] The interpretation of an insurance policy is a ques-
tion of law.3 In reviewing questions of law, an appellate
court resolves the question independently of the lower court’s
conclusion.4
[5] An appellate court will affirm a lower court’s granting
of summary judgment if the pleadings and admissible evidence
offered at the hearing show that there is no genuine issue as to
any material facts or as to the ultimate inferences that may be
drawn from those facts and that the moving party is entitled to
judgment as a matter of law.5
IV. ANALySIS
1. KoCh’s appeal
(a) Real party in Interest
For various reasons, koch contends that neither countryside
nor Michigan Millers possessed rights or interests which
would entitle either of them to recover damages in this case.
We generally interpret these arguments to assert that neither
countryside nor Michigan Millers is a real party in interest in
this case.
[6,7] Neb. Rev. Stat. § 25-301 (Reissue 2008) provides that
“[e]very action shall be prosecuted in the name of the real
party in interest . . . .” The purpose of the statute is to prevent
the prosecution of actions by persons who have no right, title,
or interest in the cause.6 The statute also discourages harass-
ing litigation and keeps litigation within certain bounds in the
interest of sound public policy.7 The focus of the real party in
interest inquiry is whether the party has standing to sue due to
some real interest in the cause of action, or a legal or equitable
3 Dutton-Lainson Co. v. Continental Ins. Co., 279 Neb. 365, 778 N.W.2d
433 (2010); Rickerl v. Farmers Ins. Exch., 277 Neb. 446, 763 N.W.2d 86
(2009).
4 Id.
5 Community Dev. Agency v. PRP Holdings, 277 Neb. 1015, 767 N.W.2d 68
(2009).
6 Schmidt v. Henke, 192 Neb. 408, 222 N.W.2d 114 (1974); Scholting v.
Alley, 185 Neb. 549, 178 N.W.2d 273 (1970).
7 Id.
couNTRySIde co-op v. hARRy A. koch co. 	801
cite as 280 Neb. 795

right, title, or interest in the subject matter of the controversy.8
The purpose of the inquiry is to determine whether the party
has a legally protectable interest or right in the controversy that
would benefit by the relief to be granted.9 We examine koch’s
arguments with respect to each party separately.
(i) Countryside
[8] 	It 	is 	uncontroverted 	that 	koch 	acted 	as 	a 	broker
with respect to the American International policy issued to
countryside. An insurance broker acts as an agent of the
insured.10 We have recognized that a broker who agrees to
obtain insurance coverage for another but fails to do so is liable
for damage proximately caused by such negligence, including
the amount that would have been due under such policy if it
had been obtained.11 In this case, countryside alleged that it
reported the Boden claim to koch and that koch undertook
to report the claim to American International within the time
period specified in its policy but negligently failed to do so.
koch does not dispute that it had a duty to countryside to
timely report the Boden claim to American International or that
it breached such duty. Rather, it argues that because the Boden
claim and related defense costs were paid by Michigan Millers
under its policy, countryside did not suffer a loss and therefore
could not maintain this action.
[9] 	The 	district 	court 	rejected 	koch’s 	argument 	that
countryside had suffered no loss by relying upon the col-
lateral source rule. under the collateral source rule, the fact
that the party seeking recovery has been wholly or partially
indemnified for a loss by insurance or otherwise cannot be set
8 See, Stevens v. Downing, Alexander, 269 Neb. 347, 693 N.W.2d 532
(2005); Misle v. Misle, 247 Neb. 592, 529 N.W.2d 54 (1995).
9 Id.
10 See, Broad v. Randy Bauer Ins. Agency, 275 Neb. 788, 749 N.W.2d 478
(2008); Moore v. Hartford Fire Ins. Co., 240 Neb. 195, 481 N.W.2d 196
(1992). See 3 Lee R. Russ & Thomas F. Segalla, couch on Insurance 3d
§ 45:1 (2007).
11 Flamme v. Wolf Ins. Agency, 239 Neb. 465, 476 N.W.2d 802 (1991);
Kenyon & Larsen v. Deyle, 205 Neb. 209, 286 N.W.2d 759 (1980).
802 	280 NeBRASkA RepoRTS

up by the wrongdoer in mitigation of damages.12 The collateral
source rule
“provides that benefits received by the plaintiff from a
source wholly independent of and collateral to the wrong-
doer will not diminish the damages otherwise recoverable
from the wrongdoer. The theory underlying the adoption
of this rule by a majority of jurisdictions is to prevent a
tort-feasor from escaping liability because of the act of
a third party, even if a possibility exists that the plaintiff
may be compensated twice.”13
here, countryside alleged that because of koch’s negli-
gence, it lost coverage for the Boden claim which would other-
wise have been provided under the American International
policy, for which countryside paid a premium. The pro-
vision of coverage under the Michigan Millers policy, for
which countryside also paid a premium, is a collateral source
with respect to countryside’s negligence claim against koch.
koch, as the alleged tort-feasor, cannot escape liability to
countryside on the basis of the benefits paid under the
Michigan Millers policy.
[10] We also note that the complaint included a claim for
defense costs incurred by countryside on the Boden claim
which were not paid by Michigan Millers, and these costs
were included in the final judgment for damages. Although
koch argues in its brief that these costs should not have been
included in the award of damages, koch makes no correspond-
ing assignment of error. We therefore do not address this issue
further because of the established principle that errors argued
but not assigned will not be considered on appeal.14
12 Fickle v. State, 274 Neb. 267, 759 N.W.2d 113 (2007); Mahoney v.
Nebraska Methodist Hosp., 251 Neb. 841, 560 N.W.2d 451 (1997);
Chadron Energy Corp. v. First Nat. Bank, 236 Neb. 173, 459 N.W.2d 718
(1990).
13 Mahoney v. Nebraska Methodist Hosp., supra note 12, 251 Neb. at 847,
560 N.W.2d at 456, quoting Hiway 20 Terminal, Inc. v. Tri-County Agri-
Supply, Inc., 232 Neb. 763, 443 N.W.2d 872 (1989).
14 Vokal v. Nebraska Acct. & Disclosure Comm., 276 Neb. 988, 759 N.W.2d
75 (2009); Agena v. Lancaster Cty. Bd. of Equal., 276 Neb. 851, 758
N.W.2d 363 (2008).
couNTRySIde co-op v. hARRy A. koch co. 	803
cite as 280 Neb. 795

We conclude from the record that countryside had rights
and interests which could be benefited by the relief sought in
this action and was therefore a real party in interest.
(ii) Michigan Millers
koch argues that Michigan Millers cannot be a real party
in interest “because there is no privity of contract between
koch and Michigan Millers, nor did koch owe any legal duty
to Michigan Millers.”15 But in making this argument, koch
concedes that it owed a duty to countryside. The district court
regarded the memorandum of understanding as an assignment
of countryside’s claim against koch to Michigan Millers. In its
appellate brief, koch assigns as error that “[t]here was no valid
assignment of rights from countryside to Michigan Millers,”
but includes no argument on this point. Because this alleged
error was not both specifically assigned and specifically argued
in koch’s brief, we do not reach it in this appeal.16 Instead, for
purposes of this appeal, we regard the memorandum of under-
standing as an assignment pursuant to which Michigan Millers
could maintain the action against koch.17
[11-15] Michigan Millers also has standing because of its
subrogation right arising from its payment of the Boden claim.
In Midwest PMS v. Olsen,18 an insurance carrier which had paid
a workers’ compensation claim on behalf of its insured sought
reimbursement from another insurance carrier which it alleged
to be liable for a portion of the settlement. We characterized
the claim as one of subrogation and summarized the applicable
principles as follows:
Generally, subrogation is the right of one, who has paid
an obligation which another should have paid, to be
indemnified by the other. It is the substitution of one
person in the place of another with reference to a lawful
claim, demand, or right, so that the one who is substituted
15 Brief for appellant at 19.
16 See Obad v. State, 277 Neb. 866, 766 N.W.2d 89 (2009).
17 See, Neb. Rev. Stat. § 25-302 (Reissue 2008); Eli’s Inc. v. Lemen, 256
Neb. 515, 591 N.W.2d 543 (1999).
18 Midwest PMS v. Olsen, 279 Neb. 492, 778 N.W.2d 727 (2010).
804 	280 NeBRASkA RepoRTS

succeeds to the rights of the other in relation to the debt
or claim, and its rights, remedies, or securities. The doc-
trine of subrogation applies where a party is compelled to
pay the debt of a third person to protect his or her own
rights or interest, or to save his or her own property. To
be entitled to subrogation, one must pay a debt for which
another is liable.19
In the context of insurance, the right to subrogation is based
on two premises: (1) A wrongdoer should reimburse an insurer
for payments that the insurer has made to its insured, and (2)
an insured should not be allowed to recover twice from the
insured’s insurer and the tort-feasor.20
In this case, it is claimed that but for koch’s negligence, the
American International policy would have provided liability
coverage to countryside for the Boden claim. had that occurred,
Michigan Millers’ liability to countryside on the Boden claim
would have been diminished by operation of the “other insur-
ance” clause in the Michigan Millers policy. Therefore, to the
extent that Michigan Millers paid more to countryside on the
Boden claim than it would have been required to pay if both
policies had been in force, it is subrogated to countryside’s
claim against koch for negligently failing to report the Boden
claim to American International. Recovery on the subrogation
claim does not constitute an “[u]nbargained for [w]indfall”21
to Michigan Millers, as koch contends, because Michigan
Millers’ policy specifically provides for a diminished exposure
in the event that its insured, countryside, had other insurance
coverage applicable to a claim which was also covered under
the Michigan Millers policy. For all of these reasons, Michigan
Millers is a real party in interest.
(b) denial of coverage by American International
koch argues that the claims of countryside and Michigan
Millers must fail because there has never been a judicial
19 Id. at 498, 778 N.W.2d at 732.
20 Jensen v. Board of Regents, 268 Neb. 512, 684 N.W.2d 537 (2004); Tri-Par
Investments v. Sousa, 268 Neb. 119, 680 N.W.2d 190 (2004).
21 Brief for appellant at 27.
couNTRySIde co-op v. hARRy A. koch co. 	805
cite as 280 Neb. 795

determination that the American International policy would
have applied to the Boden claim but for koch’s failure to
timely report the claim. We address each of koch’s arguments
in turn.
(i) Alternative Grounds for American
International’s Denial of Coverage
koch argues that the late report was only one of four
reasons given by American International for denying cover-
age on the Boden claim and that countryside and Michigan
Millers did not establish that the other three reasons given
by American International were invalid. We find no merit to
this argument.
The American International policy provided coverage for
“[b]odily [i]njury” resulting from “[p]ollution [c]onditions.”
The policy defined “pollution conditions” as “the discharge,
dispersal, release or escape of any solid, liquid, gaseous or
thermal irritant or contaminant.” The plain language of the
policy therefore clearly covered Boden’s claim that he was
physically injured by exposure to anhydrous ammonia leaking
from a tank owned by countryside.
The first alternative reason which American International
gave for denying coverage was that countryside was not an
insured under its policy. The record shows that the policy was
originally issued to “Firth cooperative co., Inc.” as the named
insured. But after Firth cooperative co. changed its name
to “countryside cooperative,” an endorsement was added to
the policy effective december 1, 2003, identifying the named
insured as “countryside cooperative.” We find nothing in the
record to contradict this evidence. Thus, the record establishes
as a matter of law that countryside was the named insured
under the American International policy.
The second alternative reason given by American International
for denying coverage was an exclusion for claims arising from
“pollution conditions resulting from an underground Storage
Tank” located on countryside’s property. But countryside’s
president averred that the Boden claim “was based upon alleged
release of anhydrous ammonia from a portable tank mounted
upon a trailer; it did not in any way involve underground
806 	280 NeBRASkA RepoRTS

storage tanks.” his deposition testimony further substantiated
this fact. And in responses to requests for admissions, koch
admitted that the Boden claim “involved an allegation of
ammonia escaping from an above ground tank.” We find no
evidence in the record from which a reasonable inference could
be drawn that the Boden claim involved an underground stor-
age tank. The record thus establishes as a matter of law that
this exclusion did not apply.
The third alternative reason given by American International
for denying coverage was an exclusion applicable to claims aris-
ing from a “known contamination” on countryside’s premises
as described in a 1995 report which is specifically identified in
the exclusion. The evidence discussed above establishes as a
matter of law that Boden’s claim involved an alleged leak in a
portable anhydrous ammonia tank which occurred on october
28, 2004, and was not in any way related to the 1995 contami-
nation described in the policy exclusion. The record establishes
as a matter of law that this exclusion did not apply.
(ii) Effect of Untimely Report of Claim
The American International policy obligated it to pay, on
behalf of countryside, claims for bodily injury, property dam-
age, or cleanup costs resulting from pollution conditions com-
mencing after december 13, 2002, “provided such claims are
first made against the Insured and reported to the company,
in writing, during the policy period, or during the extended
Reporting period if applicable.” The policy period ended on
december 13, 2004, and there was an automatic extended
reporting period of 60 days. The extended reporting period
therefore expired on February 11, 2005. There is undisputed
evidence that a representative of countryside reported the
Boden claim to koch on November 17, 2004, and requested that
it be submitted to American International. There is also undis-
puted evidence that despite assuring countryside that koch
would timely report the claim to American International, koch
did not do so until February 14, 2005. In denying coverage for
the Boden claim, American International cited the fact that this
report was not received within the time periods required under
its claims-made policy. koch argues that the district court erred
couNTRySIde co-op v. hARRy A. koch co. 	807
cite as 280 Neb. 795

in concluding as a matter of law that American International
was entitled to deny coverage on this basis, because there was
no showing that American International was prejudiced by
the delay.
[16] We have held that failure to give timely notice of a
claim to an insurer is not a defense to the claim unless there is
evidence of collusion or it is shown that the insurer has been
prejudiced in its handling of the claim.22 our cases applying
this principle have involved “occurrence” policies which pro-
vide coverage where the event resulting in liability occurs dur-
ing the policy period.23 As koch correctly notes, we have not
addressed the applicability of this principle to a claims-made
policy such as the American International policy. A claims-
made policy provides coverage only where a claim is made and
reported to the insurance carrier during the policy period or a
specified period thereafter.24
koch relies on Rentmeester v. Wis. Lawyers Mut. Ins.25 in
arguing that its untimely reporting of the Boden claim could
not justify American International’s denial of coverage in the
absence of a showing of prejudice. But in that case, the policy
included a provision specifically stating that failure to pro-
vide notice of a claim within the time period specified in the
policy “‘shall not invalidate or reduce a claim unless we are
prejudiced thereby, and it was reasonably possible to meet the
time limits.’”26 The American International policy includes no
such language, and Rentmeester is therefore distinguishable
and unpersuasive.
A majority of courts addressing the issue have held that the
failure to report a claim within the time periods specified in
a claims-made policy is sufficient to defeat coverage without
22 Steffensmeier v. Le Mars Mut. Ins. Co., 276 Neb. 86, 752 N.W.2d 155
(2008); Deprez v. Continental Western Ins. Co., 255 Neb. 381, 584 N.W.2d
805 (1998).
23 See id.
24 See Esmailzadeh v. Johnson and Speakman, 869 F.2d 422 (8th cir. 1989).
25 Rentmeester v. Wis. Lawyers Mut. Ins., 164 Wis. 2d 1, 473 N.W.2d 160
(Wis. App. 1991).
26 Id. at 8, 473 N.W.2d at 163.
808 	280 NeBRASkA RepoRTS

a showing of prejudice to the insurer.27 These holdings reflect
the essential difference between an occurrence policy and
a claims-made policy. As stated in Lexington Ins. Co. v. St.
Louis University28:
Both types of policies require the insured to promptly
notify the insurer of possible covered losses. With a
claims made policy, however, that notice is not simply
part of the insured’s duty to cooperate. It defines the lim-
its of the insurer’s obligation—if there is no timely notice,
there is no coverage.
under a claims-made policy, “the very description of the risk
covered include[s] the requirement that claims be both made
and reported within the policy period.”29 other courts character-
ize the timely reporting of the claim to the insurer as “the most
important characteristic”30 and the “essence”31 of a claims-made
policy, so that “failure to give timely notice forfeits coverage
under [a] claims-made policy as a matter of law.”32 Because of
this essential difference between occurrence and claims-made
policies, “allow[ing] an extension of reporting time where the
insurer failed to demonstrate prejudice in a claims-made policy
would extend the coverage the parties contracted for and, in
27 See, Lexington Ins. Co. v. St. Louis University, 88 F.3d 632 (8th cir.
1996); Esmailzadeh v. Johnson and Speakman, supra note 24; Simundson
v. United Coastal Ins. Co., 951 F. Supp. 165 (d.N.d. 1997); CMC v.
Executive Risk Indem., Inc., 151 N.h. 699, 867 A.2d 453 (2005); Tenovsky
v. Alliance Syndicate, Inc., 424 Mass. 678, 677 N.e.2d 1144 (1997); Gulf
Ins. Co. v. Dolan, Fertig and Curtis, 433 So. 2d 512 (Fla. 1983); Thoracic
Cardio. Assoc. v. St. Paul Fire, 181 Ariz. 449, 891 p.2d 916 (Ariz. App.
1994); Campbell & Co. v. Utica Mut. Ins. Co., 36 Ark. App. 143, 820
S.W.2d 284 (1991). See, also, 13 Lee R. Russ & Thomas F. Segalla, couch
on Insurance 3d § 186:13 (2005).
28 Lexington Ins. Co. v. St. Louis University, supra note 27, 88 F.3d at 634.
29 Esmailzadeh v. Johnson and Speakman, supra note 24, 869 F.2d at 425.
30 Simundson v. United Coastal Ins. Co., supra note 27, 951 F. Supp. at
167.
31 Gulf Ins. Co. v. Dolan, Fertig and Curtis, supra note 27, 433 So. 2d at
514.
32 CMC v. Executive Risk Indem., Inc., supra note 27, 151 N.h. at 704, 867
A.2d at 458.
couNTRySIde co-op v. hARRy A. koch co. 	809
cite as 280 Neb. 795

effect, rewrite the contract between the parties.”33 other courts
have reached similar conclusions.34
[17] We agree with the reasoning of these cases and hold
that where an insurance policy requires that a claim be made
and reported during the policy period or an extended reporting
period in order for the loss to be treated as falling within the
coverage of the policy, failure to comply with the reporting
requirement is sufficient to defeat coverage without a showing
of prejudice to the insurer in the absence of a specific policy
provision to the contrary. The district court did not err in con-
cluding as a matter of law that koch’s failure to timely report
the Boden claim was the sole reason that the claim was not
covered under the American International policy.
(c) other defenses
(i) Exhaustion of Remedies
[18] koch makes a general exhaustion of remedies argu-
ment, contending that the claims against it were barred by the
fact that countryside and Michigan Millers did not first sue
American International in order to obtain a judicial determi-
nation of American International’s liability under the claims-
made policy. We are not persuaded by this argument. As noted,
countryside and Michigan Millers proved in this action that
American International acted with justification in denying cov-
erage for the Boden claim because of koch’s failure to report
the claim as required by the policy. koch does not contend
that the settlement of the Boden claim was unreasonable, and
it stipulated that if called, appropriate witnesses would testify
in the form of opinion that the amount paid to Boden, as well
as the amount of attorney fees and costs paid by countryside
and Michigan Millers, was fair, reasonable, and necessary.
everything necessary to establish koch’s liability and the
amount of resulting damages was alleged and proved in this
action. As a general principle, “[i]t is not necessary for [an]
33 Campbell & Co. v. Utica Mut. Ins. Co., supra note 27, 36 Ark. App. at
150, 820 S.W.2d at 288.
34 Simundson v. United Coastal Ins. Co., supra note 27; Gulf Ins. Co. v.
Dolan, Fertig and Curtis, supra note 27.
810 	280 NeBRASkA RepoRTS

insured, in order to recover from the broker or agent, to show
that he or she has sued the insurance company.”35 We see no
reason to depart from this principle here.
(ii) Laches and Equitable Estoppel
[19-21] 	koch 	also 	argues 	that 	the 	claim 	asserted 	by
countryside and Michigan Millers in this action is barred by
the doctrines of laches and equitable estoppel. In Nebraska,
both laches and equitable estoppel are affirmative defenses.36
An affirmative defense must be specifically pled to be con-
sidered.37 koch did not specifically plead laches or equitable
estoppel in its answer, nor did it allege facts upon which the
defenses could reasonably be based. And the district court did
not address these issues. An issue not presented to or passed
on by the trial court is not appropriate for consideration on
appeal.38 We therefore do not address koch’s argument with
respect to these issues.
(iii) Failure of Michigan Millers to Pursue American
International’s Denial of Claim Pursuant
to Equitable Subrogation
koch 	makes 	a 	rather 	confusing 	argument 	that 	because
Michigan Millers was aware of the American International
policy but did not pursue a subrogation claim against American
International, it should be barred from recovery against koch.
We 	find 	no 	merit 	in 	this 	argument. 	Neither 	countryside
nor Michigan Millers could have recovered from American
35 44 c.J.S. Insurance § 312 at 431 (2007). See, Long Is. Lighting v. Steel
Derrick Barge FSC 99, 725 F.2d 839 (2d cir. 1984); Wolfswinkel v.
Gesink, 180 N.W.2d 452 (Iowa 1970).
36 See, Appleby v. Andreasen, 276 Neb. 926, 758 N.W.2d 615 (2008) (laches);
Vanice v. Oehm, 255 Neb. 166, 582 N.W.2d 615 (1998) (laches); Hughes
Co. v. Farmers Union Produce Co., 110 Neb. 736, 194 N.W. 872 (1923)
(equitable estoppel); Victory Lake Marine v. Velduis, 9 Neb. App. 815, 621
N.W.2d 306 (2000) (equitable estoppel).
37 Rosberg v. Lingenfelter, 246 Neb. 85, 516 N.W.2d 625 (1994); Diefenbaugh
v. Rachow, 244 Neb. 631, 508 N.W.2d 575 (1993).
38 Tolliver v. Visiting Nurse Assn., 278 Neb. 532, 771 N.W.2d 908 (2009);
Houston v. Metrovision, Inc., 267 Neb. 730, 677 N.W.2d 139 (2004).
couNTRySIde co-op v. hARRy A. koch co. 	811
cite as 280 Neb. 795

International, because coverage under its policy was negated by
the failure of koch to report the Boden claim in the time peri-
ods required by the policy. having paid amounts which should
have been paid by American International but for koch’s neg-
ligence, Michigan Millers was entitled to assert its subrogation
claim in this action, as explained more fully above.
(d) Summary
For the reasons discussed, we find no merit in any of koch’s
assignments of error.
2. C ross -appeal
(a) Total policy Insuring Intent Rule
In their complaint, countryside and Michigan Millers sought
the full amount of the Boden settlement and related defense
costs paid by Michigan Millers as damages in their claim
against koch. In their cross-appeal, they argue that the district
court erred in awarding only 50 percent of this amount.
Some additional background on this issue is necessary. Both
the Michigan Millers policy and the American International
policy contain similar “other insurance” clauses. The clause
in Michigan Millers’ policy provided that the insurance was
primary, except in limited circumstances not applicable to this
case. It further provided that if another applicable policy was
also primary, it would contribute by equal shares. The clause
in American International’s policy also provided that the insur-
ance was primary, and that if another policy was also primary,
it would contribute by equal shares.
In its order awarding damages, the district court noted the
similarity of the “other insurance” clauses of both policies, and
determined that both policies were primary, thus obligating
each insurer for an equal amount of the claim. The court con-
cluded: “While the ‘total policy insuring intent’ theory advo-
cated by [countryside and Michigan Millers], which has been
applied by the Minnesota courts, has some logic, this court will
defer to the appellate courts of this state if such a theory is to
be adopted here.”
The “total policy insuring intent rule” originated in a
circumstance where two insurance policies applicable to a
812 	280 NeBRASkA RepoRTS

claim contained conflicting “other insurance” clauses.39 In
that circumstance, the Minnesota Supreme court concluded
that instead of attempting to reconcile the policies, a better
approach is “to allocate respective policy coverages in the
light of the total policy insuring intent, as determined by
the primary policy risks upon which each policy’s premiums
were based and as determined by the primary function of
each policy.”40 under the total policy insuring intent rule,
if two applicable insurance policies have conflicting “other
insurance” clauses, the court will disregard both clauses
entirely, and instead attempt to ascertain which policy was
meant to cover the risk at issue by looking at the primary
function and intent of each policy.41 under the total policy
insuring intent test, “a policy designed to cover the risk in
question takes precedence over a policy which only inciden-
tally covers that risk.”42
While they do not contend that the “other insurance” clauses
found in the Michigan Millers and American International pol-
icies are in conflict, countryside and Michigan Millers argue
that this should not preclude application of the “total policy
insuring intent rule” under more recent cases which arguably
apply the rule in the absence of conflicting policy provi-
sions.43 They argue that because the American International
policy specifically insured against injury caused by pollution
and the Michigan Millers policy insured only against general
liability, the American International policy would have pro-
vided primary coverage for the Boden claim but for koch’s
negligence, and that therefore the full amount which would
39 Federal Insurance Co. v. Prestemon, 278 Minn. 218, 153 N.W.2d 429
(1967).
40 Id. at 231, 153 N.W.2d at 437.
41 See, Bettenburg v. Employers Liability Assurance Corp., Ltd., 350 F. Supp.
873 (d. Minn. 1972); Federal Insurance Co. v. Prestemon, supra note 39;
Redeemer Covenant Church v. Church Mut., 567 N.W.2d 71 (Minn. App.
1997).
42 15 Lee R. Russ & Thomas F. Segalla, couch on Insurance 3d § 219:44 at
219-52 to 219-53 (2005).
43 See Redeemer Covenant Church v. Church Mut., supra note 41.
couNTRySIde co-op v. hARRy A. koch co. 	813
cite as 280 Neb. 795

have been paid under that policy should be the measure of
damages for which koch is liable.
koch argues that in the absence of conflicting “other insur-
ance” clauses, Michigan Millers would have been responsible
for 50 percent of the Boden claim under the principle, well
established in our jurisprudence, that where the terms of an
insurance policy are clear, they are to be accorded their plain
and ordinary meaning.44 We agree with this argument and the
observation of one commentator that “[it] is unnecessary to
apply the total policy insuring intent test . . . where the ‘other
insurance’ clauses in overlapping insurance policies provide
a clear and consistent answer as to allocation of primary and
excess coverage.”45 Michigan Millers’ policy clearly provides
that if it and another policy are both primary, it will be obli-
gated for an equal share of a covered loss. That is precisely
how the district court computed the damage award, and it did
not err in doing so.
(b) prejudgment Interest
[22] countryside and Michigan Millers also contend in
their cross-appeal that the district court erred in not awarding
prejudgment interest. prejudgment interest may be awarded
only as provided in Neb. Rev. Stat. § 45-103.02 (Reissue
2004),46 and whether prejudgment interest should be awarded is
reviewed de novo on appeal.47
[23] prejudgment interest under § 45-103.02 is recoverable
only when the claim is liquidated, that is, when there is no rea-
sonable controversy as to either the plaintiff’s right to recover
or the amount of such recovery.48 A two-pronged inquiry is
44 See, Rickerl v. Farmers Ins. Exch., supra note 3; Steffensmeier v. Le Mars
Mut. Ins. Co., supra note 22.
45 15 Russ & Segalla, supra note 42, § 219.44 at 219-53.
46 Travelers Indemnity Co. v. International Nutrition, 273 Neb. 943, 734
N.W.2d 719 (2007); IBP, Inc. v. Sands, 252 Neb. 573, 563 N.W.2d 353
(1997).
47 Travelers Indemnity Co. v. International Nutrition, supra note 46; Ferer v.
Aaron Ferer & Sons, 272 Neb. 770, 725 N.W.2d 168 (2006).
48 Id.
814 	280 NeBRASkA RepoRTS

required. There must be no dispute either as to the amount due
or as to the plaintiff’s right to recover, or both.49 We conclude
that there was a reasonable controversy with respect to both
koch’s liability and the amount of potential damages, and
accordingly, the district court did not err in refusing to award
prejudgment interest under § 45-103.02.
V. coNcLuSIoN
For the reasons discussed, we affirm the judgment of the
district court.
affirMed.
Wright, J., not participating.
49 Id.
state of nebrasKa ex rel . C ounsel for disCipline
of the nebrasKa supreMe C ourt, relator , v.
WilliaM l. sWitzer , Jr ., respondent.
790 N.W.2d 433
Filed November 12, 2010. 	No. S-09-1095.
1. Disciplinary Proceedings. A proceeding to discipline an attorney is a trial de
novo on the record.
2. Disciplinary Proceedings: Proof. To sustain a charge in a disciplinary proceed-
ing against an attorney, the counsel for discipline must establish a charge by
clear and convincing evidence.
3. Disciplinary Proceedings: Appeal and Error. When no exceptions to the
referee’s findings of fact are filed, the Nebraska Supreme court may consider the
referee’s findings final and conclusive.
4. Disciplinary Proceedings. The basic issues in a disciplinary proceeding against
an attorney are whether the Nebraska Supreme court should impose discipline
and, if so, the appropriate discipline under the circumstances.
5. ____. To determine whether and to what extent discipline should be imposed in
an attorney discipline proceeding, the Nebraska Supreme court considers the fol-
lowing factors: (1) the nature of the offense, (2) the need for deterring others, (3)
the maintenance of the reputation of the bar as a whole, (4) the protection of the
public, (5) the attitude of the offender generally, and (6) the offender’s present or
future fitness to continue in the practice of law.
6. ____. In imposing attorney discipline, the Nebraska Supreme court evaluates
each case in the light of its particular facts and circumstances.
STATe ex ReL. couNSeL FoR dIS. v. SWITzeR 	815
cite as 280 Neb. 815