LUIS S. CUEVAS Administrator Ad Prosequendum of the ESTATE OF LINDAWATI TAN, deceased, Plaintiffs,

v.

CHRYSLER CORPORATION, DAIMLER CHRYSLER CORPORATION, EDI M. BARRERA–GONZALEZ, JOSE LOPEZ, AND THE MIGHTY ONE TRUCKING COMPANY, Defendants,

and

VELOCITY EXPRESS, Defendant/Third–Party

Plaintiff–Appellant,

v.

NATIONAL CONTINENTAL INSURANCE COMPANY, Third–Party Defendant-

Respondent,

and

A CLASSIC PLAN, INC., Third–Party Defendant.

 

DOCKET NO. A–6253–09T1

 

Superior Court of New Jersey, Appellate Division.

 

Submitted: May 11, 2011—Decided:

 

Before Judges Cuff and Fisher.

 

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L–2870–07.

Dempster & Haddix, attorneys for appellant Velocity Express (Catherine M. McCormick, on the brief).

 

Donohue Law Firm, P.C., attorneys for respondent National Continental Insurance Company (Robert Donohue, on the brief).

 

PER CURIAM

On August 24, 2005, defendant Edi M. Barrera–Gonzalez struck a car driven by Lindawati Tan, who died from the injuries sustained in the collision. Defendant Barrera–Gonzalez was driving a truck owned by defendant Jose Lopez, the sole proprietor of defendant The Mighty One Trucking Company (Mighty One). Lopez was hauling medical supplies as an independent contractor for defendant Velocity Express (Velocity).

 

Plaintiff Luis S. Cuevas, as administrator ad prosequendum of the estate of Tan, filed a complaint against Barrera–Gonzalez, Lopez, Mighty One, Velocity, and Chrysler Corporation and Daimler Chrysler Corporation (collectively Chrysler). In his June 1, 2007 complaint, Cuevas asserted strict liability and negligence claims against Chrysler and negligence claims against Barrera–Gonzalez, Lopez, Mighty One, and Velocity. On January 20, 2009, Velocity filed a third-party complaint against National Continental Insurance Company (NCIC) and A Classic Plan, Inc. (ACP). Velocity alleged that NCIC provided insurance for defendants Lopez and Mighty One and Barrera–Gonzalez; it sought reformation of the policy of insurance to provide the minimum levels of financial responsibility prescribed by federal law. Velocity alleged that ACP negligently obtained a policy of insurance for Lopez and Mighty One that did not conform to the minimum levels of financial security prescribed by federal law.

 

As the litigation progressed, Barrera–Gonzalez, Lopez, and Mighty One deposited the proceeds of their insurance policy with the court. Cuevas eventually settled his claims against the direct defendants, Velocity dismissed its claims against ACP, but the third-party complaint against NCIC remained unresolved. At the trial of the third-party complaint in June 2010, the trial judge granted third-party defendant NCIC’s motion in limine to exclude the expert report on which defendant/third-party plaintiff Velocity intended to rely to support its claims against NCIC. Having excluded the expert report, the judge granted NCIC’s motion for a directed verdict and dismissed the third-party complaint. Velocity appeals from the ruling excluding its expert report and from the order denying its motion for reconsideration. We affirm.

 

We have presented an expanded procedural history to place the discussion and disposition of Velocity’s third-party complaint against NCIC in context. Some further discussion of the procedural history is, however, in order.

 

On April 3, 2009, a judge extended discovery on the third-party action until June 15, 2009. On April 17, 2009, ACP moved for an extension of discovery and it was extended until August 15, 2009. An August 28, 2009 order denied Velocity’s motion to extend discovery another ninety days.

 

On September 14, 2009, approximately one month after the discovery end-date, Velocity provided to NCIC and ACP the expert report on which it intended to rely at trial. Velocity’s expert made no reference to NCIC in the substance of his report. Velocity did not file a certification of due diligence when it served the report. See R. 4:17–7.

 

Velocity then filed a bankruptcy petition seeking reorganization. See 11 U.S.C.A. §§ 1101 to 1174. On December 7, 2009, a bankruptcy judge lifted the automatic stay and permitted liquidation or settlement of the State law claims involving Velocity. On January 5, 2010, Velocity filed a motion to amend its third-party complaint to assert a negligence claim against NCIC, and the next day provided NCIC and ACP with a supplement to the expert report sent to them in September 2009. Velocity did not amend its answers to interrogatories or file a certification of due diligence with this supplemental report. R. 4:17–7. The supplemental report concluded that NCIC did not have the proper procedures in place for “the verification of underwriting information,” and if it had such procedures, it would have conducted a preliminary audit of Lopez’s operations and its insurance obligations.

 

Meanwhile, ACP had filed a motion to dismiss the third-party complaint for failure to provide discovery in November 2009, that could not be heard until the automatic stay was lifted. Once the stay was lifted, Judge Fernandez–Vina denied this motion without prejudice on January 8, 2010, but extended the discovery end-date until February 15, 2010, and further ordered that “[a]ll discovery by [Velocity] shall be provided by January 31, 2010.”

 

Trial commenced on Velocity’s third-party complaint against NCIC on June 16, 2010. At that time, Judge Fernandez–Vina granted the NCIC motion to exclude the supplemental expert report provided to it on January 6, 2010, based on the prior order closing discovery on August 15, 2009, and thereafter granted the NCIC motion for a directed verdict. After locating the January 8, 2010 order extending discovery until February 15, 2010, Velocity filed a motion for reconsideration. Judge Fernandez–Vina denied the motion, reasoning that the January order and the extended discovery deadline applied only to ACP. The judge stated:

 

[I]s the reasonable interpretation of this order that I extended discovery to allow the party receiving your delinquent answers [i.e. ACP] to follow-up with information, or is it that I extended discovery as to all parties in the case, even those that were not noticed in the motion and were not here to object because it didn’t apply to them?

 

The judge continued:

In the interest of fairness and justice and an overabundance of caution … the [c]ourt denied the motion to dismiss that claim against that party without prejudice and allowed the discovery by the delinquent party to be provided by January 31, 2010.

 

The judge also rejected the contention that once discovery is extended for one party, it is extended for all parties. He considered that interpretation “an inappropriate and tortured interpretation of th[e] order….” Moreover, the failure by Velocity to provide an affidavit of due diligence and the failure to obtain an expert opinion directly relating to NCIC until early January 2010 were critical flaws in the case.

 

On appeal, Velocity argues that the trial judge erred when he granted the motion to exclude Velocity’s expert report and granted a directed verdict in favor of NCIC. It further contends that its motion for reconsideration should have been granted.

 

The disposition of this appeal hinges on an interpretation of the January 8, 2010 order denying ACP’s motion to dismiss and extending discovery for several weeks. Velocity contends the handwritten paragraph extending the discovery end-date pertains to both ACP and NCIC. As such, Velocity argues the trial court erred in granting NCIC’s motion in limine and in denying Velocity’s motion for reconsideration. NCIC contends the order did not extend the discovery end-date as to it, and argues the judge was correct to grant the motion in limine and deny Velocity’s motion for reconsideration.

 

Rule 4:17–7 provides:

 

[I]f a party who has furnished answers to interrogatories thereafter obtains information that renders such answers incomplete or inaccurate, amended answers shall be served not later than 20 days prior to the end of the discovery period, as fixed by the track assignment or subsequent order.

 

The party seeking to serve that discovery beyond the deadline must certify “that the information requiring the amendment was not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date.” Ibid. If the party does not provide such a certification, “the late amendment shall be disregarded by the court and adverse parties.” Ibid.

 

The decision to exclude evidence is a sanction left within the sound discretion of the trial court. Mason v. Sportsman’s Pub, 305 N.J.Super. 482, 493 (App.Div.1997). Three factors

 

which would “strongly urge” the trial judge, in the exercise of his discretion, to suspend the imposition of sanctions, are (1) the absence of a design to mislead, (2) absence of the element of surprise if the evidence is admitted, and (3) absence of prejudice which would result from the admission of the evidence.

 

[ Westphal v. Guarino, 163 N.J.Super. 139, 146 (App.Div.), aff’d, 78 N.J. 308 (1978).]

 

Furthermore, “[t]he typical liberality with which late amendments to interrogatories had been tolerated was substantially affected by the 2000 rule amendments, then known as the Best Practice rules, which demanded stricter compliance with the discovery time frames than theretofore.” Pressler & Verniero, Current N.J. Court Rules, comment 1.1 to R. 4:17–7 (2011). The decision to exclude evidence must stand unless it is “so wide of the mark that a manifest denial of justice resulted.” Ratner v. Gen. Motors Corp., 241 N.J.Super. 197, 202 (App.Div.1990); accord In re Commitment of G.D., 358 N.J.Super. 310, 316 (App.Div.2003).

 

Here, Velocity served two expert reports. The report served in September 2009 addressed only ACP. NCIC did not receive the supplemental expert report addressing Velocity’s claims against it until January 6, 2010. Velocity did not amend its answers to interrogatories and did not serve a certification of due diligence. Based on a discovery end-date of August 15, 2009, Velocity unquestionably failed to adhere to the schedule announced in Rule 4:17–7 and the orders entered in this matter. Additionally, as Judge Fernandez–Vina noted all the information the Velocity expert reviewed was available prior to August 15, 2009, so it had no excuse for the delay. Moreover, because Velocity never served a certification of due diligence, NCIC was under no obligation to object to the supplemental expert report since the court rules instruct that the “late amendment shall be disregarded” by both the court and the opposing party. R. 4:17–7. NCIC was not required to file a motion to strike this belated report. As such, we reject Velocity’s contention that NCIC has engaged in gamesmanship by waiting to file a motion in limine at trial.

 

Velocity relies on Brun v. Cardoso, 390 N.J.Super. 409 (App.Div.2006), for the proposition that the court should have allowed NCIC time to serve a responsive expert report. In Brun, the trial judge made an in limine ruling that before a chiropractor could testify to MRI findings, “a radiologist who was qualified to interpret MRIs would have to be called.” Id. at 415. Responding to this ruling, the plaintiff met with the owner of the imaging center where the original MRI was performed, only to learn that the doctor who had performed the MRI no longer worked there. Ibid. Counsel instead secured the testimony of the owner who stated during voir dire that he only agreed in part with the original interpretation of the MRI. Ibid. The defendant objected to the testimony, but the judge permitted the owner to testify and reserved decision on the objection. Id. at 415–16. Later, the trial judge dismissed the case with prejudice and denied the plaintiff’s motion for a new trial. Id. at 418.

 

This court agreed that the trial could not “fairly proceed under these circumstances.” Ibid. However, we disagreed with the trial court’s decision to grant a dismissal with prejudice. Id. at 419. Rather, we remanded the case for a new trial. Id. at 421. We did so because the reason for the short notice was “unique, unforeseen and largely unforeseeable.” Id. at 420. Here, Velocity has yet to offer a reason why its first expert report was served one month beyond the discovery end-date, much less a reason why the supplemental report was served months later.

 

In fact, this case is analogous to Montiel v. Ingersoll, 347 N.J.Super. 246 (Law Div.2001), a post-Best Practices case. There, the trial judge granted the plaintiff’s motion to exclude the testimony of the defendant’s expert for failure to identify the expert within time. Id. at 247. The court noted the expert was identified by amendment to an interrogatory on the day discovery ended, and the expert’s report was served well after the discovery period. Id. at 251. Furthermore, the defendant did not provide a proper certification of due diligence as required by the rules. Ibid. Thus, the court barred the expert’s testimony at trial. Id. at 255.

 

In light of Velocity’s failure to comply with the rules of court, the strictness with which the rules are to be applied, and the ensuing prejudice to NCIC, we affirm the order granting the NCIC motion to strike Velocity’s expert report. Judge Fernandez–Vina’s decision was not “so wide of the mark that a manifest denial of justice resulted.” Ratner, supra, 241 N.J.Super. at 202.

 

We also affirm the denial of the motion for reconsideration. Rule 4:49–2 provides: “[A] motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it.” The comments to the rule note that this remedy is applicable “only when the court’s decision is based on plainly incorrect reasoning or when the court failed to consider evidence or there is good reason for it to reconsider new information.” Pressler & Verniero, supra, comment 2 on R. 4:49–2. Reconsideration is a matter within the sound discretion of the court. Cummings v. Bahr, 295 N.J.Super. 374, 384 (App.Div.1996); D’Atria v. D’Atria, 242 N.J.Super. 392, 401 (Ch. Div.1990).

 

Velocity argues the language of the January 8, 2010 order unambiguously extended discovery for all parties, and the trial judge erred when he limited the clear language in the order. Velocity interprets the order to replace the August 15, 2009 end-date with a new February 15, 2010 end-date for all parties to the third-party action. We disagree.

 

Velocity could not have reasonably relied on the language in the January 8, 2010 order in planning its discovery and trial strategies because it provided the supplemental expert report two days prior to the issuance of the order. Moreover, it is unreasonable to conclude that the January 8, 2010 order extended discovery as to ACP, as well as NCIC, because NCIC was not involved in the motion filed by ACP to dismiss the third-party complaint against it for failure to provide discovery. The order directs ACP’s attorney to mail a copy of it to Velocity only. There is no mention of NCIC in the order. If Judge Fernandez–Vina wished to extend the discovery end-date with respect to NCIC as well as ACP, he could have done so by amending the order ACP submitted with language indicating such.

 

Finally, we defer to the trial judge’s interpretation of his own order. Judge Fernandez–Vina entered several orders in this case. The plain language of the order does not allow the interpretation advanced by Velocity.

 

Here, the plain language of the order means nothing outside of the context of the order itself. The order indicates that ACP brought the motion to dismiss against Velocity, ACP’s counsel should mail a copy of the order to Velocity, and the “delinquent party” must provide the discovery sought by January 31, 2010. Read in its entirety, the plain language of the order does not warrant the conclusion that Velocity was permitted to serve NCIC with additional discovery.

 

We, therefore, affirm the June 30, 2010 order striking the expert report and entering a directed verdict in favor of NCIC, as well as the July 23, 2010 order denying the motion for reconsideration. Judge Fernandez–Vina did not abuse his discretion in denying the motion because his initial decision was not based on “plainly incorrect reasoning,” he did not fail to consider evidence, and there was not a good reason for him to reconsider new information.

 

Affirmed.

 

 

Supreme Court of Nebraska.

Sylvia DEVESE, Personal Representative of the Estate of Stephen O’Bryant, deceased, appellant,

v.

TRANSGUARD INSURANCE COMPANY OF AMERICA, INC., a foreign corporation, appellee.

 

No. S–10–250.

June 17, 2011.

 

Syllabus by the Court

1. Summary Judgment. Summary judgment is proper when the pleadings and evidence at the hearing disclose that there is no genuine issue as to any material fact 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.

 

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 whom the judgment is granted and gives such party the benefit of all favorable inferences deducible from the evidence.

 

3. Judgments: Appeal and Error. When dispositive issues on appeal present questions of law, an appellate court has an obligation to reach an independent conclusion irrespective of the decision of the court below.

 

4. Insurance: Contracts: Liability: Words and Phrases. An exclusion in an insurance policy is a limitation of liability, or a carving out of certain types of loss, to which the insurance coverage never applied.

 

5. Insurance: Contracts: Words and Phrases. A condition subsequent is a provision that allows insurers to suspend or avoid coverage for a loss that occurs while a failure of the condition exists after the risk has attached.

 

6. Insurance: Contracts. Regardless of an insurer’s labeling, a clause that requires an insured to avoid an increased hazard is a condition subsequent for coverage.

 

Petition for further review from the Court of Appeals, Irwin, Moore, and Carlson, Judges, on appeal thereto from the District Court for Douglas County, Leigh Ann Retelsdorf, Judge. Judgment of Court of Appeals reversed, and cause remanded with directions.

 

Betty L. Egan and Mark A. Weber, of Walentine, O’Toole, McQuillan & Gordon, for appellant.

 

Walter E. Zink II and Jarrod P. Crouse, of Baylor, Evnen, Curtiss, Grimit & Witt, L.L.P., for appellee.

 

HEAVICAN, C.J., CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER–LERMAN, JJ.

 

McCORMACK, J.

NATURE OF CASE

Stephen O’Bryant was a commercial truckdriver. He was killed during the course of his employment as the result of a motor vehicle accident. The representative of his estate sought to recover under O’Bryant’s occupational accident policy with Transguard Insurance Company of America, Inc. (Transguard). Transguard denied the claim on the ground that O’Bryant did not have a valid commercial driver’s license (CDL) at the time of the accident, and the personal representative brought this action against Transguard for breach of contract and bad faith. The policy stated that no benefits would be paid for any “[i]njury, loss or claim caused or contributed to by or resulting from … any loss occurring while the Insured Person … is operating a Vehicle without a valid [CDL].” The trial court granted summary judgment in favor of Transguard, and the personal representative appeals. We find that Neb.Rev.Stat. § 44–358 (Reissue 2010) applies so as to require a showing of causation between the breach and the loss, despite the language of the policy.

 

BACKGROUND

On September 19, 2003, O’Bryant, a member of the National Association of Independent Truckers, LLC, entered into a group vehicle master policy with Transguard. The policy, which was effective until July 1, 2004, included occupational accident coverage.

 

 

An insured person is defined under the policy as an independent contractor who is a member of the National Association of Independent Truckers in good standing and who is a certificate holder of the coverage. Under the “General Exclusions and Limitations” section, the policy states: “This Coverage Part does not cover and no benefits will be paid for any Injury, loss or claim caused or contributed to by or resulting from: … any loss occurring while the Insured Person, covered Co–Driver, Partner or Helper is operating a Vehicle without a valid [CDL].” On April 14, 2004, O’Bryant’s CDL was suspended due to an unsatisfied judgment arising out of an automobile accident.

 

On June 30, 2004, O’Bryant was involved in a semi-truck collision and sustained injuries resulting in his death. It is undisputed that O’Bryant’s CDL was still suspended at the time of the accident. O’Bryant’s beneficiaries made a claim with Transguard for benefits under the occupational accident coverage of the policy. Transguard denied the claim, and Sylvia Devese, as the personal representative for O’Bryant’s estate, brought this action against Transguard for breach of contract and bad faith.

 

Relying on the CDL provision quoted above, Transguard moved for summary judgment. Devese responded that Transguard was required to show causation between the absence of a valid CDL and the accident and that Transguard had failed to present any such evidence. The trial court granted summary judgment in favor of Transguard.

 

Devese appealed. On December 20, 2010, the Nebraska Court of Appeals summarily affirmed the judgment in favor of Transguard, citing Omaha Sky Divers Parachute Club, Inc. v. Ranger Ins. Co. (Omaha Sky Divers ). We granted Devese’s petition for further review on the grounds that Omaha Sky Divers was recently overruled by D & S Realty v. Markel Ins. Co. (D & S Realty ).

 

Omaha Sky Divers Parachute Club, Inc. v. Ranger Ins. Co., 189 Neb. 610, 204 N.W.2d 162 (1973).

 

D & S Realty v. Markel Ins. Co., 280 Neb. 567, 789 N.W.2d 1 (2010).

 

ASSIGNMENTS OF ERROR

Devese asserts that the Court of Appeals erred in (1) affirming the order of the trial court granting Transguard’s motion for summary judgment and (2) holding that Omaha Sky Divers was controlling.

 

STANDARD OF REVIEW

Summary judgment is proper when the pleadings and evidence at the hearing disclose that there is no genuine issue as to any material fact 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.

 

Riggs v. Nickel, 281 Neb. 249, 796 N.W.2d 181 (2011).

 

In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all favorable inferences deducible from the evidence.

 

Id.

 

When dispositive issues on appeal present questions of law, an appellate court has an obligation to reach an independent conclusion irrespective of the decision of the court below.

 

State v. Peterson, 280 Neb. 641, 788 N.W.2d 560 (2010).

 

ANALYSIS

In Omaha Sky Divers, we addressed an aircraft insurance policy clause which stated, under the exclusions section, that the policy did not apply to any occurrence while the aircraft was operated by someone other than a pilot as set forth under the declarations section. The declarations section, in turn, specified that only pilots having a valid medical certificate will operate the aircraft. We held that the exclusion was clear and unambiguous. Despite the fact that the accident was not contributed to by any medical issues of the pilot, the insurance company was not required under the contract to show causation between the breach and the accident.

 

Omaha Sky Divers, supra note 1.

 

We further held that the exclusion did not constitute a warranty or a condition within the meaning of § 44–358. Section 44–358 states in part:

 

The breach of a warranty or condition in any contract or policy of insurance shall not avoid the policy nor avail the insurer to avoid liability, unless such breach shall exist at the time of the loss and contribute to the loss, anything in the policy or contract of insurance to the contrary notwithstanding.

 

Because § 44–358 did not apply to impose a causation requirement as a matter of law, the plain language of the policy controlled and we affirmed judgment in favor of the insurer.

 

At the hearing on its motion for summary judgment, Transguard argued that the language of the policy in this case was similar to the one discussed in Omaha Sky Divers. We agree. Both policies clearly make coverage dependent upon the existence of valid, specified licenses. We do not read the policies as requiring causation between those licenses and the loss.

 

But in D & S Realty, we overruled Omaha Sky Divers to the extent that we had concluded § 44–358 did not apply so as to require, as a matter of law, a showing of causation between the absence of the required license and the accident. D & S Realty involved a property insurance contract which stated that the carrier would not pay for loss caused by water damage if the building was vacant for more than 60 consecutive days prior to the loss. Looking at the provision’s purpose and function, we found that the relevant clause was a “condition,” as contemplated by § 44–358, and not an “exclusion.” Therefore, despite the plain language of the insurance contract, the insurer was required by § 44–358 to demonstrate a causal connection between the condition and the loss in order to avoid liability.

 

D & S Realty, supra note 2.

 

[4–6] We explained in D & S Realty that a condition subsequent is distinct from an exclusion. An exclusion is a limitation of liability, or a carving out of certain types of loss, to which the insurance coverage never applied.  A preloss condition subsequent, in contrast, is a provision that allows insurers to suspend or avoid coverage for a loss that occurs while a failure of the condition exists after the risk has attached. We held that “increased hazard” clauses, such as the vacancy clause of the property insurance policy in issue in that case, were conditions subsequent and not exclusions. We said, “[R]egardless of an insurer’s labeling, a clause that requires an insured to avoid an increased hazard is a condition subsequent for coverage.” 0

 

See id.

 

See id.

 

0. Id. at 581, 789 N.W.2d at 13.

 

We said that Omaha Sky Divers presented a similar classification problem: “The certification provision excluded coverage unless the pilot possessed the necessary medical certification, which was proof of the pilot’s medical fitness. The proof was intended to protect the insurer from the increased hazard of a pilot with health problems flying the plane.” 1 We overruled Omaha Sky Divers to the extent that it could be read to hold that increased hazard conditions are exclusions.2

 

1. Id. at 580, 789 N.W.2d at 13.

 

2. D & S Realty, supra note 2.

 

As explained, the policy provision in Omaha Sky Divers avoided coverage for an occurrence while the plane was operated by a pilot without a medical certification. And the risk of loss had clearly attached. Thus, as a postattachment, preloss condition (subsequent) to the insurer’s obligation to pay benefits, the insured was required to maintain proof of a pilot’s medical fitness.

 

Maintaining proof of an insured’s qualification to perform a covered activity is the type of condition subsequent that § 44–358 was intended to address. The policy in Omaha Sky Divers did not provide that coverage would be voided for loss caused by the plane’s being operated by a medically unfit pilot. Clearly, the insurer could limit its coverage to loss occurring when the plane was operated by a qualified and medically fit pilot. That was the insured risk. But by requiring the insured to maintain proof of a pilot’s medical fitness regardless of any causal connectedness to the loss, the insurer avoided liability for a failure of condition that “in no way contributed to the accident,” 3 which was caused by a brake failure.

 

3. Omaha Sky Divers, supra note 1, 189 Neb. at 612, 204 N.W.2d at 163.

 

As we explained in D & S Realty, § 44–358 was intended to limit an insurer’s ability to avoid liability for a failure of preloss conditions subsequent that are “so broad that an insured’s violation of them is not causally relevant to the loss.” 4 Thus, we erred in Omaha Sky Divers by holding that the contribute-to-the-loss standard under § 44–358 did not apply to a preloss condition subsequent that required the insured to maintain proof of a pilot’s medical fitness to fly a plane.

 

4. D & S Realty, supra note 2, 280 Neb. at 580, 789 N.W.2d at 13.

 

Similarly, the issue here involves the distinction between an insured’s qualification to perform an activity and proof of the insured’s qualification. “License” has more than one meaning. It can be authorization to do what would otherwise be illegal.5 But a license is also proof that the holder is qualified to perform an activity.6 It is the latter sense that is relevant here. The policy does not purport to avoid coverage if the insured violated a motor vehicle statute.

 

5. See Syracuse Rur. Fire Dist. v. Pletan, 254 Neb. 393, 577 N.W.2d 527 (1998).

 

6. See, Mulholland v. DEC Int’l, 432 Mich. 395, 443 N.W.2d 340 (1989); Osborn v. Hertz Corp., 205 Cal.App.3d 703, 252 Cal.Rptr. 613 (1988); Asdourian v. Araj, 38 Cal.3d 276, 696 P.2d 95, 211 Cal.Rptr. 703 (1985).

 

We agree that an insurer can require an insured to have a valid CDL as a condition for coverage, because the license functions as proof that the insured is qualified to operate commercial vehicles. But if licensure is a requisite to being a qualified insured, the insurer would have presumably required this proof as part of the application process. Further, if an insured had falsely represented his or her qualifications in the application, then the insurer would have had reason to seek a revocation.

 

The availability of a revocation defense shows that the license provision was not intended to relieve Transguard of liability because an insured was never qualified to operate a commercial vehicle. Instead, the unlicensed driver provision operated to avoid liability for a loss, after the risk attached, if an insured was operating a commercial vehicle while he or she had failed to maintain a valid CDL. An insurance provision that conditions benefits based solely on whether the insured has failed to comply with a licensing or certification requirement seeks to broadly control a potential cause of loss—an unqualified insured.7

 

7. See Robert Works, Insurance Policy Conditions and the Nebraska Contribute to the Loss Statute: A Primer and A Partial Critique, 61 Neb. L.Rev. 209 (1982).

 

We conclude in this case that Transguard sought to avoid the risk of loss of an unqualified driver. As applied to the insured, the license requirement functions as a condition for coverage that the insured maintain proof of his or her continuing qualification. Because the provision imposes conditions for coverage on the insured’s conduct after the risk has attached, it is a preloss condition subsequent. As we explained in D & S Realty, there is no meaningful difference between a policy that excludes coverage unless specified conditions are met and one that provides coverage if specified conditions are met.8

 

8. See, D & S Realty, supra note 2; Works, supra note 17.

 

But the lack of the license, in itself, did not show that O’Bryant was unqualified to operate a commercial vehicle. Transguard’s failure of a condition defense illustrates that the condition was broader than necessary to protect Transguard from assuming liability for the risk that O’Bryant was unqualified to operate commercial vehicles.9 A significant difference exists between a suspension of a license for failure to pay a judgment and a revocation or refusal of a license for reasons that show the licensee is unfit to drive a commercial vehicle. By requiring O’Bryant to maintain his CDL as a condition for coverage without any requirement that the loss occurred because the insured was unqualified to operate a commercial vehicle, Transguard could avoid liability for technical reasons. That is, it could avoid liability if O’Bryant’s license lapsed or was suspended for reasons that were unrelated to his qualifications.

 

9. See Works, supra note 17.

 

Because of the condition’s excessive breadth and its failure to require any causal connectedness to the loss, it is the type of condition to which § 44–358 was intended to apply. Thus, Transguard could not avoid liability unless it showed that O’Bryant’s breach of the condition contributed to the loss.

 

We also disagree with Transguard that it has demonstrated a causal link between the breach and the loss because it was undisputed that O’Bryant was driving when he was not supposed to. The mere act of driving was not a breach of the condition. The breach was failing to maintain a valid CDL. Under § 44–358, Transguard was required to demonstrate a causal connection between the breach and the loss.

 

Transguard did not present any evidence as to the cause of the accident or O’Bryant’s abilities as a commercial driver. Therefore, viewing the evidence in the light most favorable to Devese, it was inappropriate to issue summary judgment in favor of Transguard. We reverse the decision of the Court of Appeals summarily affirming the trial court’s order of summary judgment and remand the cause to the Court of Appeals with directions to remand the cause to the trial court for further proceedings consistent with this opinion.

 

CONCLUSION

For the foregoing reasons, we reverse the decision of the Court of Appeals and remand the cause with directions.

 

Reversed and remanded with directions.

 

WRIGHT, J., not participating.