Service Restoration, Inc. v. Evanston Insurance Company

CASE: Service Restoration, Inc. v. Evanston Insurance Company, No. 24-cv-938 (LMP/JFD), U.S. District Court for the District of Minnesota. JUDGE: Laura M. Provinzino, United States District Judge. DECIDED: November 19, 2025.

BACKGROUND: On December 16, 2022, a multi-unit residential property owned by Ryan Jutting suffered water damage. Jutting had a property insurance policy with Evanston Insurance Company. That same day, Jutting hired Service Restoration, Inc. to perform remediation work. Water damage projects proceed in two phases: (1) mitigation — extracting water, drying out the property — and (2) rebuild — restoring the property to its prior condition. Jutting signed separate contracts with Service Restoration authorizing each phase. Both contracts expressly stated that Jutting, not Service Restoration, was responsible for payment even if insurance did not cover the work, and that Service Restoration had no connection to the insurer.

Evanston assigned desk adjuster Kimberly Stokes and hired an independent field adjuster, Alex Pruitt of Allcat Claims, to gather information, assess the scope of the loss, and help determine what repairs were needed. Pruitt visited the property, communicated with Service Restoration about the mitigation plan and proposed rebuild scope, and was allegedly told to 'keep going.' However, Pruitt testified he had no authority to authorize payment or determine coverage, and that Service Restoration should have known not to rely on him for work authorization. Daniel Schmidt, Service Restoration's owner, acknowledged that Pruitt never confirmed coverage, but testified that he assumed coverage was approved because Pruitt raised no objection.

Stokes was internally investigating whether the property was vacant at the time of the water loss — a condition that would void coverage under the policy — but did not inform Service Restoration of this concern until March 16, 2023. Service Restoration stopped all rebuild work at that point, having already incurred approximately $31,746.94 in rebuild costs. The mitigation work had already been completed.

THE MITIGATION INVOICE NEGOTIATION: Service Restoration issued a final mitigation invoice of $222,486.45. Evanston referred the invoice to Suredge, an independent third-party auditing firm, and assigned the matter to adjuster Michael Miller, whose role was to review the invoice and reach an agreed dollar amount with the contractor. On March 15, 2023, Miller and Service Restoration exchanged six emails over approximately 90 minutes. Miller opened at $146,800; Service Restoration countered at $184,986.32; Miller offered $162,400; Service Restoration countered at $176,200; Miller agreed, stating: 'I am in agreement to send this one up for the revised amount of $176,200.00. I will advise my claims director and they will email you shortly requesting any needed documents. Once final paperwork is obtained then the carrier will be able to issue the payment as directed.' Miller also sent an attached document titled 'Agreement to Revise Service Invoice' (Agreement to Revise) for Service Restoration to sign, along with a W-9 and revised invoice. Service Restoration signed and returned the Agreement to Revise the same day. The Agreement to Revise stated that Suredge and Service Restoration had agreed the $176,200 was fair and final compensation, but that payment was conditioned on whether Evanston 'agree[d] to the dollar amount as indicated.' The Agreement to Revise was never signed by Miller or any Evanston employee. Evanston never paid.

PROCEDURAL HISTORY: Service Restoration sued in Minnesota state court in February 2024 asserting breach of contract, quantum meruit (payment for work performed regardless of contract), and estoppel. Evanston removed the case to federal court based on diversity of citizenship jurisdiction. The quantum meruit claim was stipulated to dismissal on June 24, 2025. Both parties moved for summary judgment on the remaining breach-of-contract and estoppel claims.

ANALYSIS — PROMISSORY ESTOPPEL CLAIM: Promissory estoppel is an equitable doctrine (a court-fashioned remedy based on fairness) that implies a contract where none formally exists when a party makes a clear and definite promise, intends reliance, and reliance occurs. Under Minnesota law, however, equitable relief is unavailable where a party has an adequate remedy at law.

(1) Mechanic's Lien: Minnesota's mechanic's lien statute (Minn. Stat. § 514.01) gives contractors who improve real property the right to place a lien on that property as security for payment. The court found this statute provides an adequate legal remedy as a matter of law. Service Restoration argued the lien would have been worthless because the property was ultimately foreclosed and sold at sheriff's auction for only $215,000 against an outstanding mortgage of $716,167.36. The court rejected this argument, holding that the adequacy of a legal remedy does not depend on whether the plaintiff would have succeeded — only on whether the remedy was 'practical and efficient.' The court cited a line of Minnesota cases holding that a contractor's failure to pursue a mechanic's lien categorically bars equitable claims, with no inquiry into likely success.

(2) Breach-of-Contract Claim Against Jutting: Even if the mechanic's lien were somehow inadequate, Service Restoration retained a contract-based remedy against Jutting — the property owner who had expressly agreed in writing to pay for the work regardless of insurance. The court rejected Service Restoration's argument that Evanston, as a non-party to those contracts, could not invoke them. Relying on Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137 (Minn. Ct. App. 1992), and Fieseler Masonry, Inc. v. City of Mabel, No. A14-0246, 2014 WL 4389093 (Minn. Ct. App. 2014), the court held that a defendant may point to a third-party contract as an adequate remedy at law barring equitable relief against that defendant. The court distinguished contrary authority (Kevin Breyer Concrete, Inc. v. Beutel, No. A09-1547, 2010 WL 2732384 (Minn. Ct. App. 2010)) as unpersuasive and inconsistent with the Minnesota Supreme Court authority that Breyer Concrete relied upon. Accordingly, the court dismissed the promissory estoppel claim with prejudice.

ANALYSIS — BREACH-OF-CONTRACT CLAIM: Minnesota applies the objective theory of contract formation: what matters is the outward manifestation of assent by the parties, not their subjective intent. A contract requires a specific and definite offer, acceptance, and consideration (a mutual exchange of value or obligation).

Formation: The court found no genuine factual dispute that a contract was formed through the March 15, 2023 email exchange. Service Restoration made a definite offer ($176,200 in exchange for releasing Evanston and Jutting from further obligation); Suredge unequivocally accepted that offer on behalf of Evanston (its disclosed principal); and consideration existed — Service Restoration gave up approximately $46,000 in its invoiced amount, and Evanston (through Suredge) committed to pay $176,200. The court cited Asia Pacific Industrial Corp. v. Rainforest Cafe, Inc., 380 F.3d 383 (8th Cir. 2004); Bissada v. Arkansas Children's Hospital, 639 F.3d 825 (8th Cir. 2011); and Jackson v. Federal Reserve Employee Benefit System, No. 08-cv-4873, 2009 WL 2982924 (D. Minn. 2009) as analogous cases where email negotiations produced enforceable contracts.

Evanston's Three Counterarguments: (a) Future documents: Evanston argued the parties anticipated signing a future written agreement, preventing contract formation. The court rejected this, noting that Suredge never conditioned acceptance on future signing, and that anticipating future documents does not prevent formation when material terms are already agreed. (b) Coverage condition: Evanston argued payment was implicitly conditioned on a coverage determination. The court rejected this, noting that no such condition was ever communicated to Service Restoration. Suredge repeatedly and unconditionally promised payment. Evanston's unexpressed subjective intent is legally irrelevant under the objective contract formation standard. Notably, Evanston had already suspected a coverage issue at least a week before the email agreement was reached, yet allowed negotiations to proceed. (c) Parol evidence rule: Evanston argued the Agreement to Revise was the binding final contract, and that the email negotiations were inadmissible parol evidence (pre-contract discussions that courts normally will not consider to vary a written agreement). The court rejected this by first finding that the Agreement to Revise is not a valid contract at all — it is illusory. An illusory contract is one that does not obligate one of the parties to do anything, and therefore lacks the required consideration. The Agreement to Revise required Service Restoration to reduce its invoice but only required Evanston to 'agree' if it wanted to — retaining complete discretion. Because a promise conditioned entirely on the promisor's own future choice is not a real promise, the Agreement to Revise lacked consideration from Evanston and was unenforceable. Without a valid contract, the parol evidence rule is inapplicable. The Agreement to Revise, at most, was an attempted post-agreement modification or new offer that Service Restoration never accepted.

Agency: Evanston conceded at oral argument that Suredge acted as its agent in contacting and negotiating with Service Restoration. Under established agency law, when an agent contracts with a third party on behalf of a disclosed principal, the contract binds the principal. The email agreement therefore bound Evanston.

OUTCOME: - Service Restoration's motion for summary judgment: GRANTED as to breach-of-contract claim; DENIED as to promissory estoppel claim. - Evanston's motion for summary judgment: GRANTED as to promissory estoppel claim (dismissed with prejudice); DENIED as to breach-of-contract claim. - The court ordered judgment entered accordingly. The opinion does not specify the dollar amount of the judgment in the ordering clause, but the breach-of-contract analysis is premised on the $176,200 agreement.