Nebraska Supreme Court Affirms Summary Judgment in Bathtub Slip-and-Fall Case

Since 2016, McCook Hotel Group has operated a hotel in McCook, Nebraska. Ron Strahan stayed in this hotel in January 2019 while on business travel. One morning, while showering, he slipped and fell, sustaining injuries to his head, ribs, and wrist. He then filed a complaint in the District Court of Red Willow County alleging the bathtub was not equipped with slip-resistant materials and ‘the hotel either created the condition, knew of the condition, or, in the exercise of reasonable care, should have discovered the condition’ (317 Neb. 350). McCook generally denied any negligence and described its bathtubs as meeting the industry standard with a similar design to any other average hotel bathtub.

Approximately two years later, McCook Hotel Group moved for summary judgment. In opposition to the hotel’s motion, Strahan offered photographic evidence of the hotel bathtub in his room, multiple affidavits from himself and his friend, and an expert inspection of the tub. Strahan’s primary contention to the court was that McCook Hotel Group was negligent in creating or maintaining the hazard of a slippery bathtub. His evidence, however, was not enough to genuinely dispute whether the bathtub was unreasonably dangerous by being too slippery. This resulted despite Strahan offering an expert inspection of the tub. In the expert’s affidavit/report, he clearly stated the bathtub had a “raised truncated type slip resistant surface that is part of [its] construction” (317 Neb. 350). He also stated that the resistance felt similar in both dry and wet conditions (317 Neb. 350). The expert’s examination contradicted Strahan’s claims, highlighting to the District Court the speculative nature of Strahan’s claims. Considering that, the District Court applied the open doctrine to Strahan’s claims. The open and obvious doctrine frees the possessor of land from liability if the danger is something that an average person is expected to notice and avoid. Because the District Court applied the open and obvious doctrine, and since Strahan’s argument for the condition of the bathtub floor was based on speculation, the District Court granted summary judgment in favor of the hotel. If Strahan could have proven at least one of the elements of negligence, the District Court would not have been able to grant summary judgment. But he failed to do so.

With a timely appeal filed by Strahan, the Nebraska Supreme Court considered the grant of summary judgment. In such a review, a Nebraska appellate court will review the lower court’s decision “de novo,” meaning it will view the case and its information in a way most favorable to the nonmoving party, here the plaintiff Strahan. The Supreme Court

found no error in the District Court’s conclusion about the bathtub floor conditions. The Court more thoroughly examined the District Court’s application of the open and obvious doctrine. Part of Strahan’s appeal had claimed there was a genuine material dispute on the Court’s application of the open and obvious doctrine. For something to qualify as “open and obvious,” the initial assumption is that there exists a dangerous condition. In the case of a bathtub floor, the appellate court considered whether it was genuinely dangerous to take a shower.

As part of this analysis, the Court noted that in the 31 months that McCook Hotel was open and preceding Strahan’s complaint, there had been zero complaints about the bathroom, bathtubs, showers, etc. In January 2019, Strahan took a morning shower, turned around, slipped, and sustained injuries. In his appeal, he claimed that the absence of a slip-resistant bathtub is “unreasonably dangerous” and is not an “open and obvious” danger. Ultimately, though, the Supreme Court found that Strahan could not prove these claims. His evidence and affidavits provided nothing more than speculation, and “conclusions based on guess, speculation, conjecture, or a choice of possibilities do not create material issues of fact for the purposes of summary judgment.” (317 Neb. 350). Strahan could not show evidence that slipping in a shower—or taking a shower for that matter—supports the existence of an unreasonably dangerous condition. He could not show the shower being unreasonably slippery or having a low coefficient of friction. He could not show the shower failing to meet industry standards and regulations. He could not show any requirement for the bathtub to have a slip-resistant floor.

Thus, the Supreme Court found no error in the District Court’s grant of summary judgment in favor of McCook Hotel Group. In concluding this, the Court reviewed multiple premises liability cases, including some involving showers and bathtubs. The takeaway may be that it is difficult for claimants to win these cases, as the open and obvious doctrine will often protect against the liability of the property owners involved.

This article was prepared by ES Law Administrative Clerk John Boryca.

Nebraska Supreme Court Enforces Strict Statutory Deadlines in Perkins County v. Mid America Agri Products

In the recent decision, Perkins County Board of Equalization v. Mid America Agri Products/Wheatland Industries, LLC, The Nebraska Supreme Court dismissed a judicial review request from the Perkins County Board of Equalization (“the Board”), finding it lacked jurisdiction on the issue. The request followed an unfavorable outcome from a previous decision made by the Tax Equalization and Review Commission (TERC). The Board appealed TERC’s decision based on Neb. Rev. Stat. § 77-5019.

Wheatland owns real property in Perkins County that was improved with ethanol production facilities. In 2018, 2019, and 2020, Wheatland protested the valuations of the property set by the Perkins County assessor. The Board denied the original protests and Wheatland appealed the Board’s decision to TERC. In 2023, TERC reversed the Board’s original decision and lowered the Perkins County assessor’s valuation for each of the three years contested. Following TERC’s decision, the Board requested a judicial review of the administrative decision.

The Board filed the petition in the Court of Appeals on February 16, 2023. That same day, the Board paid the docket fee and filed a praecipe with the Court’s Clerk for a summons; the summons was issued the same day. The Board mailed the summons on February 22 and received a notification of the delivery taking place on March 29, forty-one days after the filing of the petition. Additionally, a courtesy copy of the summons was emailed to Wheatland’s counsel. On February 23, Wheatland’s counsel filed an appearance of counsel and a “Response to Petition for Review” addressing the allegations in the Board’s petition.

The Supreme Court considered whether a voluntary appearance can satisfy the statutory requirements of Neb. Rev. Stat. § 77-5019(2)(b). In general, for a judicial review of an administrative decision, the Court requires both personal and subject matter jurisdiction over the parties. Neb. Rev. Stat. § 77-5019 procedurally gives the Court personal and subject matter jurisdiction via the requirements explicitly stated in the statute. Here, the requirement at issue is found in § 77-5019(2)(b): “[s]ummons shall be served on all parties within thirty days after the filing of the petition in the manner provided for service of a summons in a civil action.” The question to the Court was then, whether the Court had subject matter jurisdiction, as service was made outside the statutory thirty-day deadline.

The Nebraska Supreme Court found it did not have jurisdiction over the parties because it lacked subject matter jurisdiction. Subject matter jurisdiction for a judicial review of an administrative decision under Neb. Rev. Stat. § 77-5019 is acquired through the proper service of summons to the defendant within thirty days of the filing of the petition for review. Additionally, the statute requires the summons to be provided in the same way as it would be in a civil action.

The Nebraska Supreme Court explained that the Board did not successfully meet the requirement of serving the summons within thirty days as the summons sent via certified mail reached Wheatland forty-one days after the filing of the petition. If the requirements for service of the summons are not met, then the Court lacks subject matter jurisdiction and ultimately has no authority over the issue. Furthermore, the Court explained that a voluntary appearance, like the one Wheatland’s counsel entered, only gives the court personal jurisdiction over the issue and does not serve as a substitute for the service requirement of Neb. Rev. Stat. § 77-5019.

As the Board did not meet the service requirements under Neb. Rev. Stat. § 77-5019 by serving the summons to Wheatland forty-one days after the filing of the petition, the Nebraska Supreme Court found it lacked subject matter jurisdiction and thus did not have authority over the issue. The Court’s opinion offers a new insight into the application of the requirements of Neb. Rev. Stat. § 77-5019 which could potentially influence future judicial reviews of administrative decisions.

Nebraska Supreme Court Deems “Ministerial Exception” Applies to Priest's Defamation and Employment Claims

On August 6, 2024, the Nebraska Supreme Court relied on the Ministerial Exception to decide a case between a priest and his employer (See Syring v. Archdiocese of Omaha, 317 Neb. 195).

In 2013, an allegation was made against Catholic priest Andrew J. Syring of the Archdiocese of Omaha that Syring had taken part in sexual misconduct with a minor. After a thorough investigation by law enforcement and a retired federal agent, “no wrongdoing was identified.” Many evaluations were done on Syring in two different treatment facilities, which all concluded that Syring had a “normal” profile and that there was “no indication that he would want to hurt anyone.” It was also determined through testing that he was not a pedophile.

Syring kept his job as a priest for some time regardless of the 2013 allegations. However, in October 2018, the Archdiocese effectively fired Syring by removing him from public ministry. The church had been facing criticisms that spurned it to make personnel changes and to place a public list on the church’s website of those who had claims against them of conducting sexual abuse/misconduct. Syring attempted to get a new job as a chaplain for a private hospital that was religiously associated with the Archdiocese, but he failed. He was forbidden by the Archdiocese to work at the hospital due to the reasonable chance that he would interact with minors. Syring sued the Archdiocese in 2020 and alleged that it was liable for defamation, tortious interference with prospective employment opportunity, breach of fiduciary duty, intentional infliction of emotional distress, and other claims.

The district court dismissed each of Syring’s claims. Syring appealed, and his primary contention to the Nebraska Supreme Court was that it was wrong to dismiss his claims under the ecclesiastical abstention doctrine. The Supreme Court considered this along with the ministerial exception. The ministerial exception is a law developed by and deeply rooted in the US Supreme Court's jurisprudence on the First Amendment. That amendment, of course, protects churches' rights to select their own minister without government interference. The ministerial exception limits courts from interfering in the employment relationship between a religious institution and its ministers. If it were to force the church to hire Syring as a priest or force the church and hospital to hire Syring as a chaplain, the Supreme Court would be intruding upon the internal governance of the church. Therefore, the Supreme Court upheld the dismissal of Syring’s claims. To do otherwise would interfere with the church's religious operations, thereby violating part of the First Amendment.

This article was prepared by ES Law Administrative Clerk John Boryca.

Nebraska’s New Standard for Special Litigation Committee Investigations

On July 12, 2024, the Nebraska Supreme Court clarified the standard for special litigation committee investigations in derivative actions involving limited liability companies, an issue of first impression in Nebraska. A derivative action is one brought by shareholders on behalf of a corporation that asserts a wrong against that corporation.

Under Neb. Rev. Stat § 21-168, when a limited liability company (“LLC”) is involved in a derivative proceeding, the LLC may appoint a special litigation committee (“SLC”) to investigate the matter to determine whether pursuing the action is in the best interests of the LLC. The SLC has the burden of showing its investigation was conducted independently, in good faith, and with reasonable care. If the Court determines the SLC met this burden, it must enforce the SLC’s recommendation as to whether the litigation should continue or be settled out of court.

In Tegra Corp v. Boeshart, 317 Neb. 100 (Neb. 2024), the Nebraska Supreme Court found that the SLC appointed by Boeshart had failed to use reasonable care in investigating Tegra Corp’s claims of breach of fiduciary duty and misappropriation of corporate assets. In this case, both Tegra Corp and Patrick and Sandra Boeshart own interests in Lite-Form Technologies, LLC (the “LLC”). Tegra Corp brought a derivative action against the Boesharts on behalf of the LLC. Pursuant to § 21-168, Patrick Boeshart appointed Cody Carse as a single-member SLC. The district court was satisfied with the SLC’s investigation and dismissed all claims against the Boesharts according to the SLC’s recommendation. Tegra Corp appealed.

The Nebraska Supreme Court reversed the district court’s ruling on the grounds that the SLC’s investigation was not conducted with reasonable care. The Court cited other jurisdictions that emphasize that thoroughness is the cornerstone of SLC investigations. Courts have noted that SLC’s weigh legal, ethical, commercial, promotional, public relations, fiscal, and other factors to come to a decision regarding a derivative action. Courts have considered the “length and scope of the investigation, the use of experts, the corporation or defendant’s involvement, and the adequacy and reliability of information supplied to the SLC.”

In Tegra Corp v. Boeshart, the Nebraska Supreme Court found that the SLC’s investigation was not conducted with reasonable care because the SLC did not consider the relevant law, failed to include a cost-benefit analysis, and deferred to the LLC’s members for its recommendation. The Court noted that determining whether pursuing the action is in the best interests of the company necessarily involves consideration of the “likelihood that the plaintiff will succeed on the merits, the financial burden on the corporation of litigating the case, the extent to which dismissal will permit the defendant to retain improper benefits, and the effect continuing litigation will have on the corporation’s reputation.” The Boesharts’ SLC did not conduct a legal or cost-benefit analysis and could not have done so because Mr. Carse did not gather the necessary data. Mr. Carse testified that he did not believe legal analysis was part of his duties and that his financial analysis consisted of estimations he made in his own mind, relying on intuition. His recommendation was that the LLC’s members vote on what to do about alleged misappropriation of assets and breach of fiduciary duties. The Court held that deferring to the LLC’s directors is not an exercise of reasonable care.

Finally, the Nebraska Supreme Court also clarified that, contrary to Mr. Carse’s understanding, it was not Tegra’s responsibility to provide the SLC enough evidence to support its allegations. Rather, when breach of fiduciary duties is alleged, the burden of proof is on the party holding that duty to establish its action was not such a breach. The committee bears the burden of proof.

Businesses in Nebraska now face a stricter standard when appointing an SLC under § 21-168. This standard enhances transparency and protects shareholder interests, while underscoring the importance of robust corporate governance practices. SLC’s are a rare feature of American jurisprudence by which defendants can escape litigation by appointing a committee that can control the court. In the future, courts will not be bound to enforce recommendations of SLC’s that conducted vacuous, cursory, or otherwise deficient investigations.

Court of Appeals Partially Vacates Arbitration Award in Complex Construction Payment Dispute

The Nebraska Court of Appeals recently considered whether to sever and vacate part of an arbitration award in a dispute brought to arbitration by a property owner against a general contractor and plumbing subcontractor.

In February 2017, Lund-Ross Constructors and the Duke of Omaha agreed Lund-Ross would be the general contractor to build an apartment complex in Omaha. In turn, Lund-Ross subcontracted Raymond Plumbing to construct the plumbing at the apartments. Upon finishing construction of the apartments, the Duke withheld payment of $952,599 from Lund-Ross.

Consequently, Lund-Ross filed a demand for arbitration against the Duke. Lund-Ross also included Raymond as a respondent since Raymond was demanding payment from Lund-Ross for its plumbing work. After the arbitration hearing in January of 2023, Raymond requested to file a counterclaim against Lund-Ross for breach of contract, breach of implied covenant of good faith and fair dealing, and quantum meruit/unjust enrichment. The arbitrator permitted the counterclaim to be filed in the arbitration proceedings and ruled on it based upon the evidence at the hearing. Lund-Ross objected since it had not had the opportunity to respond the counterclaim, but the arbitrator maintained the award notwithstanding Lund-Ross’s objection.

The award: The Duke owed Lund-Ross $307,103 and Lund-Ross owed Raymond $215,508.31.

Thereafter, Lund-Ross moved to vacate or modify the arbitration award in a Nebraska district court. In its final order, the district court denied Lund-Ross's requested relief. Lund-Ross then appealed.

In its appeal, Lund-Ross claimed several errors, but the primary issue considered by the Court of Appeals was whether the arbitration was a fair proceeding or whether improper procedures prejudiced Lund-Ross during it, which are grounds for a court to vacate arbitration awards under the Federal Arbitration Act, 9 U.S.C §10(a)(3).

When Raymond filed a counterclaim against Lund-Ross, the arbitrator entered the award without giving Lund-Ross the chance to answer the counterclaim and develop its rebuttal evidence. Based upon federal precedent, the appellate court concluded that the arbitrator

had indeed not given Lund-Ross a chance to respond with its own evidence and rebut the allegations made by Raymond. This would constitute improper conduct in the arbitration that prejudiced Lund-Ross and supported vacating the award entered by the arbitrator for Raymond.

Thus, the $215,508.31 that the arbitrator ordered Lund-Ross owed to Raymond was invalidated.

That led to the next legal question in the appeal: Is partial vacatur of an award allowed under the FAA and Nebraska law? This presented a novel issue for the Nebraska appellate court; it therefore relied upon opinions of the Connecticut Supreme Court to determine if an arbitration award against multiple parties could be severed. The court further looked to law developed by the Second Circuit, which has similar case law interpreting 9 U.S.C §10 of the FAA. See Scandinavian Reinsurance v. Saint Paul, 668 F.3d 60, 71 (2d Cir. 2012).

In the end, the Nebraska Court of Appeals severed and vacated the portion of the award on the subcontractor’s counterclaim. This case addressed the novel question in Nebraska of whether an arbitration award may be partially modified, with the court concluding that one may be. This case will inform those practicing in arbitrations reviewable by Nebraska courts in the future.

Nebraska Supreme Court Dismisses Judicial Review Request Due to Lack of Jurisdiction

In the recent decision, Perkins County Board of Equalization v. Mid America Agri Products/Wheatland Industries, LLC, The Nebraska Supreme Court dismissed a judicial review request from the Perkins County Board of Equalization ("the Board"), finding it lacked jurisdiction on the issue. The request followed an unfavorable outcome from a previous decision by the Tax Equalization and Review Commission (TERC). The Board appealed TERC's decision based on Neb. Rev. Stat. § 77-5019.

Wheatland owns real property in Perkins County that was improved with ethanol production facilities. In 2018, 2019, and 2020, Wheatland protested the valuations of the property set by the Perkins County assessor. The Board denied the original protests and Wheatland appealed the Board's decision to TERC. In 2023, TERC reversed the Board's original decision and lowered the Perkins County assessor's valuation for each of the three years contested. Following TERC's decision, the Board requested a judicial review of the administrative decision.

The Board filed the petition in the Court of Appeals on February 16, 2023. That same day, the Board paid the docket fee and filed a praecipe with the Court's Clerk for a summons; the summons was issued the same day. The Board mailed the summons on February 22 and received a notification of the delivery taking place on March 29, forty-one days after filing the petition. Additionally, a courtesy copy of the summons was emailed to Wheatland's counsel. On February 23, Wheatland's counsel filed an appearance of counsel and a "Response to Petition for Review" addressing the allegations in the Board's petition.

The Supreme Court considered whether a voluntary appearance can satisfy the statutory requirements of Neb. Rev. Stat. § 77-5019(2)(b). In general, for a judicial review of an administrative decision, the Court requires both personal and subject matter jurisdiction over the parties. Neb. Rev. Stat. § 77-5019 procedurally gives the Court personal and subject matter jurisdiction via the requirements explicitly stated in the statute. Here, the requirement at issue is found in § 77-5019(2)(b): "[s]ummons shall be served on all parties within thirty days after the filing of the petition in the manner provided for service of a summons in a civil action." The question to the Court was then whether the Court had subject matter jurisdiction, as service was made outside the statutory thirty-day deadline.

The Nebraska Supreme Court found it did not have jurisdiction over the parties because it lacked subject matter jurisdiction. Subject matter jurisdiction for a judicial review of an administrative decision under Neb. Rev. Stat. § 77-5019 is acquired through the proper service of summons to the defendant within thirty days of the filing of the petition for review. Additionally, the statute requires that the summons be provided the same way as in a civil action.

The Nebraska Supreme Court explained that the Board did not successfully meet the requirement of serving the summons within thirty days as the summons sent via certified mail reached Wheatland forty-one days after filing the petition. If the summons' service requirements are not met, then the Court lacks subject matter jurisdiction and ultimately has no authority over the issue. Furthermore, the Court explained that a voluntary appearance, like the one Wheatland's counsel entered, only gives the court personal jurisdiction over the issue and does not serve as a substitute for the service requirement of Neb. Rev. Stat. § 77-5019.

Despite the Board's diligent efforts, the Nebraska Supreme Court found that it did not meet the service requirements under Neb. Rev. Stat. § 77-5019 by serving the summons to Wheatland forty-one days after the filing of the petition. As a result, the Court found that it lacked subject matter jurisdiction and thus did not have authority over the issue. The Court's opinion offers a new insight into the application of the requirements of

The Nebraska Supreme Court's decision in this case, particularly its interpretation of Neb. Rev. Stat. § 77-5019, could potentially set a precedent and significantly influence future judicial reviews of administrative decisions. This underscores the importance of this case and its potential impact on the legal landscape.

D & M Roofing & Siding v. Distribution, Inc.

In the case of D&M Roofing & Siding v. Distribution, Inc., the Nebraska Supreme Court considered a procedural question on final judgments and appeals. D&M Roofing & Siding, the appellant, entered into a contract with Distribution, Inc., the appellee, to repair hail damage to the roof of a warehouse owned by Distribution. These repairs were subject to an insurance claim in which Distribution would pay D&M the approved claim amount. D&M alleged Distribution breached their agreement by canceling the contract and hiring a different company to repair the hail damage. This breach of contract led both parties to file a motion for summary judgment.

When a trial court grants summary judgment in Nebraska, the case is considered complete and adjudicated. The trial court awards rights and relief to the party whose motion for summary judgment is granted.

The trial court overruled D&M's motion for summary judgment and granted Distribution's motion for summary judgment in part. The court held that D&M was limited only to breach-of-contract damages stipulated in the contract. Although summary judgment was partially granted, the court's order did not express the parties' rights nor release any relief to the damaged party in a single document.

The Nebraska Supreme Court was presented with the issue of what constitutes a final judgment. Nebraska law requires that for there to be appellate jurisdiction, there must be a judgment rendered, a decree issued, or a final order from the trial court.

The Supreme Court explained a final judgment is proper when "the rights of the parties are concluded so that further proceedings cannot affect them." In other words, nothing must be left for the trial court to act on. On the other hand, the Supreme Court explained there is no final judgment when there is something of "judicial nature" the trial court must still act on.

Although the trial court denied D&M's motion and partially granted Distribution's motion, the trial court did not grant nor deny relief to D&M's breach of contract claim. To do this, as the Supreme Court explains, the trial court must sign a "single written document" containing the rights of the parties and the relief granted in the action. Until the written document is signed, the trial court still has a task of "judicial nature" which prevents a party from asserting its right to appeal.

Because the trial court did not sign a single written document containing relief and rights of the parties, there was no final judgment. Therefore, because there had yet to be a final judgment, D&M lacked the ability to appeal under Nebraska law. So, the Supreme Court did not have jurisdiction to hear D&M's other contractual claims. D&M Roofing & Siding v. Distribution, Inc. clarifies the requirements for appellate jurisdiction within Nebraska and prevents litigants from appealing a case before the trial court is finished ruling.

Navigating Legal Guardianship: The Case of Patrick W.

In the intricate landscape of legal guardianship, where the rights and well-being of individuals intersect with statutory interpretation and evidentiary standards, the recent decision by the Nebraska Supreme Court in In re Guardianship of Patrick W. stands as a significant reference point. This case delves into guardianship laws' complexities, providing invaluable insights for legal professionals and individuals grappling with similar circumstances.

The appellant, Patrick W., disputed the county court's decision to appoint a permanent guardian due to his incapacitation. The appellate review in probate cases centers on the conformity of lower court decisions to legal standards, backed by competent evidence and free from uncertainty. The case also touches on statutory interpretation, specifically concerning the admissibility of evidence in guardianship disputes under Nebraska statutes.

Patrick W. suffered a debilitating stroke in 2009, leading to a series of interventions by Adult Protective Services (APS) due to concerns about his ability to manage his medical needs and finances. In 2022, Becky Stamp filed for guardianship, asserting Patrick's incapacity due to the lasting effects of his stroke. The petition was contested by Patrick, who later appointed his cousin, Terry Crandall, as his temporary guardian.

The case underwent an evidentiary hearing where multiple witnesses testified, and several documents were presented, including a contested neuropsychological report assessing Patrick’s mental and cognitive abilities. After evaluating all evidence, the county court affirmed Patrick's incapacitation and the necessity of a permanent guardian.

The focal point of the appeal was the admissibility of the neuropsychological report, which Patrick’s legal team challenged as hearsay. The Supreme Court analyzed the application of Neb. Rev. Stat. § 30-4204, which allows certain materials obtained by guardians ad litem to be admissible in evidence. The court concluded that the statute provided a specific exception to the hearsay rule, thereby permitting the admission of the neuropsychological report.

The Supreme Court affirmed the lower court's decision, holding that the admission of the neuropsychological report was proper and that the evidence confirmed the finding of incapacity. The ruling highlighted the importance of safeguarding vulnerable individuals while balancing procedural fairness in judicial proceedings.

This case illustrates the nuanced interpretation of statutes related to guardianship and the evidentiary challenges within them. It emphasizes the court's role in ensuring that decisions regarding a person's capacity and need for guardianship are made with appropriate regard to both the individual’s rights and the evidence presented. For clients navigating similar issues, this case serves as a critical guide to understanding the intersection of health conditions, legal capacity, and guardianship within the legal framework. Erickson Sederstrom attorneys are ready to help you navigate even your most challenging moments; you can reach us at 402-397-2200.

Nebraska Supreme Court Ruling on COVID-19 Workers' Compensation Claim

In the recent decision, Thiele v. Select Medical Corp., the Nebraska Supreme Court overturned the denial of a woman's workers' compensation claim for a COVID-19 infection.

Christine Thiele contracted COVID-19 in April 2020 while working as a nurse liaison at a critical care recovery hospital in Omaha. Thiele filed a Petition in the Nebraska Workers' Compensation Court alleging that COVID-19 is an occupational disease caused by her work and that she is entitled to benefits as a result of her exposure.

"Occupational disease" is defined in Section 48-151(3) as "disease which is due to causes and conditions which are characteristic of and peculiar to a particular trade, occupation, process, or employment, and excludes all ordinary diseases of life to which the general public is exposed."

Initially, the Nebraska Workers Compensation Board denied her claim, ruling that COVID-19 was not to be considered an occupational disease. However, Thiel appealed, and the Nebraska Supreme Court reversed the dismissal of her case, finding that COVID-19 was still rare enough to be considered a particular risk for healthcare workers at the time of symptoms' contraction.

The Court's decision was split 4-3, with three justices endorsing one opinion considered the lead opinion; the result was that the trial judge should not have dismissed Thiel's claim and allowed the case to proceed to trial. Three justices dissented with the reasoning and result of the lead opinion. Ultimately, this decision does not resolve the ongoing debate about whether COVID-19 can be considered an occupational disease under the Nebraska Workers' Compensation Act.

The lead opinion introduced a new legal principle. It argued that when determining whether an illness is an 'ordinary disease of life,' the focus should be on the period of exposure prior to contraction or onset of symptoms, rather than the circumstances at the time of the hearing. In Thiel's case, this meant that the trial judge should have considered when she contracted the virus in 2020, a time when healthcare workers faced a heightened risk of exposure, rather than when the Petition was filed in 2022.

On the other hand, the three justices who dissented emphasized that COVID-19 has always spread in the same way; any person-to-person interaction carries the risk of contracting COVID-19 and found that COVID-19 cannot be considered anything other than an ordinary disease of life, regardless of the time period.

Thiel's case, while not providing binding authority or clarity on whether COVID-19 should be considered an occupational disease, does offer a starting point for future cases. The Court's opinion suggests that when determining if an illness, specifically COVID-19, is an ordinary disease of life, one must focus on the period of exposure. This interpretation could potentially influence future workers' compensation claims related to COVID-19.

Matt Rusch Triumphs - Griffith v. LG Chem et al: Summary Judgment Affirmed on Appeal

Congratulations to partner Matt Rusch regarding a recent Nebraska Supreme Court victory, Griffith v. LG Chem et al.  The Court affirmed the Lancaster County District Court’s grant of summary judgment in favor of Erickson Sederstrom clients.  The case involved a conflict of law issues between Nebraska and Pennsylvania regarding the application of the states’ conflicting statutes of limitation. 

Background: 

The case centered around John Griffith's injuries sustained while replacing electronic cigarette batteries at his home in Pennsylvania.  He had purchased the batteries at a truck stop in Nebraska.  LG Chem and LGCAI were alleged to be the manufacturers of the batteries.  The Griffiths filed suit against LG Chem, LGCAI, Shoemaker’s, and E-Titan, alleging negligence, product liability, breach of warranty, and loss of consortium. E|S represented Shoemaker’s and E-Titan, while LG Chem and LGCAI were represented by other counsel.  Key issues included conflicting statutes of limitations from Pennsylvania and Nebraska and a challenge to personal jurisdiction over LGCAI.  The case was filed in Nebraska more than 2 years after Mr. Griffith received his injuries.  Shoemaker’s and E-Titan sought summary judgment, contending that Griffith’s claims were time-barred under Pennsylvania's 2-year limitation period. The Griffiths argued that Nebraska’s 4-year statute of limitations applied. The district court determined that an actual conflict existed between the two states' laws and that the 2-year Pennsylvania statute of limitations applied, resulting in dismissal of all claims against Shoemaker’s and E-Titan.  The district court also dismissed LG Chem and LGCAI from the case, citing a lack of personal jurisdiction.

The Griffiths appealed, challenging the summary judgment in favor of Shoemaker’s and E-Titan and the dismissal of LG Chem and LGCAI. The assignments of error focused on applying the Pennsylvania statute of limitations and the court's lack of personal jurisdiction over LGCAI.

Analysis and Conclusion:

The Nebraska Supreme Court affirmed the district court’s grant of summary judgment for Shoemaker’s and E-Titan and dismissal of the other defendants. 

The appellate court concurred with the district court's findings, emphasizing that Griffith’s negligence claims were based on Pennsylvania law, justifying application of its statute of limitations. The court also upheld the dismissal of LGCAI, stating that the Griffith failed to establish sufficient contact between LGCAI and Nebraska.

Griffith v. LG Chem, 315 Neb. 892

Veik Scores Nebraska Supreme Court Victory!

Partner Heather Veik successfully defended an employer before the Nebraska Supreme Court against tort claims pursued by an employee following injuries sustained at work.  The employee asserted claims for assault and intentional infliction of emotional distress in district court after she suffered injuries during a training drill at work.  The district court dismissed the employee’s claims, concluding that the Nebraska Workers’ Compensation Act provided the employee her exclusive remedy, therefore barring her from pursuing tort claims in district court.

The Nebraska Supreme Court recently affirmed the dismissal of the employee’s claims, reaffirming that the Nebraska Workers’ Compensation Act provides the employee’s exclusive remedy for her injuries.  According to the Nebraska Supreme Court, when workers’ compensation is an employee’s exclusive remedy the employee cannot assert tort theories of recovery against his or her employer in district court.  This rule applies even when an employee claims that his or her employer acted with specific intent to cause injury.  In its decision, the Nebraska Supreme Court rejected the employee’s request to narrow the exclusivity rule and also rejected the employee’s argument that the dismissal of her claims violated public policy.

Lopez v. Catholic Charities, 315 Neb. 617 (2023)

Nebraska Supreme Court's Ruling on Insurance Policy Limitation Periods: Key Takeaways.

On October 6, 2023, the Nebraska Supreme Court issued an opinion further supporting freedom to contract and held that a choice of law provision in an insurance policy controlled resulting in the application of a two-year contract limitation period.

Teresa Rose of Carter Lake, Iowa, was injured when the vehicle she was driving was struck by an under-insured motorist on February 3, 2018. The car Rose was driving belonged to her boyfriend, Christopher Stark, a Nebraska resident. Rose was insured under her sister’s American Family auto policy at the time of the accident. Following the accident, Rose settled with the at-fault motorist’s insurer and Stark’s insurer. Rose then attempted to claim underinsured benefits under the American Family Policy but was denied.

Rose attempted to sue American Family following the denial of benefits; however, the insurance contract stated, “any suit against [American Family] will be barred unless commenced within two years from the date of the accident.” In addition to the two-year limitation, the Policy contained a choice of law provision that stated any disputes would be governed by the laws of the state shown in the declaration of residence, which in this case, was Carter Lake, Iowa.

The district court for Douglas County determined that Iowa courts have expressed a strong public policy in favor of freedom to contract, including enforcing an underinsured motorist policy that contained a two-year limitation on actions, and thus, determined Rose’s claim time-barred. Rose appealed.

The Supreme Court analyzed the district court’s finding, stating that Rose’s claim, although based on the car accident which is a tort, actually arose out of the insurance policy, which is a contract. Because of this, contract law was applied, along with it the public policy encouraging freedom to contract which supports adherence to the black-letter terms of the policy. As the Policy terms stated, Iowa law was to be applied, and as Iowa law has historically supported a two-year limitation period for an uninsured motorist claim, that is the rule of law that the Nebraska court applied. Further, although Nebraska law has a five-year statute of limitations for contracts, Nebraska’s limitation was not found to prohibit contractual limitation periods arising from policies issued in other states, just those policies issued in Nebraska. Ultimately, the Nebraska Supreme Court affirmed the order of the district court.

Rose v. American Family Insurance Co. provides important insight not only into how far one’s freedom to contract extends but also what to keep in mind when working with insurance policies that may reach over state lines.

See Rose v. American Family Ins. Co., 315 Neb. 302 (2023).

Piercing the Corporate Veil - Can you collect from the individuals that own the company that owes you money?

If you obtain a judgment against a company, you can collect that judgment from the company's owners under certain circumstances. This is a legal concept called piercing the corporate veil. It comes up with corporations, LLCs, and other types of limited liability companies (businesses formed to protect owners from liability for business debts). However, it is the exception to the general rule that owners of a limited liability business are not liable for the business’s debts. Specific facts must be proven to pierce the corporate veil. The Nebraska Supreme Court recently reviewed these in the case of 407 N 117 Street, LLC v. Harper et al.

A Nebraska court may pierce the corporate veil to hold owners liable “only where the corporation has been used to commit fraud, violate a legal duty, or perpetrate a dishonest or unjust act in contravention of the rights of another.” 407 N 117 Street, 314 Neb. 843, 849 (2023)(citation omitted). Often, fraud is alleged as the grounds for piercing. Nebraska courts will consider the following factors to determine whether to disregard the corporate entity based on fraud:

1. Was there grossly inadequate capitalization of the company?

2. Was the company insolvent at the time the debt was incurred?

3. Did a shareholder/owner divert company funds or assets for their own use or other improper use?

4. Was the company a mere façade for the personal dealings of the shareholder/owner, and were company operations conducted by the shareholder disregarding the corporate entity?

Because this is the exception to the general rule of limited liability, the party seeking to collect against the shareholders/owners must prove these facts. While possible, it can be challenging to establish absent clear, strong evidence of the above, as the recent case described here shows. The court entered summary judgment in favor of the individual owners and did not pierce the corporate veil. The result in cases like this can be that the creditor does not recover any of its judgment at all, where a company has little or no assets remaining to collect. Early strategies in litigation and collection efforts can be developed in many cases to ensure against this kind of result. On the other hand, legal advice from an experienced attorney in this field can help business owners be sure they will not become subject to claims to pierce the corporate veil of their business and hold them individually liable for company obligations.

You Are Responsible For Deciding What Your Home’s “Replacement Cost” is in Nebraska.

Mark and Michelle Callahan sued their insurance company (Shelter Mutual Insurance Company) and insurance producer (Mr. Brant) after their home was completely lost to an electrical fire in 2019. Previously, in 2011, the Callahans purchased a “replacement cost” insurance policy from Mr. Brant, a Shelter agent. This insurance policy was paid in full; however, the Callahans sued because they learned that the cost of rebuilding their home would be greater than the payout they received from the home insurance policy.

The Callahans maintain that their home was underinsured and that they were harmed by:

(1)   The negligence of their producer, Mr. Brant, who they allege inadequately calculated the replacement cost of their home and

(2)   Mr. Brant verbally reassured both Mark and Michelle that they did not need to increase the amount of the policy to pay for total replacement. The Callahans claim they would have paid a higher monthly premium to insure their home for more money.

The Nebraska Supreme Court confirmed the lower court’s ruling, citing Nebraska’s valued policy statute, and held in favor of Mr. Brant and Shelter. The Court held that the public policy behind Nebraska’s valued policy statute barred the Callahans from presenting evidence that their home was undervalued. As such, the Callahans’ claims of negligence and negligent misrepresentation against Mr. Brant and Shelter described above were foreclosed as a matter of law.

By finding for Mr. Brant and Shelter, the Nebraska Supreme Court solidifies that when insuring real property, the dollar value set by the parties to the insurance contract controls in both directions. Further, that dollar amount effectively forecloses some tort claims (here, negligence and negligent misrepresentation) that might arise after the contract. In his dissent, Chief Justice Heavican identifies this outcome as unparalleled when compared to other states and atypical of tort law which often permits claims arising out of contract. Callahan, 314 Neb. at 247-49. Essentially, both parties to the insurance contract (the insured and insurer) are responsible for declaring and/or demanding their desired amount of coverage.

Depending on whether you side with the majority or dissent, Callahan v. Brant is either a renewed reminder for or an additional burden on the homeowner. The homeowner is responsible for knowing the cost of rebuilding their home and purchasing the precise dollar amount of insurance coverage they wish to receive in the event they suffer a total loss. This case solidifies that the remedies available to a homeowner (or other real property owner) after your home is completely lost to fire, tornado, windstorm, lightning, or explosion is limited, even if your policy presents as a “replacement cost” policy. Future allegations against an insurance producer alleging that the producer (1) suggested too low a dollar amount to cover the replacement cost of your home and/or (2) offered you reassurance that the “replacement cost” policy was adequate may not stand after your home is destroyed.

Here, the Callahans did not lose on the merits of their claims against Mr. Brant. It makes no difference to the Court whether Mr. Brant and/or Shelter Insurance failed to act reasonably when calculating the value of the Callahans’ home or whether Mr. Brant may have reassured the Callahans that their policy adequately covered their home. Instead, the Court found the Callahans’ claims inadequate as a matter of law under Nebraska’s valued policy statute.

The takeaway for homeowners in Nebraska: even when your home insurance policy identifies as a “replacement cost” plan, you are responsible for insuring your home to the amount of its replacement cost. Or at least to the amount you seek to be repaid in the event of a total loss. If your home would cost more to replace than your home insurance policy insures, you are “underinsured.” Under Nebraska’s valued policy statute and Callahan, the homeowner effectively self-insures the difference as a matter of law.

Special thanks go to Erickson|Sederstrom senior law clerk Steve Lydick for his assistance with this article.

Callahan v. Brant, 314 Neb. 219, 990 N.W.2d 1 (2023)

Is an Order to Mediate a Final Order? Nebraska Supreme Court Re-Visits Final Orders Yet Again

In June of 2022, the Nebraska Supreme Court found it was without jurisdiction over an appeal because a district court’s order for mediation and further determination is not considered a final judgment. Tegra Corp. v. Boeshart, 311 Neb. 783 (2022). The decision stemmed from a dispute over what authority a committee has under Neb. Rev. Stat. § 21-168, which governs special litigation committees for corporations, and whether that authority was analyzed with regard to Neb. Rev. Stat. § 25-1902, which defines a final order.

 Patrick Boeshart is the president and sole manager of Lite-Form Technologies, LLC, based in Sioux City, Nebraska. Tegra, 311 Neb. 783 at 787.  His wife, Sandra, is the office manager and bookkeeper. Id. Boeshart Management Company is an Iowa LLC owned by Patrick and Sandra. Id.  Pat Boeshart Construction is an Iowa LLC that is wholly owned by Patrick. Id. Tegra Corporation is an Iowa corporation in Sioux City, Iowa, and is a minority shareholder of Lite-Form. Id.

            Tegra, individually and on-behalf of Lite-Form, filed a complaint against the Boeshart’s alleging breach of fiduciary duty, misappropriation and waste of corporate assets, unjust enrichment, and conversion. Id at 788. Based on Tegra’s claims and pursuant to Neb. Rev. Stat. § 21-168, the manager-defendants appointed Cody Carse to the special litigation committee for the corporation. Tegra, 311 Neb. 783 at 788. Carse determined that it was in Lite-Form’s best interests to settle. A term of settlement included disclosing certain issues to the LLC members and conducting a majority vote on how the issues should be resolved. Id at 792.

            When the District Court reviewed the committee’s report, it found the committee acted with enough disinterested independence and good faith, but that its recommendations went beyond the authority of a committee under Neb. Rev. Stat. § 21-168. Tegra, 311 Neb. 783 at 794. The District Court ordered the parties to attempt mediation and report back. Id. Tegra appealed the order and the defendants cross-appealed. Id.

            The Supreme Court selected this case to address the scope of final judgments under Neb. Rev. Stat. § 25-1911 and how they apply to the Court’s jurisdiction. First, the Court determined that to be appealable, the order in question must satisfy the requirements of Neb. Rev. Stat. § 25-1902 and when applicable, Neb. Rev. Stat. § 25-1315(1).  Id at 796. Under § 25-1315, an express determination by the court about lack of reason for delay in making a final judgment must exist which would be “fatal to [the Court’s] jurisdiction over the appeal.” Id at 798. The Court found there was no express determination here. Further, the Court found the order was not final under § 25-1902. Id.

            To determine if the order to mediate was final under § 25-1902, the Court analyzed whether a derivative action is a “special proceeding” that “affected a substantial right.” Id. A special proceeding includes every special statutory remedy that is not in itself an action. While the plea may be connected with an action through application of the proceeding, it is not the integral part of an action.  Id at 799. Prior to Tegra, the Court had not addressed if a derivative action was a special proceeding. The Court stated they “will no longer reason that a proceeding is special by the sole virtue of being governed by statutes outside of chapter 25.” Id at 802.

            Ultimately, the Court concluded derivative actions are not special proceedings, but an equitable proceeding a member asserts on behalf of the LLC. Id at 802. While a derivative action requires the extra steps of making a demand of other members to enforce the right and requires the complaint to state a demand or state the action is futile, the derivative action is an action nonetheless. Id. The derivative action is a proceeding in a court by which one party prosecutes another for enforcement. It is still possible that orders under § 21-168 are made during a special proceeding, but this is because a special proceeding may be “connected with” an action; not because it, in itself, is an action. Id at 803. Whether a special proceeding is connected with an action or is an action depends on whether the proceedings under § 21-168 are an integral part of the main derivative action or just one of the many steps taken to commence the action. Id.

            The four options available to a committee under § 21-168 are: (1) the action continue under the control of the minority-member plaintiff who brought it, (2) the action continue under the control of the committee, (3) the action be settled on terms approved by the committee, and (4) the action be dismissed. Id at 806. After analyzing the four options, the Court determined any proceedings under § 21-168 are just a step in the underlying derivative action and not itself an action. Therefore, orders made pursuant to § 21-168 are not made during a special proceeding. Id at 807.

The Court also held an order under § 21-168 does not impact a substantial right. Id. A substantial right is “an essential legal right...[that is] affected if an order affects the subject matter of the litigation, such as by diminishing a claim or defense that was available to an appellant before the order from which an appeal is taken.” Id at 807. Determining whether an order is substantial depends on if it affects, with finality, the rights of the parties in the subject matter. Id at 810. The Court held that enforcing special litigation committee determinations lead to final judgments, but their effect as independent orders is limited in duration and any delay in their enforcement does not affect any substantial right. Id. 

Both parties in this suit attempted to argue the Court’s order of mediation exceeded its authority, but the Supreme Court found it did not affect a substantial right because any alternative dispute resolution is voluntarily entered into. Id at 811.

Ultimately, the Court found the order of the lower court was not a final order because there was not a “special proceeding” that “affected a substantial right.” This means reviewing courts’ rulings issued about a corporate committee decision under § 21-168 are not part of special proceedings for purposes of the final order doctrine. Id at 812.

The Nebraska Supreme Court continues to clarify and update its stance on final orders for purposes of appeals. Erickson | Sederstrom’s litigation attorneys are well-versed in this law and happy to review any appeal issues for clients in the region as lead counsel, for out-of-state attorneys as local counsel, or for Nebraska attorneys needing expert appellate co-counsel for their clients’ matters.

** This article was researched and primarily written by E|S law clerk Amelia Rens. Amelia is starting her third year at Creighton University School of Law and will join E|S as an associate attorney in the fall of 2023 after becoming licensed. We look forward to it! **

Law or equity – whether a jury decides the claim in light of the equitable ‘clean up’ doctrine

In Schmid v. Simmons, the Nebraska Supreme Court held that the common law “clean up” doctrine is still good law, discussed when a party is entitled to a jury trial on civil disputes, and clarified how a litigants may waive the right to jury trial on legal claims.  311 Neb. 48 (2022).   

The Nebraska Constitution guarantees the right to trial by jury. However, on civil matters, which are generally disputes about money or other non-criminal matters, the state Constitution allows the Legislature to modify this right to allow juries less than 12 to decide matters in courts inferior to the District Courts, and, in such cases, the decision may be rendered by five-sixths majority of the jury.  Neb. Const. art. I, § 6.

 Litigants still have a right to seek a jury trial on legal claims—those involving disputes over specific real or personal property and money damages—but not on equitable claims, which may be tried “to the bench” without a jury.  Whether a claim is legal or equitable rests upon the “main object” of the claim, which is shown by the issue the lawsuit seeks to resolve.  

 Under the “clean up” doctrine, a court may determine equitable issues and then “clean up” other legal issues in the case, even where a defendant asserts a legal claim as a defense or counterclaim.  The purpose of this doctrine is to preserve judicial efficiency by allowing the same court to hear and determine all disputed issues in a single lawsuit. 

Applied to the facts, the Court found proper the district court’s decision to resolve plaintiff’s equitable claims (quiet title, declaratory judgment, LLC accounting, and judicial dissolution) and then “clean up” defendant’s amended counterclaims seeking damages for breach of contract, a legal claim.  Because the District Court retained jurisdiction to quiet title and determine rights of LLC members, and because the parties agreed the matter before the court was equitable, the District Court correctly applied the “clean up” to resolve any remaining legal claims all equitable claims were decided.  

The Court further clarified the manner in which parties may waive the right to trial by jury on a breach of contract action, or with the court’s agreement in other actions, finding that waiver could be accomplished in three ways: (1) by consent of a party where the other party fails to appear, (2) by written consent delivered to the clerk of court, or (3) by oral consent in open court on the record.  Neb. Rev. Stat. § 25-1126.

 E|S attorneys are experts in civil trials, whether to a jury or to a judge, whether in equity or common law. Bonnie Boryca and E|S litigators can be reached at 402-397-2200. 

Thanks to E|S law clerk Ross Serena for contributing to the above article.

No Double Liability to Amputee for Loss of Foot and Toes in Workers’ Compensation Matter

In a recent decision, the Nebraska Supreme Court considered whether the discontinuance of temporary partial disability benefits triggered the payment of permanent partial disability payments in a Workers’ Compensation case involving an employee who endured an amputation below his knee as a result of a work-related injury. 

In Melton v. City of Holdrege, Mr. Benjamin Melton (“Employee”) was employed by the City of Holdrege (“City”) as a journey-man lineman where he sustained a work-related injury resulting in an amputation of his left leg just below the knee.  309 Neb. 385, 386-87 (2021).  Thereafter, Employee obtained a prosthesis; however, he endured issues with the prosthesis including shrinking, swelling, sweating, and obtaining a good fit.  Just over six years later, Employer provided City medical documentation from his physician indicating he reached maximum medical improvement (“MMI”).  City paid Employee permanent partial disability benefits for a one hundred percent loss of his foot and an additional five percent loss to his leg upon receipt of such documentation. 

The trial court waded through conflicting evidence concerning Employee’s impairment rating and when Employee reached MMI.  It was determined Employee’s amputation below the knee entitled him to statutory benefits for 150 weeks under Neb. Rev. Stat. Ann. § 48-121(3).  The trial court reasoned that Employee had not lost all functional use of his left leg, but his loss of thigh strength and atrophy combined with his knee pain reduced the function of his leg beyond the loss of his foot.  Employee suffered a twenty percent loss of function to his leg, entitling him to forty-three weeks of disability benefits.  Employee was awarded a combined total of 193 weeks of compensation, rejecting Employee’s argument that he was entitled to an award for the loss of each toe on his left foot in addition to the loss of that foot.   

On appeal, Employee argued the trial court (1) failed to evaluate loss of use of his leg without the prosthesis attached when determining his impairment; (2) should have awarded him compensation for the total loss of use of his leg; and (3) erred in failing to award him consecutive disability benefits for a total loss of all his toes, his foot, and use of his left leg.   

The Nebraska Supreme Court held the trial court did not err in failing to evaluate Employee’s loss of use of his leg without his prosthesis attached since Employee did not lose all functional use of his left leg.  The court reasoned Employee, without his prosthesis, could pick his left leg up waist high, crawl up stairs, climb ladders, and navigate uneven terrain by crawling, scooting, or sliding.  Accordingly, the trial court was not in error in determining Employee’s loss based on the use of his prosthesis.   

To bolster his argument in favor of an award for a total loss of use for his left leg, Employee turned to the practical intents and purposes test, which derived from Pennsylvania, and was cited in Jacob v. Columbia Ins. Group, a Nebraska Court of Appeals case.  2 Neb. App. 473, (1994).  In essence, the test has been used to determine whether a disability to a claimant’s body renders such a body part to serve “no real purpose.”  Applied in Melton, Employee argued he sustained a 100 percent loss of use of his left leg.  However, the court held Employee’s left leg could not be rendered “useless” because he retained enough strength in his left leg to successfully use the prosthetic device by being able to bend his knee and support weight on the residual limb.  Therefore, although Employee’s leg was not useless, Employee suffered an additional twenty percent loss of function in his leg that went beyond what would have otherwise been expected after amputation of his left leg below the knee.   

Finally, Employee asserted he was entitled to consecutive amounts of disability benefits for the loss of his five toes, the loss of his left foot, and the total loss of his left leg under Neb. Rev. Stat. Ann. § 48-121(3).  However, the court directed Employee to the four corners of the law and held § 48-121(3) explicitly stated a below-the-knee amputation was the equivalent of a loss of a foot and did not equate to the loss of one’s entire leg.  The court turned to the policy behind the law and reasoned a party may not have double recovery for a single injury.  Accordingly, Employee’s loss of his leg below-the-knee would obviously include the loss of his toes under § 48-121(3) since the legislature limited the loss to the foot.   

Ultimately, the court upheld the trial court’s determinations that Employee did not suffer a total loss of use of his leg because it appropriately compensated Employee for the functional loss of his leg that was not already accounted for in the compensation for the loss of his foot.  Further, the court upheld the trial court’s award of loss of use benefits for the leg and refused to extend double recovery to Employee.   

This article was prepared by Erickson Sederstrom’s law clerks Alison Clark and Rob Toth under the direction of employment attorney Bonnie Boryca, who can be reached at 402-397-2200.

Duty to Bargain on Residency of Officer in CBA between Police Union and City of York?

In Fraternal Order of Police v. City of York, the Nebraska Supreme Court considered whether the City of York’s failure to reach an agreement with the Fraternal Order of Police (FOP) regarding a requirement of residency in York County to obtain a promotion at the York Police Department was a prohibited labor practice.  309 Neb. 359 (2021).  The Court found that although it was not specifically mentioned in the collective bargaining agreement, the residency requirement was within the ‘compass’ of the agreement, and therefore no further bargaining on the issue was needed. Id. at 374.

The FOP is a labor organization/union that serves the purpose of dealing with public employers (here, the City of York Police Department) concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.  Id. at 361.  On January 9, 2019, the FOP entered a collective bargaining agreement with the City of York that gave the York Police Department the right to determine, establish, and implement policies for employee promotions.  Id. at 362.  The agreement made no specific mention of the Department’s right to require officers to reside in York County to be promoted.  Id.

After the Department directed an officer to sign an agreement requiring him to obtain residency in York County upon being promoted to sergeant, the FOP claimed such a requirement was not bargained for in their agreement with the City of York.  Id. at 364. The union then demanded bargaining of the residency requirement, alleging that it was a mandatory subject of bargaining under the Industrial Relations Act (IRA).  Id.  The City declined to bargain, and the FOP filed their petition before Nebraska’s Commission of Industrial Relations (CIR).  Id. at 366. 

At trial, the parties stipulated that the residency requirement for promotion was a mandatory subject of bargaining.  Id. at 363.  However, the CIR dismissed the claim holding that the matter was addressed by the collective bargaining agreement between the City of York and the FOP, and therefore the parties had no further obligation to bargain the issue.  Id. at 369.

The Nebraska Supreme Court affirmed the CIR’s decision, further noting that while broad and vague statements that employers “may do whatever they please” are insufficient to establish that all topics are covered by a collective bargaining agreement, such an agreement does not need to specifically mention every subject in order for it to be covered by the agreement.  Id. at 373.

This article was drafted by Erickson Sederstrom’s law clerk, Joe Johnson, with assistance and supervision of our employment law attorney Bonnie M. Boryca. She can be reached at 402-397-2200 or boryca@eslaw.com.

Nebraska Supreme Court Clarifies Enforcement of Covenants Regarding Homeowners’ Associations

Erickson | Sederstrom's attorneys’ have extensive background in real estate disputes.  If faced with a difficult issue involving real estate – including conveyances, development, zoning, construction, property tax, or other issues – we recommend you contact our office and speak with one of our attorneys. 

 Real estate developments typically are governed by covenants that require or prohibit certain actions by property owners.  To be enforceable, covenants must involve issues that “touch and concern” the land.  The “touch and concern” element of real property covenants has been convoluted in its development.  The Nebraska Supreme Court recently narrowed the interpretation of this element as applied to communities governed by a homeowners’ association (“HOA”).  See Equestrian Ridge Homeowners Ass'n v. Equestrian Ridge Estates II Homeowners Ass'n, 308 Neb. 128, 146 (2021).  Specifically, the court determined that the “touch and concern” element may be satisfied as applied to communities governed by an HOA when the “burden” of HOA payments is afforded to a “benefit” that is: (1) considered a necessity to the community; and (2) increases the value of the community’s lots.

 Facts

 In Equestrian Ridge Homeowners Ass'n v. Equestrian Ridge Estates II Homeowners Ass'n, the Nebraska Supreme Court decided a dispute between two neighboring HOAs involving real covenants running at law in a neighborhood near Gretna, Nebraska.  The covenants addressed requirements to maintain a street.

 In 2004, Ted Grace (“Grace”) and Duane Dowd (“Dowd”) owned contiguous tracks of land near Gretna.  Together, Grace and Dowd agreed to grant their respective tracts of land to Equestrian Ridge, an L.L.C. established by Grace and Dowd, and develop the tracts into residential subdivisions.  Subsequently, Grace and Dowd executed an additional agreement to develop Grace’s tract (“Equestrian Ridge Estates”) first, then Dowd’s tract (“Dowd Grain Subdivision”) thereafter.  All fifteen lots in Equestrian Ridge Estates were sold and were subject to the authority of its HOA through a series of covenants, conditions, and restrictions (“CC&R’s”).  During the development of Dowd Grain Subdivision, the parties determined that Shiloh Road, the only accessible pathway to the Subdivision, terminated at a dead end; therefore, the parties decided to improve accessibility to the Subdivision by “extending Shiloh Road past its dead end to the west, across the border with” Equestrian Ridge Estates.  This agreement was evidenced by Dowd’s promise to subject Dowd Grain Subdivision and its forthcoming HOA, through a series of CC&R’s, “to a sharing of one third of the costs and expenses for the repair and maintenance of 232d Street within Equestrian Ridge Estates.”

 After developing several lots within Dowd Grain Subdivision and renaming the subdivision Equestrian Ridge Estates II, Dowd resigned from the HOA.  Thereafter, “[t]he board members of Equestrian Ridge Estates II HOA formally accepted Dowd's relinquishment of all his interests and agreed to manage the subdivision, and contributed its share of maintenance costs to improve 232d Street.

 In early 2015, Equestrian Ridge Estates II HOA “met to discuss major roadwork that was expected along 232d Street” and made several complaints, including “that when Equestrian Ridge Estates HOA made repairs to 232d Street, it did so without the input of Equestrian Ridge Estates II HOA.”  Equestrian Ridge Estates II HOA further complained “that they only ever learned about 232d Street maintenance projects upon receiving invoices from Equestrian Ridge Estates HOA, typically without any explanation about the maintenance for which they were being asked to contribute.”  Afterwards, Equestrian Ridge Estates II HOA amended its CC&R’s “to remove any requirement of [their] lot owners to contribute to maintenance costs of 232d Street” and refused to contribute to road maintenance costs, while Equestrian Ridge Estates HOA paid the entire amount.  As a result, Equestrian Ridge Estates HOA filed suit against Equestrian Ridge Estates II HOA to seek payment for the road maintenance costs pursuant to the covenants.

 Legal Conclusions

 The Nebraska Supreme Court held that Equestrian Ridge Estates II HOA “was bound to contribute to 232d Street maintenance costs under the 2004 Agreement” because Equestrian Ridge Estates II HOA “was a successor in interest of Dowd Grain Subdivision and, as such, was bound by the covenant at issue in the 2004 Agreement, which runs with the land in perpetuity.”  In support of its holding, the Nebraska Supreme Court set forth and applied the three requirements for a covenant to run with the land:

(1) The grantor and the grantee must have intended that the covenant run with the land, as determined from the instruments of record; (2) the covenant must touch and concern the land with which it runs; and (3) the party claiming the benefit of the covenant and the party who bears the burden of the covenant must be in privity of estate. 

 Applied here, the “intent to bind” element was met because it was contemplated in the 2004 agreement that the covenants at issue “would bind lot owners in the future.”  When considering the “touch and concern” element, the court noted that “it has been found impossible to state any absolute tests to determine what covenants touch and concern land and what do not.”  Therefore, this issue was “one for the court to determine in the exercise of its best judgment upon the facts of [the] case.”

 The Nebraska Supreme Court has adopted a clearer explanation of “what it means for a covenant to touch and concern the land.”  The “covenant must impose, on the one hand, a burden upon an interest in land, which on the other hand increases the value of a different interest in the same or related land.”  The “touch and concern” element is met in this instance because “[i]n exchange for the burden of being required to contribute to 232d Street maintenance costs, Dowd afforded Equestrian Ridge Estates II and its future lot owners the benefit of paved access across 232d Street to public roads.”

 Finally, the Nebraska Supreme Court distinguished and applied various definitions of “privity” when analyzing the third element of “privity of estate.”  See id. at 146-47.  In essence, “privity” can be “defined as mutual or successive relationships to the same right of property, or such an identification of interest of one person with another as to represent the same legal right or derivative interest . . . between parties.”  Id. at 147.  The “privity of estate” element is satisfied in this case because Equestrian Ridge Estates II, the same property that Dowd once owned, is now controlled by Equestrian Ridge Estates II HOA and owned by Equestrian Ridge Estates II HOA and Equestrian Ridge Estates II's lot owners.  Id.  Accordingly, “Dowd and these lot owners are successive owners of the same land pursuant to their deeds of purchase for the lots.”  Id. 

 Therefore, Dowd’s promise to subject his subdivision to a requirement to contribute to 232d Street maintenance costs at the time of the 2004 agreement “was a covenant that ran with the land.”  As a result, Equestrian Ridge Estates II HOA, as the successor in interest to Dowd, was bound to contribute to 232d Street maintenance costs.

 Future Developments for Covenants Running at Law as Applied to Communities Governed by an HOA

 Although the “touch and concern” element has been convoluted throughout its development, the Nebraska Supreme Court has now narrowed its interpretation of this element as applied to communities governed by an HOA.  Specifically, the court determined that the “touch and concern” element may be satisfied as applied to communities governed by an HOA when the “burden” of HOA payments is afforded to a “benefit” that is: (1) considered a necessity to the community; and (2) increases the value of the community’s lots, such as the street maintenance costs involved here.