In Nebraska, Lenders Have Five Years to Pursue Deficiency Lawsuits after Judicial Foreclosures

In First National Bank of Omaha v. Scott L. Davey and Deborah Davey, the Nebraska Supreme Court held that a creditor has five years to pursue a deficiency action in situations where a piece of real estate has been foreclosed through judicial proceedings.

Nebraska law provides that, when real estate lending is secured by a deed of trust, the deed of trust can be foreclosed either through a non-judicial trustee sale of the property or a judicial foreclosure proceeding.  If the foreclosure, through either process, does not generate enough proceeds to pay off the underlying loan, the lender will be entitled to pursue the defaulted party for the remaining unpaid balance (the “deficiency”).  The Nebraska Deed of Trust Act, however, states that any legal action to secure a deficiency judgment must be brought within three months after “any sale of property under a trust deed…”

In Davey, a deed of trust had been foreclosed through use of judicial foreclosure proceedings which culminated with a sheriff’s sale of the property.  A deficiency resulted, but the lender did not file a deficiency lawsuit within the three month time frame.  The Douglas County District Court held that the lender filed its deficiency action too late and the action was dismissed.  The Nebraska Supreme Court reversed that decision, finding that the general five year statute of limitations for written contract matters applied instead.  The Court found that, notwithstanding the statutory language, applying the shorter three month time frame to filing of deficiency actions after a judicial foreclosure sale could produce absurd results in some cases and that it was more appropriate, given the overall statutory intent, to apply the five year limit instead.  Accordingly, lenders using the judicial foreclosure process have a considerable length of time to determine whether they wish to seek a deficiency judgment when the foreclosure did not produce enough funds to pay off the underlying loan.  
Davey reflects that, in Nebraska, despite the expedient procedure for foreclosure provided in the Deed of Trust Act, many situations can exist in which judicial foreclosure is more appropriate.  While the judicial process will take much longer, it is appropriate for use in situations in which competing liens need to be resolved, and can also be appropriate when the lender will need more time to evaluate its options.  

Erickson|Sederstrom attorneys are available to aggressively pursue both judicial and non-judicial foreclosure actions and any resulting deficiency suits.  Erickson|Sederstrom attorneys also provide a wide variety of additional real estate litigation services, including quiet title actions and landlord/tenant dispute litigation.

Differences Between Application of General Negligence and Professional Negligence Statutes of Limitation Clarified

In Churchill v. Columbus Community Hospital, Inc., the Nebraska Supreme Court attempted to provide clarification, in the context of services provided by a physical therapist, about how to determine when the two year professional negligence statute of limitation applies and when the four year general negligence statute of limitation applies.
In Churchill, a patient participating in aquatic therapy was injured after she slipped on a puddle of water while descending steps to leave a pool area located within a physical therapy clinic. The clinic’s policy was not to assist patients leaving the pool unless an initial evaluation indicated the patient had trouble walking. Churchill’s evaluation did not reveal any such trouble. On November 1, 2011, one day before the four year anniversary of her fall, Churchill filed an action in Platte County District Court against the clinic’s owner, claiming negligence in failing to clean the floor and failing to warn of the water hazard. The district court granted summary judgment in favor of the defendant, determining that the action was one for professional negligence, which Nebraska Revised Statute §25-222 states must be filed within two years after the act or omission occurred.
Churchill appealed the grant of summary judgment against her on the grounds that her claim was for premises liability, which is subject to a four year statute of limitation under Neb. Rev. Stat. §25-207. Addressing an issue it had not previously specifically determined, the Court concluded that physical therapists are considered professionals, taking into account that physical therapists are licensed by the state, are required to have a college degree, are subject to professional disciplinary authority, and are required to maintain certain educational requirements. The Court then stated that the alleged negligent act, directing Churchill to leave the pool without assistance, occurred within the scope of a professional relationship between patient and therapist. The Court reasoned that performing aquatic exercises was part of Churchill’s therapy, and her therapist evaluated her ability to walk. When the therapist directed Churchill to leave the pool without assistance, he was providing professional services. Thus, Churchill’s action was not allowed to proceed, as it was governed by the two year statute of limitation for professional negligence. 
Churchill thus clarified the analysis by which Nebraska courts evaluate whether a claim must be filed within two years as professional negligence, or within four years as required for other causes of action. The act or omission alleged must be essential and an integral part of the professional service rendered. Also, the profession addressed must exhibit factors similar to the factors set forth in Churchill.   This rule of law has been upheld in subsequent cases.
Churchill gives plaintiffs an incentive to file suit early if they have any question as to whether their claim is subject to the professional negligence statute of limitation.  Those defending against claims may argue for a broader application of the definition of “professional negligence”, as Churchill may broaden that definition in some situations.

Jury Confusion: What Happens When the Jury Makes a Mistake?

The Iowa Court of Appeals recently affirmed a district court’s denial of a motion for new trial based on juror misconduct. In Resetich v. State Farm, the Leanna Resetich was involved in a car accident in which she sustained injuries. Her and her husband eventually sued State Farm for underinsured motorist coverage and loss of consortium. The jury returned a verdict for $48,000, and assessed Ms. Resetich’s fault at 45%. Consequently, the judge reduced the plaintiff’s judgment to $26,500. 

The plaintiffs then filed a motion for a new trial alleging, among other things, juror misconduct. In support of the assertions, they produced a juror’s sworn statement attesting that the jurors had already considered Ms. Resetich’s fault in calculating the $48,000 verdict, an action prohibited by the jury instructions. The district court refused to admit the affidavit and denied the motion for new trial. Plaintiffs appealed. 

On appeal, the court noted that I.C.A. § 5.606(b) prohibits the use of juror testimony unless it refers to extraneous prejudicial information or outside influences that improperly affected jurors. In order to protect the sanctity of the juror room, any thoughts, emotions, or internal matters are not admissible. The court reasoned that jurors’ understanding or lack thereof represented the internal workings of the jury, which was barred by the evidence statute. Thus, the district court properly excluded the juror’s affidavit and denied the motion for new trial on the grounds of juror misconduct.

For any litigant, this result is upsetting. I.C.A. §5.606(b) is a statute used in different forms across the country to protect jurors. To avoid a confused jury, it is important to have an attorney that fights for clearly worded jury instructions and protects an appellate record in case unfair instructions are sent to the jury room. 

If you are considering suit or facing a complaint, attorneys at Erickson | Sederstrom may be able to assist you on a variety of legal topics. Attorney MaKenna Dopheide may be reached at (402) 397-2200.

Nebraska Strikes Employer’s Strategy to Keep Workers’ Compensation Plaintiffs from Dismissing Cases

Nebraska’s highest court recently ruled that employers in workers’ compensation cases cannot hold a counterclaim to keep a plaintiff from dismissing their case voluntarily. In Interiano-Lopez v. Tyson Fresh Meats, the plaintiff filed a case in Nebraska’s workers compensation court asking the court to determine his employer’s liability as to an alleged injury in October 2013. Tyson, the plaintiff’s employer, answered with a counterclaim asking that the court also determine its liability. Eventually, the plaintiff requested that the court dismiss the case without prejudice so that he could file the same case in the Iowa workers’ compensation system. (At the time, the plaintiff lived in Iowa, while the Tyson plant was located in Nebraska) The judge dismissed the plaintiff’s case, but Tyson’s counterclaim continued. Before Iowa could adjudicate the plaintiff’s claim, the Nebraska court ruled in favor of Tyson with regard to the October 2013 injury.

On appeal to the Nebraska Supreme Court, the court noted the alleged conflict in workers’ compensation statutes. Neb. Rev. Stat. § 48-177 allows a plaintiff to dismiss a case with the ability to refile if the case has not been submitted to the judge or if both parties agree. Meanwhile, Neb. Rev. Stat. § 48-173 allows both parties in interest to petition the Nebraska workers’ compensation court to resolve a dispute about an employee’s workers’ compensation benefits. While the court did not consider Tyson’s counterclaim to be a “petition” under Neb. Rev. Stat. § 48-173, it also noted that to allow counterclaims would interfere with plaintiffs’ right to dismiss a case under Neb. Rev. Stat. § 48-177. It stated, “[w]e will not construe an employer’s right to file a petition under § 48-173 in a manner which negates a plaintiff’s right to dismiss a case under § 48-177”.

This case represents a blow to a defense strategy to keep plaintiffs from increasing employer costs. In this case, the court noted that the plaintiff sought to refile in Iowa because the benefits and law were more favorable to him. The employer’s strategy sought to protect itself from last minute dismissals to save money and costs. After this opinion, plaintiffs will be allowed to dismiss a case voluntarily without regard to an employer’s right to file a petition.