Association of Commonwealth Claimants v. Hake

• Decision Date: 19 October 1993
• Docket Number: No. A-92-039,A-92-039
• Citation: 2 Neb.App. 123,507 N.W.2d 665
• Parties: ASSOCIATION OF COMMONWEALTH CLAIMANTS, An Unincorporated Association, Appellant, v. Kenlon HAKE et al., Appellees.
• Court: Nebraska Court of Appeals

Page 665

507 N.W.2d 665

2 Neb.App. 123

ASSOCIATION OF COMMONWEALTH CLAIMANTS, An Unincorporated Association, Appellant, v. Kenlon HAKE et al., Appellees.

No. A-92-039.

Court of Appeals of Nebraska.

Oct. 19, 1993.

Robert R. Gibson, of Professional Legal Associates of Nebraska, P.C., Lincoln, for appellant.

James B. Cavanagh, of Lieben, Dahlk, Whitted, Houghton, Slowiaczek & Jahn, P.C., Omaha, for appellees First Nat. Bank of Omaha and Dennis O'Neal.

Rodney M. Confer and Trev E. Peterson, of Knudsen, Berkheimer, Richardson & Endacott, William D. Kuester, of Crosby, Guenzel, Davis, Kessner & Kuester, Lincoln, Thomas L. Kimer, of Faegre & Benson, Minneapolis, MN, Paul M. Schudel, of Woods & Aitken, Lincoln, Gerald Laughlin and Jill Robb Ackerman, of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, Gregory Perry, of Perry, Guthery, Haase & Gessford, P.C., and David A. Barron, of Cline, Williams, Wright, Johnson & Oldfather, Lincoln, for appellees Hake et al.

CONNOLLY, HANNON, and IRWIN, JJ.

IRWIN, Judge.

Appellant, Association of Commonwealth Claimants (ACC), as assignee of various depositors and creditors of the insolvent Commonwealth Savings Company, brought this action for damages against appellees, alleging mismanagement and other improprieties which resulted in the insolvency, collapse, and liquidation of Commonwealth. Appellees are former directors of the Nebraska Depository Institution Guaranty Corporation (NDIGC), financial institutions that employed the former directors, and alleged coconspirators.

Appellees demurred to ACC's third amended petition, claiming that ACC failed to state facts sufficient to constitute a cause of action, that ACC failed to allege that it made a proper demand on the receiver to bring this action, and that ACC was not the real party in interest. The district court for Lancaster County sustained the demurrers and dismissed this action. For the reasons set forth below, we affirm the order of the district court.

FACTUAL BACKGROUND

Commonwealth Savings Company was an industrial loan and investment company located in Lincoln, Nebraska. On November 1, 1983, the Nebraska Department of Banking and Finance took possession of Commonwealth pursuant to state law regarding the insolvency of industrial loan and investment companies. See Neb.Rev.Stat. §§ 8-416 (Reissue 1991) and 8-187 (Reissue 1983). On November 8, the district court for Lancaster County issued an order declaring Commonwealth insolvent and appointed the Department of Banking and Finance as the receiver of Commonwealth pursuant to § 8-416 and Neb.Rev.Stat. § 8-198 (Reissue 1983).

Commonwealth deposits were guaranteed at up to $30,000 per account by the NDIGC. However, the NDIGC defaulted on its guarantees. In January 1985, the receiver and the NDIGC entered into an agreement providing that the NDIGC would transfer all of its remaining assets, worth $3 million, to the receiver. The agreement also provided that the receiver would indemnify the NDIGC, its officers, and its directors against any claims arising out of the transfer of the NDIGC's assets.

The receiver also filed two tort claims against the State of Nebraska. These claims were filed with the State Claims Board pursuant to the State Tort Claims Act, Neb.Rev.Stat. § 81-8,209 et seq. (Reissues 1981 & 1987 & Supp.1983). The first claim was filed on behalf of the creditors of Commonwealth against the State, its officers, and its employees. The second claim was brought under the Nebraska Depository Institution Guaranty Corporation Act, Neb.Rev.Stat. § 21-17,127 et seq. (Reissue 1991). Both claims essentially alleged that state officers and employees committed negligent, willful, and wanton acts that resulted in the creditors' losses.

After two settlements proposed by the State Claims Board were rejected by the district court for Lancaster County, the receiver ACC and Claude T. Weimer filed the present action on October 28, 1987, seeking $58 million in damages from appellees. Weimer died in 1990 and is no longer a named party in this action. See, Neb.Rev.Stat. § 25-1405 (Reissue 1989); Vogt v. Daily, 70 Neb. 812, 98 N.W. 31 (1904). Appellees filed demurrers to ACC's amended petition, and the district court for Lancaster County sustained appellees' demurrers and dismissed ACC's petition on the grounds that the causes of action belonged to the receiver and that ACC had no standing to bring this action. ACC appealed this ruling to the Nebraska Supreme Court. On May 11, 1990, the Supreme Court ruled on ACC's claims as follows:

filed suit against the State of Nebraska on March 20, 1985, in the district court for Lancaster County. On April 26, the district court approved a settlement entered into by the receiver and the State. The terms of the settlement included a payment to the receiver of $8.5 million as a full and complete satisfaction of all claims held by the receiver against the State and its employees.

We have determined that appellants' [Weimer's and ACC's] actions are derivative and that they have not suffered individual harm upon which they can sue directly. Their actions are properly brought by the receiver. However, the record shows that the receiver sued only the State of Nebraska.... If [Weimer and ACC] in fact state a cause of action against the NDIGC or other defendants, this leaves Commonwealth, its creditors, and its depositors with a claim which the receiver failed or neglected to pursue.

....

... [A]ppellants have stated a cause of action at least against the NDIGC based on statutory and common-law contractual liability toward Commonwealth and its depositors.

Although the receiver was the proper party to enforce that liability, the appellants are not left without a remedy in this situation. While § 8-199 gives the receiver broad authority to enforce claims on behalf of the bank, its shareholders, and creditors, we find that the shareholders and creditors must be afforded relief when the receiver fails or neglects to enforce a claim. Therefore, in remaining consistent with general corporate law and the federal common law, we hold that a depositor may bring a derivative action to recover for wrongs against the bank or financial institution, which wrongs have indirectly injured depositors, but only after having made an unsuccessful demand on the bank or its receiver to bring suit. [Citations omitted.]

In order for appellants to state a derivative action, their petition must allege the fact that a demand has been made on the receiver or that such a demand would be futile. The petition makes no such allegation, thereby failing to allege facts sufficient to constitute a cause of action.

Weimer v. Amen, 235 Neb. 287, 302-04, 455 N.W.2d 145, 155-57 (1990). The Supreme Court reversed the district court's dismissal of this action and remanded the cause with directions to permit Weimer and ACC to amend their petition.

On remand, ACC filed its third amended petition, in which ACC alleged that Weimer had requested the receiver and the court supervising the receiver to prosecute causes of action against the NDIGC, the officers and directors of the NDIGC, and "all others including officials of Nebraska and co-conspirators." ACC also alleged that requests to the receiver to pursue the above causes of action "were and continue to be futile" because (1) the receiver had failed to file actions against any of the defendants named in the petition; (2) the counsel for the receiver had orally informed ACC that he was of the opinion that it was inappropriate for the receiver to bring the causes of action set forth in the third amended petition, and the receiver had continuously agreed with that opinion; (3) the receiver had entered into agreements with the NDIGC and the State; and (4) the court supervising the receivership was also the court that had approved the settlement between the Commonwealth receiver and the State.

Appellees demurred to ACC's third amended petition on the grounds that it failed to allege that a proper demand was We note at this point that while this case was before the Supreme Court in Weimer, the successor receiver assigned his causes of action against appellees to ACC. In addition, while this case was pending appeal in this court, ACC filed a petition to intervene in its capacity as assignee of the receiver. We will address the intervention issue after addressing the issues pending from the order of the district court.

made on the receiver, that it failed to state facts sufficient to constitute a cause of action, and that ACC was not the real party in interest. On December 13, 1991, the district court issued an order dismissing the case after sustaining the demurrers on the basis that ACC failed to make demand on the receiver prior to the commencement of the action and failed to allege circumstances that would excuse ACC from making such demand. ACC has timely appealed the order to this court.

ASSIGNMENTS OF ERROR

ACC has assigned four errors on this appeal, which we have condensed into three assigned errors for purposes of this discussion. ACC alleges that the district court erred in (1) finding that ACC failed to make demand on the receiver, (2) finding that ACC failed to allege circumstances that would excuse demand, and (3) finding that ACC failed to state a cause of action against appellees.

STANDARD OF REVIEW

In ruling on a demurrer, the court is to liberally construe the petition. If as so construed the petition states a cause of action, the demurrer is to be overruled. Matheson v. Stork, 239 Neb. 547, 477 N.W.2d 156 (1991). In reviewing a ruling sustaining a demurrer, an appellate court must accept the truth of the facts well pled and the factual and legal inferences which may be reasonably deduced from such facts, but the court will not accept conclusions of the pleader. Meyerson v. Coopers & Lybrand, 233 Neb. 758, 448 N.W.2d 129 (1989); Security Inv. Co. v. State, 231 Neb. 536, 437 N.W.2d 439 (1989)....