Lake v. Piper, Jaffray and Hopwood, Inc.

• Court: Nebraska Supreme Court
• Writing for the Court: KRIVOSHA; PER CURIAM
• Citation: Lake v. Piper, Jaffray and Hopwood, Inc., 324 N.W.2d 660, 212 Neb. 570 (Neb. 1982)
• Decision Date: 17 September 1982
• Docket Number: No. 82-041,82-041
• Parties: William K. LAKE, Appellant, v. PIPER, JAFFRAY AND HOPWOOD INCORPORATED et al., Appellees.

Page 660

324 N.W.2d 660

212 Neb. 570

William K. LAKE, Appellant, v. PIPER, JAFFRAY AND HOPWOOD INCORPORATED et al., Appellees.

No. 82-041.

Supreme Court of Nebraska.

Sept. 17, 1982.

Syllabus by the Court

1. Final Orders: Appeal and Error. As a general rule, where a plaintiff is allowed to continue prosecution of the cause of action on behalf of himself, but is denied class action status, no substantial right of the plaintiff has been affected by such denial and that order is not a final order which may be appealed.

2. Municipal Corporations: Actions. Ordinarily, a demand upon the responsible officers of the governmental subdivision or municipal corporation that they take action is necessary and a condition precedent to the right of a taxpayer to maintain an action for the recovery of funds on behalf of the governmental entity.

3. Municipal Corporations: Actions. Where a taxpayer brings an action against the officers of a governmental subdivision or municipal corporation for the recovery of funds on behalf of such governmental entity without making a prior demand, the resistance to such action by the subdivision or corporation in the nature of a demurrer attacking the legal capacity of the plaintiff to sue because of that deficiency generally does not constitute a waiver of that requirement.

Frank Matthews of Matthews, Cannon & Riedmann, P. C., Omaha, for appellant.

James P. Fitzgerald of McGrath, North, O'Malley & Kratz, P. C., Omaha, for appellee Omaha P. P. Dist.

Michael A. Nelsen of Schmid, Ford, Mooney & Frederick, Omaha, and Gordon G. Busdicker of Faegre & Benson, Minneapolis Minn., for appellee Piper, Jaffray & Hopwood Inc.

Submitted without oral argument.

KRIVOSHA, C. J., and BOSLAUGH, McCOWN, CLINTON, WHITE, and HASTINGS, JJ.

PER CURIAM.

This is a consolidated appeal involving two class action cases brought by the plaintiff, William K. Lake (Lake), a ratepayer of the Omaha Public Power District (OPPD), against OPPD and its financial advisor, Piper, Jaffray and Hopwood Incorporated (Piper, Jaffray). One of the suits alleged that a March 17, 1977, contract for Piper, Jaffray to act as OPPD's financial advisor was illegal and void in violation of Neb.Rev.Stat. § 70-624.01 (Reissue 1981). The other suit alleged that OPPD violated the public meetings act, Neb.Rev.Stat. §§ 84-1408 et seq. (Reissue 1981), in appointing Piper, Jaffray as financial advisor and agreeing to pay Piper, Jaffray a fixed fee of $184,000 for its services in connection with a bond issue. Both defendants filed demurrers to the petitions.

In the contract action the District Court for Douglas County sustained the defendants' demurrers and dismissed the action. The District Court found that the plaintiff lacked legal capacity to sue, either as an individual or on behalf of a class. It also found that the plaintiff should have made a demand on OPPD prior to bringing the action to set aside the contract.

In the public meetings suit the District Court sustained the demurrers in part and overruled them in part. The court held that the plaintiff could not maintain the action as a class action, but could maintain it individually. The court also held that the plaintiff had stated a cause of action.

The plaintiff appeals and assigns the following errors: (1) With respect to the contract action (a) The court erred in ruling that the plaintiff lacked legal capacity to sue on behalf of the members of a class consisting of those who purchase electrical service from OPPD, and (b) The court erred in ruling that the plaintiff lacked legal capacity to bring an action in his own name as an individual. (2) With respect to the public meetings suit the court erred in ruling that the plaintiff lacked legal capacity to sue on behalf of the members of a class consisting of those who purchase electrical service from OPPD.

We affirm the judgment in the contract action. As to the public meetings lawsuit, although we do not disagree with the court's reasoning as to plaintiff's capacity to maintain the action as a class action, we dismiss the appeal since the order complained of was not a final order from which an appeal may be prosecuted.

In 1977 OPPD, because of a drop in bond interest rates, was considering two plans to refund previously issued bonds. One plan was submitted by Lazard Freres & Co., a New York investment banking firm, and the other plan was submitted by Piper, Jaffray, an investment banking firm with an office in Omaha, Nebraska.

On January 31, 1977, the OPPD board of directors named Piper, Jaffray as financial advisor to OPPD in addition to Lazard Freres, its financial advisor at that time. On February 1, 1977, OPPD entered into a contract with Piper, Jaffray, which provided that a fee for Piper, Jaffray's development of a refunding/refinancing plan would be determined by agreement between Piper, Jaffray and OPPD's finance committee. At a February 7, 1977, meeting, OPPD approved the Piper, Jaffray refunding/refinancing plan and appointed Piper, Jaffray as OPPD's sole financial advisor. Another meeting was held on February 16, 1977. At this meeting, OPPD's board of directors reconsidered the Piper, Jaffray plan and contract, and reaffirmed its action taken at the February 7, 1977, meeting. OPPD also agreed to pay Piper, Jaffray a fee of $184,000 for its services for the refunding plan and the issuance of $200 million in bonds. Finally, on March 17, 1977, the OPPD board of directors authorized an agreement with Piper, Jaffray for continuing financial consulting services and assistance in reviewing engineering and operating costs, the development of a financial plan, and assistance with a bond offering. The agreement provided that fees would be based on the size of the bond issue. The agreement was terminable at will by OPPD on 30 days' notice.

Beginning in 1977 the plaintiff filed the first of a series of petitions against the defendants, attacking the same action of OPPD which is the object of the present litigation. The plaintiff's third amended petition, filed on November 15, 1978, was challenged by the demurrers of the defendants. The District Court sustained the demurrers as to the second cause of action and overruled them as to the first cause of action, but ordered the plaintiff to separately state and number the various causes of action alleged therein. The present actions were filed on August 27, 1981, as a result of those procedural steps taken in the previous lawsuit.

We will first discuss the public meetings lawsuit. It has long been the rule in this state that the Supreme Court has jurisdiction only to hear appeals from final orders. Neb.Rev.Stat. § 25-1911 (Reissue 1979). A final order is defined in Neb.Rev.Stat. § 25-1902 (Reissue 1979) as "[a]n order affecting a substantial right in an action, when such order in effect determines the action and prevents a judgment, and an order affecting a substantial right made in a special proceeding, or upon a summary application in an action after judgment ...."

In Anson v. Kruse, 147 Neb. 989, 990, ...