Mandolfo v. Mandolfo
| Citation | 281 Neb. 443,796 N.W.2d 603 |
| Decision Date | 06 May 2011 |
| Docket Number | No. S–09–1175.,S–09–1175. |
| Parties | Joseph MANDOLFO, appellant,v.Mario MANDOLFO and American National Bank, appellees. |
| Court | Supreme Court of Nebraska |
1. Summary Judgment: Appeal and Error. An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.
3. Uniform Commercial Code: Claims. Whether common-law claims are displaced by the Uniform Commercial Code presents a question of law.
4. Limitations of Actions. Which statute of limitations applies is a question of law.
5. Judgments: Appeal and Error. An appellate court reaches a conclusion regarding questions of law independently of the trial court's conclusion.
6. Pretrial Procedure: Appeal and Error. Determination of an appropriate sanction for failure to comply with a proper discovery order initially rests with the discretion of the trial court. and its rulings on appropriate sanctions will not be disturbed on appeal absent a showing of an abuse of that discretion.
7. Uniform Commercial Code. Often, the common law will supplement the Uniform Commercial Code.
8. Uniform Commercial Code. The common law will not supplement the Uniform Commercial Code when it is displaced by particular provisions of the code.
9. Uniform Commercial Code: Actions. When a provision of the Uniform Commercial Code applies, a litigant cannot rely on common-law causes of action.
10. Uniform Commercial Code: Limitations of Actions: Conversion. When dealing with Neb. U.C.C. § 3–420 (Reissue 2001) claims, courts generally hold that the cause of action “accrues” at the time the instrument is converted.
11. Actions: Conversion. Each conversion constitutes its own cause of action.
12. Limitations of Actions: Negotiable Instruments. The overwhelming majority rule is that the discovery rule does not apply to cases involving negotiable instruments.
13. Uniform Commercial Code: States. One of the purposes of the Uniform Commercial Code is to make uniform the law among the various jurisdictions.
14. Uniform Commercial Code: Limitations of Actions: Conversion: Negotiable Instruments: Fraud. In cases for conversion of a negotiable instrument under the Uniform Commercial Code, the plaintiff may benefit from the discovery rule when the defendant has engaged in fraudulent concealment.
15. Appeal and Error. A party that assigns error in a proceeding must point out the factual and legal bases that show the error.
16. Judges: Words and Phrases. A judicial abuse of discretion exists when a judge, acting within effective limits of authorized judicial power, elects to act or refrain from action, but the selected option results in a decision which is untenable and unfairly deprives the litigant of a substantial right or a just result.
17. Motions for New Trial: Appeal and Error. An appellate court reviews the denial of a motion for new trial or to alter or amend the judgment for an abuse of discretion.
Theodore R. Boecker, Jr., of Boecker Law, P.C., L.L.O., Omaha, for appellant.James B. Cavanagh and Brittney J. Krause, of Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., L.L.O., Omaha, for appellees.HEAVICAN, C.J., CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER–LERMAN, JJ.CONNOLLY, J.
Joseph Mandolfo (Joe) sued his brother Mario Mandolfo and American National Bank (ANB). Joe alleged that Mario had, with the assistance of ANB, wrongfully deposited checks into his own account. The district court granted summary judgment to Joe against Mario. The court, however, granted summary judgment to ANB, concluding that the statute of limitations barred Joe's claims. We conclude that Joe's common-law claims are displaced by the Uniform Commercial Code (U.C.C.) and are thus subject to a 3–year statute of limitations. Further, we conclude that the application of a discovery rule is inappropriate to these claims. In sum, Joe's claims against ANB were untimely. We affirm.
Joe, at one time, owned several businesses, some of which had accounts with ANB. These businesses included grocery stores and franchise restaurants. After his brother Mario lost his job as a teacher, Joe hired Mario to work for him.
Betraying his benefactor, Mario eventually opened his own accounts at ANB and began depositing checks made out to Joe or Joe's companies into these accounts. Based on the record before us, it appears that Mario misappropriated checks from December 1995, until July 20, 2000. Joe contends that Mario embezzled about $1.2 million.
Joe did not discover Mario's misappropriations until 2003, when the Internal Revenue Service contacted him about some “irregularities” that it had uncovered. Within a year of this discovery, on March 19, 2004, Joe sued Mario and ANB. Joe alleged that Mario misappropriated checks belonging to Joe and his companies. He alleged that ANB had assisted Mario's misappropriations by failing to exercise reasonable care in allowing Mario to deposit unendorsed or improperly endorsed checks. In other words, Joe alleged that through its negligence, ANB allowed Mario to collect on checks that did not belong to him.
In October 2004, the court granted Joe summary judgment on his claims against Mario. Mario—who had asserted his Fifth Amendment right not to incriminate himself—did not deny the allegations in Joe's complaint and offered no evidence to refute Joe's claims. The court awarded Joe damages of $678,430.86. Joe's claims against Mario are not at issue in this appeal.
In April 2009, Joe moved to compel discovery for his claims against ANB. Joe had previously served requests for production and interrogatories on ANB, but ANB had not timely responded. Because ANB took more than 30 days to answer Joe's requests, the court awarded Joe attorney fees for the motion to compel as a sanction against ANB.
In May 2009, ANB moved for summary judgment. ANB argued, among other things, that Joe's claims were time barred under Neb. U.C.C. § 3–118(g) (Cum.Supp.2010), which provides for a 3–year statute of limitations for conversion claims. Joe moved to strike ANB's summary judgment motion. In support of his motion, Joe cited ANB's alleged failures to cooperate with his discovery requests.
The court granted ANB's motion for summary judgment. The court concluded that although Joe had couched his claims against ANB in negligence, he was asserting a claim for conversion under the U.C.C.1 Because the court concluded that Joe was asserting a conversion claim, it agreed with ANB that the 3–year statute of limitations under § 3–118(g) applied. The court also concluded that the discovery rule did not apply to toll the time limit for actions for conversion under the U.C.C. Because Mario converted the last check in July 2000 and Joe did not file his complaint until March 2004, the court ruled that Joe's claims were untimely.
Joe moved for a new trial or, in the alternative, to alter or amend the judgment. His arguments mirror his arguments in his present appeal. He argued that the court erred in (1) allowing ANB to proceed to summary judgment when it had failed to comply with discovery orders, (2) concluding that Joe had alleged only U.C.C. conversion claims, and (3) applying the wrong statute of limitations. The court denied Joe's motion.
Joe assigns, restated and renumbered, that the district court erred as follows:
(1) in granting ANB summary judgment;
(2) in failing to strike ANB's motion for summary judgment as a sanction for ANB's failure to comply with discovery orders; and
(3) in failing to grant Joe's motion for new trial or to alter or amend the judgment.
We will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law. 2 In reviewing a summary judgment, we view the evidence in the light most favorable to the party against whom the judgment is granted and give such party the benefit of all reasonable inferences deducible from the evidence. 3
Whether common-law claims are displaced by the U.C.C. presents a question of law.4 Which statute of limitations applies is also a question of law.5 We reach a conclusion regarding questions of law independently of the trial court's conclusion.6
Determination of an appropriate sanction for failure to comply with a proper discovery order initially rests with the discretion of the trial court, and its rulings on appropriate sanctions will not be disturbed on appeal absent a showing of an abuse of that discretion.7
In granting ANB summary judgment, the court began by noting that Joe alleged that ANB allowed Mario to improperly deposit checks belonging to Joe and his companies into Mario's account. Joe claimed that ANB failed to exercise reasonable care in its practices, which, if exercised, would have prevented Mario's misappropriations. The court noted that although Joe tried to characterize this as negligence, what he was really asserting was a claim for conversion under § 3–420. Joe claims the court erred in this conclusion. Citing a number of our cases 8 as well as federal courts applying Nebraska law,9 Joe argues that the court erred in concluding that the U.C.C. displaced common-law causes of action such as conversion and negligence.
Joe is correct...
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