Meyer v. Broekemeier

• Decision Date: 09 September 2003
• Docket Number: No. A-02-468.,A-02-468.
• Parties: Roger Meyer, appellee and cross-appellee, v. Willis J. Broekemeier, appellee and cross-appellant, and LuAnn Broekemeier, appellant. Meyer, v. Broekemeier.
• Court: Nebraska Court of Appeals

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Roger Meyer, appellee and cross-appellee, v. Willis J. Broekemeier, appellee and cross-appellant, and LuAnn Broekemeier, appellant.

Meyer, v. Broekemeier.

No. A-02-468.

Court of Appeals of Nebraska.

Filed September 9, 2003.

Appeal from the District Court for Seward County: Alan G. Gless, Judge. Affirmed.

Charles L. Caskey for appellant.

Willis J. Broekemeier, pro se.

Robert B. Creager and Jonathan M. Braaten, of Anderson, Creager & Wittstruck, P.C., for appellee Roger Meyer.

Sievers, Carlson, and Moore, Judges.

Sievers, Judge.

Willis J. Broekemeier and LuAnn Broekemeier appeal from the order of the district court for Seward County, Nebraska, finding the Broekemeiers jointly and severally liable to Roger Meyer on an indemnity agreement, and a subsequent modification of the agreement, in the amount of $206,250 plus costs.

I. FACTUAL BACKGROUND

In about April 1982, the Broekemeiers started a restaurant and motel business in Seward County called Dandy Lion Inns of America, Inc. (Dandy Lion Inns). Sometime thereafter, the Broekemeiers attempted to find other investors for their business venture, and Meyer purchased 25 percent of the corporate stock. Thus, the Broekemeiers owned 75 percent of the capital stock in Dandy Lion Inns and Meyer owned 25 percent. On or about May 26, construction began on the "Dandy Lion Inn." On August 19, Dandy Lion Inns entered into a loan agreement with the National Bank of Commerce Trust and Savings Association (NBC) and executed a note and "Mortgage and Construction Security Agreement" (Note and MCS Agreement 1) with NBC in the amount of $650,000 for the purpose of constructing improvements on the real estate owned by Dandy Lion Inns. Note and MCS Agreement 1 was signed by Willis as president and Meyer as secretary. Meyer testified that he and the Broekemeiers also executed written personal guaranties on Note and MCS Agreement 1, something which is referenced in subsequent instruments; however, these written personal guaranties are not in our record.

On or about December 9, 1982, Meyer purchased $200,000 worth of equipment for Dandy Lion Inns and leased the equipment back to the corporation. As a result of the equipment lease agreement between Meyer as lessor and Dandy Lion Inns as lessee, on December 9, Dandy Lion Inns and Meyer entered into a second mortgage and the Broekemeiers and Meyer entered into a "Guaranty Agreement" whereby the Broekemeiers and Meyer personally guaranteed to Meyer the prompt payment of "all sums now or at anytime hereafter due" from Dandy Lion Inns to Meyer in the event Dandy Lion Inns defaulted on the equipment lease agreement or the second mortgage. The Guaranty Agreement stated that it was "SUBJECT TO AN INDEMNIFICATION AGREEMENT . . . TO APPORTION SUCH OBLIGATION

IN PROPORTION TO THEIR OWNERSHIP INTEREST IN THE CORPORATION."

As such, on the same date, and contemporaneously with the execution of the Guaranty Agreement, the Broekemeiers and Meyer entered into an "Indemnity Agreement." The Indemnity Agreement stated that the Broekemeiers and Meyer "have executed separate written guarantees" to NBC for the purpose of extending credit to the corporation and imposing liability upon the parties and that in the event of default by the corporation, the parties desire "indemnification between the parties." The Indemnity Agreement further stated that "in the event of default by the corporation on the indebtedness secured by such written guarantees, or in the event of default by the corporation on its obligations secured by such written guarantees, or any extensions thereof," individual liability of the Broekemeiers and Meyer shall be apportioned based on their ownership in the corporate stock (Broekemeiers—75 percent, Meyer—25 percent). The Indemnity Agreement also provided for an adjustment in the percentage of liability in the event of a change in stock ownership. Lastly, the Indemnity Agreement stated the following:

[E]ach party hereby agrees to indemnify and holder [sic] the other party free and harmless from and against all liability or loss whatsoever, relating to or in any way arising out of the guaranty agreements above described, or any other guaranty agreements entered into between the parties for an [sic] on behalf of the corporation, in excess of the [stated percentages], and in the event of default by the corporation imposing personal liability on any of the parties hereto, the remaining parties hereby agree to make contribution for their pro-rata obligation in the manner above provided.

On March 24, 1983, Dandy Lion Inns entered into a renewal and extension of the loan agreement with NBC and executed a second note and "Mortgage (Participation) Construction Security Interest" agreement (Note and MCS Agreement 2) with NBC in the amount of $650,000 for the purpose of obtaining long-term financing for the aforementioned construction improvements on Dandy Lion Inns' real estate. Note and MCS Agreement 2 was also signed by Willis as president and Meyer as secretary. On this occasion, however, only Meyer entered into a "Small Business Administration (SBA) Guaranty" (SBA Guaranty) with NBC, whereby Meyer assumed personal liability on the $650,000 NBC debt and guaranteed repayment of the debt in the event of default on the loan. The SBA Guaranty referenced Note and MCS Agreement 2 and stated: "Guaranty to be reduced to $300,000 three years from date of Note, and to $150,000 at five years from date of Note. Reductions in guaranty may be made so long as [Meyer] is not in defau[lt] under the Note or any agreement executed in connection with the loan."

After the restaurant and motel operation opened to the public, it experienced cashflow shortages. As a result of the financial difficulties, on January 18, 1984, the Broekemeiers and Meyer entered into a modification of the Guaranty Agreement and Indemnity Agreement (Modification Agreement) in order to (1) protect the parties' individual assets, (2) release Dandy Lion Inns from its liabilities and obligations to its shareholders arising from loans made by the shareholders to the corporation, and (3) resolve the current financial problems of the corporation. The Modification Agreement, which attached and incorporated the Guaranty Agreement and Indemnity Agreement, stated that (1) the Broekemeiers and Meyer have "personally guaranteed" the loan of $650,000 to Dandy Lion Inns by NBC and the Small Business Administration (SBA), (2) the Broekemeiers have "personally guaranteed" the lease payments due and owing to Meyer as a result of an equipment lease between Dandy Lion Inns and Meyer, and (3) the Broekemeiers and Meyer entered into an Indemnity Agreement apportioning individual liability to NBC and SBA in the event of a default by Dandy Lion Inns of its mortgage payments. Pursuant to the Modification Agreement, the parties agreed to the following: (1) The Broekemeiers grant unto Meyer an option to purchase all of their capital stock in Dandy Lion Inns, subject to certain conditions; (2) the sale of the Broekemeiers' stock "shall not change" the apportionment of individual liability as set forth in the Indemnity Agreement, and no adjustment shall be made in the liability percentages (Broekemeiers—75 percent, Meyer—25 percent); (3) in consideration of the option to buy the Broekemeiers' stock, Meyer releases the Broekemeiers from any and all claims arising out of a default on the payments due on the equipment lease agreement between Dandy Lion Inns and Meyer; and (4) Dandy Lions Inns is released from any and all liabilities and obligations resulting from loans made to the corporation by its shareholders, and the parties also release and relieve each other from any and all claims and obligations arising out of losses incurred by the parties as a result of nonpayment of the loans made to Dandy Lion Inns by its shareholders.

Sometime thereafter, Meyer executed the option to purchase the Broekemeiers' 75-percent interest in Dandy Lion Inns. Meyer then obtained new investors who purchased some of the capital stock in the corporation. Dandy Lion Inns, however, eventually ran out of money and defaulted on its payments on Note and MCS Agreement 2, and the corporation subsequently filed for chapter 11 bankruptcy. On May 20, 1988, NBC filed suit against Dandy Lion Inns on Note and MCS Agreement 2. On October 11, NBC filed another suit against Meyer on the SBA Guaranty. On March 27, 1989, pursuant to the latter lawsuit, the district court for Seward County entered judgment in favor of NBC and against Meyer in the sum of $300,000; however, pursuant to an agreement between Meyer and NBC, the judgment was stayed so that Meyer could attempt to satisfy the judgment by liquidating Dandy Lion Inns' assets. On September 1, 1993, NBC assigned all its rights in the $300,000 judgment against Meyer to SBA.

Meyer eventually became the sole equity owner of Dandy Lion Inns. However, he was unsuccessful in satisfying the $300,000 judgment from liquidation of the corporate assets, and Dandy Lion Inns filed for chapter 7 bankruptcy. SBA acquired the remaining corporate assets; however, a deficiency in the judgment still remained. Meyer eventually paid SBA a total of $275,005 ($59,153.03 from the sale of Meyer's medical office, a $100,000 check made to SBA on July 5, 1995, a $40,846.97 check made to SBA on August 16, 1995, and a $75,005 check made to First National Bank (with "final payment to SBA" on the check's memorandum line) on November 15, 1995). On January 4, 1996, pursuant to a "Release and Satisfaction of Judgment" filed in the district court for Seward County, SBA released Meyer from the court-ordered judgment based on his $275,005 payment.

II. PROCEDURAL BACKGROUND

On February 23, 2000, Meyer filed a second amended petition in the district court for Seward County, asserting that the Broekemeiers were jointly and severally indebted to Meyer for $206,250 (75 percent of $275,000) based on the Indemnity Agreement...