Mut. of Omaha Bank v. Kassebaum
| Decision Date | 01 June 2012 |
| Docket Number | No. S–11–749.,S–11–749. |
| Citation | 814 N.W.2d 731,283 Neb. 952 |
| Parties | MUTUAL OF OMAHA BANK, appellee, v. Patrick J. KASSEBAUM and April M. Kassebaum, appellants, and Timothy R. Engler, appellee. |
| Court | Nebraska Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court
Judgments:
Appeal and Error.
An appellate court reviews questions of law independently of the lower court's conclusion.
2.
Judgments:
Moot Question:
Appeal and Error. When a party voluntarily complies with the mandate of the trial court, satisfying the judgment, the appeal no longer presents an actual controversy, but an abstract question.
3.
Judgments:
Moot Question:
Appeal and Error. Where the payment of a judgment compelled by law is not voluntary, payment will not render an appeal moot.
4.
Torts:
Claims:
Assignments:
Death:
Abatement, Survival, and Revival. The common-law rule regarding the assignability of tort claims is that such a right of action is not assignable where the tort causes a strictly personal injury and does not survive the death of the person injured.
5.
Torts:
Claims:
Assignments:
Death: Abatement, Survival, and Revival.
The prohibition against the assignability of a tort claim is grounded on two principles: (1) that prior to more recent statutory amendments, personal claims did not survive the death of the victim, and (2) that prohibiting the assignment of tort claims prevents champerty and maintenance.
6.
Assignments:
Words and Phrases.
Champerty consists of an agreement whereby a person without interest in another's suit undertakes to carry it on at his own expense, in whole or in part, in consideration of receiving, in the event of success, a part of the proceeds of the litigation.
7.
Actions:
Words and Phrases.
Maintenance exists when a person without interest in a suit officiously intermeddles therein by assisting either party with money or otherwise to prosecute or defend it.
8.
Claims:
Assignments.
Where only the proceeds of the litigation, and not control of the litigation, have been assigned, there is little or no concern of intermeddling as a reason for declining to allow the assignment of the claim.
Katie Martens, of Ritnour & Associates, P.C., L.L.O., and, on brief, Matthew S. Torres for appellants.
William F. Austin, of Erickson & Sederstrom, P.C., and, on brief, William C. Nelson, Lincoln, for appellee Mutual of Omaha Bank.
Mutual of Omaha Bank (Bank) filed a petition seeking declaratory judgment against Patrick J. Kassebaum and April M. Kassebaum. In particular, the Bank sought to have the district court declare the rights of the parties with respect to an assignment executed by the Kassebaums. The Kassebaums filed a motion to dismiss or, in the alternative, a motion for summary judgment, alleging that the assignment was ineffective. The district court denied the motion, and the matter proceeded to trial. A jury entered a verdict in favor of the Bank in the amount of $126,376.42. The Kassebaums appeal. We affirm.
The Kassebaums are the owners of residential real estate located in Seward County, Nebraska. Financing for this property was obtained through a series of promissory notes and deeds of trust, first with Security Federal Savings, and then with its successor, the Bank. Two promissory notes and deeds of trust were executed on July 1, 1999, one in the amount of $240,000 and the other in the amount of $156,000. On July 26, 2002, a third note and deed of trust were executed in the amount of $31,692.56.
The Kassebaums had difficulty paying the amounts due on the notes. Various efforts were made to help the Kassebaums become current. Ultimately, on May 25, 2007, the Kassebaums refinanced the notes and executed two more notes and deeds of trust in the amounts of $336,000 and $98,350.
On that same date, the Kassebaums also executed an assignment of settlement proceeds or monetary judgment in favor of the Bank. At the time they executed the assignment, the Kassebaums had pending in federal court a lawsuit against Bausch and Lomb, Inc. The basis of this suit was a claim for damages suffered by Patrick when a defective Bausch and Lomb product caused him to suffer severe injuries to his left eye. Patrick eventually settled the suit, and the proceeds were deposited to the trust account of Timothy R. Engler, Patrick's counsel in the litigation. Engler is a nominal defendant in this case.
The Bank filed a declaratory judgment action on January 19, 2010, seeking that the balance of the funds held by Engler be distributed to the Bank as required by the assignment. Specifically, the Bank sought judgment in the amount of $365,601.55 plus interest.
The Kassebaums filed a motion to dismiss and/or a motion for summary judgment on March 15, 2010, alleging that the assignment was unenforceable. Specifically, the Kassebaums contended that the assignment occurred before the “claims were liquidated by settlement or judgment” and that the assignment was “against the public policy ... and void as a matter of law.” The district court denied this motion, concluding that the assignment of a claim might be unenforceable, but that in this case, it was only the proceeds that were assigned. As such, the district court ruled that the assignment was not invalid for the reasons raised by the motion.
The matter then proceeded to trial. In their answer, the Kassebaums raised a number of affirmative defenses, none of which are at issue on appeal. Following a jury trial, on August 11, 2011, the court accepted the verdict and entered a judgment against the Kassebaums and in favor of the Bank for $126,376.42, as well as judgment interest and costs. This amount was stipulated to by the parties. Engler subsequently paid and distributed to the Bank the funds held under his control.
This case raises the issue of whether an assignment of unliquidated proceeds from a personal injury claim is valid and enforceable under Nebraska law.
On appeal, the Kassebaums argue that the district court erred in (1) denying their motion to dismiss/motion for summary judgment and (2) enforcing the assignment.
An appellate court reviews questions of law independently of the lower court's conclusion.1
The Bank first asserts that because the Kassebaums have paid the judgment entered against them, this appeal is moot.
When a party voluntarily complies with the mandate of the trial court, satisfying the judgment, the appeal no longer presents an actual controversy, but an abstract question.2 But where the payment of the judgment compelled by law is not voluntary, payment will not render an appeal moot. 3 Thus, the question presented here is whether the Kassebaums' payment in this case was voluntary.
We addressed the voluntariness of the payment of a judgment in Green v. Hall.4 There, we concluded that the payment was involuntary because it was made to avoid a forced sale, which could not be undone by legal process.5 Conversely, in Hormandl v. Lecher Constr. Co.,6 we concluded that the payment was voluntary where the defendant's insurer, also a third-party defendant, paid the judgment.
In addition, this issue was addressed in Ray v. Sullivan.7 In that case, the Nebraska Court of Appeals found that an appeal was moot where the record did not show that the defendants were aware that execution of the judgment had been ordered by the district court. The Court of Appeals reasoned that in the absence of this showing, it could not be determined whether the motivation in paying the judgment was the execution of judgment or if the payment was made voluntarily. The Court of Appeals concluded that it was the burden of the appealing party to show why any payment was not voluntary.
The record shows that the settlement proceeds from the Bausch and Lomb litigation were held in Engler's trust account. Following the jury's finding in this case, Engler was served with the judgment entered by the district court. That judgment specifically ordered Engler to pay the funds over to the Bank. Engler averred to all these facts in an affidavit contained in the record.
Engler was presented with a judgment of the district court ordering him to perform a legal duty. Engler performed that duty. On these facts, any payment by Engler is not considered voluntary on the part of the Kassebaums. We therefore reject the Bank's argument that this appeal is moot.
The primary issue presented by this appeal is whether an assignment of proceeds made at a time when the amount to be assigned was unliquidated is valid and enforceable under Nebraska law. This is an issue of first impression in Nebraska.
The common-law rule regarding the assignability of tort claims is that such a right of action is not assignable where the tort causes a strictly personal injury and does not survive the death of the person injured. 8 This prohibition is grounded on two principles: (1) that prior to more recent statutory amendments, personal claims did not survive the death of the victim, and (2) that prohibiting the assignment of tort claims prevents champerty and maintenance.9
“ ‘Champerty consists of an agreement whereby a person without interest in another's suit undertakes to carry it on at his or her own expense, in whole or in part, in consideration of receiving, in the event of success, a part of the proceeds of the litigation.’ ” 10 “ ‘Maintenance exists when a person without interest in a suit officiously intermeddles therein by assisting either party with money or otherwise to prosecute or defend it.’ ” 11
There is a split of authority regarding whether an assignment of the proceeds of litigation violates this common-law prohibition12:
It has been held that, although a personal injury claim is not assignable before judgment, an assignment of the proceeds of whatever recovery is had in such an action is enforceable, at least where the plaintiff retains...
To continue reading
Request your trial
-
Med. Lien Mgmt., Inc. v. Allstate Ins. Co.
...320, 321 (1981) ); see also Hernandez v. Suburban Hosp. Ass'n, 319 Md. 226, 572 A.2d 144, 148–49 (1990) ; Mut. of Omaha Bank v. Kassebaum, 283 Neb. 952, 814 N.W.2d 731, 737 (Neb.2012) ; Achrem v. Expressway Plaza Ltd. P'ship, 112 Nev. 737, 917 P.2d 447, 448-49 (Nev.1996) ; Charlotte – Meckl......
-
Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co.
... ... Millard Gutter Co. v. Shelter Mut. Ins. Co ... (Shelter), [ 2 ] we now in part reverse the Court of ... 20 Farm Bureau policyholders in Omaha, Nebraska. It alleged ... these policyholders suffered property damage in ... explained that under the rule announced in Mutual of ... Omaha Bank v. Kassebaum, [ 23 ] the proceeds from personal ... injury tort ... ...
-
Millard Gutter Co. v. Shelter Mut. Ins. Co.
...for first-party bad faith, allowing Millard Gutter to bring such claims in its own name would violate the rule announced in Mutual of Omaha Bank v. Kassebaum, [3] which held that the proceeds of personal injury litigation may be validly assigned, but control of the litigation may not. The c......
-
Jeffrey B. v. Amy L.
... ... Wright for intervenor-appellee Todd W. C.G. (Dooley) Jolly, Omaha, and Tyler J. Volkmer, of Jolly Law, P.C., L.L.O., for appellee Jeffrey B ... Laverty, 110 Neb. 672, 194 N.W. 862 (1923). 7. Bank of Quitman v. Phillips, 270 Ark. 53, 56, 603 S.W.2d 450, 452 ... ...