Pan v. IOC Realty Specialist Inc.

• Decision Date: 12 October 2018
• Docket Number: No. S-17-815,S-17-815
• Citation: 918 N.W.2d 273,301 Neb. 256
• Parties: Samuel PAN, doing business as US World Daycare Center, Appellee, v. IOC REALTY SPECIALIST INC. and Bernard M. Tompkins, Appellants.
• Court: Nebraska Supreme Court

301 Neb. 256
918 N.W.2d 273

Samuel PAN, doing business as US World Daycare Center, Appellee,
v.
IOC REALTY SPECIALIST INC. and Bernard M. Tompkins, Appellants.

No. S-17-815

Supreme Court of Nebraska.

Filed October 12, 2018.

John C. Chatelain, of Chatelain & Maynard, Omaha, for appellants.

Willow T. Head, of Law Offices of Willow T. Head, P.C., L.L.O., Omaha, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Freudenberg, J.

918 N.W.2d 280

I. SUMMARY OF CASE

This case involves a dispute between a landlord and a tenant over the disposition of personal property. A former tenant, Samuel Pan, sued his landlord, IOC Realty Specialist Inc., and

301 Neb. 258

its sole shareholder, Bernard M. Tompkins, when the landlord refused to return the tenant’s personal property that remained on the leased premises. After a bench trial, a judgment was entered against IOC Realty Specialist and Tompkins for the wrongful retention of property pursuant to the Disposition of Personal Property Landlord and Tenant Act (the Act).¹ The district court held that IOC Realty Specialist and Tompkins violated the Act by knowingly retaining personal property that belonged to Pan and awarded Pan damages and attorney fees. We affirm.

II. FACTS

IOC Realty Specialist is a corporation that deals in real estate and property management. IOC Realty Specialist is owned by its sole shareholder and licensed real estate broker, Tompkins (collectively IOC). For approximately 20 years, Tompkins, by and through IOC Realty Specialist, has managed the leased premises at issue in Omaha, Nebraska, for its owners, Leon and Mary Kleinschmit. The Kleinschmits or their corporation, Millard Electronics, Inc., were consistently listed as the "lessor" on each lease signed concerning the subject property.

In 2007, Pan purchased a daycare business which included an assignment of a lease at a commercial property owned by the Kleinschmits. IOC facilitated this assignment as the Kleinschmits’ real estate broker. The leasehold was assigned in October

918 N.W.2d 281

2007, designating Pan and his business partner, Mary Chol, as the new tenants on the assignment agreement and lease documentation. In 2007, Chol left the business arrangement with Pan. However, Pan’s daycare business continued to lease the property on a month-to-month basis until June 2014.

In June 2014, Pan negotiated with Ci Nuer Ben America (CNBA), a Nebraska corporation, for the purchase of Pan’s

301 Neb. 259

daycare business and all of Pan’s personal property on the leased premises. The personal property included various children’s toys, sleeping mats, appliances, a wooden fence, a storage shed, and outside playsets embedded in concrete at the back of the building. Pan advised IOC of his agreement with CNBA for the purchase of Pan’s daycare business, including all of his personal property on the leased premises. IOC met with the owner of CNBA, James Panoam, in July and signed a new lease to begin CNBA’s tenancy of the property on August 1.

Soon thereafter, CNBA paid rent for the month of August, but failed to make any further rent payments. Additionally, Pan never received any payment from CNBA under the terms of their agreement and, as a consequence, Pan never delivered the keys to the lease premises to CNBA.

Pan advised IOC in August 2014 that CNBA never paid the contract price for the personal property on the leased premises. Pan repeatedly attempted to recover his property through December. Pan called IOC and visited the leased property in an effort to retrieve the personal property at issue, but found that the locks had been changed.

Pan and IOC spoke both over the telephone and in person regarding the disposition of the property. At one point, IOC allowed Pan to access the leased property to recover some of his belongings. However, IOC did not allow Pan to retrieve the remainder of his property after further requests from Pan to do so.

After 3 consecutive months (September through November 2014) of nonpayment of rent, IOC evicted CNBA and sought a new lessee. In an effort to mitigate damages and relet the building, IOC had several personal property items subject to the agreement between Pan and CNBA moved to a warehouse that IOC managed for Millard Electronics.

Pan retained an attorney who sent a letter to IOC requesting that Pan’s property be returned. IOC stated it was concerned about future property disputes between Pan and CNBA. Therefore, IOC requested that Pan provide a statement from

301 Neb. 260

CNBA waiving its claim to the property. On December 26, 2014, Pan provided IOC an affidavit from Panoam, identifying himself as president of CNBA, and indicating that Pan owned the property. IOC refused to return the property and requested a notarized corporate resolution, reasoning that the initial affidavit was insufficient to bind CNBA. On January 12, 2015, Pan provided a second statement from Panoam as "President and Sole Shareholder d/b/a [CNBA]" containing a list of personal property and stating that CNBA did not have any ownership in the personal property on the leased premises. However, IOC again refused to return the personal property, because it did not receive a corporate resolution as requested.

In January 2015, IOC entered into a new lease with another company to operate a daycare. Some of the disputed property was considered by IOC too large to remove and remained on the leased premises. IOC permitted the new daycare to utilize the property.

IOC did not request storage fees from Pan during any of their business discussions

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regarding the property. IOC first requested storage fees when it filed a counterclaim for such payment in its answer to Pan’s complaint.

In June 2015, IOC mailed correspondence to Pan stating a willingness to release the subject personal property if Pan would provide a " ‘Transfer or Assignment and Indemnification,’ " requesting that Pan indemnify IOC from claims by CNBA. Pan refused to agree to indemnify IOC and subsequently filed suit for recovery of the property, damages for IOC’s retention of the property, and attorney fees. IOC denied that Pan was entitled to the property and filed a counterclaim for storage fees incurred.

1. EXHIBITS 17 AND 32 AND REASONABLE BELIEF OF OWNERSHIP

During trial, two affidavits were admitted into evidence over hearsay objections. The first, exhibit 17, was a letter authored by Pan’s attorney which included one of the

301 Neb. 261

above-mentioned affidavits from Panoam doing business as CNBA. The affidavit asserted that the property did not belong to CNBA, but, rather, it belonged to Pan. The court admitted the exhibit, reasoning that the exhibit was being offered as a showing by Pan that he complied with IOC’s demand for a statement from CNBA disavowing its ownership in the subject personal property.

In a similar fashion, Pan offered exhibit 32, the second affidavit by Panoam stating that the personal property located at the subject leased premises did not belong to CNBA. The court again overruled the hearsay objection, finding Pan was not offering the exhibit for the truth of its contents. Further, the district court detailed that exhibit 32 would be utilized only to show that Pan complied with the requests made by IOC as opposed to proving that the property was owned by Pan.

2. EVIDENCE OF DAMAGES AND FAIR MARKET VALUE

At trial, Pan opined on the value of the disputed personal property. Pan, although lacking several itemized and specific receipts of his expenditures on the subject personal property, asserted that the property was worth $27,611, according to an itemization in exhibit 14. In addition, Pan testified as to the accuracy of bank statements and copies of checks stemming from two accounts used in the operation of his daycare business. Pan also testified that these statements and checks corresponded to the property at issue. Generally, these bank statements and checks identify to whom funds were paid, but do not enumerate the specific purchases being made.

Contesting Pan’s asserted valuation of the personal property, IOC presented testimony that the property was bug infested, dirty, and in poor condition following CNBA’s eviction in November 2014. IOC did not present evidence as to a specific monetary value of the personal property. No expert

301 Neb. 262

evidence was presented by either party regarding the fair market value of the property at issue.

3. DISTRICT COURT’S FINAL ORDER

After the trial, the district court found that the Act applied. The court reasoned that by utilizing the phrase "whether such premises are used as a dwelling unit or self-storage unit or facility or not " in the definition of "tenant," the Act did not preclude commercial tenants from citing the Act in...