PIPE AND PILING v. Betterman & Katelman

• Decision Date: 08 June 1999
• Docket Number: No. A-97-1327.,A-97-1327.
• Parties: PIPE AND PILING SUPPLIES (U.S.A.), LTD., a foreign corporation, Appellant, v. BETTERMAN & KATELMAN, a Nebraska general partnership, Appellee.
• Court: Nebraska Court of Appeals

596 N.W.2d 24

8 Neb. App. 475

PIPE AND PILING SUPPLIES (U.S.A.), LTD., a foreign corporation, Appellant, v. BETTERMAN & KATELMAN, a Nebraska general partnership, Appellee.

No. A-97-1327.

Court of Appeals of Nebraska.

June 8, 1999.

Jeffrey A. Silver, Omaha, for appellant.

Mary Lou Perry, of Betterman & Perry, Omaha, for appellee.

IRWIN, Chief Judge, and HANNON and SIEVERS, Judges.

HANNON, Judge.

Pipe and Piling Supplies (U.S.A.), Ltd. (P & P), a foreign corporation, sued Betterman & Katelman (B & K), a Nebraska general partnership, to recover $50,000 of the more than $130,000 P & P paid to B & K for legal services rendered from September 3, 1991, to June 11, 1993, on the ground that the legal fees were "excessive and/or unnecessary for a law firm which had environmental law litigation experience." B & K had recovered the last $8,230 of those fees in a previous action and moved for and received a summary judgment of dismissal in the instant case upon the basis of res judicata, but it was denied its prayer for attorney fees and expenses under Neb.Rev.Stat. § 25-824 (Reissue 1995). We conclude that B & K's previous action against P & P barred P & P from any recovery in this action under the principle of res judicata and that the district judge did not abuse her discretion in denying attorney fees under § 25-824. We, therefore, affirm.

BACKGROUND

This is the third appeal between the parties concerning the legal fees charged by B & K for legal services rendered to P & P. The first two appeals were from a case pending in the Sarpy County District Court in which B & K sued for $8,230, the balance it claimed due for legal services it rendered P & P. The first appeal, Betterman & Katelman v. Pipe & Piling Supplies, 95 NCA No. 38, case No. A-94-019, 1995 WL 569315 (not designated for permanent publication), reversed a summary judgment in favor of B & K because a notice was found to be inadequate. In the second appeal, Betterman & Katelman v. Pipe & Piling Supplies, 5 Neb.App. xx (case No. A-96-199, June 3, 1997), this court affirmed in a memorandum opinion a summary judgment in favor of B & K for a balance of attorney fees, but we reversed the trial court's decision which denied B & K prejudgment interest. P & P brought the present case in the district court for Douglas County, Nebraska.

In order to frame the res judicata issues in this appeal, it is necessary to describe the pleaded issues in the Sarpy County case. B & K alleged the organization and residence of the parties. B & K also alleged that on or about September 1, 1991, P & P retained B & K to "represent it in all matters arising out of or connected with the storage of asbestos wrapped pipe at its places of business located in Nebraska"; that it so represented P & P from September 1, 1991, to June 11, 1993; that on May 25, 1993, P & P terminated B & K's representation; and that B & K then withdrew from the cases in which it had appeared on behalf of P & P.

B & K also alleged that the parties had agreed that its representation was on an hourly basis, billed monthly, and that "Defendant is indebted to Plaintiff for legal services provided to and costs incurred on behalf of Defendant by Plaintiff at the special instance and request of Defendant between September 1, 1991 and June 11, 1993, in the sum of $8,230.02." B & K attached to its petition a statement of what it alleged to be P & P's account which included every charge it made to P & P during the parties' relationship. The account showed a balance due of $8,230.02, which B & K prayed for and recovered in the judgment for the Sarpy County case.

In the Sarpy County case, P & P filed an answer admitting the organization and residence of the parties but denying the other allegations. The answer "[f]or its affirmative defense ... alleges the services rendered ... were of no benefit to the defendant." However, P & P failed to answer certain requests for admissions as required by discovery rules, and these admissions were deemed admitted. These admissions proved B & K's case, and the trial court granted summary judgment. We affirmed on that basis.

In this case, B & K in its answers admitted that it rendered legal services to P & P during the alleged period and that it had received fees in excess of $130,000. B & K denied allegations as to specific services and alleged all fees charged were fair and reasonable. As affirmative defenses, B & K alleged that the petition is barred by waiver, estoppel, res judicata, issue preclusion, settlement, and accord and satisfaction and that the alleged action was frivolous. B & K prayed for dismissal of the petition and attorney fees and costs under § 25-824.

B & K moved for summary judgment on the grounds of res judicata and collateral estoppel, and also moved for sanction under § 25-824, that is, attorney fees and costs on the basis that P & P brought a frivolous action in bad faith. The trial court granted the motion for summary judgment and denied B & K's request for sanction without a finding or explanation.

ASSIGNMENTS OF ERROR

P & P appeals, alleging that the trial court erred in granting the summary judgment, and B & K cross-appeals, alleging the trial court erred (1) in denying its plea in abatement and (2) in denying its motion for sanctions. B & K raised the same issue by the plea in abatement as it did by the motion for summary judgment, and therefore, we need not discuss denial of the plea in abatement.

STANDARD OF REVIEW

The applicability of the doctrines of collateral estoppel and res judicata to this case constitutes questions of law. See Kopecky v. National Farms, Inc., 244 Neb. 846, 510 N.W.2d 41 (1994). With regard to questions of law, an appellate court is obligated to reach a conclusion independent from the trial court's conclusion. In re Estate of Wagner, 246 Neb. 625, 522 N.W.2d 159 (1994); Petska v. Olson Gravel, Inc., 243 Neb. 568, 500 N.W.2d 828 (1993).

The standard of review on the trial court's determination of a request for sanctions under § 25-824 is whether the trial court abused its discretion. See Malicky v. Heyen, 251 Neb. 891, 560 N.W.2d 773 (1997).

ANALYSIS

In most situations, whether the facts are analyzed under the name of res judicata or issue preclusion, the end result may be the same, but there still is a considerable difference. The doctrine of res judicata provides that a final judgment on the merits is conclusive upon the parties in any later litigation involving the same cause of action. Petska v. Olson Gravel, Inc., supra.

Collateral estoppel applies when an issue of ultimate fact has been determined by a final judgment, and that issue cannot again be litigated between the same parties in a future lawsuit. Id.

In the Sarpy County case, B & K sued to recover the balance it claimed to be owed for legal services rendered to P & P. B & K alleged, and by admissions proved, that the parties agreed that B & K would be paid at an hourly rate. It then attached a complete statement of the account with the alleged hours spent, the services performed, and the charges billed, as well as the payments made by P & P.

In this case, P & P alleged in its petition that B & K billed it for the same legal services over the same time period and that it was charged and paid $50,000 too much for these services. The question is whether the fact that B & K sued for and won a lawsuit in Sarpy County for the balance of fees it claimed to be entitled to receive is res judicata to a case in which P & P is attempting to litigate its claim that the fees paid were too high. The Nebraska Supreme Court has recently said:

Under the traditional rule of res judicata, sometimes called claim preclusion, any rights, facts, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered upon the merits is conclusively settled by the judgment therein and cannot again be litigated by the parties and privies.

Vann v. Norwest Bank Neb., 256 Neb. 623, 626, 591 N.W.2d 574, 577 (1999).

The doctrine of res judicata provides that a final judgment on the merits is conclusive upon the parties in any later litigation involving the same cause of action. Kerndt v. Ronan, 236 Neb. 26, 458 N.W.2d 466 (1990). The real issue is, What is the cause or causes of action involved in the disputes between the parties in both cases?

P & P, citing Swift v. Dairyland Ins. Co., 250 Neb. 31, 547 N.W.2d 147 (1996), argues that res judicata is not available when the cause of action in the original action is different from the current cause of action. We certainly agree with that proposition. P & P argues that the Sarpy County case settled only one issue, that is, the extent of B & K's claim, no more and no less. Brief for appellant at 7. We do not agree with that statement because, as will be seen, we understand the "extent" of B & K's claim to include more items than P & P's counsel thinks.

P & P goes on to argue that under Nebraska law, it was not required to file a counterclaim. If P & P had a counterclaim against B & K, we would agree that it need not have filed it in the Sarpy County case. See Neb.Rev.Stat. § 25-814 (Reissue 1995). A counterclaim is "one in favor of a defendant and against a plaintiff between whom a several judgment might be had in the action, and arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff's claim, or connected with the subject of the action." Neb.Rev.Stat. § 25-813 (Reissue 1995). As part of our analysis, we observe that the counterclaim arises out of the contract, not that it inheres in the plaintiff's claim. We note by way of example that P & P does not allege that B & K damaged it in some fashion such as negligently losing a lawsuit, which would give rise to a counterclaim, but, rather, the crux of its claim is that B & K charged too much.

If we understand P & P's argument, it would have us...