Priesner v. Starry
| Decision Date | 25 May 2018 |
| Docket Number | No. S-17-713.,S-17-713. |
| Citation | 912 N.W.2d 249,300 Neb. 81 |
| Parties | Kenneth D. PRIESNER and Laurie Wrage Priesner, appellants, v. Jim L. STARRY and Bayview Townhouses, appellees. |
| Court | Nebraska Supreme Court |
300 Neb. 81
912 N.W.2d 249
Kenneth D. PRIESNER and Laurie Wrage Priesner, appellants,
v.
Jim L. STARRY and Bayview Townhouses, appellees.
No. S-17-713.
Supreme Court of Nebraska.
Filed May 25, 2018.
Jeffrey S. Armour, Ogallala, of Armour Law, P.C., L.L.O., for appellants.
Gary F. Burke, of Law Office of Gary F. Burke, L.L.C., for appellee Jim L. Starry.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ., and Harder and Noakes,
Harder, District Judge.
NATURE OF CASE
This case involves protracted litigation by the minority owners of a condominium against the majority owner, who repeatedly failed to comply with the declaration of covenants, conditions, and restrictions. The court eventually appointed a receiver to sell the condominium at a public sale after determining that the co-owners would "never be able to work together." The condominium was offered at a public sale. The plaintiffs appeal from the court’s subsequent order confirming the sale.
BACKGROUND
Kenneth D. Priesner and Laurie Wrage Priesner own one of four condominium units in the Bayview Townhouses, a condominium. They purchased the unit in 1983, when the condominium was built, and they have lived there since.
Jim L. Starry purchased the remaining three units and a detached garage in 1994 and 1995. He lives in Colorado and rents the units out.
The Priesners and Starry are members of the Bayview Townhouse Association (Association). The condominium is governed by a "Declaration of Covenants, Conditions and Restrictions of Bayview Townhouses" (Declaration).
Under the Declaration, Starry had control over the Association as the majority owner. Since Starry obtained his majority ownership in 1995, the Association ceased having meetings, collecting assessments, and maintaining the common elements of the condominium.
In 2013, the Priesners filed a complaint against Starry and the Association for damages and specific performance. The action concerned conversion of Association and insurance funds, failure to maintain
proper insurance, and Starry’s negligent repair of the condominium roof in 1997, which eventually resulted in the need to replace the roof and siding.
On February 24, 2014, the court awarded the Priesners compensation for interior damage to the Priesners’ unit resulting from Starry’s negligent repair of the roof, as well as the Priesners’ share of insurance proceeds that Starry had received but never utilized for repairs. The court ordered a lien on Starry’s units in the amount of damages awarded. The court ordered specific performance against Starry to purchase blanket property and liability insurance, hold an association meeting, elect a board of directors, and prepare an annual budget that would include the removal and replacement of the roof and siding.
The court then set forth:
In the event the parties are unable to reach an agreement on any of the requirements set forth in this paragraph, or for the payment of the costs associated herewith, either party may apply to this Court for the appointment of a receiver to manage the condominium ... and/or to sell the condominium ... at public sale.
The 2014 judgment was affirmed as modified by the Nebraska Court of Appeals in an unpublished memorandum opinion filed February 25, 2015, in case No. A-14-330. The
Court of Appeals held that the district court had erred in not awarding to the Priesners the portion of the converted insurance proceeds attributable to damage to the Priesners’ shed. It found no reversible error in the court’s order of specific performance that determined the Priesners would share the costs for replacing the roof and siding in proportion to their unit interest. The Court of Appeals noted in this regard that the Priesners had, like Starry, failed to request meetings, notify the Association of necessary repairs or upkeep, or paid any Association dues.
After the 2014 judgment, the Priesners eventually began acting as a quorum pursuant to their rights under the Declaration when Starry repeatedly failed to call for or attend Association meetings. By October 2015, the Association had apparently filed liens against Starry’s units for Starry’s share of special assessments to repair and replace the roof and siding of the condominium.
But the Association did not foreclose on these liens pursuant to Neb. Rev. Stat. § 76-874 (Cum. Supp. 2016). Instead, in October 2015, the Priesners filed an application for injunctive relief, under the same docket number as the 2014 judgment. Starry had apparently satisfied the damages portion of the judgment. The Priesners alleged, however, that Starry had failed to comply with the order of specific performance. The Priesners asked that Starry be enjoined from acting on behalf of the Association or conducting construction work on the exterior of the condominium, alleging that Starry had unilaterally arranged for unqualified workers to replace the siding and the roof.
The court granted the Priesners a temporary injunction and restraining order during the pendency of their application for injunctive relief.
In response, Starry filed an application for the appointment of a receiver, noting that he was temporarily enjoined from holding Association meetings or acting for the benefit of the condominium. The court initially denied the motion until it
was able to conduct a hearing on the Priesners’ contempt allegation. At the hearing, Starry renewed his motion to appoint a receiver, explaining that he wished to resolve the dispute between the parties by selling the condominium.
MARCH 14, 2016, ORDER TO SELL ALL UNITS AND COMMON AREAS
In a journal entry file stamped March 14, 2016, the court found that Starry was not in contempt of the 2014 judgment and "sustain[ed] [Starry’s] oral motion to appoint a [r]eceiver to sell all of the units and common areas" of the condominium. The court found that the parties would "never be able to work together" to operate the Association for their mutual benefit. The court set a hearing for April 4 to determine who should be appointed as receiver.
The receiver was selected by the court, and a journal entry was filed on July 13, 2016, stating that the receiver was appointed. A detailed "Order Appointing Receiver" was issued on July 14, the same day the receiver executed his oath. An amended order appointing the receiver was filed on August 2 to correct scrivener’s errors.
AUGUST 2, 2016, ORDER APPOINTING RECEIVER WITH DIRECTIONS
The operative order of appointment described that the court had ordered the sale of the property at a public sale. The property was described as "four (4) townhouse units and collective common elements."
The order stated that the receiver should immediately take charge, manage, operate, or discontinue all or part of the operations in his sole discretion and appoint such managers or management companies, leasing agents, listing agents, accountants, attorneys, and other professionals as he deemed appropriate and necessary to assist in the management, operation, or discontinuance of its operations, and protection and operation of the property according to the Declaration.
The order set forth that the receiver had all powers and authority reasonably necessary to accomplish his purposes.
The order set forth numerous powers, including, but not limited to (1) taking charge and possession of the property subject to the Declaration and all improvements thereto and all personal property used or associated therewith, regardless of where such property is located; (2) repairing, replacing, maintaining, and protecting the receivership property and paying for ordinary and necessary maintenance thereto, including deferred maintenance and taking such other steps as the receiver deems appropriate to prevent waste; (3) incurring indebtedness to the extent required to perform his duties as receiver in securing such indebtedness by granting a lien on the receivership property that is prior and superior to any lien other than the mortgage and tax liens; (4) using "income, rents, and receipts from the Receivership Property," for the payment of, in order of priority, administrative expenses, the receiver’s fees and costs, the receiver’s attorney and consultant fees and costs, expenses of the receivership, any debts secured by a lien, principal and interest payments, and "only after paying all expenses of the Receivership and all arrearages in principal and interest shall the Receiver pay pre-Receivership debts and/or liens of any nature and only after a determination is made by the Receiver that such pre-Receivership debts and /or liens of any nature are properly payable"; (5) making determinations as to the nature and validity of any prereceivership property debt or lien of any nature assessed according to the Declaration and whether it is properly payable or dischargeable by the receiver; and (6) doing "any and all...
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