Shadow Ridge Ltd. v. Ryan (In re Ryan)

• Decision Date: 05 April 2019
• Docket Number: No. S-18-799.,S-18-799.
• Parties: IN RE ESTATE OF Wayne L. RYAN, Deceased. Shadow Ridge Limited Partnership, a Nebraska Limited Partnership, Appellant, v. Steven Ryan, Personal Representative of the Estate of Wayne L. Ryan, Deceased, Appellee.
• Court: Nebraska Supreme Court

302 Neb. 821

925 N.W.2d 336

IN RE ESTATE OF Wayne L. RYAN, Deceased.

Shadow Ridge Limited Partnership, a Nebraska Limited Partnership, Appellant,

v.Steven Ryan, Personal Representative of the Estate of Wayne L. Ryan, Deceased, Appellee.

No. S-18-799.

Supreme Court of Nebraska.

Filed April 5, 2019

Thomas M. Locher and Kevin J. Dostal, of Locher, Pavelka, Dostal, Braddy & Hammes, L.L.C., Omaha, for appellant.

Marnie A. Jensen and Kamron T.M. Hasan, of Husch Blackwell, L.L.P., Omaha, and William J. Lindsay, Jr., and John A. Svoboda, of Gross &Welch, P.C., L.L.O., Omaha, for appellee.

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

Cassel, J.

INTRODUCTION

In a decedent’s probate proceeding, a golf course partnership sought to enforce a claim based upon an unfulfilled pledge agreement, relying alternatively upon contract and promissory estoppel theories. The probate court dismissed both theories for failure to state a claim. Because the partnership is not a charitable, educational, or like institution, it failed to state a claim based on contract. But because it alleged having expended substantial funds in reliance upon the pledge—which must be accepted as true—it stated a claim based upon promissory estoppel. We affirm in part, and in part reverse and remand for further proceedings.

BACKGROUND

PLEDGE AGREEMENT

In 2016, Wayne L. Ryan entered into a written "Pledge Agreement" with Shadow Ridge Limited Partnership, a Nebraska limited partnership (Shadow Ridge). The signature block identified Ryan as "Donor" and Shadow Ridge as "Donee." According to the agreement, Ryan would make a total gift of $ 20 million so that Shadow Ridge could make improvements to the golf course it operated. In the agreement, Ryan stated that he had resided along the golf course for 23 years and had "great pride and affection" for it. His intent in providing funds, as stated in the agreement, was to "develop the golf course into one of the top-rated golf courses in the entire Midwest" and to make it "become a significant asset to the City of Omaha in much the same manner as the Omaha Henry Doorly Zoo, the TD Ameritrade Ball Park and other similar civic improvements which attract people to visit and reside in the City of Omaha."

According to the pledge agreement, "[Ryan] has discussed a number of improvements which [Shadow Ridge] would like to make to the Shadow Ridge Golf Course in order to provide the underwriting that is appropriate to meet the goals and objectives generally set forth in this Pledge Agreement." The improvements were set forth in an attachment to the pledge agreement and were incorporated by reference. The 11-page attachment detailed $ 12.5 million in capital improvements. Because recognizing Ryan’s contributions would "be paramount to this endeavor," Shadow Ridge would construct and name a golf performance center after Ryan and place a bronze statue in Ryan’s honor at the first tee.

The pledge agreement stated that "in consideration of the foregoing Recitals and the mutual promises hereinafter set forth, [Ryan] hereby agrees to provide the gratuitous transfers hereinafter described ..., subject to the conditions set forth in paragraph 3 below." Paragraph 3, titled "Conditions," stated that the intended transfers were "specifically subject to" two conditions. One condition was the resolution of specified litigation in Sarpy County, Nebraska, and the eventual sale of the stock or assets of "Streck, Inc.," to an independent third party for fair value. The other condition was the agreement of Shadow Ridge "to pay the anticipated transfer taxes attributable to the transfers contemplated by this Pledge Agreement (gift taxes reportable on IRS Forms 709) so that the practical result of the intended transfers is that they will be properly characterized as a net gift for federal gift tax purposes."

PROBATE PROCEEDINGS

Ryan died in 2017. Shadow Ridge filed a statement of claim against the estate of Wayne L. Ryan (estate) for the $ 20 million pledge agreement. The claim disclosed that payment was contingent on the resolution of the Sarpy County case. The estate denied the claim.

Shadow Ridge filed a petition for allowance of claim and attached the pledge agreement. According to the petition, Ryan "enjoyed ‘Founding Membership’ status with Shadow Ridge at the time of the execution of the Pledge Agreement." Shadow Ridge alleged that in reliance upon Ryan’s pledge, it had incurred expenses in beginning improvements specified in the agreement. It claimed that the pledge agreement was an enforceable obligation that was binding against the estate. Alternatively, Shadow Ridge alleged that the petition should be granted under a promissory estoppel theory. Shadow Ridge conceded that the contingency in the pledge agreement concerning the Sarpy County case had not occurred, but asserted that it would likely occur prior to the distribution of the estate.

DISMISSAL

The estate moved to dismiss the petition for failure to state a claim. The probate court thereafter dismissed the petition with prejudice, finding that the petition failed to state a claim upon which relief may be granted and that no future amendments to the petition would be successful. The court’s order stated: "The conclusion of the ... litigation in Sarpy County is a prerequisite before the intended gifts could be made by ... Ryan. [He] has died and no gifts were made to [Shadow Ridge] before his death."

Shadow Ridge filed a timely appeal, and we granted the estate’s petition to bypass review by the Nebraska Court of Appeals.

ASSIGNMENTS OF ERROR

Shadow Ridge assigns that the court erred in dismissing its contract claim based upon the pledge agreement and in dismissing its claim based upon a promissory estoppel theory.

STANDARD OF REVIEW

An appellate court reviews a trial court’s order granting a motion to dismiss de novo, accepting all allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.¹

ANALYSIS

PRINCIPLES OF LAW REGARDING MOTION TO DISMISS

We begin by recounting principles governing motions to dismiss pursuant to Neb. Ct. R. Pldg. § 6-1112(b)(6). A motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint, not the claim’s substantive merits.² To prevail against a motion to dismiss for failure to state a claim, a plaintiff must allege sufficient facts, accepted as true, to state a claim to relief that is plausible on its face.³ In cases in which a plaintiff does not or cannot allege specific facts showing a necessary element, the factual allegations, taken as true, are nonetheless plausible if they suggest the existence of the element and raise a reasonable expectation that discovery will reveal evidence of the element or claim.⁴ At this stage, the question boils down to whether, after accepting the well-pleaded facts as true, Shadow Ridge’s petition stated either a claim on a contract or a claim for promissory estoppel.

CONTINGENT CLAIMS

The transfers of money set forth in the pledge agreement were subject to two conditions. The estate argues that Shadow Ridge’s claims fail due to the nonoccurrence of conditions precedent. Here, we disagree.

A condition precedent includes a condition which must be fulfilled before a duty to perform an existing contract arises.⁵ There is no dispute that the conditions set forth in the agreement have not occurred. But this was not an action against Ryan to compel payment of an obligation; here, Shadow Ridge seeks to preserve its claims against Ryan’s estate in the probate proceeding resulting from Ryan’s death.

The Nebraska Probate Code requires that all claims, whether absolute or contingent, be presented within certain time periods or be barred against the estate.⁶ Neb. Rev. Stat. § 30-2492 (Reissue 2016) specifically addresses the disposition of contingent claims:

(a) If a claim which will become due at a future time or a contingent or unliquidated claim becomes due or certain before the distribution of the estate, and if the claim has been allowed or established by a proceeding, it is paid in the same manner as presently due and absolute claims of the same class.

(b) In other cases the personal representative or, on petition of the personal representative or the claimant in a special proceeding for the purpose, the court may provide for payment as follows:

(1) if the claimant consents, he may be paid the present or agreed value of the claim, taking any uncertainty into account;

(2) arrangement for future payment, or possible payment, on the happening of the contingency or on liquidation may be made by creating a trust, giving a mortgage, obtaining a bond or security from a distributee, or otherwise.

This statute treats contingent claims differently, depending upon whether the contingency is resolved before distribution of the estate. If it is, the claim is paid pursuant to the rules governing payment of claims of the same class.⁷ If not, the statute anticipates that the probate court will craft an equitable solution to dispose of the contingent claim.⁸

Here, it is not clear which subsection of § 30-2492 may ultimately apply. Shadow Ridge alleged that the contingency of the resolution of the litigation would likely occur prior to distribution of the estate. But it asserted that if the contingency had not occurred prior to the distribution of the entire estate, the claim should be paid under § 30-2492(b). To the extent Shadow Ridge argues that it must then be paid even if the contingencies have not been met, we disagree. If a claim’s contingencies remain unmet at the time of an estate’s distribution, § 30-2492(b) provides a probate court with a wide range of tools to achieve a just result. And depending upon the situation then, a contingency may be so unlikely of being performed as to justify only minimal provision for future payment.

Regardless of which subsection may apply, our probate code compelled Shadow Ridge to assert its claim against the estate even...