Weyh v. Gottsch
| Decision Date | 07 June 2019 |
| Docket Number | No. S-18-192.,S-18-192. |
| Citation | 929 N.W.2d 40,303 Neb. 280 |
| Parties | David WEYH, appellee, v. Barry GOTTSCH, appellant. |
| Court | Nebraska Supreme Court |
Molly J. Miller, Patrick J. Sullivan, and Travis M. Jacott, of Adams & Sullivan, P.C., L.L.O., Papillion, for appellant.
Cathy S. Trent-Vilim, Daniel P. Chesire, Brian J. Brislen, and Adam R. Feeney, of Lamson, Dugan & Murray, L.L.P., Omaha, for appellee.
Heavican, C.J., Miller -Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
Pursuant to an oral agreement, David Weyh and Barry Gottsch farmed together for approximately 10 years and agreed to share net profits equally. When the farming operation ended and it was time to settle up, a dispute arose and Weyh filed this action seeking to recover his share of the operation’s profits. After a bench trial, the district court found that Gottsch owed Weyh $ 1,214,056.73 in unpaid profits. It also found that Weyh was entitled to prejudgment interest in the amount of $ 972,582.10 pursuant to Neb. Rev. Stat. § 45-104 (Reissue 2010).
Gottsch appealed, and we granted bypass to address the assignments of error related to recovery of prejudgment interest under Nebraska law. On that issue, Gottsch argues that all requests for prejudgment interest must comply with Neb. Rev. Stat. § 45-103.02 (Reissue 2010), and he contends it was error to award prejudgment interest under § 45-104 without also finding Weyh’s claim was liquidated under § 45-103.02(2). Weyh disagrees, and argues §§ 45-103.02(2) and 45-104 provide alternate routes for recovering prejudgment interest. Weyh contends that because his claim is the type of claim enumerated in § 45-104, prejudgment interest was properly awarded.
After examining the statutory language and legislative history of the pertinent statutes, and considering our competing lines of authority on prejudgment interest, we hold that § 45-103.02(2) is not the exclusive means of recovering prejudgment interest in Nebraska, and we disapprove of prior cases holding otherwise. We clarify that §§ 45-103.02 and 45-104 provide separate and independent means of recovering prejudgment interest, and we hold that when a claim is of the types enumerated in § 45-104, then prejudgment interest may be recovered without regard to whether the claim is liquidated. We thus find no error in applying § 45-104 to award prejudgment interest to Weyh, but we agree with Gottsch there was an error in calculating prejudgment interest. We affirm the judgment as modified.
In October 2004, Weyh and Gottsch entered into an oral agreement to farm together. They agreed Weyh would provide the labor and manage the day-to-day farming operations. They agreed Gottsch would provide the equipment and some occasional labor and would handle all the financial aspects of the farming operation. They agreed the operation would farm some land owned by Gottsch and some land owned by third parties. They agreed the operation would continue from year to year until one of them decided to end it, and they agreed to share the net profits of the farming operation equally. Their agreement was never reduced to writing.
Weyh and Gottsch farmed together continuously through the 2014 harvest. During that period, Weyh performed work on the farm nearly every day and also hired and supervised additional laborers. Weyh kept a general log of his daily farming activities. He did not take a salary or wage from the farming operation, but Gottsch occasionally provided Weyh with what the parties described as "draws against future profits." Both parties understood those draws were being advanced against Weyh’s share of the farming operation’s net profits once they finally "settled up." While the farming operation was ongoing, Gottsch and Weyh did not settle up at the end of each farming year. Instead, it was understood that when one or both of them decided to end the farming operation, Gottsch would provide an accounting and the net profits would then be determined and distributed equally.
Gottsch purchased the planting and harvesting equipment for the farming operation, and he was responsible for marketing the crops and keeping the farming operation’s books. All proceeds from the farming operation went into bank accounts controlled exclusively by Gottsch. Gottsch also used these accounts for his personal expenses and for some of his other business endeavors. Gottsch’s bookkeeper, Debra Wetzel, maintained the books for the farming operation and for Gottsch’s other businesses. After the farming operation ended, Wetzel prepared a profit-and-loss statement for the entire farming operation. While the farming operation was ongoing, there was no formal accounting prepared.
In October 2014, Gottsch notified Weyh he had decided to end the farming operation and it was time to "settle up." Shortly thereafter, Gottsch told Weyh the entire farming operation generated net profits of $ 1,518,115.65. Gottsch arrived at that figure by expensing to the farming operation, among other things, $ 1,813,164.15 for accumulated rent on land owned by Gottsch and farmed by the operation, and $ 144,161.04 for earnings paid to one of Gottsch’s employees, Philip Kollars, who sometimes worked for the farming operation. Weyh disputed both these expenses, claiming neither was properly attributed to the farming operation.
In December 2014, Weyh sued Gottsch in the district court for Sarpy County, Nebraska, seeking to recover his share of the net profits of the farming operation. Weyh’s complaint set out the parties' oral agreement and alleged several theories of recovery, including breach of contract. The complaint alleged the farming operation’s net profits totaled $ 3,475,440.70, and Weyh sought to recover half of that amount plus prejudgment interest.
Gottsch’s answer admitted he had failed to pay Weyh the agreed upon one-half share of net profits and admitted he was in possession of money belonging to Weyh. But Gottsch alleged that a profit-and-loss statement had not yet been completed for the 2014 crop year, and further alleged that a final accounting and payment had been "hindered" by Weyh’s demands to change the profit-and-loss statement. Gottsch admitted that his "failure to perform his obligations under the contract has damaged [Weyh] in an amount to be determined following a full accounting," but he denied that Weyh was entitled to recover the amount sought in the complaint.
Eventually, Gottsch provided Weyh a final accounting that included the 2014 crop year. The final accounting showed the entire farming operation generated net profits of $ 1,079,003.58. Included among the expenses of the farming operation were $ 2,130,657.21 in rent to Gottsch for land owned by him and farmed by the operation, and $ 208,452.64 in earnings paid to Kollars.
After Weyh received the final accounting from Gottsch, he amended his complaint to expressly accept the final accounting, with two exceptions: Weyh alleged that neither the $ 2,130,657.21 in accumulated rent to Gottsch nor the $ 208,452.64 in earnings paid to Kollars were properly expensed to the farming operation. The amended complaint sought a declaratory judgment to that effect and alleged separate theories of recovery for breach of contract, fraudulent misrepresentation, fraudulent concealment, unjust enrichment/constructive trust, money received and retained, and breach of the implied covenant of good faith and fair dealing. On each theory of recovery, Weyh’s amended complaint sought recovery of his one-half share of the net profits plus prejudgment interest.
Gottsch filed an answer to the amended complaint and later was permitted to amend his answer. The amended answer admitted the parties had orally agreed to farm together and had agreed to share equally in the profits and losses of the farming operation. But Gottsch denied that Weyh was entitled to recover the amount sought in the amended complaint, and he raised several affirmative defenses, including that Weyh’s claims were time barred under Neb. Rev. Stat. §§ 25-211 and 25-212 (Reissue 2016).
During the 3-day bench trial, the primary disputes were (1) whether Weyh’s claims were time barred and (2) how to treat the two contested expenses: rent to Gottsch and earnings to Kollar. Both parties testified on these issues.
According to Weyh, he and Gottsch decided to farm together while they were standing on a hillside in 2004. At that time, they agreed Weyh would provide the farm labor and Gottsch would provide the land, the equipment, and the financial management. They agreed to share net profits equally, and they agreed to farm together "until we both decided to quit." Weyh testified they never agreed that Gottsch would be paid cash rent in addition to a share of the profits.
In the fall of 2014, Gottsch told Weyh he was ending the farming operation. After learning this, Weyh demanded a full accounting, and Gottsch agreed it was time to "settle up." Weyh claims Gottsch remarked at the time "I owe you so much money" and suggested that with the all the money he was owed, Weyh could start his own operation if he wanted to continue farming.
Once a final accounting was prepared, Weyh accepted it, with the exception of two expenses: $ 2,130,657.21 in rent to Gottsch and $ 208,452.64 in earnings paid to Kollars. According to Weyh, neither of these expenses were properly attributed to the farming operation.
Weyh testified that Gottsch never brought up the topic of rent until 2006, when they met to go over Gottsch’s financial notes. During that 2006 meeting, Weyh noticed that Gottsch had listed, as a farm expense, rent to himself on the land he owned. Weyh told Gottsch that was not a proper farm expense under their agreement, and Gottsch replied that "we'll figure it out." Weyh testified the two did not discuss rent again, and Weyh did not press the issue further. Weyh testified that when he and Gottsch farmed land owned by others, the...
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