The Nebraska Court of Appeals here affirms a district court’s decision in a petition in error proceeding regarding the Nebraska Real Estate Commission’s actions regarding the license of a real estate broker.
Clark v. Tyrrell, 16 Neb. App. 692 (2008)
Court of Appeals Headnotes
Administrative Law:
1. Real Estate: Final Orders: Appeal and Error. Final orders of the State real estate Commission are appealed in accordance with the Administrative procedure Act.
2. Final Orders: Courts: Appeal and Error. In reviewing final administrative orders under the Administrative procedure Act, the district court functions not as a trial court but as an intermediate court of appeals.
3. Appeal and Error. In an appeal under Neb. rev. Stat. § 84-917(5)(a) (Cum. Supp. 2006), the district court conducts a de novo review of the record of the agency.
4. Courts: Appeal and Error. In a de novo review by a district court of the decision of an administrative agency, the level of discipline imposed by the agency is subject to the district court’s power to affirm, reverse, or modify the decision of the agency or to remand the case for further proceedings.
5. Judgments: Appeal and Error. A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record. ••• When reviewing an order of a district court under the Administrative procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is not arbitrary, capricious, or unreasonable.
6. Due Process: Notice: Evidence. In proceedings before an administrative agency or tribunal, procedural due process requires notice, identification of the accuser, factual basis for the accusation, reasonable time and opportunity to present evidence concerning the accusation, and a hearing before an impartial board.
Judgments:
1. Appeal and Error. Whether a decision conforms to law is by definition a question of law, in connection with which an appellate court reaches a conclusion independent of that reached by the lower court.
Criminal Law:
1. Double Jeopardy. The Double Jeopardy Clause of the Fifth Amendment to the U.S. Constitution protects against three distinct abuses: (1) a second prosecution for the same offense after acquittal, (2) a second prosecution for the same offense after conviction, and (3) multiple punishments for the same offense.
Constitutional Law:
1. Double Jeopardy. The protection provided by Nebraska’s double jeopardy clause is coextensive with that provided by the U.S. Constitution.
2. Courts: Jurisdiction: Statutes. The Nebraska Court of Appeals cannot determine the constitutionality of a statute, yet when necessary to a decision in the case before it, the court does have jurisdiction to determine whether a constitutional question has been properly raised.
3. Rules of the Supreme Court: Statutes: Appeal and Error. To properly raise a challenge to the constitutionality of a statute, a litigant is required to strictly comply with Neb. Ct. r. of prac. 9e (rev. 2006) and to properly raise and preserve the issue before the trial court.
4. Appeal and Error. A constitutional issue not presented to or passed upon by the trial court is not appropriate for consideration on appeal.
Double Jeopardy:
1. Legislature: Intent: Appeal and Error. In analyzing whether a penalty or sanction constitutes punishment for purposes of double jeopardy, an appellate court must inquire (1) whether the Legislature intended the statutory sanction to be criminal or civil and (2) whether the statutory sanction is so punitive in purpose or effect as to transform what was clearly intended as a civil sanction into a criminal one.The Double Jeopardy Clause protects against only multiple criminal punishments or prosecutions.
2. Licenses and Permits: Revocation. The State can discipline and regulate professionals, including suspending the privilege to practice, without running afoul of the Double Jeopardy Clause. ••• The revocation or suspension of a professional license generally does not constitute punishment for the purposes of double jeopardy analysis, but, rather, serves the remedial purpose of protecting the public from unfit practitioners.
Statutes:
1. Words and Phrases. A penal statute is one by which a forfeiture is imposed for transgressing the provisions of the act and where the extent of liability imposed is not measured or limited by the damage caused by the act or omission.
2. Legislature: Intent. Whether the Legislature intended a civil or criminal sanction is simply a matter of statutory construction. ••• In analyzing whether the purpose or effect of a civil sanction statute is so punitive as to negate the Legislature’s intent, the following factors are considered: (1) whether the sanction involves an affirmative disability or restraint, (2) whether it has historically been regarded as a punishment, (3) whether it comes into play only on a finding of scienter, (4) whether its operation will promote the traditional aims of punishment—retribution and deterrence, (5) whether the behavior to which it applies is already a crime, (6) whether an alternative purpose to which it may rationally be connected is assignable for it, and (7) whether it appears excessive in relation to the alternative purpose assigned. ••• In analyzing whether the purpose or effect of a civil sanction statute is so punitive as to negate the Legislature’s intent, the factors must be considered in relation to the statute on its face and are helpful, but are neither exhaustive nor dispositive.
a. Proof. once a determination is made that a sanction was intended to be civil in nature, a court will reject the Legislature’s manifest intent only where a party challenging the statute provides the clearest proof that the statutory scheme is so punitive in either purpose or effect as to negate the State’s intention.
Supersedeas Bonds:
1. Appeal and Error. The trial court may in its discretion grant supersedeas in cases not specified in Neb. rev. Stat. § 25-1916 (Cum. Supp. 2006). An allowance of supersedeas in such a case may be granted in such an amount and on such conditions as the court determines necessary for the protection of the parties.
Date Filed and Case No.: May 20, 2008. No. A-07-231.
Court Appealed From: District Court for Lancaster County: Karen B. Flowers, Judge.
Attorneys for the Appeal: Robert R. Otte for John C. Clark, appellant and cross-appellee. Adam J. Prochaska and, on brief, Neal E. Stenberg for Les Tyrrell, Director of the State Real Estate Commission, and The State of Nebraska ex rel. State Real Estate Commission, appellees and cross-appellants.
Judges: Sievers, Moore, and Cassel, Judges.
Authored By: Moore, Judge.
Summary: John C. Clark holds a real estate broker’s license in both Nebraska and Iowa. Among the real estate agents affiliated with John is his son, David Clark, who is licensed as a real estate agent only in Nebraska. In early 2004, prospective purchasers (the Terrys) spoke to David about their interest in buying a house within a 50-mile radius of Bellevue, Nebraska. The Terrys were also conducting their own research and located a house they wanted to see in Carter Lake, Iowa. The Terrys called David, who agreed to show them the property. Sometime after David and the Terrys arrived at the property, David realized the house was in Iowa and that he was not licensed to show it to them or provide them with assistance in purchasing it.
David spoke with John about the Terrys’ interest in the Carter Lake property, and together, David and John determined that if the Terrys pursued their interest, John would be “the essential realtor of record.” The Terrys later called David and told him they were considering making an offer on the Carter Lake house and asked to see it again. David met them at the property and brought with him a standard real estate purchase agreement. David discussed an offer with the Terrys and completed the offer form with them, which the Terrys signed. David then returned to the office, where, at some point, John signed the offer as a witness and as an agent. David communicated the offer to the sellers, who made a counteroffer. David communicated the counteroffer to the Terrys, who accepted it. David then performed whatever tasks remained for a buyer’s agent to do with respect to closing on the Carter Lake property.
The matter came to the attention of the real estate commissions in both Iowa and Nebraska that David had represented a buyer with respect to a sale in Iowa without the requisite license and that John, his broker, had permitted, if not facilitated, his doing so. John admitted wrongdoing before the Iowa Real Estate Commission (IREC) and paid a fine. In July 2005, the Nebraska’s State Real Estate Commission (NREC) initiated proceedings against John, alleging that John had violated Neb. Rev. Stat. § 81-885.24(22) and (29) (reissue 2003) in various regards. Following a hearing the NREC determined that John demonstrated unworthiness to act as a broker in violation of § 81-885.24(29). The NREC ordered that John’s license be suspended for 2 years, all but 60 days of which suspension were to be served on probation. The NREC also ordered that John complete certain continuing education requirements. John appealed the decision of the NREC to the district court.
The district court entered an order and ruled that in considering the NREC’s finding of a violation of § 81-885.24(29), John’s wrongdoing was something more than a simple failure to adequately supervise David. The court found that John knowingly aided David in violating the licensing regulations by representing himself to be the Terrys’ agent when, in fact, he was not. The court found that John’s actions evidenced a blatant disregard for the rules of his profession and clearly demonstrated unworthiness to act as a broker. Rejecting John’s double jeopardy argument (because of the previous IREC fine), his argument that the NREC had used his prior disciplinary history to enhance the discipline imposed in this case (the court determined that the NREC would have been remiss in deciding what sanction, within the permissible range of sanctions, to impose if it had not first looked at John’s disciplinary history) and his suggestion that the due process applicable to criminal sentencing should be applied to civil penalties such as this one, the district court determined that the sanction imposed was not excessive.
John filed notice of his intent to appeal the district court’s decision to the Nebraska Court of Appeals and moved the district court to stay execution, during the pendency of his appeal, the sanctions imposed by the NREC. John also requested that the district court set the amount of any necessary supersedeas bond. The court granted the motions and set the supersedeas bond. On cross-appeal, Les Tyrrell, director of the NREC, and the “State of Nebraska ex rel. State real estate Commission” (collectively the State) took issue with the court’s grant of a stay.
Did the district court err by concluding that John’s discipline by the NREC did not violate double jeopardy in light of the discipline imposed by the IREC? The Court said the question in this case is whether John has received multiple punishments for the same offense. The district court determined that double jeopardy has no application in this case, and the Court agreed. They wrote that the Nebraska Supreme Court has determined that the revocation or suspension of a professional license generally does not constitute punishment for the purposes of double jeopardy analysis. The Court has also previously determined that the State can discipline and regulate professionals, including suspending the privilege to practice, without running afoul of the Double Jeopardy Clause. Nebraska and Iowa are also separate sovereigns and leading the Court to conclude that the discipline imposed on John by the real estate commissions of two separate sovereign entities did not violate double jeopardy. John’s discipline by the NREC served the remedial purpose of protecting the public from an unfit practitioner and did not constitute punishment for the purposes of double jeopardy analysis.
Did the district court err by deciding that the NREC’s consideration of John’s prior disciplinary record before the NREC did not violate due process? John argued that by virtue of the recitation of his prior disciplinary history at the start of the penalty phase of the proceedings before the NREC, he was somehow subjected to a penalty enhancement, and that his due process rights were accordingly violated. The Court said that there is nothing in the record to show that John’s procedural due process rights were violated here. John was present with his counsel during the disciplinary portion of the hearing, and although the NREC discussed among its members what sanction to impose and did not solicit input from John or his counsel during this portion of the hearing, John could have objected in some way if he found the chairperson’s recitation of his disciplinary history to be inaccurate.
Further, the Court found no indication in the record that the district court placed any undue emphasis on John’s prior disciplinary history in affirming the discipline imposed by the NREC. In the criminal context, the Court noted that at the sentencing stage of the proceedings, a court may consider many factors that would not be entered into evidence at trial, including past criminal record, which may include information about dismissed charges and sentences imposed for past convictions.
Did the district court err by finding that John’s conduct constituted unworthiness to act as a broker? John urged the Nebraska Court of Appealsis court to find § 81-885.24(29) to be unconstitutionally vague. Because the district court did not pass on the constitutional issue raised by John on appeal, the Court found that he has waived it.
John argued that he did not violate § 81-885.24(29), because his conduct did not reach the required level of negligence, incompetency, or unworthiness. In addressing John’s argument in this case, the district court stated:
John wishes to characterize his wrong doing as a simple failure to adequately supervise David. The [NREC] saw it differently and so do I. What John did was knowingly aid David in violating the licensing regulations by representing himself to be the Terrys’ agent when, in fact, he was not. John also [re]presented that he witnessed the Terrys’ signatures on the offer to purchase when, in fact, he did not. . . . These actions evidence a blatant disregard for the rules of his profession and clearly demonstrate unworthiness to act as a broker.
The Court saw the more critical fact to be that John allowed David to continue with the Terry transaction although David was not licensed in Iowa and that John, by signing the offer to purchase, held himself out as the Terrys’ agent, when he was not.
Did the district court err by determining that the level of discipline imposed by the NREC was not excessive? John argued that a suspension served entirely on probation with a continuing education requirement and/or fine would have been more appropriate and that the sanction imposed will operate as a “‘death penalty’” for his business. The district court simply found that the sanction was not excessive and the Court agreed. The sanction imposed was well within the NREC’s authority.
Did the district court err by ordering a stay of execution, pending resolution of this appeal, of the discipline imposed against John? The State directed the Court’s attention to § 84-917(3) (concerning stays of agency decisions in appeals to district court under Administrative procedure Act) and argued that the provisions of this subsection should continue to apply when an agency decision is further appealed from the district court to this court.
The Court found it need not determine whether § 84-917(3) is applicable to further appeals of agency decisions from the district court to this court. Even if it were applicable, they found there is nothing in the record in this case to suggest that the district court would have been required to make findings on the criteria listed in the statute. The requirement in § 84-917(3) that the court must make findings on these criteria before granting relief is conditioned upon a finding by the agency that “its action on an application for stay or other temporary remedies is justified to protect against a substantial threat to the public health, safety, or welfare.” There is no such finding in the record before here.
Conclusion: The Court affirmed the decision of the district court in this case because it conforms to the law, is supported by competent evidence, and is not arbitrary, capricious, or unreasonable. AFFIRMED.
In this sale of real estate where sellers had agreed to provide purchasers with clear and marketable title, after closing it was discovered that a portion of the property sold was actually owned by a third-party due to a scriveners’ error in 1922. While the trial court found it could not grant rescission to remedy the situation, the Nebraska Court of Appeals found that equitable rescission could be granted and reversed the trial court.
Holoubek v. Romshek, 16 Neb. App. 677 (2008)
Court of Appeals Headnotes
Equity:
1. Appeal and Error. In an appeal of an equitable action, the appellate court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses.
Real Estate:
1. Title: Words and Phrases. A clear title means that the land is free from encumbrances. ••• A good title is one free from litigation, palpable defects, and grave doubts, comprising both legal and equitable titles, and fairly deducible of record. ••• A clear title means a good title, and a good title means a marketable or merchantable title.
2. Contracts: Conveyances: Title. A contract to convey in fee simple, clear of all encumbrances, implies a marketable title, and a marketable title is one of such character as assures to the purchaser the quiet and peaceable enjoyment of the property and one which is free from encumbrances.
3. Vendor and Vendee:
a. Title. A merchantable title need not be free from every technical defect, but the test is whether a man of reasonable prudence, familiar with the facts and the questions of law involved, would, in the ordinary course of business, accept such a title as one which could be sold to a reasonable purchaser.••• A purchaser of real estate cannot be made to buy a quiet title lawsuit.
b. Words and Phrases. The terms “marketable” and “merchantable” title are practically synonymous, and mean a title in which there is no doubt involved, either as to matter of law or fact, and a purchaser who contracts for a marketable title will not be required to take it if there is color of outstanding title and he may encounter the hazards of litigation.
Contracts:
1. Rescission. An implied agreement to rescind a contract may be given effect.
Equity:
1. Rescission. In equity, a lawsuit is not on rescission, but, rather, is for rescission, and thus it is a suit to have the court declare a rescission which is not accomplished in equity until the court so decrees. ••• When a court of equity grants rescission, its decree wipes out the instrument and renders it as though it does not exist.
Rescission:
1. Words and Phrases. rescission is the equitable relief that the court grants in the event of a breach of the warranty of marketable title.
2. Vendor and Vendee: Claims: Ratification: Estoppel. A purchaser’s claim for rescission can be defeated by conduct showing acquiescence, ratification, or estoppel.
Date Filed and Case No.: May 20, 2008. No. A-06-1146.
Court Appealed From: District Court for Butler County: Mary C. Gilbride, Judge.
Attorneys for the Appeal: Stephen D. Mossman for Mark R. Holoubek and Willow A. Holoubek, appellants. James M. Egr for Patricia K. Romshek et al., appellees.
Judges: Sievers and Moore, Judges.
Participating on Briefs: Irwin, Judge
Authored By: Sievers, Judge.
Summary: Mark R. Holoubek and Willow A. Holoubek filed a complaint in the district court for Butler County seeking to rescind their purchase of real estate from Patricia K. Romshek, Elsie Grubaugh, and Dick Grubaughe (collectively Grubaughs). After the closing of such sale, the money was paid, and the sale was closed without incident. The Holoubeks intended to subdivide the tract, and after the closing, for that purpose, they engaged the services of Richard Ronkar, who has been the Butler County surveyor for approximately 25 years.
In the course of working with Ronkar, the Holoubeks first became aware of the “problem.” it came to light that the owners of the land to the south of the land purchased by the Holoubeks claimed the southernmost 27 feet of the Holoubeks’ approximately 6.3-acre rectangular tract purchased from the Grubaughs. The two tracts are the same length, but the Holoubek tract is wider than the adjacent tract owned by Rick Lord and Debra Sypal. The evidence traces this “problem” to a scrivener’s error in a deed filed on August 3, 1922. As explained by Ronkar, at least on paper, the Lord-Sypal tract overlaps approximately 27 feet to the north onto the Holoubek tract. The fact of such “overlap” was discerned by Ronkar, and he so advised the Holoubeks; the Grubaughs do not dispute this evidence in any way.
The record is clear that it was not until after the Holoubeks began the platting process of the tract that the Grubaughs and Holoubeks became aware of the “problem.” The district court denied rescission, and the Holoubeks appealed to the Nebraska Court of Appeals.
At the outset, the Court noted that in the pleadings and the Holoubeks’ pretrial statement of issues, the Holoubeks raised issues of negligent misrepresentation. The Court also noted that the Grubaughs in their appellees’ brief, under the guise of examining all of the circumstances surrounding the purchase, seemed to frame the matter in language of fault or blame.
The trial court likewise found some of such concepts advanced by the Grubaughs significant. For example, the “order of Dismissal Following Trial” notes that the purchase agreement did not contain an express rescission clause and that the Holoubeks drafted the agreement, were familiar with the land, and chose not to have it surveyed until after closing. However, in the Court’s view, the initial analytical focus must be on two key provisions of the “Agreement for the Sale of real estate” entered into by the parties because the analytical calculus for the case must reflect that this is essentially a breach of contract claim. Therefore, the Nebraska Court of Appeals analytical approach to the case was different from that of the district court.
Did the sellers present the purchasers with good and clear marketable title to the property as warranted? In the agreement, the Grubaughs represented and warranted to the Holoubeks that “(a) [at] the time of closing, the Seller will have good and clear marketable title to the property” and that “(c) . . . no other persons or entities will have any interest in the property being conveyed.” Therefore, these contractual provisions form the first key point of analysis.
The term “marketable title” means under Nebraska law according to the Nebraska Supreme Court in Northouse v.Torstenson, 146 Neb. 187, 19 N.W.2d 34 (1945) where they “A title to real estate, to be good, satisfactory or marketable, should be free from reasonable doubt, either in law or in fact.” Here the Lord-Sypal tract on the south edge of the Grubaugh property to Lord-Sypal made claim by virtue of their deed (which perpetuates a scrivener’s error from 1922), left the Court to find that no judgment is possible under the facts of this case. No judgment, other than to conclude that at the time of closing (remembering the express proviso of the contract that the warranty of marketable title survives the closing) the Grubaughs did not have, nor did they convey to the Holoubeks, marketable title.
“Quite clearly,” wrote the Court “unless the Grubaughs are held to their representation and warranty to decisions of convey marketable title, the Holoubeks are buying a quiet title lawsuit to resolve what we have nicknamed the ‘problem.’” Without rescission, the Court said they would be forcing the Holoubeks to “buy a lawsuit.” They found “obviously reasonable doubt in law and in fact” about the title to the Grubaugh property, and a reasonably prudent purchaser, well informed as to the facts and their legal consequences would not accept such title under the warranty of marketable title contained in the contract.
Finally, although the evidence is undisputed that at the time of closing, no one, including Lord and Sypal, was aware of their potential claim to a portion of the Grubaugh tract, the Grubaughs did warrant that “no other persons . . . will have any interest in the property being conveyed” and such provision also survived the closing. Lord and Sypal have resisted all attempts, first by the Holoubeks and then by the Grubaughs, to amicably resolve the “problem.” Thus, a provision of the purchase agreement had clearly been breached. On the record before them, the Court said that it is quite apparent that the Lord-Sypal claim cannot be resolved without further litigation.
Did the trial court err in denying rescission? The trial court cites, apparently as a circumstance supporting the denial of rescission, the fact that “[t]he purchase Agreement does not contain an express rescission clause.” However, the Court said that the law is clear that an implied agreement to rescind a contract may be given effect.
“Clearly, a warranty of marketable title, meaning that the facts or law do not put the title in doubt, would be worthless if such did not carry with it the implied remedy of rescission.”
In this regard, they Court pointed out that it is important that in equity, the lawsuit is not on rescission, but, rather, is for rescission, and thus it is a suit to have the court declare a rescission which is not accomplished in equity until the court so decrees. Accordingly, the fact that the agreement between the Grubaughs and the Holoubeks did not contain an express provision for rescission is of no moment, because such remedy is implied from and inherent in the warranty of marketable title, and rescission is the equitable relief that the court grants in the event of a breach of the warranty of marketable title.
The Court then turned to those specific findings of the trial court which were a material part of the trial court’s rationale in denying the Holoubeks relief and distinguished them all.
Conclusion: For the foregoing reasons, the Nebraska Court of Appeals reversed the decision of the district court and remanded the matter to the district court for entry of an order rescinding the agreement for sale of real estate. Because the purpose of rescission is to place the parties in status quo, that is, to return them to their position which existed before the rescinded contract, the Court directed the district court to consider the Holoubeks’ claims for damages upon the record previously made.
REVERSED AND REMANDED WITH DIRECTIONS.
Real Estate, Purchase Agreement, Free and Marketable Title
In this sale of real estate where sellers had agreed to provide purchasers with clear and marketable title, after closing it was discovered that a portion of the property sold was actually owned by a third-party due to a scriveners’ error in 1922. While the trial court found it could not grant rescission to remedy the situation, the Nebraska Court of Appeals found that equitable rescission could be granted and reversed the trial court.
Holoubek v. Romshek, 16 Neb. App. 677 (2008)
Court of Appeals Headnotes
Equity:
1. Appeal and Error. In an appeal of an equitable action, the appellate court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses.
Real Estate:
1. Title: Words and Phrases. A clear title means that the land is free from encumbrances. ••• A good title is one free from litigation, palpable defects, and grave doubts, comprising both legal and equitable titles, and fairly deducible of record. ••• A clear title means a good title, and a good title means a marketable or merchantable title.
2. Contracts: Conveyances: Title. A contract to convey in fee simple, clear of all encumbrances, implies a marketable title, and a marketable title is one of such character as assures to the purchaser the quiet and peaceable enjoyment of the property and one which is free from encumbrances.
3. Vendor and Vendee:
a. Title. A merchantable title need not be free from every technical defect, but the test is whether a man of reasonable prudence, familiar with the facts and the questions of law involved, would, in the ordinary course of business, accept such a title as one which could be sold to a reasonable purchaser.••• A purchaser of real estate cannot be made to buy a quiet title lawsuit.
b. Words and Phrases. The terms “marketable” and “merchantable” title are practically synonymous, and mean a title in which there is no doubt involved, either as to matter of law or fact, and a purchaser who contracts for a marketable title will not be required to take it if there is color of outstanding title and he may encounter the hazards of litigation.
Contracts:
1. Rescission. An implied agreement to rescind a contract may be given effect.
Equity:
1. Rescission. In equity, a lawsuit is not on rescission, but, rather, is for rescission, and thus it is a suit to have the court declare a rescission which is not accomplished in equity until the court so decrees. ••• When a court of equity grants rescission, its decree wipes out the instrument and renders it as though it does not exist.
Rescission:
1. Words and Phrases. rescission is the equitable relief that the court grants in the event of a breach of the warranty of marketable title.
2. Vendor and Vendee: Claims: Ratification: Estoppel. A purchaser’s claim for rescission can be defeated by conduct showing acquiescence, ratification, or estoppel.
Date Filed and Case No.: May 20, 2008. No. A-06-1146.
Court Appealed From: District Court for Butler County: Mary C. Gilbride, Judge.
Attorneys for the Appeal: Stephen D. Mossman for Mark R. Holoubek and Willow A. Holoubek, appellants. James M. Egr for Patricia K. Romshek et al., appellees.
Judges: Sievers and Moore, Judges.
Participating on Briefs: Irwin, Judge
Authored By: Sievers, Judge.
Summary: Mark R. Holoubek and Willow A. Holoubek filed a complaint in the district court for Butler County seeking to rescind their purchase of real estate from Patricia K. Romshek, Elsie Grubaugh, and Dick Grubaughe (collectively Grubaughs). After the closing of such sale, the money was paid, and the sale was closed without incident. The Holoubeks intended to subdivide the tract, and after the closing, for that purpose, they engaged the services of Richard Ronkar, who has been the Butler County surveyor for approximately 25 years.
In the course of working with Ronkar, the Holoubeks first became aware of the “problem.” it came to light that the owners of the land to the south of the land purchased by the Holoubeks claimed the southernmost 27 feet of the Holoubeks’ approximately 6.3-acre rectangular tract purchased from the Grubaughs. The two tracts are the same length, but the Holoubek tract is wider than the adjacent tract owned by Rick Lord and Debra Sypal. The evidence traces this “problem” to a scrivener’s error in a deed filed on August 3, 1922. As explained by Ronkar, at least on paper, the Lord-Sypal tract overlaps approximately 27 feet to the north onto the Holoubek tract. The fact of such “overlap” was discerned by Ronkar, and he so advised the Holoubeks; the Grubaughs do not dispute this evidence in any way.
The record is clear that it was not until after the Holoubeks began the platting process of the tract that the Grubaughs and Holoubeks became aware of the “problem.” The district court denied rescission, and the Holoubeks appealed to the Nebraska Court of Appeals.
At the outset, the Court noted that in the pleadings and the Holoubeks’ pretrial statement of issues, the Holoubeks raised issues of negligent misrepresentation. The Court also noted that the Grubaughs in their appellees’ brief, under the guise of examining all of the circumstances surrounding the purchase, seemed to frame the matter in language of fault or blame.
The trial court likewise found some of such concepts advanced by the Grubaughs significant. For example, the “order of Dismissal Following Trial” notes that the purchase agreement did not contain an express rescission clause and that the Holoubeks drafted the agreement, were familiar with the land, and chose not to have it surveyed until after closing. However, in the Court’s view, the initial analytical focus must be on two key provisions of the “Agreement for the Sale of real estate” entered into by the parties because the analytical calculus for the case must reflect that this is essentially a breach of contract claim. Therefore, the Nebraska Court of Appeals analytical approach to the case was different from that of the district court.
Did the sellers present the purchasers with good and clear marketable title to the property as warranted? In the agreement, the Grubaughs represented and warranted to the Holoubeks that “(a) [at] the time of closing, the Seller will have good and clear marketable title to the property” and that “(c) . . . no other persons or entities will have any interest in the property being conveyed.” Therefore, these contractual provisions form the first key point of analysis.
The term “marketable title” means under Nebraska law according to the Nebraska Supreme Court in Northouse v.Torstenson, 146 Neb. 187, 19 N.W.2d 34 (1945) where they “A title to real estate, to be good, satisfactory or marketable, should be free from reasonable doubt, either in law or in fact.” Here the Lord-Sypal tract on the south edge of the Grubaugh property to Lord-Sypal made claim by virtue of their deed (which perpetuates a scrivener’s error from 1922), left the Court to find that no judgment is possible under the facts of this case. No judgment, other than to conclude that at the time of closing (remembering the express proviso of the contract that the warranty of marketable title survives the closing) the Grubaughs did not have, nor did they convey to the Holoubeks, marketable title.
“Quite clearly,” wrote the Court “unless the Grubaughs are held to their representation and warranty to decisions of convey marketable title, the Holoubeks are buying a quiet title lawsuit to resolve what we have nicknamed the ‘problem.’” Without rescission, the Court said they would be forcing the Holoubeks to “buy a lawsuit.” They found “obviously reasonable doubt in law and in fact” about the title to the Grubaugh property, and a reasonably prudent purchaser, well informed as to the facts and their legal consequences would not accept such title under the warranty of marketable title contained in the contract.
Finally, although the evidence is undisputed that at the time of closing, no one, including Lord and Sypal, was aware of their potential claim to a portion of the Grubaugh tract, the Grubaughs did warrant that “no other persons . . . will have any interest in the property being conveyed” and such provision also survived the closing. Lord and Sypal have resisted all attempts, first by the Holoubeks and then by the Grubaughs, to amicably resolve the “problem.” Thus, a provision of the purchase agreement had clearly been breached. On the record before them, the Court said that it is quite apparent that the Lord-Sypal claim cannot be resolved without further litigation.
Did the trial court err in denying rescission? The trial court cites, apparently as a circumstance supporting the denial of rescission, the fact that “[t]he purchase Agreement does not contain an express rescission clause.” However, the Court said that the law is clear that an implied agreement to rescind a contract may be given effect.
“Clearly, a warranty of marketable title, meaning that the facts or law do not put the title in doubt, would be worthless if such did not carry with it the implied remedy of rescission.”
In this regard, they Court pointed out that it is important that in equity, the lawsuit is not on rescission, but, rather, is for rescission, and thus it is a suit to have the court declare a rescission which is not accomplished in equity until the court so decrees. Accordingly, the fact that the agreement between the Grubaughs and the Holoubeks did not contain an express provision for rescission is of no moment, because such remedy is implied from and inherent in the warranty of marketable title, and rescission is the equitable relief that the court grants in the event of a breach of the warranty of marketable title.
The Court then turned to those specific findings of the trial court which were a material part of the trial court’s rationale in denying the Holoubeks relief and distinguished them all.
Conclusion: For the foregoing reasons, the Nebraska Court of Appeals reversed the decision of the district court and remanded the matter to the district court for entry of an order rescinding the agreement for sale of real estate. Because the purpose of rescission is to place the parties in status quo, that is, to return them to their position which existed before the rescinded contract, the Court directed the district court to consider the Holoubeks’ claims for damages upon the record previously made.
The Nebraska Court of Appeals here affirms a district court’s decision in a petition in error proceeding regarding the Nebraska Real Estate Commission’s actions regarding the license of a real estate broker.
Clark v. Tyrrell, 16 Neb. App. 692 (2008)
Court of Appeals Headnotes
Administrative Law:
1. Real Estate: Final Orders: Appeal and Error. Final orders of the State real estate Commission are appealed in accordance with the Administrative procedure Act.
2. Final Orders: Courts: Appeal and Error. In reviewing final administrative orders under the Administrative procedure Act, the district court functions not as a trial court but as an intermediate court of appeals.
3. Appeal and Error. In an appeal under Neb. rev. Stat. § 84-917(5)(a) (Cum. Supp. 2006), the district court conducts a de novo review of the record of the agency.
4. Courts: Appeal and Error. In a de novo review by a district court of the decision of an administrative agency, the level of discipline imposed by the agency is subject to the district court’s power to affirm, reverse, or modify the decision of the agency or to remand the case for further proceedings.
5. Judgments: Appeal and Error. A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record. ••• When reviewing an order of a district court under the Administrative procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is not arbitrary, capricious, or unreasonable.
6. Due Process: Notice: Evidence. In proceedings before an administrative agency or tribunal, procedural due process requires notice, identification of the accuser, factual basis for the accusation, reasonable time and opportunity to present evidence concerning the accusation, and a hearing before an impartial board.
Judgments:
1. Appeal and Error. Whether a decision conforms to law is by definition a question of law, in connection with which an appellate court reaches a conclusion independent of that reached by the lower court.
Criminal Law:
1. Double Jeopardy. The Double Jeopardy Clause of the Fifth Amendment to the U.S. Constitution protects against three distinct abuses: (1) a second prosecution for the same offense after acquittal, (2) a second prosecution for the same offense after conviction, and (3) multiple punishments for the same offense.
Constitutional Law:
1. Double Jeopardy. The protection provided by Nebraska’s double jeopardy clause is coextensive with that provided by the U.S. Constitution.
2. Courts: Jurisdiction: Statutes. The Nebraska Court of Appeals cannot determine the constitutionality of a statute, yet when necessary to a decision in the case before it, the court does have jurisdiction to determine whether a constitutional question has been properly raised.
3. Rules of the Supreme Court: Statutes: Appeal and Error. To properly raise a challenge to the constitutionality of a statute, a litigant is required to strictly comply with Neb. Ct. r. of prac. 9e (rev. 2006) and to properly raise and preserve the issue before the trial court.
4. Appeal and Error. A constitutional issue not presented to or passed upon by the trial court is not appropriate for consideration on appeal.
Double Jeopardy:
1. Legislature: Intent: Appeal and Error. In analyzing whether a penalty or sanction constitutes punishment for purposes of double jeopardy, an appellate court must inquire (1) whether the Legislature intended the statutory sanction to be criminal or civil and (2) whether the statutory sanction is so punitive in purpose or effect as to transform what was clearly intended as a civil sanction into a criminal one.The Double Jeopardy Clause protects against only multiple criminal punishments or prosecutions.
2. Licenses and Permits: Revocation. The State can discipline and regulate professionals, including suspending the privilege to practice, without running afoul of the Double Jeopardy Clause. ••• The revocation or suspension of a professional license generally does not constitute punishment for the purposes of double jeopardy analysis, but, rather, serves the remedial purpose of protecting the public from unfit practitioners.
Statutes:
1. Words and Phrases. A penal statute is one by which a forfeiture is imposed for transgressing the provisions of the act and where the extent of liability imposed is not measured or limited by the damage caused by the act or omission.
2. Legislature: Intent. Whether the Legislature intended a civil or criminal sanction is simply a matter of statutory construction. ••• In analyzing whether the purpose or effect of a civil sanction statute is so punitive as to negate the Legislature’s intent, the following factors are considered: (1) whether the sanction involves an affirmative disability or restraint, (2) whether it has historically been regarded as a punishment, (3) whether it comes into play only on a finding of scienter, (4) whether its operation will promote the traditional aims of punishment—retribution and deterrence, (5) whether the behavior to which it applies is already a crime, (6) whether an alternative purpose to which it may rationally be connected is assignable for it, and (7) whether it appears excessive in relation to the alternative purpose assigned. ••• In analyzing whether the purpose or effect of a civil sanction statute is so punitive as to negate the Legislature’s intent, the factors must be considered in relation to the statute on its face and are helpful, but are neither exhaustive nor dispositive.
a. Proof. once a determination is made that a sanction was intended to be civil in nature, a court will reject the Legislature’s manifest intent only where a party challenging the statute provides the clearest proof that the statutory scheme is so punitive in either purpose or effect as to negate the State’s intention.
Supersedeas Bonds:
1. Appeal and Error. The trial court may in its discretion grant supersedeas in cases not specified in Neb. rev. Stat. § 25-1916 (Cum. Supp. 2006). An allowance of supersedeas in such a case may be granted in such an amount and on such conditions as the court determines necessary for the protection of the parties.
Date Filed and Case No.: May 20, 2008. No. A-07-231.
Court Appealed From: District Court for Lancaster County: Karen B. Flowers, Judge.
Attorneys for the Appeal: Robert R. Otte for John C. Clark, appellant and cross-appellee. Adam J. Prochaska and, on brief, Neal E. Stenberg for Les Tyrrell, Director of the State Real Estate Commission, and The State of Nebraska ex rel. State Real Estate Commission, appellees and cross-appellants.
Judges: Sievers, Moore, and Cassel, Judges.
Authored By: Moore, Judge.
Summary: John C. Clark holds a real estate broker’s license in both Nebraska and Iowa. Among the real estate agents affiliated with John is his son, David Clark, who is licensed as a real estate agent only in Nebraska. In early 2004, prospective purchasers (the Terrys) spoke to David about their interest in buying a house within a 50-mile radius of Bellevue, Nebraska. The Terrys were also conducting their own research and located a house they wanted to see in Carter Lake, Iowa. The Terrys called David, who agreed to show them the property. Sometime after David and the Terrys arrived at the property, David realized the house was in Iowa and that he was not licensed to show it to them or provide them with assistance in purchasing it.
David spoke with John about the Terrys’ interest in the Carter Lake property, and together, David and John determined that if the Terrys pursued their interest, John would be “the essential realtor of record.” The Terrys later called David and told him they were considering making an offer on the Carter Lake house and asked to see it again. David met them at the property and brought with him a standard real estate purchase agreement. David discussed an offer with the Terrys and completed the offer form with them, which the Terrys signed. David then returned to the office, where, at some point, John signed the offer as a witness and as an agent. David communicated the offer to the sellers, who made a counteroffer. David communicated the counteroffer to the Terrys, who accepted it. David then performed whatever tasks remained for a buyer’s agent to do with respect to closing on the Carter Lake property.
The matter came to the attention of the real estate commissions in both Iowa and Nebraska that David had represented a buyer with respect to a sale in Iowa without the requisite license and that John, his broker, had permitted, if not facilitated, his doing so. John admitted wrongdoing before the Iowa Real Estate Commission (IREC) and paid a fine. In July 2005, the Nebraska’s State Real Estate Commission (NREC) initiated proceedings against John, alleging that John had violated Neb. Rev. Stat. § 81-885.24(22) and (29) (reissue 2003) in various regards. Following a hearing the NREC determined that John demonstrated unworthiness to act as a broker in violation of § 81-885.24(29). The NREC ordered that John’s license be suspended for 2 years, all but 60 days of which suspension were to be served on probation. The NREC also ordered that John complete certain continuing education requirements. John appealed the decision of the NREC to the district court.
The district court entered an order and ruled that in considering the NREC’s finding of a violation of § 81-885.24(29), John’s wrongdoing was something more than a simple failure to adequately supervise David. The court found that John knowingly aided David in violating the licensing regulations by representing himself to be the Terrys’ agent when, in fact, he was not. The court found that John’s actions evidenced a blatant disregard for the rules of his profession and clearly demonstrated unworthiness to act as a broker. Rejecting John’s double jeopardy argument (because of the previous IREC fine), his argument that the NREC had used his prior disciplinary history to enhance the discipline imposed in this case (the court determined that the NREC would have been remiss in deciding what sanction, within the permissible range of sanctions, to impose if it had not first looked at John’s disciplinary history) and his suggestion that the due process applicable to criminal sentencing should be applied to civil penalties such as this one, the district court determined that the sanction imposed was not excessive.
John filed notice of his intent to appeal the district court’s decision to the Nebraska Court of Appeals and moved the district court to stay execution, during the pendency of his appeal, the sanctions imposed by the NREC. John also requested that the district court set the amount of any necessary supersedeas bond. The court granted the motions and set the supersedeas bond. On cross-appeal, Les Tyrrell, director of the NREC, and the “State of Nebraska ex rel. State real estate Commission” (collectively the State) took issue with the court’s grant of a stay.
Did the district court err by concluding that John’s discipline by the NREC did not violate double jeopardy in light of the discipline imposed by the IREC? The Court said the question in this case is whether John has received multiple punishments for the same offense. The district court determined that double jeopardy has no application in this case, and the Court agreed. They wrote that the Nebraska Supreme Court has determined that the revocation or suspension of a professional license generally does not constitute punishment for the purposes of double jeopardy analysis. The Court has also previously determined that the State can discipline and regulate professionals, including suspending the privilege to practice, without running afoul of the Double Jeopardy Clause. Nebraska and Iowa are also separate sovereigns and leading the Court to conclude that the discipline imposed on John by the real estate commissions of two separate sovereign entities did not violate double jeopardy. John’s discipline by the NREC served the remedial purpose of protecting the public from an unfit practitioner and did not constitute punishment for the purposes of double jeopardy analysis.
Did the district court err by deciding that the NREC’s consideration of John’s prior disciplinary record before the NREC did not violate due process? John argued that by virtue of the recitation of his prior disciplinary history at the start of the penalty phase of the proceedings before the NREC, he was somehow subjected to a penalty enhancement, and that his due process rights were accordingly violated. The Court said that there is nothing in the record to show that John’s procedural due process rights were violated here. John was present with his counsel during the disciplinary portion of the hearing, and although the NREC discussed among its members what sanction to impose and did not solicit input from John or his counsel during this portion of the hearing, John could have objected in some way if he found the chairperson’s recitation of his disciplinary history to be inaccurate.
Further, the Court found no indication in the record that the district court placed any undue emphasis on John’s prior disciplinary history in affirming the discipline imposed by the NREC. In the criminal context, the Court noted that at the sentencing stage of the proceedings, a court may consider many factors that would not be entered into evidence at trial, including past criminal record, which may include information about dismissed charges and sentences imposed for past convictions.
Did the district court err by finding that John’s conduct constituted unworthiness to act as a broker? John urged the Nebraska Court of Appealsis court to find § 81-885.24(29) to be unconstitutionally vague. Because the district court did not pass on the constitutional issue raised by John on appeal, the Court found that he has waived it.
John argued that he did not violate § 81-885.24(29), because his conduct did not reach the required level of negligence, incompetency, or unworthiness. In addressing John’s argument in this case, the district court stated:
John wishes to characterize his wrong doing as a simple failure to adequately supervise David. The [NREC] saw it differently and so do I. What John did was knowingly aid David in violating the licensing regulations by representing himself to be the Terrys’ agent when, in fact, he was not. John also [re]presented that he witnessed the Terrys’ signatures on the offer to purchase when, in fact, he did not. . . . These actions evidence a blatant disregard for the rules of his profession and clearly demonstrate unworthiness to act as a broker.
The Court saw the more critical fact to be that John allowed David to continue with the Terry transaction although David was not licensed in Iowa and that John, by signing the offer to purchase, held himself out as the Terrys’ agent, when he was not.
Did the district court err by determining that the level of discipline imposed by the NREC was not excessive? John argued that a suspension served entirely on probation with a continuing education requirement and/or fine would have been more appropriate and that the sanction imposed will operate as a “‘death penalty’” for his business. The district court simply found that the sanction was not excessive and the Court agreed. The sanction imposed was well within the NREC’s authority.
Did the district court err by ordering a stay of execution, pending resolution of this appeal, of the discipline imposed against John? The State directed the Court’s attention to § 84-917(3) (concerning stays of agency decisions in appeals to district court under Administrative procedure Act) and argued that the provisions of this subsection should continue to apply when an agency decision is further appealed from the district court to this court.
The Court found it need not determine whether § 84-917(3) is applicable to further appeals of agency decisions from the district court to this court. Even if it were applicable, they found there is nothing in the record in this case to suggest that the district court would have been required to make findings on the criteria listed in the statute. The requirement in § 84-917(3) that the court must make findings on these criteria before granting relief is conditioned upon a finding by the agency that “its action on an application for stay or other temporary remedies is justified to protect against a substantial threat to the public health, safety, or welfare.” There is no such finding in the record before here.
Conclusion: The Court affirmed the decision of the district court in this case because it conforms to the law, is supported by competent evidence, and is not arbitrary, capricious, or unreasonable. AFFIRMED.
NCLE Teleseminar: Ethics in Litigation, Part 1 (Live Replay)