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Case Summaries
Conveyances: Fraud: Proof

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The Nebraska Supreme Court here reverses a district court’s grant of a motion for directed verdict in a case involving fraud.

State of Florida v. Countrywide Truck Ins. Agency, 275 Neb. 842 (2008)

Supreme Court Headnotes

Directed Verdict:

1.  Appeal and Error. In reviewing a trial court’s ruling on a motion for directed verdict, an appellate court must treat the motion as an admission of the truth of all competent evidence submitted on behalf of the party against whom the motion is directed; such being the case, the party against whom the motion is directed is entitled to have every controverted fact resolved in its favor and to have the benefit of every inference which can reasonably be deduced from the evidence.

Conveyances:

1.  Fraud. The question whether a transfer of property was made with intent to defraud creditors is a question of fact.

Debtors and Creditors:

1.  Conveyances: Fraud: Proof. The burden is upon the creditor to prove by clear and convincing evidence that fraud existed in a questioned transaction.

Evidence:

1.  Proof: Words and Phrases. Clear and convincing evidence is that amount of evidence which produces in the trier of fact a firm belief or conviction about the existence of a fact to be proved.

Date Filed and Case No.: June 6, 2008. No. S-06-1220.

Internet Address: http://www.supremecourt.ne.gov/opinions/2008/june/jun6/s06-1220.pdf

Court Appealed From: District Court for Douglas County: Peter C. Bataillon, Judge.

Attorneys for the Appeal: William E. Gast and Michael D. McClellan for Countrywide Truck Insurance Agency, Inc., a Florida Corporation, appellee, and Countrywide Insurance Agency, Inc., a Nebraska corporation, and David F. Fulkerson, appellants. Robert F. Craig and Jenna B. Taub for State of Florida ex rel. Department of Insurance of the State of Florida. appellee.

Supreme Court: Heavican, C.J., Wright, Connolly, Gerrard, Stephan, McCormack, and Miller-Ferman, JJ.

Authored By: Wright, J.

Summary: The State of Florida (Florida), on the relation of the Department of Insurance of the State of Florida, as the receiver of United Southern Assurance Company (USAC), an insolvent insurance company, brought suit against Countrywide Truck Insurance Agency, Inc. (Truck); Countrywide Insurance Agency, Inc. (Agency); and David L. Fulkerson to recover money Truck allegedly owed USAC. Florida alleged that Agency was the “alter ego” of Truck and that Fulkerson was the operator, director, and “controlling person” of both Truck and Agency. Florida sought relief collectively against Truck, Agency, and Fulkerson.

     In 1989, USAC and Truck entered into an agreement, pursuant to which Truck functioned as an insurance agent on behalf of USAC in Nebraska, collecting premiums for USAC insurance products. Truck's principal office was in Omaha and David L. Fulkerson managed Truck, functioned as its president, and was one of the five directors of the corporation. USAC and Truck were Florida corporations. USAC was regulated by the Florida Department of Insurance (the FDI) and owned Truck.

     Before procuring monthly insurance premiums for USAC, Truck would collect 2.4 times the amount of the monthly premium from the insured and place that amount in a customer deposit account. Thereafter, when the insured paid the monthly premium into the customer deposit, Truck withdrew the monthly premium paid it to USAC as it came due, which left an amount equal to 2.4 times the monthly premium in the customer deposit account. Then the insured, often on the road, would be covered if late in paying the monthly premium

     In 1991, Concord General Corporation (Concord), a holding company, purchased USAC which was in poor financial condition. (Concord subsequently sold USAC to JBW Corporation, which was also owned by Beresford-Wood.) As a condition for approval of the purchase and the continued licensure of USAC, the FDI required Concord to remove certain assets or subsidiaries owned by USAC and replace them with cash. Concord consequently took $2 million from Truck's customer deposit account and used that money to purchase Truck from USAC. Concord replaced the $2 million with a note receivable on Truck's balance sheet and extended the time for payment of premiums to USAC from 25 days to 90 days, which enabled Truck to use the premium money to replenish the $2 million taken from the customer deposit account. Concord retained Fulkerson as Truck's president, but he was instructed that Bruce Ricci, a board member of Concord, US AC, and Truck, would be his supervisor.

     FDI regulations led it to order USAC to reduce the amount of insurance it wrote because the value of two of its subsidiary companies had depreciated. The reduction of USAC's insurance created problems for Truck. Accordingly, Concord decided to sell Truck quickly. Fulkerson entered into a "Stock Purchase Agreement" in which Concord/JBW Corporation agreed to sell Truck's stock. However, because Beresford-Wood had pledged Truck's stock as collateral, Concord/JBW Corporation could not deliver the stock and the deal was put on hold. The parties then entered into an "Interim Management Agreement." Fulkerson agreed to manage Truck until the parties could close the deal or until such time as the parties otherwise mutually agreed.

     Concord/JBW Corporation was unable to produce the stock so Fulkerson exercised his option to purchase Truck's assets and assigned this option to Agency, a Nebraska corporation that he and USA Insurance Group, Inc., owned in equal shares. Agency acquired all of Truck's assets except (1) Truck's bank accounts and petty cash accounts, (2) Concord's $2 million promissory note owed to Truck, (3) the lawsuits pending in which Truck was a plaintiff, and (4) Truck's accounts receivable. Fulkerson continued in a similar position at Agency as he had held at Truck. Subsequently, Truck canceled all USAC's policies, and Agency rewrote most of the policies with Acceleration National Insurance Company (Acceleration).

     A Florida Court placed USAC into receivership for the purpose of liquidation appointing FDI as receiver. In January 1998, the State of Florida, on the relation of the FDI, filed a petition in the district court alleging that Truck collected premiums for USAC but failed to remit them pursuant to the parties' agency agreement. The petition alleged that Agency was the alter ego of Truck and that Fulkerson was the operator, director, and controlling person of both Truck and Agency. Florida sought relief against Truck, Agency, and Fulkerson on nine separately designated causes of action: conversion of trust funds, statutory obligation to remit premium, enforcement of security interest, fraudulent conveyance, receivership fraudulent conveyance, conversion, breach of contract, breach of fiduciary duty, and accounting. Each cause of action referred to Truck, Agency, and Fulkerson collectively as "defendants."

     Truck did not file a responsive pleading, and Florida moved for default judgment against Truck. Agency and Fulkerson moved to stay the entry of default judgment against Truck until after trial. The district court overruled the motion to stay and entered judgment against Truck. Agency and Fulkerson appealed and the Nebraska Supreme Court concluded that the district court erred in entering the default judgment. State of Florida v. Countrywide Truck Ins. Agency, 258 Neb. 113, 602 N.W.2d 432 (1999) (Countrywide I). They held that although Truck was in default, the district court should have deferred entry of judgment until the claims against Agency and Fulkerson were adjudicated, reversed and vacated the judgment and remanded the cause for further proceedings consistent with our opinion.

     Thereafter, a jury trial commenced. Fulkerson testified that all of the money held in the customer deposit account ($2,325,401) was either returned to the insureds or applied to new policies for the benefit of the insureds. At the conclusion of the trial, the district court sustained Florida’s motion for a directed verdict, finding Truck, Agency, and Fulkerson jointly and severally liable for fraudulently transferring $2,235,361.95 from Truck to Agency. Agency and Fulkerson appealed, asserting that the uncontroverted evidence showed that no such transfer occurred.

Did the district court err in directing a verdict in favor of Florida and in finding there was a fraudulent transfer of money from Truck to Agency? Agency and Fulkerson claimed that the district court erred in finding there was a fraudulent transfer from Truck to Agency and the Nebraska Supreme Court agreed. The record in this case showed that Truck transferred to Agency $2,325,401. However, there was evidence presented that this money was in the customer deposit account and was used to purchase replacement insurance for the former clients of Truck. The record does not establish that any other transfer occurred.

     Florida characterized the named defendants as a single entity. It alleged that Agency was the alter ego of Truck and referred to Fulkerson as the “controlling person” of both corporations. Based on these allegations, the Court concluded in Countrywide I that no one defendant could be liable unless all were liable. USAC and Truck were owned by Concord or JBW Corporation at all times relevant. Concord and JBW Corporation were, in turn, owned and controlled by Beresford-Wood. Fulkerson was Truck’s president, but he was supervised by Ricci, who was a board member of Concord, USAC, and Truck.

     Fulkerson did not own stock in any of these companies. He was one of five members of Truck’s board of directors. In 1997, Truck’s board of directors voted to sell Truck to Agency. As a part of the agreement, Agency was given the right to collect and use the premiums of Truck to fund Truck’s customer deposit account up to $2,480,431.

     The evidence introduced by Agency and Fulkerson supports the fact that the customer deposit account was in fact funded with premiums collected by Truck. There is evidence that the money from this account was either returned to the insureds or applied to new policies purchased for the benefit of such insureds. There was no evidence that Fulkerson used the funds from the premiums in this account for his own benefit. There was evidence that the only transfer that occurred from Truck to Agency was money in the customer deposit account that was used to purchase replacement insurance.

     Whether Agency or Fulkerson committed a fraudulent transfer was a question of fact for the jury. Therefore, the Court said that the district court erred in granting Florida’s motion for directed verdict and in entering judgment in favor of Florida.

Conclusion: The Nebraska Supreme Court ruled that the district court erred in granting a directed verdict in favor of Florida. Giving all reasonable inferences to Agency and Fulkerson, there is a question of fact whether a fraudulent transfer occurred between Truck and Agency. There is evidence that the transfer of $2,235,401 represented the amount held in the customer deposit account on behalf of Truck’s insureds and that Agency used this money to purchase insurance for Truck’s insureds. There is no evidence of any other transfer. REVERSED AND VACATED, AND CAUSE REMANDED FOR FURTHER PROCEEDINGS.


Directed Verdit: Appeal and Error: Evidence

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The Nebraska Supreme Court here reverses a district court’s grant of a motion for directed verdict in a case involving fraud.

State of Florida v. Countrywide Truck Ins. Agency, 275 Neb. 842 (2008)

Supreme Court Headnotes

Directed Verdict:

1.  Appeal and Error. In reviewing a trial court’s ruling on a motion for directed verdict, an appellate court must treat the motion as an admission of the truth of all competent evidence submitted on behalf of the party against whom the motion is directed; such being the case, the party against whom the motion is directed is entitled to have every controverted fact resolved in its favor and to have the benefit of every inference which can reasonably be deduced from the evidence.

Conveyances:

1.  Fraud. The question whether a transfer of property was made with intent to defraud creditors is a question of fact.

Debtors and Creditors:

1.  Conveyances: Fraud: Proof. The burden is upon the creditor to prove by clear and convincing evidence that fraud existed in a questioned transaction.

Evidence:

1.  Proof: Words and Phrases. Clear and convincing evidence is that amount of evidence which produces in the trier of fact a firm belief or conviction about the existence of a fact to be proved.

Date Filed and Case No.: June 6, 2008. No. S-06-1220.

Internet Address: http://www.supremecourt.ne.gov/opinions/2008/june/jun6/s06-1220.pdf

Court Appealed From: District Court for Douglas County: Peter C. Bataillon, Judge.

Attorneys for the Appeal: William E. Gast and Michael D. McClellan for Countrywide Truck Insurance Agency, Inc., a Florida Corporation, appellee, and Countrywide Insurance Agency, Inc., a Nebraska corporation, and David F. Fulkerson, appellants. Robert F. Craig and Jenna B. Taub for State of Florida ex rel. Department of Insurance of the State of Florida. appellee.

Supreme Court: Heavican, C.J., Wright, Connolly, Gerrard, Stephan, McCormack, and Miller-Ferman, JJ.

Authored By: Wright, J.

Summary: The State of Florida (Florida), on the relation of the Department of Insurance of the State of Florida, as the receiver of United Southern Assurance Company (USAC), an insolvent insurance company, brought suit against Countrywide Truck Insurance Agency, Inc. (Truck); Countrywide Insurance Agency, Inc. (Agency); and David L. Fulkerson to recover money Truck allegedly owed USAC. Florida alleged that Agency was the “alter ego” of Truck and that Fulkerson was the operator, director, and “controlling person” of both Truck and Agency. Florida sought relief collectively against Truck, Agency, and Fulkerson.

     In 1989, USAC and Truck entered into an agreement, pursuant to which Truck functioned as an insurance agent on behalf of USAC in Nebraska, collecting premiums for USAC insurance products. Truck's principal office was in Omaha and David L. Fulkerson managed Truck, functioned as its president, and was one of the five directors of the corporation. USAC and Truck were Florida corporations. USAC was regulated by the Florida Department of Insurance (the FDI) and owned Truck.

     Before procuring monthly insurance premiums for USAC, Truck would collect 2.4 times the amount of the monthly premium from the insured and place that amount in a customer deposit account. Thereafter, when the insured paid the monthly premium into the customer deposit, Truck withdrew the monthly premium paid it to USAC as it came due, which left an amount equal to 2.4 times the monthly premium in the customer deposit account. Then the insured, often on the road, would be covered if late in paying the monthly premium

     In 1991, Concord General Corporation (Concord), a holding company, purchased USAC which was in poor financial condition. (Concord subsequently sold USAC to JBW Corporation, which was also owned by Beresford-Wood.) As a condition for approval of the purchase and the continued licensure of USAC, the FDI required Concord to remove certain assets or subsidiaries owned by USAC and replace them with cash. Concord consequently took $2 million from Truck's customer deposit account and used that money to purchase Truck from USAC. Concord replaced the $2 million with a note receivable on Truck's balance sheet and extended the time for payment of premiums to USAC from 25 days to 90 days, which enabled Truck to use the premium money to replenish the $2 million taken from the customer deposit account. Concord retained Fulkerson as Truck's president, but he was instructed that Bruce Ricci, a board member of Concord, US AC, and Truck, would be his supervisor.

     FDI regulations led it to order USAC to reduce the amount of insurance it wrote because the value of two of its subsidiary companies had depreciated. The reduction of USAC's insurance created problems for Truck. Accordingly, Concord decided to sell Truck quickly. Fulkerson entered into a "Stock Purchase Agreement" in which Concord/JBW Corporation agreed to sell Truck's stock. However, because Beresford-Wood had pledged Truck's stock as collateral, Concord/JBW Corporation could not deliver the stock and the deal was put on hold. The parties then entered into an "Interim Management Agreement." Fulkerson agreed to manage Truck until the parties could close the deal or until such time as the parties otherwise mutually agreed.

     Concord/JBW Corporation was unable to produce the stock so Fulkerson exercised his option to purchase Truck's assets and assigned this option to Agency, a Nebraska corporation that he and USA Insurance Group, Inc., owned in equal shares. Agency acquired all of Truck's assets except (1) Truck's bank accounts and petty cash accounts, (2) Concord's $2 million promissory note owed to Truck, (3) the lawsuits pending in which Truck was a plaintiff, and (4) Truck's accounts receivable. Fulkerson continued in a similar position at Agency as he had held at Truck. Subsequently, Truck canceled all USAC's policies, and Agency rewrote most of the policies with Acceleration National Insurance Company (Acceleration).

     A Florida Court placed USAC into receivership for the purpose of liquidation appointing FDI as receiver. In January 1998, the State of Florida, on the relation of the FDI, filed a petition in the district court alleging that Truck collected premiums for USAC but failed to remit them pursuant to the parties' agency agreement. The petition alleged that Agency was the alter ego of Truck and that Fulkerson was the operator, director, and controlling person of both Truck and Agency. Florida sought relief against Truck, Agency, and Fulkerson on nine separately designated causes of action: conversion of trust funds, statutory obligation to remit premium, enforcement of security interest, fraudulent conveyance, receivership fraudulent conveyance, conversion, breach of contract, breach of fiduciary duty, and accounting. Each cause of action referred to Truck, Agency, and Fulkerson collectively as "defendants."

     Truck did not file a responsive pleading, and Florida moved for default judgment against Truck. Agency and Fulkerson moved to stay the entry of default judgment against Truck until after trial. The district court overruled the motion to stay and entered judgment against Truck. Agency and Fulkerson appealed and the Nebraska Supreme Court concluded that the district court erred in entering the default judgment. State of Florida v. Countrywide Truck Ins. Agency, 258 Neb. 113, 602 N.W.2d 432 (1999) (Countrywide I). They held that although Truck was in default, the district court should have deferred entry of judgment until the claims against Agency and Fulkerson were adjudicated, reversed and vacated the judgment and remanded the cause for further proceedings consistent with our opinion.

     Thereafter, a jury trial commenced. Fulkerson testified that all of the money held in the customer deposit account ($2,325,401) was either returned to the insureds or applied to new policies for the benefit of the insureds. At the conclusion of the trial, the district court sustained Florida’s motion for a directed verdict, finding Truck, Agency, and Fulkerson jointly and severally liable for fraudulently transferring $2,235,361.95 from Truck to Agency. Agency and Fulkerson appealed, asserting that the uncontroverted evidence showed that no such transfer occurred.

Did the district court err in directing a verdict in favor of Florida and in finding there was a fraudulent transfer of money from Truck to Agency? Agency and Fulkerson claimed that the district court erred in finding there was a fraudulent transfer from Truck to Agency and the Nebraska Supreme Court agreed. The record in this case showed that Truck transferred to Agency $2,325,401. However, there was evidence presented that this money was in the customer deposit account and was used to purchase replacement insurance for the former clients of Truck. The record does not establish that any other transfer occurred.

     Florida characterized the named defendants as a single entity. It alleged that Agency was the alter ego of Truck and referred to Fulkerson as the “controlling person” of both corporations. Based on these allegations, the Court concluded in Countrywide I that no one defendant could be liable unless all were liable. USAC and Truck were owned by Concord or JBW Corporation at all times relevant. Concord and JBW Corporation were, in turn, owned and controlled by Beresford-Wood. Fulkerson was Truck’s president, but he was supervised by Ricci, who was a board member of Concord, USAC, and Truck.

     Fulkerson did not own stock in any of these companies. He was one of five members of Truck’s board of directors. In 1997, Truck’s board of directors voted to sell Truck to Agency. As a part of the agreement, Agency was given the right to collect and use the premiums of Truck to fund Truck’s customer deposit account up to $2,480,431.

     The evidence introduced by Agency and Fulkerson supports the fact that the customer deposit account was in fact funded with premiums collected by Truck. There is evidence that the money from this account was either returned to the insureds or applied to new policies purchased for the benefit of such insureds. There was no evidence that Fulkerson used the funds from the premiums in this account for his own benefit. There was evidence that the only transfer that occurred from Truck to Agency was money in the customer deposit account that was used to purchase replacement insurance.

     Whether Agency or Fulkerson committed a fraudulent transfer was a question of fact for the jury. Therefore, the Court said that the district court erred in granting Florida’s motion for directed verdict and in entering judgment in favor of Florida.

Conclusion: The Nebraska Supreme Court ruled that the district court erred in granting a directed verdict in favor of Florida. Giving all reasonable inferences to Agency and Fulkerson, there is a question of fact whether a fraudulent transfer occurred between Truck and Agency. There is evidence that the transfer of $2,235,401 represented the amount held in the customer deposit account on behalf of Truck’s insureds and that Agency used this money to purchase insurance for Truck’s insureds. There is no evidence of any other transfer. REVERSED AND VACATED, AND CAUSE REMANDED FOR FURTHER PROCEEDINGS.


Judgments: Appeal and Error: Conditional Use of Special Exception Permit

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This is an appeal from the judgment of the district court, which affirmed the decision of a Board of Commissioners denying an application for a conditional use permit. The applicant contended that the district court erred by reviewing his appeal from the Board’s decision under the standard of review for error proceedings, arguing that the district court should have conducted a trial de novo pursuant to Neb. Rev. Stat. § 25-1937 (Reissue 1995). This opinion by the Nebraska Supreme Court concludes that because of legislation, an applicant such as the one here has the option of proceeding either by way of a petition in error or by filing an appeal under § 25-1937.

In re Application of Olmer, 275 Neb. 852 (2008)

Supreme Court Headnotes

Political Subdivisions:

1.  Appeal and Error. A party may seek review of a decision regarding a conditional use or special exception permit either by appealing to the district court under Neb. Rev. Stat. § 23-114.01(5) (Cum. Supp. 2006) or by filing a petition in error under Neb. Rev. Stat. § 25-1901 (Supp. 2007).

2.  Judgments: Appeal and Error. When a decision regarding a conditional use or special exception permit is appealed under Neb. Rev. Stat. § 23-114.01(5) (Cum. Supp. 2006) and a trial is held de novo under Neb. Rev. Stat. § 25-1937 (Reissue 1995), the findings of the district court shall have the effect of a jury verdict and the court’s judgment will not be set aside by an appellate court unless the court’s factual findings are clearly erroneous or the court erred in its application of the law.

Date Filed and Case No.: June 6, 2008. No. S-07-247.

Internet Address: http://www.supremecourt.ne.gov/opinions/2008/june/jun6/s07-247.pdf

Court Appealed From: District Court for Madison County: Patrick G. Rogers, Judge.

Attorneys for the Appeal: Stephen D. Mossman and James G. Egley for Mark Olmer, appellant. Joseph M. Smith for Madison County Board of Commissioners, appellee.

Supreme Court: Wright, Connolly, Gerrard, Stephan, McCormack, and Miller-Ferman , J J.

Not Participating: Heavican, C.J.

Authored By: Gerrard, J.

Summary: Mark Olmer filed an application for a conditional use permit to allow a “swine finishing operation” in Madison County, Nebraska. After hearings before the Madison County Planning Commission, the planning commission recommended to the Madison County Board of Commissioners (the Board) approve Olmer’s application with certain conditions. The Board held hearings on Olmer’s application and received into evidence various exhibits and heard the testimony of several individuals. After all of the evidence was presented, the Board issued a resolution which set forth in detail its findings of fact and denying Olmer’s application for a conditional use permit.

     Olmer, within 30 days of the issuance of that resolution, filed a “Notice of Appeal” with the county commissioners informing them of his intent to appeal the Board’s decision to the Madison County District Court. Olmer then filed a "Petition on Appeal” in the district court, setting forth his grounds for appeal. In his "Petition on Appeal,” Olmer stated that he “has properly perfected his appeal under Section 25-1937.”

     The district court held a trial on a joint stipulated record including, among other things, the minutes of the hearings held before the Board, all of the exhibits offered and received by the Board and the stipulated record which included evidence that was not presented to the Board.

     One of the issues presented to the district court was whether Olmer’s appeal from the Board’s decision is governed by Neb. Rev. Stat. § 25-1901 and is therefore treated as a review on a petition in error or whether his appeal is governed by § 25-1937 which requires a trial de novo in the district court. The district court found that the Board, in denying Olmer’s conditional use permit, acted as a tribunal exercising judicial functions and that therefore, Olmer’s appeal should be treated as a petition in error. Therefore, the court determined that Olmer was not entitled to a trial de novo, nor could the court receive additional evidence that was not offered at the hearing before the Board. The court determined that Olmer had met all of the jurisdictional requirements for filing a petition in error, that it had jurisdiction to review the Board’s decision and relying on the standard of review for error proceedings, found that the Board acted within its jurisdiction and that its findings were supported by some competent evidence in the record. Accordingly, the court affirmed the Board’s decision denying Olmer’s application. Olmer appealed.

What is the proper procedure for an appeal and proper standard of review for an appeal of a denial of a conditional use permit by a county board of commissioners? In Mogensen v. Board of Supervisors, 268 Neb. 26, 679 N.W.2d 413 (2004) the Court had ruled that the appeal procedure in Neb. Rev. Stat. §§ 23-168.01 to 23-168.04 (Reissue 1997) foreclosed the ability to appeal a decision of the board of supervisors to the district court through a petition in error under § 25-1901. In response to the circumstances presented there and a similar case, the Legislature amended § 23-114.01(5) so thatappeals from a planning commission, county board, or board of supervisors are not to be made to the board of adjustment. Instead, these appeals are now to be taken directly to the district court.

     The Board here, in denying Olmer’s application, was exercising judicial functions which decisions are generally reviewed through the filing of a petition in error. However, the Court found that § 23-114.01(5) clearly provides for a right of appeal to the district court, without setting forth any procedure for prosecuting the appeal. Therefore, the appeal procedure in Neb. Rev. Stat. § 25-1937 is also implicated and there is nothing in § 23-114.01(5), nor in § 25-1937, that purports to remove the right to proceed in error under § 25-1901. Thus, the Court concluded that under the circumstances presented here, Olmer had the option of filing either a petition in error under § 25-1901 or an appeal under § 25-1937. Olmer specifically referenced § 25-1937 as his chosen method of appeal and the Court ruled that the district court erred in treating Olmer’s appeal as if it were a petition in error.

Did Olmer properly perfect his appeal to the district court? Pursuant to § 25-1937 “the procedure for appeal to the district court shall be the same as for appeals from the county court to the district court in civil actions.” Section 25-2729 governs the procedure for appeals from county court to district court and § 25-2729(l)(a) requires that in order to perfect an appeal from the county court, the appealing party must file a notice of appeal with the clerk of the county court within 30 days after the entry of the judgment or final order.

     Olmer argued that he has complied by filing, within 30 days of the resolution, a “Notice of Appeal” with the county commissioners of Madison County. As § 25-2729(l)(a) was intended to apply to appeals from county court, the Court noted it cannot be applied “literally” to the present case. Applying this statutory provision to the circumstances presented here by analogy, the Court said that, as applicable here, § 25-2729(l)(a), in essence, requires that the appealing party file a notice of appeal with the lower tribunal or decision-maker within 30 days after entry of the judgment. The record establishes that Olmer has complied with this requirement. The record further establishes that the other requirements for appeal to the district court were met. Therefore, the Court concluded that Olmer has met the jurisdictional requirements for filing an appeal to the district court.

What is the appellate standard of review in a situation like this? Olmer has chosen to appeal the Board’s decision under § 25-1937. After reflecting on confusion in the statutes (as to the district court’s trial de novo on appeal, and how a Court of Appeals should review the district court’s ultimate decision) the Court noticed that an appeal under § 25-1937 is comparable to the manner in which appeals have previously been taken to a district court from a decision of a small claims court. “And in those cases, we have held that when reviewing the decision of a district court that has conducted a trial de novo upon appeal from a small claims court, the judgment of the district court has the effect of a jury verdict and should not be set aside unless clearly wrong.” The Court reminded that evidence must be considered in the light most favorable to the successful party, with evidentiary conflicts being resolved in favor of the successful party, who is entitled to every reasonable inference that may be drawn from the evidence.

     Because of the similarities between that procedure and an appeal under § 25-1937, the Court concluded that a comparable standard of review should be applied.

     They disagreed with Olmer’s suggestion that their review of the district court’s decision is de novo on the record, and to the extent In re Dissolution of School Dist. No. 22, 216 Neb. 89, 341 N.W.2d 918 (1983) holds otherwise, “it is disapproved.” It is apparent under § 25-1937 that the Legislature intended a trial de novo in the district court for these types of appeals. Given such circumstances, in determining the standard of review for Courts of Appeals, the Court found no reason to deviate from the same deferential standard of review that apply to appeals from the district court in other civil law actions. “Thus, we conclude that when a decision regarding a conditional use or special exception permit is appealed under § 23-114.01(5) and a trial is held de novo under § 25-1937, the findings of the district court shall have the effect of a jury verdict and the court’s judgment will not be set aside by an appellate court unless the court’s factual findings are clearly erroneous or the court erred in its application of the law.”

     Because Olmer was entitled to a trial de novo under § 25-1937, the district court erred in reviewing Olmer’s appeal under the standard of review applicable for error proceedings. The district court also erred in refusing to consider the new facts and evidence presented by Olmer that were not originally in the record before the Board. “Given our deferential standard of review and the fact that we cannot, as a matter of law, determine whether Olmer is entitled to a conditional use permit, we remand this cause to the district court with directions to hold a trial de novo under § 25-1937 and to make the necessary findings of fact and conclusions of law” ruled the Court.

     The Court acknowledged and encouraged a trial de novo in the district court by way of a stipulated record, “as sensibly occurred in the present case.” They also recognized the potential burden that may be placed on district courts, and did not comment on the “wisdom or efficacy of having a trial de novo on an appeal from a decision of the county board regarding a conditional use or special exception permit.” The Court noted that it was not at liberty to ignore the clear mandate of § 23-114.01(5). “If more efficient and effective procedures for review are to be implemented, the Legislature is the body that must make such a policy determination.”

Conclusion: For the reasons discussed, the Nebraska Supreme Court reversed the judgment of the district court and remanded the cause with directions to conduct a trial de novo under § 25-1937. REVERSED AND REMANDED WITH DIRECTIONS.


Political Subdivisions: County Board: Appeal and Error

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This is an appeal from the judgment of the district court, which affirmed the decision of a Board of Commissioners denying an application for a conditional use permit. The applicant contended that the district court erred by reviewing his appeal from the Board’s decision under the standard of review for error proceedings, arguing that the district court should have conducted a trial de novo pursuant to Neb. Rev. Stat. § 25-1937 (Reissue 1995). This opinion by the Nebraska Supreme Court concludes that because of legislation, an applicant such as the one here has the option of proceeding either by way of a petition in error or by filing an appeal under § 25-1937.

In re Application of Olmer, 275 Neb. 852 (2008)

Supreme Court Headnotes

Political Subdivisions:

1.  Appeal and Error. A party may seek review of a decision regarding a conditional use or special exception permit either by appealing to the district court under Neb. Rev. Stat. § 23-114.01(5) (Cum. Supp. 2006) or by filing a petition in error under Neb. Rev. Stat. § 25-1901 (Supp. 2007).

2.  Judgments: Appeal and Error. When a decision regarding a conditional use or special exception permit is appealed under Neb. Rev. Stat. § 23-114.01(5) (Cum. Supp. 2006) and a trial is held de novo under Neb. Rev. Stat. § 25-1937 (Reissue 1995), the findings of the district court shall have the effect of a jury verdict and the court’s judgment will not be set aside by an appellate court unless the court’s factual findings are clearly erroneous or the court erred in its application of the law.

Date Filed and Case No.: June 6, 2008. No. S-07-247.

Internet Address: http://www.supremecourt.ne.gov/opinions/2008/june/jun6/s07-247.pdf

Court Appealed From: District Court for Madison County: Patrick G. Rogers, Judge.

Attorneys for the Appeal: Stephen D. Mossman and James G. Egley for Mark Olmer, appellant. Joseph M. Smith for Madison County Board of Commissioners, appellee.

Supreme Court: Wright, Connolly, Gerrard, Stephan, McCormack, and Miller-Ferman , J J.

Not Participating: Heavican, C.J.

Authored By: Gerrard, J.

Summary: Mark Olmer filed an application for a conditional use permit to allow a “swine finishing operation” in Madison County, Nebraska. After hearings before the Madison County Planning Commission, the planning commission recommended to the Madison County Board of Commissioners (the Board) approve Olmer’s application with certain conditions. The Board held hearings on Olmer’s application and received into evidence various exhibits and heard the testimony of several individuals. After all of the evidence was presented, the Board issued a resolution which set forth in detail its findings of fact and denying Olmer’s application for a conditional use permit.

     Olmer, within 30 days of the issuance of that resolution, filed a “Notice of Appeal” with the county commissioners informing them of his intent to appeal the Board’s decision to the Madison County District Court. Olmer then filed a "Petition on Appeal” in the district court, setting forth his grounds for appeal. In his "Petition on Appeal,” Olmer stated that he “has properly perfected his appeal under Section 25-1937.”

     The district court held a trial on a joint stipulated record including, among other things, the minutes of the hearings held before the Board, all of the exhibits offered and received by the Board and the stipulated record which included evidence that was not presented to the Board.

     One of the issues presented to the district court was whether Olmer’s appeal from the Board’s decision is governed by Neb. Rev. Stat. § 25-1901 and is therefore treated as a review on a petition in error or whether his appeal is governed by § 25-1937 which requires a trial de novo in the district court. The district court found that the Board, in denying Olmer’s conditional use permit, acted as a tribunal exercising judicial functions and that therefore, Olmer’s appeal should be treated as a petition in error. Therefore, the court determined that Olmer was not entitled to a trial de novo, nor could the court receive additional evidence that was not offered at the hearing before the Board. The court determined that Olmer had met all of the jurisdictional requirements for filing a petition in error, that it had jurisdiction to review the Board’s decision and relying on the standard of review for error proceedings, found that the Board acted within its jurisdiction and that its findings were supported by some competent evidence in the record. Accordingly, the court affirmed the Board’s decision denying Olmer’s application. Olmer appealed.

What is the proper procedure for an appeal and proper standard of review for an appeal of a denial of a conditional use permit by a county board of commissioners? In Mogensen v. Board of Supervisors, 268 Neb. 26, 679 N.W.2d 413 (2004) the Court had ruled that the appeal procedure in Neb. Rev. Stat. §§ 23-168.01 to 23-168.04 (Reissue 1997) foreclosed the ability to appeal a decision of the board of supervisors to the district court through a petition in error under § 25-1901. In response to the circumstances presented there and a similar case, the Legislature amended § 23-114.01(5) so thatappeals from a planning commission, county board, or board of supervisors are not to be made to the board of adjustment. Instead, these appeals are now to be taken directly to the district court.

     The Board here, in denying Olmer’s application, was exercising judicial functions which decisions are generally reviewed through the filing of a petition in error. However, the Court found that § 23-114.01(5) clearly provides for a right of appeal to the district court, without setting forth any procedure for prosecuting the appeal. Therefore, the appeal procedure in Neb. Rev. Stat. § 25-1937 is also implicated and there is nothing in § 23-114.01(5), nor in § 25-1937, that purports to remove the right to proceed in error under § 25-1901. Thus, the Court concluded that under the circumstances presented here, Olmer had the option of filing either a petition in error under § 25-1901 or an appeal under § 25-1937. Olmer specifically referenced § 25-1937 as his chosen method of appeal and the Court ruled that the district court erred in treating Olmer’s appeal as if it were a petition in error.

Did Olmer properly perfect his appeal to the district court? Pursuant to § 25-1937 “the procedure for appeal to the district court shall be the same as for appeals from the county court to the district court in civil actions.” Section 25-2729 governs the procedure for appeals from county court to district court and § 25-2729(l)(a) requires that in order to perfect an appeal from the county court, the appealing party must file a notice of appeal with the clerk of the county court within 30 days after the entry of the judgment or final order.

     Olmer argued that he has complied by filing, within 30 days of the resolution, a “Notice of Appeal” with the county commissioners of Madison County. As § 25-2729(l)(a) was intended to apply to appeals from county court, the Court noted it cannot be applied “literally” to the present case. Applying this statutory provision to the circumstances presented here by analogy, the Court said that, as applicable here, § 25-2729(l)(a), in essence, requires that the appealing party file a notice of appeal with the lower tribunal or decision-maker within 30 days after entry of the judgment. The record establishes that Olmer has complied with this requirement. The record further establishes that the other requirements for appeal to the district court were met. Therefore, the Court concluded that Olmer has met the jurisdictional requirements for filing an appeal to the district court.

What is the appellate standard of review in a situation like this? Olmer has chosen to appeal the Board’s decision under § 25-1937. After reflecting on confusion in the statutes (as to the district court’s trial de novo on appeal, and how a Court of Appeals should review the district court’s ultimate decision) the Court noticed that an appeal under § 25-1937 is comparable to the manner in which appeals have previously been taken to a district court from a decision of a small claims court. “And in those cases, we have held that when reviewing the decision of a district court that has conducted a trial de novo upon appeal from a small claims court, the judgment of the district court has the effect of a jury verdict and should not be set aside unless clearly wrong.” The Court reminded that evidence must be considered in the light most favorable to the successful party, with evidentiary conflicts being resolved in favor of the successful party, who is entitled to every reasonable inference that may be drawn from the evidence.

     Because of the similarities between that procedure and an appeal under § 25-1937, the Court concluded that a comparable standard of review should be applied.

     They disagreed with Olmer’s suggestion that their review of the district court’s decision is de novo on the record, and to the extent In re Dissolution of School Dist. No. 22, 216 Neb. 89, 341 N.W.2d 918 (1983) holds otherwise, “it is disapproved.” It is apparent under § 25-1937 that the Legislature intended a trial de novo in the district court for these types of appeals. Given such circumstances, in determining the standard of review for Courts of Appeals, the Court found no reason to deviate from the same deferential standard of review that apply to appeals from the district court in other civil law actions. “Thus, we conclude that when a decision regarding a conditional use or special exception permit is appealed under § 23-114.01(5) and a trial is held de novo under § 25-1937, the findings of the district court shall have the effect of a jury verdict and the court’s judgment will not be set aside by an appellate court unless the court’s factual findings are clearly erroneous or the court erred in its application of the law.”

     Because Olmer was entitled to a trial de novo under § 25-1937, the district court erred in reviewing Olmer’s appeal under the standard of review applicable for error proceedings. The district court also erred in refusing to consider the new facts and evidence presented by Olmer that were not originally in the record before the Board. “Given our deferential standard of review and the fact that we cannot, as a matter of law, determine whether Olmer is entitled to a conditional use permit, we remand this cause to the district court with directions to hold a trial de novo under § 25-1937 and to make the necessary findings of fact and conclusions of law” ruled the Court.

     The Court acknowledged and encouraged a trial de novo in the district court by way of a stipulated record, “as sensibly occurred in the present case.” They also recognized the potential burden that may be placed on district courts, and did not comment on the “wisdom or efficacy of having a trial de novo on an appeal from a decision of the county board regarding a conditional use or special exception permit.” The Court noted that it was not at liberty to ignore the clear mandate of § 23-114.01(5). “If more efficient and effective procedures for review are to be implemented, the Legislature is the body that must make such a policy determination.”

Conclusion: For the reasons discussed, the Nebraska Supreme Court reversed the judgment of the district court and remanded the cause with directions to conduct a trial de novo under § 25-1937. REVERSED AND REMANDED WITH DIRECTIONS.