Alpha Wealth Advisors, LLC v. Cook

313 Neb. 237

983 N.W.2d 526

ALPHA WEALTH ADVISORS, LLC, a Nebraska limited liability company, and Michael Hall, individually, appellants,

v.Jenna L. COOK, appellee.

No. S-21-972.

Supreme Court of Nebraska.

Filed January 13, 2023

Perry A. Pirsch, of Pirsch Legal Services, P.C., L.L.O., for appellants.

Jane D. Hansen, for appellee.

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

Funke, J.

INTRODUCTION

Alpha Wealth Advisors, LLC (Alpha Wealth), and Michael Hall (collectively the appellants) appeal the decision of the district court for Lancaster County, Nebraska, which granted directed verdicts against them. After a traffic accident, the appellants sued Jenna L. Cook for negligence, alleging that they lost commissions because the injuries that Hall received in the accident kept him from meeting with clients for several weeks. The district court found that there was insufficient evidence to submit those claims to a jury and granted Cook's motion for a directed verdict against the appellants on those claims. Finding no error, we affirm.

BACKGROUND

Hall and Cook were involved in a traffic accident in Lincoln, Nebraska, in 2019. Cook admits that she was at fault. Hall is a registered investment advisor and a partner in Alpha Wealth.

In suing Cook, the appellants sought damages because the soft tissue injuries that Hall received in the accident kept him from meeting with clients and potential clients for several weeks. The appellants alleged that Hall worked primarily with clients who have at least $500,000 to invest and that they received commissions of 1.18 percent or 5 percent on investments, as well as an additional .5 percent on certain investments in subsequent years. Accordingly, the appellants claimed that Hall's inability to meet clients decreased his "earnings" in the second quarter of 2019 by nearly $33,000. They similarly claimed that Alpha Wealth "lost, conservatively, over $71,000 in gross compensation for 2019 and $19,000 each year going forward." They sought damages for those losses and for Hall's medical expenses and pain and suffering.

A jury trial was held. The appellants presented testimony from Hall; Cassi Hillgren, operations manager for Alpha Wealth; David Rosenbaum, a forensic economist; and Robert Kallio, Hall's chiropractor.

HILLGREN'S TESTIMONY

Hillgren testified that she knew of at least three potential clients whom Hall was unable to meet after the accident. She stated that Hall typically met with 5 to 10 clients or potential clients per week, with "one or two out of ten" meetings resulting in new business. She indicated that she was familiar with the appellants’ "gross revenue," but was not asked to specify their revenue or their expenses.

Hillgren also testified that Hall's productivity and commissions dropped after the accident. She indicated that Alpha Wealth's expenses "are taken out" of the commissions of Hall and another agent and that it was "really hard for [them]" after the accident "because of the income that ... was no longer coming in." She attributed that decrease in revenue to the accident.

HALL'S TESTIMONY

Hall testified that he was unable to meet with three or four clients after the accident. According to Hall, over 90 percent of the people he meets with become clients. Hall explained that he and Alpha Wealth received a commission of between .5 and 3 percent on investments and, in certain cases, in subsequent years. He stated that those commissions were "gross revenue paid to Alpha Wealth" and that the company's expenses "come out of this gross revenue." He also testified that he is "by far" the "largest income producer for [his] firm." When asked how the accident "impacted the [company's] revenue stream," Hall stated that it "basically cost [him] a full month of work ... that amounts to $40,000 of revenue coming in, by me not being able to get out and see people."

On cross-examination, Hall testified that he "personally lost $32,000" after the accident and that "Alpha Wealth also lost income." He initially stated that the company's claim was "the same" as his, but later clarified that it was $71,000. He stated that his concern as to Alpha Wealth "is the future income from the people we would have got during that time.... The trails on all that business ... over the next five to ten years ...."

ROSENBAUM'S TESTIMONY

Rosenbaum testified that he reviewed "Hall's commission statements" from 2018 and 2019 and found a "variance of just over $32,000" between the commissions received in the second quarter of 2019 and the commissions received in other quarters. The appellants repeatedly attempted to elicit testimony from Rosenbaum that the accident caused that decrease. However, Cook objected on foundational grounds. The district court agreed, but noted that the appellants could make an offer of proof.

On cross-examination, Rosenbaum agreed that the commissions in any given month can reflect work with clients in prior months and that "whatever was going on in the second quarter may have been a result of ... the first quarter."

KALLIO'S TESTIMONY

Kallio testified that he had been Hall's chiropractor since 2011. The appellants repeatedly sought to have Kallio opine that the accident caused Hall to lose productivity. However, Cook objected to those questions on foundational grounds, and her objections were sustained. Kallio did testify that Hall's diagnoses after the accident would have made it painful to sit at a desk and work at a computer and that he advised Hall to "take more breaks."

On cross-examination, Kallio testified that Hall had a history of neck and back pain and was treated for such pain 3 days before the accident. Kallio also testified that 3 days after the accident, Hall stated on a medical form that he had been able to work since the accident and that his pain was "moderate."

At the conclusion of this testimony, the appellants rested their case without making an offer of proof. Cook then moved for a directed verdict against the appellants on their claims for lost commissions. As to Alpha Wealth, Cook argued that although the company is "listed as a plaintiff," no evidence had been submitted defining or explaining its claim. Similarly, Cook argued that there was no evidence to support Hall's claim for "lost earnings, lost commissions"; "[i]t's all speculation." Cook also indicated that she had initially understood Hall's claims to be his own, but that the appellants were now making claims on behalf of Alpha Wealth that suggested they were "asking for double damages."

The appellants countered that there was testimony regarding "gross revenue" lost by both of the appellants. They argued that Alpha Wealth's involvement had been clear from the start given that Alpha Wealth was named as a plaintiff and argued that it is a basic principle of agency law that the commissions Hall received while working as "an agent for his company" belong to the company. They also argued that Cook submitted nothing to suggest another explanation for the decrease in commissions and argued that a jury could reasonably infer from the testimony and evidence that Hall had suffered damages "in excess of $32,000."

Thereafter, the district court granted a directed verdict against Alpha Wealth and dismissed it from the case because "there was no evidence of any damages" to it. The district court also granted a directed verdict against Hall on his claims for lost commissions because the evidence submitted was insufficient for a jury to decide the issue of damages under Midlands Transp. Co. v. Apple Lines, Inc.¹ and inadequate to support an award of lost profits under Evergreen Farms v. First Nat. Bank & Trust .²

Hall's claims for medical expenses and pain and suffering were then submitted to the jury, which returned a verdict in his favor for $1,312. The district court accepted this verdict on the record, and Hall moved for additur, arguing that the amount awarded did not adequately compensate him. That motion was denied.

The appellants sought review by the Nebraska Court of Appeals, and we moved the matter to our docket.

ASSIGNMENTS OF ERROR

The appellants assign, restated, that the district court erred in concluding that, as a matter of law, there was no evidence of damages to Alpha Wealth or "lost income" to Hall and in instructing the jury to "disregard" Rosenbaum's testimony.

STANDARD OF REVIEW

Whether a party who commences an action has standing, and is therefore the real party in interest, presents a jurisdictional issue.³ When a jurisdictional question does not involve a factual dispute, determination of the issue is a matter of law which requires an appellate court to reach a conclusion independent from the trial court.⁴

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.⁵

ANALYSIS

ALPHA WEALTH'S DAMAGES

The appellants argue that the district court erred in granting a directed verdict against Alpha Wealth on its claim for damages because the testimony of "numerous witnesses" showed that the company "sustained damages" due to Hall's inability to meet with clients following the accident.⁶ They also argue that as a basic matter of agency law, the "revenue" that Hall produced while "working [as] an agent" for a limited liability company belongs to the company.⁷ Cook counters that the appellants "presented no evidence ... of any loss incurred by Alpha Wealth."⁸

Before reaching the merits of the legal issue presented for review, however, an appellate court must determine whether it has jurisdiction over the matter before it.⁹ A party must have standing before a court can...