Arnold v. Walz

306 Neb. 179

944 N.W.2d 747

Joy ARNOLD, Personal Representative of the Estate of Beverly Freiden, deceased, appellee,

v. Michael J. WALZ, an individual, appellant,andJohn Doe et al., appellees.

No. S-19-619.

Supreme Court of Nebraska.

Filed June 19, 2020

James R. Place, of Place Law Office, Omaha, for appellant.

Edward F. Pohren, of Smith, Slusky, Pohren & Rogers, L.L.P., Omaha, for appellee Joy Arnold.

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

Miller-Lerman, J.

NATURE OF CASE

Michael J. Walz, the appellant, leased real property from Beverly Freiden, and the lease included an option to purchase the property at any time before the end date of the lease. During Walz’ tenancy, Beverly Freiden died. Joy Arnold (Arnold), an appellee, and Jon Freiden were appointed copersonal representatives of her estate. Beverly Freiden's will provided that the property would remain in the estate, or if sold, the proceeds would be divided variously as indicated later in this opinion. After the term of Walz’ initial option ended, Jon Freiden and Walz executed several lease modifications which purportedly extended Walz’ option to buy the real property. Walz eventually claimed he owned the property. Arnold was reappointed personal representative of the estate and petitioned the district court for Douglas County seeking a declaratory judgment and to quiet title to the property in the estate. Arnold claimed that the property had not been distributed and remained in the estate, and she alleged that the purported lease modification contracts between Jon Freiden and Walz were improper and unenforceable. The district court granted Arnold's motion for summary judgment and quieted titled in favor of the estate. Walz appealed. We affirm.

STATEMENT OF FACTS

Beverly Freiden died on December 8, 2012. In the subsequent related probate proceedings in the county court for Douglas County, Arnold and Jon Freiden were appointed copersonal representatives of the estate. Beverly Freiden's last will and testament stated, inter alia, that her real property, an unimproved lot located at the southwest corner of 18th and Jackson Streets in Omaha, Nebraska,

may either be sold or retained by my personal representatives as they shall determine, and upon sale, whenever it occurs, my son, Jon Freiden, shall receive the first $25,000 from the sale and the remainder of the net sale proceeds shall be paid over to my grandson, Bart Arnold for his care; provided however, if I am not the owner of said real estate at the time of my death, then I give, devise and bequeath from my estate to my son, Jon Freiden, the sum of $25,000.00 and I give, devise and bequeath the reminder of the net sale proceeds received when the property was sold to my grandson, Bart Arnold for his care.

Arnold and Jon Freiden, as copersonal representatives, did not sell the property. They filed an informal closing by verified statement on December 31, 2013, which stated, consistent with Neb. Rev. Stat. § 30-24,117(b) (Reissue 2016), that Arnold and Jon Freiden's appointments as copersonal representatives "shall terminate one year after the filing hereof." The schedule of distribution regarding Beverly Freiden's assets provided that "[c]ash and real estate" would be distributed to Jon Freiden. The parties agree that this reference to "real estate" was undoubtedly describing the real property at issue in this case. It is undisputed that there is no evidence of recording (such as a deed), and the will did not designate the real estate as an asset to be given wholly to Jon Freiden.

The appellant, Walz, had leased the real property from Beverly Freiden since at least 2012 and was interested in eventually buying the real property. The dispute before this court arises from an option-to-purchase provision originally included in a February 1, 2012, lease between Beverly Freiden and Walz. The lease/purchase agreement was for a period of tenancy to terminate on July 31, 2014. The 2012 option to purchase (2012 Option) provided as follows:

6. OPTION TO PURCHASE : The Tenant shall, simultaneously with the execution hereof, have an option to purchase the leased premises under the following terms and conditions:

a. The option price at the end of the lease term to be $20,000.00, which option price shall be available to the Tenant only if all of the lease payments as set forth herein have been paid. The Tenant may exercise his option at any time before July 31, 2014, however, the option price shall then be $20,000.00, and in addition, an amount equal to the number of unpaid rental installments (as set forth above) multiplied by $250.00.

b. Tenant must exercise this option in writing at the address of the Landlord or her agent or representative at any time during the term of the lease as set forth herein.

c. Upon exercise of this option, the Tenant shall close on the purchase not later than August 15, 2014.

Walz did not exercise the 2012 Option during the original tenancy.

In July 2014, Walz presented Jon Freiden with a document titled "MODIFICATION TO LEASE/PURCHASE AGREEMENT" (2014 Agreement). Jon Freiden signed the document as a "[r]epresentative for Beverly Freiden" on August 4; Walz and Arnold did not sign the document. The 2014 Agreement stated that "both parties had entered into a prior agreement regarding the parking lot" and provided:

Both parties wish to make the following modifications to the original agreement.

1. ... Walz is to be responsible for the payment of the real estate taxes for this property.

2. The balance owed as of August 1, 2014 for the purchase of this property is $15,000.

3. ... Walz will continue to make monthly payments in the amount of $250 each month due on the first of the month and late after the 15th of each month. If the payment is received late, a $25 late fee will be due and payable.

4. This agreement is for one year, ending on July 31, 2015. At the end of this agreement the balance of $12,000 will be paid off or this agreement will be renegotiated at that time.

5. Jon Freiden will provide to ... Walz, legal documents showing that as son for Beverly Freiden, he has authority to sell this property on behalf of Beverly Freiden.

Walz did not exercise the option to purchase the real property by July 31, 2015. After the terms of the 2014 Agreement ended, Jon Freiden and Walz executed another "MODIFICATION TO LEASE/PURCHASE AGREEMENT" (2015 Agreement) on August 28, 2015. It stated, inter alia:

2. The balance owed as of August 1, 2015 for the purchase of this property is $11,750.

3. ... Walz will continue to make monthly payments in the amount of $250 each month due on the first of the month and late after the 15th of each month. If the payment is received late, a $25 late fee will be due and payable.

4. This agreement is for one year, ending on July 31, 2016. At the end of this agreement the balance will be paid off or this agreement will automatically renew at the same terms and conditions as the previous year.

Based on the 2015 Agreement, Walz began to exercise control of the property and claims that he had purchased the property from Jon Freiden.

In January 2017, Arnold petitioned the county court for Douglas County to reopen the estate of Beverly Freiden, alleging that assets of the estate were not fully distributed and needed to be distributed. On January 24, that court reappointed Arnold as personal representative of the estate. Jon Freiden, whose appointment as personal representative had expired, was not involved in the second appointment. See § 30-24,117(b).

Arnold, as sole personal representative of the estate, filed a complaint in the district court for Douglas County seeking declaratory judgment and quiet title to the property. The complaint alleged that Walz had not timely exercised the 2012 Option, and it indicated that there was no enforceable modification. Walz filed an answer denying the allegations.

Arnold moved for summary judgment. Arnold claimed that the real property had never been distributed and remained in the estate, and Walz claimed that either he had purchased the property from Beverly Freiden according to a modified option agreement or the property was distributed to Jon Freiden, who sold it to Walz.

The district court held a hearing on the motion for summary judgment and received evidence but agreed not to hear oral arguments until after the parties could review the evidence and submit briefs. The parties submitted briefs but did not provide notice of a hearing. The court took the matter under advisement. In its written order, filed December 6, 2018, the district court granted Arnold's motion for summary judgment and quieted title in favor of the estate. The court found that Walz had not exercised the 2012 Option, because he had not attempted to exercise it before July 31, 2014, and had not " ‘close[d] on the purchase not later than August 15, 2014,’ " as required by the contract. The district court also found that the subsequent 2014 Agreement and 2015 Agreement were unenforceable with respect to the option to purchase, because the option had ended on its own terms and there was no longer a valid option to exercise by Walz as a holdover tenant.

On December 13, 2018, Walz filed a "Motion for New Hearing and/or Motion to Reconsider and Set Aside Order Granting Summary Judgment on December 6, 2018." Walz sought reconsideration of the summary judgment order, because the court had not held oral arguments on the motion and had made "[e]rrors in [l]aw ... contrary to the [e]vidence." At the hearing on Walz’ motion, in addition to identifying the aforementioned claimed procedural irregularities with the motion for summary judgment, Walz claimed that the court had failed to consider several of his arguments related to the validity of the 2014 Agreement and 2015 Agreement and attacked the judgment on the basis of errors of substantive law. The district court denied Walz’ motion to reconsider, and Walz appeals.

ASSIGNMENTS OF ERROR

Walz assigns,...