Walker v. Probandt

29 Neb.App. 704

958 N.W.2d 459

Dennis WALKER et al., appellees,

v. John PROBANDT, appellee,andJohn Raynor, appellant.

No. A-20-299.

Court of Appeals of Nebraska.

Filed March 30, 2021.

Patrick M. Heng, of Patrick M. Heng Law Office, P.C., L.L.O., for appellant.

Diana J. Vogt and James D. Sherrets, of Sherrets, Bruno & Vogt, L.L.C., Omaha, for appellees.

Riedmann, Bishop, and Welch, Judges.

Riedmann, Judge.

INTRODUCTION

Upon remand, a debtor sought to have a judgment against him vacated on the basis that the district court lacked subject matter jurisdiction to adjudicate the case. The district court denied the motion to vacate on the basis that the relief sought fell outside the directions of the mandate. We determine that the district court erred in determining that it lacked authority to address the issue, but affirm its decision denying the motion to vacate.

BACKGROUND

The relevant facts of this matter originated upon remand from this court to the district court for Dawson County. In Walker v. Probandt , 25 Neb. App. 30, 902 N.W.2d 468 (2017), John Raynor was found liable on a promissory note originally issued by First State Bank (FSB) and subsequently assigned to Skyline Acquisition, LLC (Skyline). An appeal was brought, and Raynor filed a cross-appeal. This court affirmed in part, and in part reversed and remanded to the district court with directions. Various other parties and issues were involved in the underlying action, but this present appeal is limited to the proceedings on mandate as they relate to Raynor's liability on the promissory note.

In our previous opinion, we provided specific directions on remand, stating:

We conclude that the district court abused its discretion in declining to enter default judgment against [John] Probandt on the fraud/misappropriation cause of action, and we remand the cause to the district court with directions to enter a default judgment against Probandt in the amount of $2,184,530.

We find no error in the decision to enter judgment in favor of Skyline against Raynor. However, the district court erred in failing to award a credit against the judgment for the amounts received in settlement, and we remand the cause for recalculation of this amount.

Id. at 52, 902 N.W.2d at 484.

Upon remand, the district court entered an order on August 8, 2018, spreading the mandate, entering judgment against Probandt in the amount of $2,184,530, and setting an evidentiary hearing to determine the credit to be applied to the judgment against Raynor. Thereafter, on November 21, Raynor sought an order vacating the judgment for want of subject matter jurisdiction. He claimed that the district court lacked subject matter jurisdiction to decide liability on the FSB promissory note because FSB assigned the note to Skyline in June 2011, but Skyline was not made a party to the litigation until trial (and after the statute of limitations had run); therefore, Raynor claimed that all pleadings filed by FSB during the interim that sought recovery on the note were a nullity. The evidentiary hearing to determine the credit to be applied to the judgment was held on July 30, 2019.

In a subsequent written order, the court ruled that on mandate, it did not have jurisdiction to vacate the judgment as requested by Raynor; rather, it was confined to do only what the appellate court mandated be done. It therefore denied the motion to vacate. It then determined that a $450,000 credit was to be applied to the judgment against Raynor and entered an order accordingly. Raynor filed a motion for new trial, and after a hearing, the court determined that it incorrectly calculated the amount of credit. It entered a new order—awarding $1,600,000 in credit and adjusting the interest—and issued judgment in the amount of $735,932.34. Raynor appeals.

ASSIGNMENTS OF ERROR

Raynor assigns, restated and renumbered, that the district court erred in failing to (1) grant his motion to dismiss for lack of subject matter jurisdiction, (2) find that Raynor was an accommodation party under Neb. U.C.C. § 3-419(a) (Reissue 2020), and (3) find that a judgment against Raynor is unsupported and inconsistent with § 3-419.

STANDARD OF REVIEW

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 that of the inferior court. K N Energy, Inc. v. Cities of Broken Bow et al. , 248 Neb. 112, 532 N.W.2d 32 (1995).

ANALYSIS

On remand, Raynor sought to have the judgment entered against him vacated on the basis that the district court lacked subject matter jurisdiction over the case. The district court denied the motion, stating that it lacked jurisdiction to consider it, given the limited nature of the mandate. Raynor argues the court erred in denying his motion, because subject matter jurisdiction may be raised at any stage of the proceedings. We agree that the district court had jurisdiction to consider the motion.

Raynor asserts that the district court lacked subject matter jurisdiction for 3½ years because the action was originally commenced with FSB as a party but when FSB assigned the note to Skyline in June 2011, Skyline became an indispensable party. Because Skyline was not added as a party until January 7, 2015, Raynor reasons that the amended complaints filed during that time period which sought recovery from him on the promissory note were a nullity. He asserts, "It is indisputable that, as the assignee of [FSB], P-Skyline was an indispensable party under Neb. Rev. Stat. § 25-323 . There is no subject matter jurisdiction without the assignee, P-Skyline, prosecuting the claim as is mandated by Neb. Rev. Stat. § 25-301 ." Brief for appellant at 16.

The absence of an indispensable party to a controversy deprives the court of subject matter jurisdiction to determine the controversy and cannot be waived. Panhandle Collections v. Singh , 28 Neb. App. 924, 949 N.W.2d 554 (2020). Lack of subject matter jurisdiction may be raised at any time by any party or by the court sua sponte. J.S. v. Grand Island Public Schools , 297 Neb. 347, 899 N.W.2d 893 (2017).

Through his motion to dismiss, Raynor raised the issue of the court's subject matter jurisdiction. The district court concluded that because the matter was before it on remand, it was limited to the specific directions of the mandate. Its understanding of the constraints of a remand is supported in Nebraska case law. See, e.g., TransCanada Keystone Pipeline v. Tanderup , 305 Neb. 493, 941 N.W.2d 145 (2020) (stating we have consistently held that when lower court is given specific instructions on remand, it must comply with specific instructions and has no discretion to deviate from mandate). However, as stated above, lack of subject matter jurisdiction may be raised at any stage of a proceeding.

In Bolan v. Boyle , 222 Neb. 826, 387 N.W.2d 690 (1986), defendants raised the issue of the court's subject matter jurisdiction for the first time on remand through a motion for summary judgment. The district court granted the motion and dismissed the case. On appeal, the plaintiff argued that it was error for the district court to entertain a jurisdictional challenge on remand. The Nebraska Supreme Court rejected the argument. Although it recognized that the first appeal "turned out to be an exercise in futility," it concluded:

[T]his court cannot act to impose or grant subject matter jurisdiction on a court which otherwise does not have it. As we have reaffirmed recently, "parties cannot confer subject matter jurisdiction upon a judicial tribunal by either acquiescence or consent." Riedy v. Riedy [, 222 Neb.] 310, 312, 383 N.W.2d 742, 744 (1986). Subject matter jurisdiction may not be waived.

Bolan v. Boyle , 222 Neb. at 827, 387 N.W.2d at 691.

Bolan v. Boyle, supra , involved a general remand as opposed to a specific mandate. See TransCanada Keystone Pipeline v. Tanderup, supra (explaining general remand is reversal of judgment and remand of cause for further proceedings without specific direction as to what trial court should do, whereas specific mandate directs court as to what it must do on mandate). In cases of specific remand, Nebraska case law is clear that when a lower court is given specific instructions on remand, it must comply with the specific instructions and has no discretion to deviate from the mandate. Id. Insofar as tension arises between the court's inability to act beyond the scope of a specific mandate and its inability to address a matter over which it is claimed it has no jurisdiction, we determine it must address the issue of jurisdiction.

Addressing the same conflict, an Illinois appellate court explained:

The mandate of this court directing the trial court to proceed to review the assessment was, of course, based on the assumption that the circuit court had jurisdiction of the subject matter. Accordingly, we hold that it was proper for the trial court to entertain the Department's objection to jurisdiction.

Fredman Bros. Furniture v. Ill. Dept. of Rev. , 129 Ill. App. 3d 38, 40, 471 N.E.2d 1037, 1038, 84 Ill. Dec. 271, 272 (1984).

Our opinion in Walker v. Probandt , 25 Neb. App. 30, 902 N.W.2d 468 (2017), was also premised on the assumption that the district court had subject matter jurisdiction of the case. Raynor raised the issue on remand through a motion to vacate, and the court denied the motion not on the merits, but, rather, under the belief it was without jurisdiction to address the issue. Because lack of subject matter jurisdiction may be raised at any time, we determine the court erred in not addressing the issue.

While an appellate court will not ordinarily decide an issue not passed upon by the trial court, see Capitol City Telephone v. Nebraska Dept. of Rev. , 264 Neb. 515, 650 N.W.2d 467 (2002), an appellate court has the duty to determine whether the trial court had subject matter jurisdiction to enter the final order sought to be reviewed, and to...