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Zornes v. Zornes

Supreme Court of Nebraska

December 18, 2015

ERIC M. ZORNES, AS TRUSTEE OF THE ERIC M. ZORNES REVOCABLE TRUST, APPELLANT AND CROSS-APPELLEE,
v.
JULIA A. ZORNES, AS TRUSTEE OF THE JULIA A. ZORNES REVOCABLE TRUST, APPELLEE AND CROSS-APPELLANT

Page 572

[Copyrighted Material Omitted]

Page 573

Appeal from the District Court for Lancaster County: Andrew R. Jacobsen, Judge.

James B. Luers and Krista M. Carlson, of Wolfe, Snowden, Hurd, Luers & Ahl, L.L.P., for appellant.

Jane F. Langan Mach and Sheila A. Bentzen, of Rembolt Ludtke, L.L.P., for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ. STACY, J., not participating.

OPINION

Page 574

[292 Neb. 272] Heavican, C.J.

INTRODUCTION

In this conversion suit, Eric M. Zornes, as trustee for his revocable trust, appeals the district court's summary judgment in favor of his ex-wife, Julia A. Zornes, as trustee of her revocable trust. We also review the district court's partition of two promissory notes. We reverse, and remand for further proceedings.

BACKGROUND

In 2006, Eric won a lottery with a group of coworkers who had pooled their money. With their new wealth, Eric and his wife, Julia, commenced a gifting plan to three family members: Julia's brothers, Andy Wolfe and Jason Wolfe, and Jason Reed, the husband of Eric's niece. To avoid taxes, these gifts were structured as loans with annual payment forgiveness. Each borrower made a promissory note for his loan, payable to Julia's and Eric's trusts jointly.

Andy's note was secured by a deed of trust for real property in Lincoln, Nebraska. Deciding to make a change, Andy sold his Lincoln property in July 2009 and purchased a new home with the sale proceeds. Julia had discussed the prospect of the sale with Eric and told him the new home would not cost Julia and Eric " any more or less money." In response, Eric told Julia she was " going to do what she was going to do."

[292 Neb. 273] Later that month, after the sale, Andy wired full payment on the note to Julia's individual savings account. Without informing Eric, Julia re-lent all but $22,154.66 of the proceeds to Andy's wife, Sara Whitney, for the purchase of the new home. Whitney made two notes for the loan, payable only to Julia's trust. Julia retained the surplus proceeds. There is some dispute as to whether Eric had knowledge of these transactions at that time.

A couple of weeks after Andy and Whitney paid the old note and made the new notes, Eric and Julia legally separated. In October 2009, Eric filed for divorce. During divorce settlement negotiations, Eric's attorney made reference several times to the promissory notes for Andy, Jason Wolfe, and Jason Reed. However, the final settlement agreement reached in August 2011 did not mention the promissory notes or the proceeds. Nothing in the record indicates the parties ever discussed the Whitney notes.

A year later, in August 2012, Julia's attorney sent a letter to Eric's attorney referencing " recent discussions" between them. The letter stated that Andy's note had been paid in full to Julia and that the proceeds were loaned to Whitney. In response, on October 19, one of Eric's attorneys sent a letter to Julia's attorney, demanding Eric's alleged share of the note proceeds.

Eric claims that he did not learn that Andy's house had been sold until March 2010. He further alleges he discovered sometime later, presumably around the time of the August 2012 letter, that Julia had retained the proceeds of the sale and lent money to Whitney. But Julia argues that Eric consented to her handling of the proceeds. Julia also asserts several affirmative defenses, including, as relevant to this appeal, accord and satisfaction.

Eric filed his complaint in this action on October 30, 2012, alleging ...


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