Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Cattle National Bank & Trust Co. v. Watson

Supreme Court of Nebraska

June 24, 2016

The Cattle National Bank & Trust Co., appellee,
v.
Robert Watson and Shona Watson, appellees, and Bill Watson and Rebecca Watson, appellants. The Cattle National Bank & Trust Co., appellee,
v.
Robert Watson, appellant and cross-appellee, Shona Watson, appellee and cross-appellee, and Bill Watson and Rebecca Watson, appellees and cross-appellants.

         1. Summary Judgment: Appeal and Error. An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law.

         2. __: __. In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment was granted and gives that party the benefit of all reasonable inferences deducible from the evidence.

         3. Contracts: Judgments: Appeal and Error. The meaning of a contract is a question of law, in connection with which an appellate court has an obligation to reach its conclusions independently of the determinations made by the court below.

         4. Actions: Parties: Judgments: Appeal and Error. Neb. Rev. Stat. § 25-1315(1) (Reissue 2008) requires, in cases with multiple claims or parties, an explicit adjudication with respect to all claims or parties or, failing such explicit adjudication of all claims or parties, an express determination that there is no just reason for delay of an appeal of an order disposing of less than all claims or parties and an express direction for the entry of judgment as to those adjudicated claims or parties.

          [293 Neb. 944] 5. Summary Judgment: Proof. A party moving for summary judgment must make a prima facie case by producing evidence to demonstrate that the movant is entitled to judgment if the evidence were uncontroverted at trial.

         6. __: __. Once the moving party makes a prima facie case, the burden to produce evidence showing the existence of a material issue of fact that prevents judgment as a matter of law shifts to the party opposing the motion.

         7. Contracts: Guaranty: Debtors and Creditors: Words and Phrases. A guaranty is a contract by which the guarantor promises to make payment if the principal debtor defaults.

         8. Contracts: Guaranty. A guaranty is interpreted using the same general rules as are used for other contracts.

         9. Contracts: Guaranty: Appeal and Error. To determine the obligations of the guarantor, an appellate court relies on general principles of contract and guaranty law.

         10. Guaranty: Liability. When the meaning of a guaranty is ascertained, or its terms are clearly defined, the liability of the guarantor is controlled absolutely by such meaning and limited to the precise terms.

         11. Actions: Contracts: Guaranty. A suit on a contractual guaranty presents an action at law.

         12. Actions: Parties. The purpose of Neb. Rev. Stat. § 25-301 (Reissue 2008) is to prevent the prosecution of actions by persons who have no right, title, or interest in the cause.

         13. Actions: Parties: Standing. The focus of the real party in interest inquiry is whether the party has standing to sue due to some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy.

         14. __: __: __. The purpose of the real party in interest inquiry is to determine whether the party has a legally protectable interest or right in the controversy that would benefit by the relief to be granted.

         15. Declaratory Judgments. In Nebraska, a party may not simply move the court for a declaratory judgment.

         16. Right to Counsel: Effectiveness of Counsel. A self-represented litigant will receive the same consideration as if he or she had been represented by an attorney, and, concurrently, that litigant is held to the same standards as one who is represented by counsel.

         17. Judgments: Garnishment: Jurisdiction. A garnishment in aid of execution issued before judgment is without jurisdiction and void, and not merely irregular.

         18. Judgments: Debtors and Creditors. An execution issued without a judgment to support it is void.

          [293 Neb. 945] 19. Jurisdiction: Appeal and Error. Before reaching the legal issues presented for review, it is the power and duty of an appellate court to determine whether it has jurisdiction over the matter before it, irrespective of whether the issue is raised by the parties.

         20. Jurisdiction: Final Orders: Appeal and Error. For an appellate court to acquire jurisdiction over an appeal, there must be a final order or final judgment entered by the court from which the appeal is taken.

         21. Final Orders: Appeal and Error. There are three types of final orders that may be reviewed on appeal under the provisions of Neb. Rev. Stat. § 25-1902 (Reissue 2008): (1) an order which affects a substantial right in an action and which in effect determines the action and prevents a judgment, (2) an order affecting a substantial right made during a special proceeding, and (3) an order affecting a substantial right made on summary application in an action after judgment is rendered.

         22. Final Orders: Words and Phrases. A substantial right under Neb. Rev. Stat. § 25-1902 (Reissue 2008) is an essential legal right.

         23. Final Orders: Appeal and Error. A substantial right is affected if an order affects the subject matter of the litigation, such as diminishing a claim or defense that was available to an appellant before the order form which an appeal is taken.

         24. Final Orders. Substantial rights under Neb. Rev. Stat. § 25-1902 (Reissue 2008) include those legal rights that a party is entitled to enforce or defend.

         25. Summary Judgment: Claims: Garnishment. An interlocutory order granting summary judgment on fewer than all of the claims in an action cannot serve as the judgment required for an execution or garnishment in aid of execution.

         26. Final Orders. Since Neb. Rev. Stat. 25-1315(1) (Reissue 2008) is substantially similar to Fed.R.Civ.P. 54(b), federal cases construing rule 54(b) may be used for guidance in determining when a decision is a "final judgment" for purposes of § 25-1315(1).

         27. Appeal and Error. Appellate courts do not generally consider arguments and theories raised for the first time on appeal.

         28. Judgments: Collateral Attack. A void order may be attacked at any time in any proceeding.

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

          Bill Watson and Rebecca Watson, pro se, in Nos. S-15-512 and S-15-872.

         [293 Neb. 946] John M. Guthery, of Perry, Guthery, Haase & Gessford, PC, L.L.O., for appellee The Cattle National Bank & Trust Co., in Nos. S-15-512 and S-15-872.

          Robert Watson, pro se, in No. S-15-872.

          Justin J. Knight, of Perry, Guthery, Haase & Gessford, PC, L.L.O., and Michael C. Cox, of Koley Jessen, PC, L.L.O., for appellee The Cattle National Bank & Trust Co., in No. S-15-872.

          Heavican, C.J., Wright, Connolly, Cassel, and Kelch, JJ.

          Cassel, J.

         I. INTRODUCTION

         A bank's action against four guarantors on their respective personal guaranties of an entity's debts has generated three appeals by various guarantors. The first appeal was taken after the district court granted the bank's motions for summary judgment but failed to adjudicate a cross-claim. The second appeal was taken from execution and garnishment proceedings that occurred while the first appeal was pending. Because of the undisposed cross-claim, the Nebraska Court of Appeals dismissed the first appeal. One guarantor then moved to vacate the summary judgment order. The district court denied the motion and simultaneously dismissed the pending cross-claim. The third appeal followed. We consider it first.

         The third appeal raises three issues. First, were the guarantors bound by the second page of the document? They were, because the first page incorporated the second page and defined "Undersigned" to include them. Second, can a guarantor assert defenses arising from the entity's underlying debt? For various reasons, he cannot. Finally, did the district court err in failing to vacate the summary judgment order? Because the guarantor conflated the order's initial lack of finality with its validity, the court correctly overruled the motion. In the third appeal, we affirm the district court's judgment.

          [293 Neb. 947] In the second appeal, the guarantors now argue a new ground-that the execution and garnishment proceedings were void because they were commenced prior to judgment. Although the interlocutory order granting summary judgment motions was not void, it was not a "judgment" sufficient to support execution or garnishment in aid of execution. The interlocutory order ultimately became part of a judgment. But this did not validate the void process. We therefore vacate the void execution and garnishments.

         II. BACKGROUND

         1. Guaranties

         The action proceeded against four members of the Watson family-Robert Watson, Shona Watson, Bill Watson, and Rebecca Watson (collectively the Watsons). Robert, Shona, and Rebecca were members of Reserve Design, LLC (Reserve), a construction business. In 2007, the Watsons signed identical personal guaranties for the debts that Reserve owed to The Cattle National Bank & Trust Co. (Bank). The guaranties expressly included Reserve's future indebtedness.

         Each of the guaranties consisted of a single sheet of paper with print on both sides. The pages were labeled "page 1 of 2" and "page 2 of 2." The Watsons' signatures appear at the bottom of page 1, and there is no dispute that they signed page 1. Although page 2 included what appear to be lines for initials, none of the Watsons initialed or otherwise signed page 2.

         Several provisions on page 1 are relevant. First, a definition stated: "'Undersigned' shall refer to all persons who sign this guaranty, severally and jointly." This definition appeared immediately below the last signature line and within its width. The term "Undersigned, " appearing in the same initially capitalized form, was used throughout the document. Second, a provision on the first page stated:

[T]he Undersigned guarantees to [the Bank] the payment and performance of each and every debt, liability and obligation of every type and description which [Reserve] [293 Neb. 948] may now or at any time hereafter owe to [the Bank] (whether such debt, liability or obligation now exists or is hereafter created or incurred[)].

         Third, the first page provided that the liability of "the Undersigned" was "UNLIMITED." Finally, page 1 stated, in bold type: "This guaranty includes the additional provisions on page 2, all of which are made a part hereof."

         Page 2 consisted of eight additional provisions. One pertained to the waiver of defenses. It stated, in relevant part:

The Undersigned waives any and all defenses, claims and discharges of [Reserve], or any other obligor, pertaining to Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the Undersigned will not assert, plead or enforce against [the Bank] any defense of . . . fraud . . . which may be available to [Reserve] or any other person liable in respect of any Indebtedness ....

         Another provided that the Bank could "enter into transactions resulting in the creation or continuance of Indebtedness, without any consent or approval by the Undersigned and without any notice to the Undersigned."

         2. Loan

         In 2010, 3 years after the guaranties had been given to the Bank, the Bank loaned Reserve $40, 000 (loan). Robert signed a loan agreement on behalf of Reserve as "Rob Watson, Manager." And he extended the loan's maturity date on three later occasions, signing each extension as "Rob Watson, Manager." Robert claims that the Bank's loan officer promised him that if he signed the loan on behalf of Reserve, the officer would later rewrite it as a third mortgage for Robert's personal residence. The loan was never rewritten as Robert's personal obligation.

         In 2012, Reserve failed to make a required payment on the loan, and the Bank declared default and demanded payment from the Watsons on the guaranties. The Watsons refused to [293 Neb. 949] pay. The Bank filed a complaint for breach of guaranty, naming the Watsons as defendants.

         Robert's amended answer included a counterclaim for fraud in the inducement. He claimed that he was fraudulently induced to sign the loan in his capacity as manager of Reserve. He also claimed that he was not bound by the terms on page 2 of the guaranty, because he did not "undersign" it. Bill and Rebecca's answer asserted numerous defenses, but it did not assert the absence of signatures or initials on page 2. Shona's answer included a cross-claim against Robert.

         3. Summary Judgment

         Robert and the Bank each filed motions for summary judgment as to the breach of guaranty claims and Robert's counterclaim. One of Robert's motions included a motion "for Declaratory Judgment on contractual effect of Personal Guarantees."

         The district court sustained the Bank's motions and overruled Robert's motions in an October 17, 2014, order (hereinafter summary judgment order). Regarding the Bank's claims for breach of guaranty, it observed that there was no dispute that the Watsons all signed the guaranties for the debt of Reserve. And it noted that the guaranties provided that the Bank could enter transactions resulting in the creation or continuance of indebtedness without the Watsons' notice or approval.

         Regarding Robert's counterclaim for fraud in the inducement, the court first concluded that Robert was not a real party in interest, because Reserve and the Bank were the only two parties to the loan agreement. Therefore, because Reserve was not a party to the action, Robert could not raise a claim for fraud on its behalf. Second, it concluded that even if Reserve was a party to the action, the defense of fraud in the inducement was not available to the Watsons, because it was waived under the terms on page 2. Finally, the court concluded that Robert's motion for a declaratory judgment was improper, because the request was not made in the pleadings.

          [293 Neb. 950] The court entered "judgment" for the Bank "against the [Watsons] jointly and severally in the amount of $30, 000 plus interest of $1, 839.45." The summary judgment order did not address Shona's cross-claim against Robert, and it did not direct the entry of final judgment pursuant to Neb. Rev. Stat. § 25-1315 (Reissue 2008).

         Robert, Bill, and Rebecca filed the first appeal. It was docketed in the Court of Appeals as case No. A-14-1028.

         4. Execution and Garnishment

         While the first appeal was pending, the Bank apparently filed requests for writs of execution and garnishment, but its requests are not in our record. The district court appears to have issued the requested writs, but they, too, are not in our record. In response, Robert and Bill filed objections to garnishment and Bill and Rebecca filed an objection to execution. These filings are also not in our record.

         The court overruled the objections in two June 8, 2015, orders, which are in our record. One concluded that the Bank could proceed with the garnishments, because Robert and Bill failed to show that they did not owe the debts in question. And the other concluded that the Bank could proceed with the execution, because Bill and Rebecca made no showing that their property was exempt. According to the bill of exceptions, there was no discussion at the hearing regarding whether the summary judgment order was appealable or whether it was a "judgment" sufficient to support a writ of execution or garnishment.

         Bill and Rebecca quickly filed the second appeal. It is docketed in this court as case No. S-15-512. Although the parties argue that an execution sale of a vehicle owned by Bill and Rebecca took place after June 8, 2015, neither the writ of execution nor any return of the writ is included in our record.

         To the extent shown in our record, the events that followed are summarized below:

[293 Neb. 951] • July 8, 2015: Court of Appeals dismissed the first appeal, concluding that the summary judgment order was not final and appealable, because Shona's cross-claim against Robert was still pending.
• July 17, 2015: Robert filed motion in district court to vacate the summary judgment order.
•August 25, 2015: District court dismissed Shona's cross-claim and overruled Robert's motion to vacate.
• September 17, 2015: Robert filed notice of the third appeal, which was taken from the summary judgment order and the order overruling his motion to vacate. The third appeal is docketed in this court as case No. S-15-872.
• September 18, 2015: Bill and Rebecca filed a notice of appeal from the summary judgment order. Our clerk treated this as a second notice of appeal[1] in the third appeal.

         We moved the second and third appeals to our docket, [2] and we consolidated them for argument and disposition.

         III. ASSIGNMENTS OF ERROR

         1. Second Appeal (No. S-15-512)

         Bill and Rebecca assign that the district court erred by "[i]ssuing an order to execute and garnish on the statutorily deficient" summary judgment order.

         2. Third Appeal (No. S-15-872)

         Robert assigns, restated and consolidated, that the district court erred in (1) finding that there was no genuine issue of material fact regarding whether he is bound by the terms on page 2, (2) failing to consider his defense of fraud, (3) failing to find that the Bank has unclean hands, (4) finding that he was not a real party in interest in his counterclaim, (5) failing to consider his request for a declaratory judgment, and (6) failing to vacate the summary judgment order after ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.