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O'Connor v. Kearny Junction, L.L.C.

Supreme Court of Nebraska

March 3, 2017

Raymond J. O'Connor and Jennifer S. O'Connor. HUSBAND AND WIFE, APPELLEES,
KEARNY Junction, L.L.C., a Nebraska limited LIABILITY COMPANY, APPELLANT.

         1. Specific Performance: Equity: Appeal and Error. An action for specific performance sounds in equity, and on appeal, an appellate court tries factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent from the conclusion reached by the trial court.

         2. Equity: Appeal and Error. On appeal from an equity action, when credible evidence is in conflict on material issues of fact, the court considers and may give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.

         3. Actions: Final Orders: Appeal and Error. The law-of-the-case doctrine reflects the principle that an issue litigated and decided in one stage of a case should not be relitigated at a later stage. The doctrine requires a final order. A party is not bound by a court's findings in an order that it was not required to appeal.

         4. Summary Judgment: Final Orders. Partial summary judgments are usually considered interlocutory. They must ordinarily dispose of the whole merits of the case to be considered final.

         5. Estoppel. When a party has unequivocally asserted a position in a proceeding and a court accepts that position, judicial estoppel can bar that party's inconsistent claim against the same or a different party in a later proceeding.

         6. __ . Judicial estoppel should be applied with caution within a single action.

         7. Contracts: Specific Performance. In an action where specific performance is decreed, courts ordinarily attempt to place the parties in [295 Neb. 982] the same position in which they would have been if the contract had been performed at the time agreed upon.

         8. Damages: Proof. While damages need not be proved with mathematical certainty, neither can they be established by evidence which is speculative and conjectural.

         9. __: __ . Mitigation of damages is an affirmative defense, as to which the defendant has the burden of proof.

         10. Vendor and Vendee: Specific Performance. The general rule is that from the time when a contract of sale of land should be performed the land is in equity the property of the vendee held by the vendor in trust for him, and the purchase price is the property of the vendor held in trust for him by the vendee, and that upon specific performance the vendor is liable to account for the rents and profits and the vendee for the interest on the purchase price.

         11. Equity. Equity treats things agreed to be done as actually performed.

         12. Courts: Equity. Where a situation exists which is contrary to the principles of equity and which can be redressed within the scope of judicial action, a court of equity will devise a remedy to meet the situation.

         Appeal from the District Court for Buffalo County: Mark J. Young, Judge. Affirmed as modified.

          Kenneth F. George and Luke M. Simpson, of Ross, Schroeder & George, L.L.C., for appellant.

          Arend R. Baack, of Leininger, Smith, Johnson, Baack, Placzek & Allen, for appellees.

          Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

          Cassel, J.


         The assignees of a purchase option in a lease of real estate sought specific performance. The landlord initially resisted, asserting that a condition precedent had not been fulfilled. The landlord later moved for specific performance, which was ordered, but now appeals from a judgment awarding equitable monetary relief for lost rentals. We conclude that based on the content of the motion and the resulting order, the landlord [295 Neb. 983] was judicially estopped from asserting the condition precedent in avoidance of equitable monetary relief. Because we also conclude that the landlord was entitled to offset the monetary award with the interest on the unpaid purchase price, we modify that part of the judgment. As so modified, we affirm the court's judgment.


         Kearny Junction, L.L.C. (Landlord), leased commercial real estate to a third party (Tenant), who was not a party to this suit. The lease agreement provided an option to purchase "conditional upon [Tenant's] full and faithful performance of all of [Tenant's] duties and obligations under the Lease." These words created a condition precedent.

         In 2007, Tenant assigned this purchase option to Raymond J. O'Connor and Jennifer S. O'Connor, husband and wife (Assignees). At the time, Tenant had fully performed all obligations under the lease.

         But for several years after the assignment, Tenant paid less than the full amount of the rent. The parties disputed who discovered the underpayment. But Landlord conceded that it had agreed Tenant could pay the delinquent rent and continue the lease. Tenant did so and thereafter paid the full monthly rental payments.

         1. Assignees' Attempt to Exercise Option

         In October 2013, Assignees attempted to exercise the purchase option. At the time of the attempted exercise, no rent was past due. Nonetheless, Landlord rebuffed their attempt, returning their tendered downpayment. Landlord maintained that because of the rental underpayments, Tenant had failed to satisfy the condition precedent. Further, Landlord maintained that the condition precedent could never be met.

         Assignees objected and argued that the default had been cured. But Landlord contended that with respect to the purchase option, the acceptance of rent did not waive the default.

         [295 Neb. 984] 2. Settlement Negotiations and Lawsuit

         Assignees and Landlord attempted to resolve the dispute by negotiating through counsel. After these negotiations were unsuccessful, Assignees filed a complaint in March 2014 and sought (1) a declaratory judgment determining that they had a valid purchase option and had duly exercised that option to purchase and (2) specific performance of the purchase option and costs associated with the action. Landlord filed an answer that asserted the option was lost and forfeited upon the default in rent.

         Despite its stated position, Landlord offered in October 2014 to sell the property to Assignees and value the property pursuant to the terms of the purchase option by averaging three appraisals. However, a disagreement arose as to the selection of the three appraisers and the negotiations apparently halted.

         In November 2014, Assignees obtained permission to amend their complaint. Before they filed their amended complaint, Landlord filed a motion. The district court treated it as a motion for ...

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