Midwest Renewable Energy, LLC. appellant,
American Engineering Testing, Inc., et al., appellees.
Judgments: States. Whether the law of
Nebraska or that of another state controls the disposition of
an issue by a Nebraska court is an issue of law.
Jurisdiction: Statutes. Subject matter
jurisdiction and statutory interpretation present questions
Equity: Quiet Title. A quiet title action
sounds in equity.
Equity: Appeal and Error. On appeal from an
equity action, an appellate court resolves questions of law
and fact independently of the trial court's
Corporations: Partnerships. In cases
concerning limited liability companies, courts look to the
principles of corporate law when addressing areas of similar
functions, because a limited liability company is a hybrid of
the partnership and corporate forms.
Corporations: Actions. At common law, a
corporation's capacity to sue or be sued terminates when
the corporation is legally dissolved.
Corporations: Limitations of Actions: Abatement,
Survival, and Revival. Where a survival statute
continues the existence of a corporation for a certain period
after its dissolution for purposes of defending and
prosecuting suits, no action can be maintained by or against
it after the expiration of that period.
Abatement, Survival, and Revival. A survival
statute operates on the right or claim itself.
Corporations: States. The internal affairs
doctrine is a conflict-of-laws principle which recognizes
that only one state should have the authority to regulate a
corporation's internal affairs-matters peculiar to the
relationships among or between the corporation and its
current officers, directors, and shareholders-because
otherwise, a corporation could be faced with conflicting
Corporations. Neb. Rev. Stat. § 21-155
(Reissue 2012) incorporates the comments of the Revised
Uniform Limited Liability Company Act, which it was patterned
Corporations: States. Neb. Rev. Stat. §
21-155 (Reissue 2012) codifies the internal affairs doctrine,
Restatement (Second) of Conflict of Laws § 302 (1971),
for limited liability companies.
Corporations: States: Limitations of
Actions. The Restatement (Second) of Conflict of
Laws § 302 (1971) applies during the life of the
corporation and the winding-up process only. Once the
effective date of dissolution has passed and the corporation
is legally dissolved, however, the Restatement (Second) of
Conflict of Laws § 299 (1971) governs.
Corporations: States. Under Neb. Rev. Stat.
§ 21-155 (Reissue 2012), courts apply the dictates of
the Restatement (Second) of Conflict of Laws § 299
(1971) to require that the laws of a fully dissolved foreign
limited liability corporation's state of incorporation
governs its amenability.
Statutes: States. When the interpretation of
another state's statute is a question of first
impression, courts must interpret the statute by applying the
statutory interpretation standards of that state.
Judgments: Liens. The lien of a judgment is
merely an incident of the judgment and may not exist
independently of the judgment. It cannot be assigned unless
the judgment which it secures is also transferred.
Judgments: Actions: Assignments. A judgment,
as a chose in action, is assignable.
Assignments: Words and Phrases. An
assignment is a transfer vesting in the assignee all of the
assignor's rights in the property which is the subject of
Assignments: Actions. The assignee of a
chose in action acquires no greater rights than those of the
assignor, and takes it subject to all the defenses existent
at the time.
Assignments: Actions: Parties. The assignee
of a chose in action is the proper and only party who can
maintain the suit thereon. The assignor loses all right to
control or enforce an assigned right against the obligor.
Parties. Neb. Rev. Stat. § 25-323
(Reissue 2016) makes it the court's duty to require an
indispensable party be added to the litigation sua sponte
when one is absent and statutorily deprives a court of the
authority to determine a controversy absent all indispensable
Jurisdiction: Words and Phrases. Subject
matter jurisdiction includes a court's power to hear and
determine a case in the general class or category to which
the proceedings in question belong, but it also includes a
court's power to determine whether it has the authority
to address a particular question within a general class or
category that it assumes to decide or to grant the particular
Jurisdiction: Parties: Waiver. The absence
of an indispensable party to a controversy deprives the court
of subject matter jurisdiction to determine the controversy
and cannot be waived.
Jurisdiction: Appeal and Error. When a lower
court lacks the power, that is, the subject matter
jurisdiction, to adjudicate the merits of a claim, issue, or
question, an appellate court also lacks the power to
determine the merits of the claim, issue, or question
presented to the lower court.
Parties: Equity: Appeal and Error. When it
appears that all indispensable parties to a proper and
complete determination of an equity cause were not before the
district court, an appellate court will remand the cause for
the purpose of having such parties brought in.
Parties: Words and Phrases. Necessary
parties are parties who have an interest in the controversy,
and should ordinarily be joined unless their interests are
separable so that the court can, without injustice, proceed
in their absence.
An indispensable party to a suit is one whose interest in the
subject matter of the controversy is such that the
controversy cannot be finally adjudicated without affecting
the indispensable party's interest, or which is such that
not to address the interest of the indispensable party would
leave the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good
Parties: Equity: Final Orders. All persons
whose rights will be directly affected by a decree in equity
must be joined as parties in order that complete justice may
be done and that there may be a final determination of the
rights of all parties interested in the subject matter of the
Parties: Words and Phrases. All persons
interested in the contract or property involved in a suit are
necessary parties, and all persons whose interests therein
may be affected by the decree in equity are indispensable
from the District Court for Lincoln County: Richard A. Birch,
Judge. Vacated and remanded with direction.
J. Jungers for appellant.
William J. Troshynski, of Brouillette, Dugan &
Troshynski. PC, L.L.O., for appellees.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy. Kelch,
and Funke, JJ.
appeal concerns a quiet title action brought in the district
court for Lincoln County by the appellant, Midwest Renewable
Energy, LLC (Midwest Renewable), against several entities and
all known and unknown parties claiming an interest in its
real property located in Lincoln County, Nebraska. Western
Ethanol Company, LLC (Western Ethanol), was one of the named
parties alleged to claim an interest in the real estate.
Ethanol obtained a judgment lien on Midwest Renewable's
Lincoln County property after transcribing a California
judgment against Midwest Renewable with the district court
and filing a writ of execution on that judgment. Before
Midwest Renewable filed its quiet title action, Western
Ethanol dissolved and transferred its assets to its members.
Douglas Vind, the managing member of Western Ethanol, claimed
that Western Ethanol transferred the Midwest Renewable
judgment to him, but he was never made a party to the
trial on the merits, the court ruled that Western
Ethanol's judgment had been assigned to Vind and that the
judgment lien against the real estate owned by Midwest
Renewable in Lincoln County was still valid and subsisting.
The court then dismissed with prejudice Midwest
Renewable's action regarding Western Ethanol. Midwest
Renewable filed a motion to alter or amend the court's
order, which the court substantively overruled. Midwest
order to consider this appeal, we must determine whether
Western Ethanol, as a limited liability company, was amenable
to the present action; whether Vind was an indispensable
party to the controversies; and whether the court had subject
matter jurisdiction to determine if the judgment and the
judgment lien were assigned and remained valid and
that Western Ethanol was amenable to suit under Nevada law.
Further, we decide that Vind was an indispensable party to
the controversies decided by the court. Accordingly, his
absence from the litigation deprived the court of subject
matter jurisdiction over the issues of whether the judgment
and the judgment lien were assigned and whether they were
still valid and subsisting. Because the court erred in not
making Vind a party to the action sua sponte, we vacate the
court's memorandum opinion and judgment and remand the
cause with direction to make Vind a party.
Ethanol was a limited liability company formed under Nevada
law and registered in California. In September 2010, it
obtained a judgment against Midwest Renewable in California
for $30, 066.59, plus interest and costs. Western Ethanol
transcribed the foreign judgment with the district court for
Lincoln County in November 2010 and filed a writ of execution
on the judgment in September 2011.
Ethanol filed its articles of dissolution in Nevada on
November 12, 2013, and a certificate of cancellation in
California on November 21, both effective on December 31. In
both documents, Vind attested that Western Ethanol had
distributed all of its assets to its members.
September 2014, Midwest Renewable filed a petition to quiet
title claims to its Lincoln County property, an ethanol
manufacturing facility in Sutherland, Nebraska. In its
petition, Midwest Renewable named nine specific entities, the
property, and '"all persons having or claiming any
interest in said real estate, real names unknown, '"
under Neb. Rev. Stat. § 25-21, 113 (Reissue 2016).
Western Ethanol was one of the named parties.
February 5, 2015, Midwest Renewable filed a motion for
partial summary judgment against Western Ethanol and a motion
for default judgment against all parties who had failed to
answer or otherwise plead. Both motions were heard on
February 23. At the hearing on Midwest Renewable's motion
for partial summary judgment, an affidavit executed by
Vind-alleging that Western Ethanol had transferred its
Midwest Renewable judgment to Vind-was entered into evidence.
The record does not reflect that Vind filed an assignment of
the judgment with the district court in the prior case where
the judgment had been transcribed or provided notice of the
assignment to Midwest Renewable. Neither Vind, the other
parties, nor the court made Vind a party to the litigation.
court entered a default judgment against three of the named
parties and all of the unknown parties for failing to answer
the complaint. The court denied Midwest Renewable's
motion for partial summary judgment against Western Ethanol.
Midwest Renewable settled with the other parties. The matter
proceeded to trial against Western Ethanol as the only
trial, the court found, under Nevada law, that Western
Ethanol could defend itself against the action by entering an
appearance and asserting that its judgment lien had been
assigned to Vind. The court also found that Western Ethanol
had transferred its interest to Vind and that "he was
then the interested party."
court went on to address the merits of the quiet title
action, because it determined that "the validity of any
lien interest . . . Vind has in real estate of [Midwest
Renewable] is dependent upon validity of Western
Ethanol's judgment lien against [Midwest Renewable]. . .
. Vind's interest in the property flows directly from the
interest of Western Ethanol." The court stated that
neither Western Ethanol's dissolution nor the failure to
provide notice of the assignment to Midwest Renewable
canceled the judgment lien. Therefore, the court ruled that
the judgment lien "is and continues to be a valid and
subsisting judgment lien against real estate owned by
[Midwest Renewable] in Lincoln County, Nebraska."
Accordingly, the court dismissed the quiet title action
against Western Ethanol with prejudice.
Renewable then filed a motion to alter or amend the judgment,
arguing that Nebraska law allows a corporation to continue
defending itself only during the winding-up process and that
the court had already quieted the lien in Vind's name
when it issued its default judgment against unnamed parties.
The court overruled the motion, relying on its earlier order.
ASSIGNMENTS OF ERROR
Renewable assigns, reordered and restated, as error the
court's findings that (1) Western Ethanol owned the
judgment in question on the date of trial and (2) the
judgment and the judgment lien against Midwest
Renewable's Lincoln County property are valid and
subsisting. Additionally, it ...