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LeRette v. Howard

Supreme Court of Nebraska

June 1, 2018

David LeRette, Jr., Individually and as Owner of Master Blaster, Inc., Appellants and Cross-Appellees, Steven H. Howard and Dowd, Howard & Corrigan, L.L.C., Appellees and Cross-Appellants.

         1. Jurisdiction: Appeal and Error. Subject matter jurisdiction is a question of law for the court, which requires an appellate court to reach a conclusion independent of the lower court's decision.

         2. Judgments: Verdicts: Appeal and Error. Review of a ruling on a motion for judgment notwithstanding the verdict is de novo on the record.

         3. Trial: Appeal and Error. The standard of review of a trial court's determination of a request for sanctions is whether the trial court abused its discretion.

         4. Actions: Parties. The purpose of Neb. Rev. Stat. § 25-301 (Reissue 2016) is to prevent the prosecution of actions by persons who have no right, title, or interest in the cause.

         5. Actions: Parties: Public Policy. Neb. Rev. Stat. § 25-301 (Reissue 2016) discourages harassing litigation and keeps litigation within certain bounds in the interest of sound public policy.

         6. 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 controversy. The purpose of the 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.

         7. Actions: Pleadings: Parties. The character in which one is a party to a suit, and the capacity in which a party sues, is determined from the allegations of the pleadings and not from the caption alone.

         [300 Neb. 129] 8. Judgments: Verdicts. On a motion for judgment notwithstanding the verdict, the moving party is deemed to have admitted as true all relevant evidence admitted that is favorable to the party against whom the motion is directed, and, further, the party against whom the motion is directed is entitled to the benefit of all proper inferences deducible from the relevant evidence.

         9. ___: ___. To sustain a motion for judgment notwithstanding the verdict, the court resolves the controversy as a matter of law and may do so only when the facts are such that reasonable minds can draw but one conclusion.

         10. Attorneys at Law: Attorney Fees: Conflict of Interest. An attorney who violates established rules of professional conduct and performs services despite a conflict of interest may not receive compensation for such services.

         11. Judgments: Words and Phrases. An abuse of discretion occurs when a trial court's decision is clearly against justice or conscience, reason, and evidence, or when the decision unfairly deprives the litigant of a substantial right or a just result.

          Appeal from the District Court for Douglas County: Timothy P. Burns, Judge. Affirmed as modified.

          Ronald J. Palagi and Donna S. Colley, of Law Offices of Ronald J. Palagi, PC, L.L.O., and Kathy Pate Knickrehm for appellants.

          David A. Domina, of Domina Law Group, PC, L.L.O., for appellees.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ., and Steinke, District Judge.

          Steinke, District Judge.

         NATURE OF CASE

         The jury found in favor of the plaintiffs on a claim for legal malpractice and fraudulent misrepresentation and awarded $775, 000. After trial, the district court overruled the plaintiffs' motion for sanctions and partially granted the defendants' motion for judgment notwithstanding the verdict (JNOV), [300 Neb. 130] reducing the damages to $235, 968.78. The plaintiffs appeal, and the defendants cross-appeal, challenging the district court's subject matter jurisdiction.

         BACKGROUND

         In November 2013, David LeRette, Jr., individually and as the owner of Master Blaster, Inc., filed a complaint against Steven H. Howard and his law firm, alleging, among other things, that Howard committed legal malpractice and breached his duty as LeRette's attorney when he failed to advise LeRette of his conflicts of interest and when he acted adversely to LeRette's interests. A jury trial was held on the matter in early 2017. From the evidence presented, we adduce the following set of facts.

         Master Blaster's Judgment Against Anderson

         In 2006, LeRette sold certain assets of his business, Master Blaster, to Johnnie Anderson. Pursuant to the purchase agreement, Anderson executed a promissory note to Master Blaster for $350, 000 with 12 percent annual interest. After three payments, Anderson defaulted on the note.

         Master Blaster filed suit for the balance owed. During those proceedings, Master Blaster was represented by Sandra L. Maass.

         Anderson then filed for bankruptcy. Master Blaster's suit against Anderson was stayed. In the bankruptcy proceeding, Master Blaster challenged the discharge of Anderson's debt to Master Blaster. The bankruptcy court ultimately granted Master Blaster's request after finding that omissions and mis-statements in Anderson's schedules and statements of financial affairs were inaccurate, unreliable, and constituted intentional or reckless indifference to the truth. Thereafter, the stay was lifted from Master Blaster's suit against Anderson. In 2009, Master Blaster secured a judgment against Anderson for $470, 020.39 plus interest.

         [300 Neb. 131] Legal Malpractice Action Against Anderson's Bankruptcy Attorneys

         LeRette's bankruptcy attorney thought Anderson's bankruptcy attorneys may have been negligent in their representation of Anderson and suggested to LeRette that Anderson could pursue a legal malpractice claim against them in order to generate funds that could be used to satisfy his debt to Master Blaster. Based on this information, LeRette contacted Maass, who told LeRette that she thought her former classmate, Howard, might be able to help.

         With LeRette's approval, Maass called Howard to discuss the matter. Howard indicated that he was interested in the case. Thereafter, Maass gave Howard's contact information to LeRette, who then called Howard.

         After talking to Howard, LeRette contacted Anderson and asked him if he was interested in pursuing a legal malpractice claim against his bankruptcy attorneys. Anderson indicated that he was, and LeRette and Anderson met at a fast food restaurant to discuss it. According to LeRette, he told Anderson that he would hire the attorney.

         LeRette then called Howard and scheduled a meeting in Howard's law office for May 1, 2009. Howard told LeRette to bring Anderson, which he did. At the meeting, Howard advised LeRette and Anderson that any proceeds from the suit would be used to satisfy the judgment against Anderson. Howard advised LeRette not to execute on the judgment against Anderson, because it would make the case more difficult for Howard. LeRette did not execute on the judgment. According to LeRette, Howard told him that he could not be named in the malpractice action, because ...


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