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Junker v. Carlson

Supreme Court of Nebraska

July 6, 2018

Debra J. Junker et al., appellants,
v.
Elwyn Carlson and Joel Carlson, defendants and third-party plaintiffs, appellees, SLS Partners, appellee, and Michael Carlson, also known as Mike Carlson, third-party defendant, appellee.

         1. Actions: Trusts: Equity. An action to impose a constructive trust is an equitable action.

         2. Equity: Appeal and Error. On appeal from an equity action, an appellate court decides factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the trial court's determination.

         3. ___: ___. 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.

         4. Trusts: Property: Title: Unjust Enrichment: Equity. A constructive trust is a relationship, with respect to property, subjecting the person who holds title to the property to an equitable duty to convey it to another on the ground that his or her acquisition or retention of the property would constitute unjust enrichment.

         5. Trusts: Property: Title: Equity: Proof. Regardless of the nature of the property upon which a constructive trust is imposed, a party seeking to establish the trust must prove by clear and convincing evidence that the individual holding the property obtained title to it by fraud, misrepresentation, or an abuse of an influential or confidential relationship and that under the circumstances, such individual should not, according to the rules of equity and good conscience, hold and enjoy the property so obtained.

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

          [300 Neb. 424] Appeal from the District Court for Kearney County: Terri S. Harder, Judge.

          George G. Vinton for appellants.

          Steve Windrum, of Malcom, Nelsen & Windrum, L.L.C., for appellees Elwyn Carlson and Joel Carlson.

          Donald J. Pepperl, PC, L.L.O., for appellee SLS Partners.

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

          CASSEL, J.

         I. INTRODUCTION

         A trust's grantors and beneficiaries asserted claims for constructive trusts against other parties who had dealt with the trustee. After a bench trial, the district court dismissed the claims. Because we agree that the claims failed either for lack of proof or because of Neb. Rev. Stat. § 30-38, 101 (Reissue 2016), which protects third parties dealing in good faith with a trustee, we affirm.

         II. BACKGROUND

         In 1997, Dale E. Carlson and Carol A. Carlson (collectively Grantors), husband and wife, conveyed certain real estate to a trust known as Mill Creek Trust Company. Although the trust instrument is not a part of our record, evidence and testimony established that the intended beneficiaries of this trust were Grantors' three children: Debra J. Junker, Lynn P. Carlson, and Mike Carlson. The conveyed real estate included farmland, several buildings, and one residential home. Grantors lived in this residential home until 2006.

         The property was conveyed between trusts in order to avoid taxation and Grantors' creditors until it was held by the Aebeskiver Company Trust (the Trust), of which Roger Wells (Trustee) was trustee. In his deposition, Trustee acknowledged [300 Neb. 425] that the property was conveyed to the Trust for the benefit of Grantors' children.

         Grantors and two of the three beneficiaries brought suit against (1) Trustee, (2) a buyer of the property, and (3) tenants who had leased a portion of the property. There were two other defendants whom we do not address, because they were dismissed from the suit prior to judgment and are not relevant for the purposes of this appeal. The suit asserted that the defendants had knowingly participated in certain transactions which constituted a breach of Trustee's fiduciary duties. The third beneficiary was later added as a third-party defendant, but his interests aligned with the other trust beneficiaries and he was represented by their counsel at trial. For convenience, we will refer to the Grantors and the three beneficiaries collectively as "Claimants." And we will disregard technical distinctions in pleadings between the trust beneficiaries.

         After judgment was entered against Trustee in his separate bankruptcy action, he was dismissed from the suit. After the dismissal of Trustee, the contested issues were limited to (1) whether the transactions constituted a breach of trust and, if so, whether the buyer and tenants knowingly participated in those breaches and (2) whether the buyer and tenants were unjustly enriched.

         1. Overview of Transactions

         In December 2001, Trustee leased the farmland portion of the trust property to Joel Carlson and Elwyn Carlson (collectively Tenants), with the lease to expire in 2007. While the lease was still in place, Trustee sold the property to SLS Partners (Buyer), a company that provides capital to property owners by buying their property and leasing it back with an option to repurchase. The terms of the sale were such that, in exchange for the property, Buyer paid $200, 000, as well as executed a lease and an option agreement. Buyer agreed to lease the property back to the seller for $26, 405 per year, and the agreement provided the seller with the option to purchase [300 Neb. 426] the property back in the first 4 years of the lease at a price which increased each year the option was not exercised.

         In July 2004, even though the property had been sold to Buyer, Trustee entered into an agreement to amend the original lease with Tenants, extending it from February 2007 to February 2014.

         In January 2007, the Trust exercised its option to repurchase the trust property from Buyer for $294, 000 and simultaneously sold it to a third party for $515, 000. In order to clear the title prior to closing, the Trust negotiated with and paid ...


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