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Pan v. IOC Realty Specialist Inc.

Supreme Court of Nebraska

October 12, 2018

Samuel Pan, doing business as U.S. World Daycare Center, appellee,
v.
IOC Realty Specialist Inc. and Bernard M. Tompkins, appellants.

         1. Statutes: Judgments: Appeal and Error. Issues of statutory interpretation present a question of law, and when reviewing questions of law, an appellate court has an obligation to resolve the questions independently of the conclusion reached by the trial court.

         2. Judgments: Appeal and Error. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

         3. Intent: Words and Phrases. The word "include" preceding a list does not indicate an exclusive list absent other language showing a contrary intent.

         4. Landlord and Tenant: Leases: Property: Statutes. The scope of the Disposition of Personal Property Landlord and Tenant Act is not so narrowly confined as to exclude commercial leases. As such, the act applies in commercial lease cases.

         5. Landlord and Tenant: Property: Proof: Liability. All that is required under the Disposition of Personal Property Landlord and Tenant Act is evidence that would lead a prudent person to believe the property belonged to the requesting party. The landlord need not know for certain that the party requesting the personal property owns it in order to be relieved from liability.

         6. Actions: Parties. In order for a party to be indispensable or necessary, the threshold determination that must be made is whether the party has an interest in the subject matter of the controversy.

          [301 Neb. 257] 7. Landlord and Tenant: Property: Conversion. The remedial provisions within the Disposition of Personal Property Landlord and Tenant Act are rooted in the theories of conversion by seeking to restore the status quo when a landlord improperly disposes of or withholds the property of a former tenant.

         8. Landlord and Tenant: Property: Damages: Words and Phrases. The phrase "value of the personal property" in its relation to "actual damages" is the fair market value of the property at the time the tenant's property is improperly detained by the landlord.

         9. Judgments: Appeal and Error. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

         10. Attorney Fees: Appeal and Error. When an attorney fee is authorized, the amount of the fee is addressed to the trial court's discretion, and its ruling will not be disturbed on appeal absent an abuse of discretion.

         11. Attorney Fees: Records. An award of attorney fees involves consideration of such factors as the nature of the case, the services performed and results obtained, the length of time required for preparation and presentation of the case, the customary charges of the bar, and general equities of the case. If the contents of the record show the allowed fee not to be unreasonable, then that fee would not be untenable or an abuse of discretion.

          Appeal from the District Court for Douglas County: Gregory M. Schatz, Judge. Affirmed.

          John C. Chatelain, of Chatelain & Maynard, for appellants.

          Willow T. Head, of Law Offices of Willow T. Head, PC, L.L.O., for appellee.

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

          Freudenberg, J.

         I. SUMMARY OF CASE

         This case involves a dispute between a landlord and a tenant over the disposition of personal property. A former tenant, Samuel Pan, sued his landlord, IOC Realty Specialist Inc., and [301 Neb. 258] its sole shareholder, Bernard M. Tompkins, when the landlord refused to return the tenant's personal property that remained on the leased premises. After a bench trial, a judgment was entered against IOC Realty Specialist and Tompkins for the wrongful retention of property pursuant to the Disposition of Personal Property Landlord and Tenant Act (the Act).[1] The district court held that IOC Realty Specialist and Tompkins violated the Act by knowingly retaining personal property that belonged to Pan and awarded Pan damages and attorney fees. We affirm.

         II. FACTS

         IOC Realty Specialist is a corporation that deals in real estate and property management. IOC Realty Specialist is owned by its sole shareholder and licensed real estate broker, Tompkins (collectively IOC). For approximately 20 years, Tompkins, by and through IOC Realty Specialist, has managed the leased premises at issue in Omaha, Nebraska, for its owners, Leon and Mary Kleinschmit. The Kleinschmits or their corporation, Millard Electronics, Inc., were consistently listed as the "lessor" on each lease signed concerning the subject property.

         In 2007, Pan purchased a daycare business which included an assignment of a lease at a commercial property owned by the Kleinschmits. IOC facilitated this assignment as the Kleinschmits' real estate broker. The leasehold was assigned in October 2007, designating Pan and his business partner, Mary Choi, as the new tenants on the assignment agreement and lease documentation. In 2007, Choi left the business arrangement with Pan. However, Pan's daycare business continued to lease the property on a month-to-month basis until June 2014.

         In June 2014, Pan negotiated with Ci Nuer Ben America (CNBA), a Nebraska corporation, for the purchase of Pan's [301 Neb. 259] daycare business and all of Pan's personal property on the leased premises. The personal property included various children's toys, sleeping mats, appliances, a wooden fence, a storage shed, and outside playsets embedded in concrete at the back of the building. Pan advised IOC of his agreement with CNBA for the purchase of Pan's daycare business, including all of his personal property on the leased premises. IOC met with the owner of CNBA, James Panoam, in July and signed a new lease to begin CNBA's tenancy of the property on August 1.

         Soon thereafter, CNBA paid rent for the month of August, but failed to make any further rent payments. Additionally, Pan never received any payment from CNBA under the terms of their agreement and, as a consequence, Pan never delivered the keys to the lease premises to CNBA.

         Pan advised IOC in August 2014 that CNBA never paid the contract price for the personal property on the leased premises. Pan repeatedly attempted to recover his property through December. Pan called IOC and visited the leased property in an effort to retrieve the personal property at issue, but found that the locks had been changed.

         Pan and IOC spoke both over the telephone and in person regarding the disposition of the property. At one point, IOC allowed Pan to access the leased property to recover some of his belongings. However, IOC did not allow Pan to retrieve the remainder of his property after further requests from Pan to do so.

         After 3 consecutive months (September through November 2014) of nonpayment of rent, IOC evicted CNBA and sought a new lessee. In an effort to mitigate damages and relet the building, IOC had several personal property items subject to the agreement between Pan and CNBA moved to a warehouse that IOC managed for Millard Electronics.

         Pan retained an attorney who sent a letter to IOC requesting that Pan's property be returned. IOC stated it was concerned about future property disputes between Pan and CNBA. Therefore, IOC requested that Pan provide a statement from [301 Neb. 260] CNBA waiving its claim to the property. On December 26, 2014, Pan provided IOC an affidavit from Panoam, identifying himself as president of CNBA, and indicating that Pan owned the property. IOC refused to return the property and requested a notarized corporate resolution, reasoning that the initial affidavit was insufficient to bind CNBA. On January 12, 2015, Pan provided a second statement from Panoam as "President and Sole Shareholder d/b/a [CNBA]" containing a list of personal property and stating that CNBA did not have any ownership in the personal property on the leased premises. However, IOC again refused to return the personal property, because it did not receive a corporate resolution as requested.

         In January 2015, IOC entered into a new lease with another company to operate a daycare. Some of the disputed property was considered by IOC too large to remove and remained on the leased premises. IOC permitted the new daycare to utilize the property.

         IOC did not request storage fees from Pan during any of their business discussions regarding the property. IOC first requested storage fees when it filed a counterclaim for such payment in its answer to Pan's complaint.

         In June 2015, IOC mailed correspondence to Pan stating a willingness to release the subject personal property if Pan would provide a '"Transfer or Assignment and Indemnification, "' requesting that Pan indemnify IOC from claims by CNBA. Pan refused to agree to indemnify IOC and subsequently filed suit for recovery of the property, damages for IOC's retention of the property, and attorney fees. IOC denied that Pan was entitled to the property and filed a counterclaim for storage fees incurred.

         1. Exhibits 17 and 32 and Reasonable Belief of Ownership

         During trial, two affidavits were admitted into evidence over hearsay objections. The first, exhibit 17, was a letter authored by Pan's attorney which included one of the [301 Neb. 261] above-mentioned affidavits from Panoam doing business as CNBA. The affidavit asserted that the property did not belong to CNBA, but, rather, it belonged to Pan. The court admitted the exhibit, reasoning that the exhibit was being offered as a showing by Pan that he complied with IOC's demand for a statement from CNBA disavowing its ownership in the subject personal property.

         In a similar fashion, Pan offered exhibit 32, the second affidavit by Panoam stating that the personal property located at the subject leased premises did not belong to CNBA. The court again overruled the hearsay objection, finding Pan was not offering the exhibit for the truth of its contents. Further, the district court detailed that exhibit 32 would be utilized only to show that Pan complied with the requests made by IOC as opposed to proving that the property was owned by Pan.

         2. Evidence of Damages and Fair Market Value

         At trial, Pan opined on the value of the disputed personal property. Pan, although lacking several itemized and specific receipts of his expenditures on the subject personal property, asserted that the property was worth $27, 611, according to an itemization in exhibit 14. In addition, Pan testified as to the accuracy of bank statements and copies of checks stemming from two accounts used in the operation of his daycare business. Pan also testified that these statements and checks corresponded to the property at issue. Generally, these bank statements and checks identify to whom funds were paid, but do not enumerate the specific purchases being made.

         Contesting Pan's asserted valuation of the personal property, IOC presented testimony that the property was bug infested, dirty, and in poor condition following CNBA's eviction in November 2014. IOC did not present evidence as to a specific monetary value of the personal property. No expert [301 Neb. 262] evidence was presented by either party regarding the fair market value of the property at issue.

         3. District Court's Final Order

         After the trial, the district court found that the Act applied. The court reasoned that by utilizing the phrase ''whether such premises are used as a dwelling unit or self-storage unit or facility or not" in the definition of "tenant," the Act did not preclude commercial tenants from citing the Act in attempting to retrieve their personal property from landlords.

         The district court found each defendant to be jointly and severally liable, because neither IOC Realty Specialist nor Tompkins made any distinction between themselves in the pleadings. Further, the court found IOC held itself out to be the owner, landlord, and lessor of the property in question and never took the position that it was simply an agent for the true owners of the property in any pleadings filed in the case. The court also noted that IOC's counterclaim for storage fees corroborated this finding.

         Based on the evidence received at trial, the district court found that IOC retained Pan's property in violation of the Act. By finding that IOC withheld Pan's property from him while knowing that Pan's sale of the property had not been completed in August 2014, the court implicitly found IOC's asserted belief that the property belonged to CNBA was unreasonable.

         The court relied on exhibit 14, as well as the testimony regarding the condition of the property, in order to determine damages in the case. Pan was awarded $10, 000, or approximately 50 percent of Pan's personal valuation, in damages. The court notably excluded the storage shed and fence, finding that these items were permanently affixed to the real property and no longer personal property.

         Also pursuant to the Act, the district court awarded Pan attorney fees. IOC's counterclaim for storage fees was dismissed. From this order, IOC appeals.

          [301 Neb. 263] III. ASSIGNMENTS OF ERROR

         IOC assigns that the district court erred in (1) failing to join necessary and indispensable parties, (2) admitting hearsay into evidence, (3) finding that Pan had ownership and a right to possession of the subject party, (4) entering a money judgment in a replevin action without determining that the property could not be returned, (5) determining the fair market value of the property at issue without sufficient evidence, (6) finding the Act applicable to a commercial lease, (7) finding that IOC violated the Act, and (8) denying IOC's claim for storage fees.

         IV. STANDARD OF REVIEW

         Issues of statutory interpretation present a question of law, and when reviewing questions of law, an appellate court has an obligation to resolve the questions independently of the conclusion reached by the trial court.[2]

         The amount of damages to be awarded is a determination solely for the fact finder, and its action in this respect will not be disturbed on appeal if it is supported by evidence and bears a reasonable relationship to the elements of the damages proved.[3] With respect to damages, an appellate court reviews the trial court's factual findings under a clearly erroneous standard of review.[4]

         In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict, and the Supreme Court will not disturb those findings unless they are clearly erroneous.[5] In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, [301 Neb. 264] but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.[6]

         When an attorney fee is authorized, the amount of the fee is addressed to the trial court's discretion, and its ruling will not be ...


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