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Weyh v. Gottsch

Supreme Court of Nebraska

June 7, 2019

David Weyh, appellee,
v.
Barry Gottsch, appellant.

         1. Judgments: Appeal and Error. In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be disturbed on appeal unless clearly wrong. But an appellate court independently reviews questions of law decided by a lower court.

         2. Limitations of Actions: Appeal and Error. The point at which a statute of limitations begins to run must be determined from the facts of each case, and the decision of the district court on the issue of the statute of limitations normally will not be set aside by an appellate court unless clearly wrong.

         3. Declaratory Judgments: Contracts: Appeal and Error. An action for declaratory judgment is sui generis; whether such action is to be treated as one at law or one in equity is to be determined by the nature of the dispute. When a dispute sounds in contract, the action is to be treated as one at law. An appellate court treats the determination of factual issues in such a declaratory judgment action which was tried without a jury in the same manner as any other action at law; accordingly, the findings of the trial court have the effect of a verdict and will not be set aside unless clearly wrong.

         4. Prejudgment Interest: Appeal and Error. Awards of prejudgment interest are reviewed de novo.

         5. Statutes: Appeal and Error. Statutory interpretation presents a question of law on which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.

         6. Limitations of Actions: Contracts. An action upon an oral contract must be brought within 4 years from the date of the event giving rise to the cause of action.

         7. Actions: Contracts: Time: Damages. A cause of action in contract accrues at the time of breach or the failure to do the thing agreed to. [303 Neb. 281] This is so even though the nature and extent of damages may not be known.

         8. Limitations of Actions. Generally, a cause of action accrues and the period of limitations begins to run upon the violation of a legal right, that is, when the aggrieved party has the right to institute and maintain suit.

         9. Contracts: Judgments: Appeal and Error. The disputed terms of an oral agreement are questions of fact, and in a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be disturbed on appeal unless clearly wrong.

         10. Trial: Witnesses: Evidence: Appeal and Error. In a bench trial of an action at law, the trial court is the sole judge of the credibility of the witnesses and the weight to be given their testimony. An appellate court will not reevaluate the credibility of witnesses or reweigh testimony but will review the evidence for clear error.

         11. Trial: Expert Witnesses: Appeal and Error. Generally, an appellate court reviews a trial court's decision to exclude expert testimony for an abuse of discretion.

         12. Trial: Evidence: Appeal and Error. In a civil case, the admission or exclusion of evidence is not reversible error unless it unfairly prejudiced a substantial right of the complaining party.

         13. Statutes: Appeal and Error. When an appellate court construes statutes relating to the same subject matter, it should do so in a manner that maintains a sensible and consistent scheme and gives effect to every statutory provision.

         14. Statutes. It is not within the province of a court to read a meaning into a statute that is not warranted by the language; neither is it within the province of a court to read anything plain, direct, or unambiguous out of a statute.

         15. Prejudgment Interest: Statutes. Neb. Rev. Stat. §§ 45-103.02 and 45-104 (Reissue 2010) are alternate and independent statutes authorizing the recovery of prejudgment interest.

         16. Prejudgment Interest. Neb. Rev. Stat. § 45-104 (Reissue 2010) contains no requirement that the claims described therein must also be liquidated in order to recover prejudgment interest.

         17. Judgments: Interest: Time. Prejudgment interest under Neb. Rev. Stat. § 45-104 (Reissue 2010) ends, and post judgment interest begins, on the date of entry of judgment.

          Appeal from the District Court for Sarpy County: Stefanie A. Martinez, Judge.

         [303 Neb. 282] Molly J. Miller, Patrick J. Sullivan, and Travis M. Jacott, of Adams & Sullivan, PC, L.L.O., for appellant.

          Cathy S. Trent-Vilim, Daniel P. Chesire, Brian J. Brislen, and Adam R. Feeney, of Lamson, Dugan & Murray, L.L.P, for appellee.

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

          Stacy, J.

         Pursuant to an oral agreement, David Weyh and Barry Gottsch farmed together for approximately 10 years and agreed to share net profits equally. When the farming operation ended and it was time to settle up, a dispute arose and Weyh filed this action seeking to recover his share of the operation's profits. After a bench trial, the district court found that Gottsch owed Weyh $1, 214, 056.73 in unpaid profits. It also found that Weyh was entitled to prejudgment interest in the amount of $972, 582.10 pursuant to Neb. Rev. Stat. § 45-104 (Reissue 2010).

         Gottsch appealed, and we granted bypass to address the assignments of error related to recovery of prejudgment interest under Nebraska law. On that issue, Gottsch argues that all requests for prejudgment interest must comply with Neb. Rev. Stat. § 45-103.02 (Reissue 2010), and he contends it was error to award prejudgment interest under § 45-104 without also finding Weyh's claim was liquidated under § 45-103.02(2). Weyh disagrees, and argues §§ 45-103.02(2) and 45-104 provide alternate routes for recovering prejudgment interest. Weyh contends that because his claim is the type of claim enumerated in § 45-104, prejudgment interest was properly awarded.

         After examining the statutory language and legislative history of the pertinent statutes, and considering our competing lines of authority on prejudgment interest, we hold that § 45-103.02(2) is not the exclusive means of recovering [303 Neb. 283] prejudgment interest in Nebraska, and we disapprove of prior cases holding otherwise. We clarify that §§ 45-103.02 and 45-104 provide separate and independent means of recovering prejudgment interest, and we hold that when a claim is of the types enumerated in § 45-104, then prejudgment interest may be recovered without regard to whether the claim is liquidated. We thus find no error in applying § 45-104 to award prejudgment interest to Weyh, but we agree with Gottsch there was an error in calculating prejudgment interest. We affirm the judgment as modified.

         I. FACTS

         In October 2004, Weyh and Gottsch entered into an oral agreement to farm together. They agreed Weyh would provide the labor and manage the day-to-day farming operations. They agreed Gottsch would provide the equipment and some occasional labor and would handle all the financial aspects of the farming operation. They agreed the operation would farm some land owned by Gottsch and some land owned by third parties. They agreed the operation would continue from year to year until one of them decided to end it, and they agreed to share the net profits of the farming operation equally. Their agreement was never reduced to writing.

         Weyh and Gottsch farmed together continuously through the 2014 harvest. During that period, Weyh performed work on the farm nearly every day and also hired and supervised additional laborers. Weyh kept a general log of his daily farming activities. He did not take a salary or wage from the farming operation, but Gottsch occasionally provided Weyh with what the parties described as "draws against future profits." Both parties understood those draws were being advanced against Weyh's share of the farming operation's net profits once they finally "settled up." While the farming operation was ongoing, Gottsch and Weyh did not settle up at the end of each farming year. Instead, it was understood that when one or both of them decided to end the farming operation, Gottsch [303 Neb. 284] would provide an accounting and the net profits would then be determined and distributed equally.

         Gottsch purchased the planting and harvesting equipment for the farming operation, and he was responsible for marketing the crops and keeping the farming operation's books. All proceeds from the farming operation went into bank accounts controlled exclusively by Gottsch. Gottsch also used these accounts for his personal expenses and for some of his other business endeavors. Gottsch's bookkeeper, Debra Wetzel, maintained the books for the farming operation and for Gottsch's other businesses. After the farming operation ended, Wetzel prepared a profit-and-loss statement for the entire farming operation. While the farming operation was ongoing, there was no formal accounting prepared.

         In October 2014, Gottsch notified Weyh he had decided to end the farming operation and it was time to "settle up.'' Shortly thereafter, Gottsch told Weyh the entire farming operation generated net profits of $1, 518, 115.65. Gottsch arrived at that figure by expensing to the farming operation, among other things, $1, 813, 164.15 for accumulated rent on land owned by Gottsch and farmed by the operation, and $144, 161.04 for earnings paid to one of Gottsch's employees, Philip Kollars, who sometimes worked for the farming operation. Weyh disputed both these expenses, claiming neither was properly attributed to the farming operation.

         1. Complaint

         In December 2014, Weyh sued Gottsch in the district court for Sarpy County, Nebraska, seeking to recover his share of the net profits of the farming operation. Weyh's complaint set out the parties' oral agreement and alleged several theories of recovery, including breach of contract. The complaint alleged the farming operation's net profits totaled $3, 475, 440.70, and Weyh sought to recover half of that amount plus prejudgment interest.

         Gottsch's answer admitted he had failed to pay Weyh the agreed upon one-half share of net profits and admitted he was [303 Neb. 285] in possession of money belonging to Weyh. But Gottsch alleged that a profit-and-loss statement had not yet been completed for the 2014 crop year, and further alleged that a final accounting and payment had been "hindered" by Weyh's demands to change the profit-and-loss statement. Gottsch admitted that his "failure to perform his obligations under the contract has damaged [Weyh] in an amount to be determined following a full accounting," but he denied that Weyh was entitled to recover the amount sought in the complaint.

         2. Amended Complaint

         Eventually, Gottsch provided Weyh a final accounting that included the 2014 crop year. The final accounting showed the entire farming operation generated net profits of $1, 079, 003.58. Included among the expenses of the farming operation were $2, 130, 657.21 in rent to Gottsch for land owned by him and farmed by the operation, and $208, 452.64 in earnings paid to Kollars.

         After Weyh received the final accounting from Gottsch, he amended his complaint to expressly accept the final accounting, with two exceptions: Weyh alleged that neither the $2, 130, 657.21 in accumulated rent to Gottsch nor the $208, 452.64 in earnings paid to Kollars were properly expensed to the farming operation. The amended complaint sought a declaratory judgment to that effect and alleged separate theories of recovery for breach of contract, fraudulent misrepresentation, fraudulent concealment, unjust enrichment/ constructive trust, money received and retained, and breach of the implied covenant of good faith and fair dealing. On each theory of recovery, Weyh's amended complaint sought recovery of his one-half share of the net profits plus prejudgment interest.

         Gottsch filed an answer to the amended complaint and later was permitted to amend his answer. The amended answer admitted the parties had orally agreed to farm together and had agreed to share equally in the profits and losses of the farming operation. But Gottsch denied that Weyh was entitled [303 Neb. 286] to recover the amount sought in the amended complaint, and he raised several affirmative defenses, including that Weyh's claims were time barred under Neb. Rev. Stat. §§ 25-211 and 25-212 (Reissue 2016).

         3. Bench Trial

         During the 3-day bench trial, the primary disputes were (1) whether Weyh's claims were time barred and (2) how to treat the two contested expenses: rent to Gottsch and earnings to Kollar. Both parties testified on these issues.

         (a) Weyh's Testimony

         According to Weyh, he and Gottsch decided to farm together while they were standing on a hillside in 2004. At that time, they agreed Weyh would provide the farm labor and Gottsch would provide the land, the equipment, and the financial management. They agreed to share net profits equally, and they agreed to farm together "until we both decided to quit." Weyh testified they never agreed that Gottsch would be paid cash rent in addition to a share of the profits.

         In the fall of 2014, Gottsch told Weyh he was ending the farming operation. After learning this, Weyh demanded a full accounting, and Gottsch agreed it was time to "settle up." Weyh claims Gottsch remarked at the time "I owe you so much money" and suggested that with the all the money he was owed, Weyh could start his own operation if he wanted to continue farming.

         Once a final accounting was prepared, Weyh accepted it, with the exception of two expenses: $2, 130, 657.21 in rent to Gottsch and $208, 452.64 in earnings paid to Kollars. According to Weyh, neither of these expenses were properly attributed to the farming operation.

         Weyh testified that Gottsch never brought up the topic of rent until 2006, when they met to go over Gottsch's financial notes. During that 2006 meeting, Weyh noticed that Gottsch had listed, as a farm expense, rent to himself on the land he owned. Weyh told Gottsch that was not a proper farm expense [303 Neb. 287] under their agreement, and Gottsch replied that "we'll figure it out." Weyh testified the two did not discuss rent again, and Weyh did not press the issue further. Weyh testified that when he and Gottsch farmed land owned by others, the farming operation entered into written lease agreements for cash rent, and that none of those agreements also included crop share.

         Weyh also testified about a hunting operation he and Gottsch entered into in 2005, again pursuant to an oral agreement. Initially, they agreed Gottsch would contribute the property upon which hunts would take place, Weyh would serve as the hunting guide, and they would split net profits equally. Under that initial agreement, Gottsch did not charge rent for the use of his land. Later, they modified the agreement so that Weyh paid Gottsch cash rent for the use of his land, and Weyh retained 100 percent of the profits from the hunts. At no time during the operation of the parties' hunting business did Gottsch receive both cash rent and a share of the profits.

         Weyh objected to expensing Kollars' earnings to the farming operation. According to Weyh, Gottsch hired Kollars in 2010 to take care of Gottsch's personal and rental properties, and at that time, Gottsch assured Weyh that Kollars' wages would not come out of the farming operation. Kollars performed work on Gottsch's cars and pool and several of Gottsch's properties. Over time, Gottsch asked Kollars to do maintenance work on some of the farming equipment too. Weyh objected to Kollars' working for the farming operation, as he did not think Kollars' help was needed. At some point, Kollars told Weyh that Gottsch had instructed him to charge at least 50 percent of his time to the farming operation. Weyh objected to that practice because he did not think Kollars was really working for the farm, and Kollars replied, "I only do what I'm told."

         (b) Gottsch's Testimony

         According to Gottsch, when he and Weyh agreed to farm together, they also agreed that rent on Gottsch's land would be a farm expense. Gottsch did not dispute that he and Weyh [303 Neb. 288] discussed farming together while they were on the hillside in 2004, but he thought the agreement on rent occurred during a later conversation at the "brown shop" sometime before the 2005 planting season. Gottsch admitted that his recollection of that conversation was vague, but he recalled telling Weyh he would "put up all the money and all the equipment" but "I got to charge rent." Gottsch testified that one of the reasons he started farming, and agreed to purchase all the equipment, was that he had sold his share of a family business and wanted to manage his capital gains exposure.

         Gottsch testified that after the 2005, 2006, and 2007 crop years, he provided Weyh with some handwritten financial notes that listed, as a farm expense, rent on Gottsch's land. Gottsch did not recall that Weyh ever "confronted" him about including rent as an expense of the farming operation.

         Gottsch testified that "just before the lawsuit" was filed, he hired an agronomist to help him set the cash rents for all of the prior farming years. At that time, he also modified the rents for the 2005, 2006, and 2007 crop years. Gottsch admitted that he never discussed the amount of rent with Weyh prior to any crop year and that Weyh had "zero" input on the amount of rent. Gottsch was not aware of any other farming operation where the landowner would get cash rent plus half the crop share, and he admitted it was common to agree in advance on the amount of rent so the farm tenant could decide whether to accept or reject the rent before the crop year. Gottsch admitted Weyh did not have such an opportunity before any of the crop years for which Gottsch was seeking rent.

         Regarding the "draws" paid to Weyh, Gottsch testified there was no set schedule, interval, or timeframe for draws. Instead, Weyh would ask for a draw when he needed it and Gottsch would "just round it up to whatever I felt like would be good," because he knew Weyh "had money coming." Gottsch testified that the parties did not take stock of their profits and losses after each crop year and that they never agreed to settle up after each year. Gottsch admitted that he was "terrible [303 Neb. 289] at settling up" and that when he decided to end the farming operation in the fall of 2014, he knew an accounting needed to be done for "the entirety of the operation."

         In 2010, Gottsch hired Kollars to perform maintenance and repairs on Gottsch's various properties and vehicles. Gottsch also directed Kollars to do "some" work for the farming operation. When Gottsch informed Weyh that Kollars would be available to help with the farming operation, Weyh disapproved, because "he wanted his guys helping." Gottsch told Kollars to report his time directly to Wetzel, Gottsch's bookkeeper, and he denied that he ever instructed Kollars to attribute a certain amount of his time to the farming operation.

         In 2014, Wetzel attributed most of Kollars' time to the farming operation. At trial, Gottsch admitted that was not correct. Gottsch testified that Kollars performed "some" work for the farm in 2014, but Gottsch did not think there was "any way he had that high of a percentage with the farm." Gottsch admitted that, other than what Kollars reported to Wetzel, he had no way of knowing what percentage of Kollars' time was attributable to the farming operation.

         (c) Bookkeeper's Testimony

         In 2006, Wetzel began keeping the books for Gottsch's personal and business entities, including those related to the farming operation. Wetzel did not keep separate accounts for the farming operation and Gottsch's personal and other business affairs; all of Gottsch's financial information went into a single account for bookkeeping purposes, with separate classifications. Using a business software application, Wetzel would, as much as possible, enter "farm" expenses contemporaneously as they occurred. Sometimes she was provided information on expenses from Gottsch, and other times from Weyh. Wetzel described Weyh's recordkeeping practices as "pretty detailed" and Gottsch's as "[p]retty bad."

         Wetzel testified that while the farming operation was ongoing, Gottsch never asked her to include rent on his land as a farm expense. It was not until the farming operation ended in [303 Neb. 290] 2014 that Gottsch made such a request, and at that time, he told Wetzel that when she prepared the final accounting, rent on the land he owned "needed to be part of that equation." In response, Wetzel made a list of all the property Gottsch owned "so he could establish what he wanted to charge for rent." Wetzel testified that after she prepared the accounting in early 2015, Gottsch was still "adjusting the rents that he thought he should charge on properties he owned."

         According to Wetzel, Kollars began working for Gottsch in 2010 and all of Kollars' W-2 wage and tax statements listed Gottsch as the employer. Kollars was instructed by Gottsch to call or text Wetzel each week to report what percentage of his work was attributable to the farming operation and what percentage was attributable to Gottsch's other personal and business ventures. When Kollars did not contact Wetzel to report his percentages for the week, she would automatically attribute all of Kollars' time to the farming operation.

         In 2014, Kollars gave Wetzel no information about how his work should be allocated, so Wetzel attributed all of Kollars' earnings as an expense of the farming operation. Wetzel's records also attributed a portion of Kollars' earnings in 2010 through 2013 to the farming operation, but the records did not include an hourly breakdown, and Wetzel had no personal knowledge of how much time Kollars actually devoted to the farming operation. From 2010 through 2014, the total amount of Kollars' earnings expensed to the farming operation was $208, 452.64.

         4. District Court's Findings

         (a) Claims Not Time Barred

         The district court rejected Gottsch's contention that any of Weyh's claims were time barred. It found the parties intended the farming operation to be ongoing until one or both of them decided to end it, at which time they would settle up and divide net profits equally. The court found that while the farming operation was ongoing, the parties did not distribute "draws" on any regular basis and that there was no agreement to do [303 Neb. 291] so. Nor was there any agreement to settle up after each crop year. The court thus reasoned that Weyh's claim for breach of contract did not accrue until late 2014, because that was the point at which the farming operation ended and it was time to settle up, and Gottsch failed to pay Weyh his share of the net profits. Because Weyh's suit against Gottsch was filed just a few months after the claim accrued, the court found it was not time barred.

         (b) Rent to Gottsch

         On the issue of rent, the court stated "[t]he crux of the issue" was one of credibility, and it ultimately found "there was no credible evidence that the parties agreed [Gottsch] would charge rent for properties he owned that the farming operation farmed." The court reasoned the parties' course of conduct supported this finding, as it was undisputed that Gottsch unilaterally set the rent amounts for the majority of the farming years after the farming operation had ended and that Gottsch never sought input or agreement from Weyh on rent amounts during the course of the farming operation. The court thus concluded that rent to Gottsch was not part of the parties' oral agreement and, consequently, entered a declaratory judgment that rent to Gottsch was not a proper expense of the farming operation.

         (c) Kollars' Earnings

         The court found the evidence did not support including Kollars' earnings as a farm expense. First, the court found the parties' oral agreement did not include expensing Kollars' earnings to the farming operation, finding it significant that Gottsch expressly told Weyh that Kollars' time would not be expensed to the farming operation. Additionally, the court found that neither Gottsch nor Wetzel had firsthand knowledge of how much of Kollars' work was actually devoted to the farming operation. That lack of knowledge, combined with admittedly incorrect information in the final accounting, left the court with "no way of knowing how many hours, if any, [303 Neb. 292] . . . Kollars worked for the farming operation, as opposed to for [Gottsch] personally." The court found this failure of proof prevented Gottsch from claiming any portion of Kollars' earnings as a farm expense for any farming year, and entered a declaratory judgment that Kollars' earnings were not properly expensed to the farming operation.

         (d) Breach of Contract

         The court found that Gottsch breached the parties' oral contract by failing to pay Weyh the full amounts owed to him when the operation ended and by providing an accounting that improperly listed rent to Gottsch and earnings to Kollars as expenses of the farming operation. Using the figures from Gottsch's final accounting that Weyh had accepted, the court found the farming operation's net profits were $3, 418, 113.45, and concluded Weyh was entitled to half this amount, less sums he had previously taken in "draws" over the years. Ultimately, the court determined Weyh was entitled to damages for breach of contract in the amount of $1, 214, 056.73. The court also found in Weyh's favor on several other theories of recovery and awarded identical damages under each theory.

         (e) Prejudgment Interest

         Weyh's original and amended complaints sought prejudgment interest, and in closing argument, Weyh suggested he was entitled to prejudgment interest under either of two theories: because his claim was liquidated under § 45-103.02(2) or because his claim fit within those described in § 45-104. Gottsch opposed an award of prejudgment interest, arguing it was not recoverable either because Weyh's claim was not liquidated or because it would be too difficult to determine the date on which Weyh's entitlement to prejudgment interest accrued.

         The district court concluded Weyh was entitled to prejudgment interest "in the amount of 12% per annum under Neb. Rev. Stat. § 45-104" and awarded $972, 582.10 in prejudgment interest. The order does not explain how this amount [303 Neb. 293] was calculated, but it is clear the court relied exclusively on § 45-104 in awarding prejudgment interest. It found that Weyh had met his burden of proof under § 45-104 by showing that Gottsch received, into his personal bank account, Weyh's share of the net profits from the farming operation and retained such sums after they should have been paid to Weyh. In addressing prejudgment interest, the court's order did not discuss § 45-103.02(2) or make any findings as to whether Weyh's claim was liquidated or unliquidated.

         (f) Appeal and Petition to Bypass

         Gottsch timely appealed and moved to bypass the Nebraska Court of Appeals, arguing this case presents an important and unresolved issue of statutory interpretation regarding the recoverability of prejudgment interest under Nebraska law. Weyh agrees, and both parties seek clarification regarding whether all prejudgment interest awards must satisfy § 45-103.02, or whether an award of prejudgment interest may be based only on § 45-104.

         In several prior appeals, parties have raised the issue of whether §§ 45-103.02(2) and 45-104 are separate and independent means of obtaining prejudgment interest or whether they are interrelated and, if so, how.[1] But until now, the issue has been presented in cases where the facts did not satisfy one or both statutes and, consequently, the tension between §§ 45-103.02(2) and 45-104 has not been directly addressed by this court.[2] We granted the petition to bypass to address that issue.

         II. ASSIGNMENTS OF ERROR

         Gottsch assigns, consolidated and restated, that the district court erred in (1) finding the breach of contract claim accrued [303 Neb. 294] when the farming operation ended and was not time barred, (2) finding the parties had not agreed that rent to Gottsch or earnings to Kollars were proper expenses of the farming operation. (3) finding an agreement to charge rent on Gottsch's property would violate the statute of frauds, (4) relying on evidence of the parties' previous hunting operation, (5) excluding expert testimony offered by Gottsch, (6) finding in favor of Weyh on several ...


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