Summer Haven Lake Assn. v. Vlach , 25 Neb. Ct. App. 384 ( 2017 )

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www.nebraska.gov/apps-courts-epub/
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SUMMER HAVEN LAKE ASSN. v. VLACH
Cite as 25 Neb. Ct. App. 384
Summer H aven Lake Association, Inc., a Nebraska
corporation, appellee and cross-appellant,
v. Ronald G. Vlach, appellant and
cross-appellee, and Victory Lake
M arine, Inc., a Nebraska
corporation, appellee.
___ N.W.2d ___
Filed December 26, 2017. No. A-16-638.
1. Injunction: Equity: Appeal and Error. An action for injunction sounds
in equity. On appeal from an equity action, an appellate court tries fac-
tual questions de novo on the record and, as to questions of both fact
and law, is obligated to reach a conclusion independent of the conclu-
sion reached by the trial court.
2. Principal and Agent. If an agent intends to bind his principal, the agent
must not only name the principal, but must express by some form of
words that the writing is the act of the principal.
3. Contracts. Extrinsic evidence is not permitted to explain the terms of a
contract that is not ambiguous.
4. Contracts: Intent. When a contract is unambiguous, the intentions of
the parties must be determined from the contract itself.
5. Contracts: Parties: Intent. The interpretation given to a contract by the
parties themselves while engaged in the performance of it is one of the
best indications of true intent and should be given great, if not control-
ling, influence.
6. Corporations. A corporation will be looked upon as a legal entity as a
general rule, and until sufficient reason to the contrary appears.
7. Corporations: Equity: Fraud. In equity, the corporate entity may be
disregarded and held to be the mere alter ego of a shareholder or share-
holders in various circumstances where necessary to prevent fraud or
other injustice.
8. Waters. The State Boat Act, Neb. Rev. Stat. §§ 37-1201 through
37-12,110 (Reissue 2016), was enacted to promote safety for persons
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and property in and connected with the use, operation, and equipment of
vessels and to promote uniformity of laws relating thereto.
9. ____. The State Boat Act applies to any waters within the territorial
limits of Nebraska.
10. ____. The provisions of the State Boat Act and of other applicable
laws govern the operation, equipment, numbering, and all other matters
relating thereto whenever any vessel shall be operated on the waters
of Nebraska or when any activity regulated by the State Boat Act shall
take place.
11. Waters: Administrative Law: Ordinances. The State Boat Act permits
the adoption of any ordinance or local law relating to operation and
equipment of vessels so long as the provisions of which are and con-
tinue to be identical to the provisions of the State Boat Act or rules or
regulations issued thereunder.
12. Waters: Administrative Law. The State Boat Act specifically autho-
rizes the Game and Parks Commission to make special rules and regula-
tions with reference to the operation of vessels on any specific water or
waters within the territorial limits of Nebraska.
13. ____: ____. Pursuant to authority granted by the State Boat Act, the
Game and Parks Commission prescribed certain boating regulations
contained in the Nebraska Administrative Code, including special rules
and regulations for nonpublic lake associations governing operation
of vessels on waters administratively controlled by nonpublic lake
associations.
14. Waters: Administrative Law: Words and Phrases. The Nebraska
Administrative Code defines a nonpublic lake association as an organi-
zation of lakeside residents with administrative control over nonpublic
waters of this state.
15. Contracts: Public Policy. Any contract which is clearly contrary to
public policy is void.
16. Contracts: Parties. A party cannot, by contractual agreement with
another party, obtain the power to do something that state law forbids.
17. Waters: Administrative Law. Any subdivision of this state may at
any time make formal application to the Game and Parks Commission
for special rules and regulations with reference to the operation of ves-
sels on any waters within its territorial limits and shall set forth therein
the reasons which make such special rules or regulations necessary
or appropriate.
18. Injunction. An injunction is an extraordinary remedy, and it ordi-
narily should not be granted unless the right is clear, the damage is
irreparable, and the remedy at law is inadequate to prevent a failure
of justice.
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19. Injunction: Proof. The party seeking an injunction must establish by
a preponderance of the evidence every controverted fact necessary to
entitle him or her to relief.
20. Restrictive Covenants: Injunction. A mandatory injunction is an
appropriate remedy for a breach of a restrictive covenant.
21. Appeal and Error. To be considered by an appellate court, an alleged
error must be both specifically assigned and specifically argued in the
brief of the party asserting the error.
22. Attorney Fees. Attorney fees and expenses may be recovered only
where provided for by statute or when a recognized and accepted uni-
form course of procedure has been to allow recovery of attorney fees.
23. Attorney Fees: Costs. Customarily, attorney fees and costs are awarded
only to prevailing parties, or assessed against those who file frivo-
lous suits.
24. ____: ____. Neb. Rev. Stat. § 25-824(2) (Reissue 2016) permits a court
in any civil action to award as part of its judgment and in addition to any
other costs otherwise assessed reasonable attorney fees and court costs
against any attorney or party who has brought or defended a civil action
that alleges a claim or defense which a court determines is frivolous or
made in bad faith.
25. Actions: Attorney Fees: Words and Phrases. The term “frivolous”
connotes an improper motive or legal position so wholly without merit
as to be ridiculous.
26. Attorney Fees: Appeal and Error. On appeal, a trial court’s decision
allowing or disallowing attorney fees for frivolous or bad faith litiga-
tion will be upheld in the absence of an abuse of discretion.
Appeal from the District Court for Dodge County: Geoffrey
C. H all, Judge. Affirmed.
K.C. Engdahl for appellant.
Thomas B. Thomsen, of Sidner Law, for appellee Summer
Haven Lake Association, Inc.
Inbody, Pirtle, and R iedmann, Judges.
R iedmann, Judge.
INTRODUCTION
Ronald G. Vlach appeals and Summer Haven Lake
Association, Inc. (Summer Haven), cross-appeals the order of
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the Dodge County District Court which granted an injunction
enjoining Vlach from further violations of Summer Haven’s
rules and regulations and upheld a 120-day suspension of
Vlach’s lake privileges. Finding no merit to the issues raised
on appeal or cross-appeal, we affirm.
BACKGROUND
Vlach is the owner and sole shareholder of Victory Lake
Marine, Inc. (Victory Lake). Summer Haven is a Nebraska
corporation and is the owner of Summer Haven Lake and the
real estate surrounding the lake. Persons interested in purchas-
ing a cabin at Summer Haven Lake must commit to purchasing
one share of Summer Haven common stock. Summer Haven’s
bylaws require that each shareholder enter into a shareholder
agreement with Summer Haven. Accordingly, in June 2006, a
shareholder agreement was executed between Summer Haven
and Victory Lake/Vlach. The body of the agreement stated
that it was being entered into between Summer Haven as the
“Association” and Victory Lake as the “Shareholder.” The
signature page contained a line for Vlach to sign as share-
holder and president of Victory Lake and a separate line for
him to sign as shareholder only. The line reserved for the
signature of the president of Victory Lake was left blank, and
Vlach signed only the line marked “Shareholder.” The share-
holder agreement also contains an acknowledgment wherein
the shareholder acknowledges receiving a copy of Summer
Haven’s rules and regulations and agrees to abide by them.
Vlach again signed only the line marked for “Shareholder”
and not the line designated for the signature of the president
of Victory Lake.
Summer Haven’s safety rules and regulations provide
that all members and residents of Summer Haven Lake are
responsible for ensuring that they and their guests follow the
rules and the terms of the shareholder agreement. A violation
of the rules is a ground for suspension of lake privileges for
a period of up to 120 days. Relevant to this appeal, the rules
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provide that the maximum length for inboard and outboard
boats is 18 feet 6 inches and that pontoon boats are restricted
to operation on the lake between the hours of 8 p.m. and
10 a.m.
In August 2012, safety violations were reported against
Vlach for having a boat longer than the maximum length
at his “shore station” and operating a pontoon boat before
8 p.m. Vlach appealed the violations to Summer Haven’s
board of directors, which voted to reject the appeal and
impose a 120-day suspension of lake privileges. Vlach then
appealed the decision to the shareholders, and the shareholders
voted at a May 2013 meeting to uphold the board’s decision.
Nevertheless, Vlach was observed operating a boat on the lake
on at least three occasions in July 2013, and he ultimately
admitted that he operated boats on the lake during the 120-day
suspension period.
Accordingly, Summer Haven commenced this action in
August 2013, requesting a temporary and permanent injunction
restraining Vlach’s use of the lake for a period of 120 days as
a result of violating Summer Haven’s rules and regulations
and enjoining him from further violations. Vlach and Victory
Lake filed an answer, counterclaim, and third-party complaint
joining the individual members of Summer Haven’s board of
directors as third-party defendants. The relief requested in the
counterclaim was limited to dismissal of the claims at Summer
Haven’s cost and reimbursement of attorney fees and costs
expended in defending the action. In their third-party com-
plaint, Vlach and Victory Lake alleged that Summer Haven
lacked the authority to institute legal proceedings against
them, and because the directors knew or should have known
they were exceeding their authority, their actions constitute
a breach of trust and fiduciary obligations. Summer Haven
filed a motion to dismiss the counterclaim and third-party
complaint, and after concluding that the counterclaim and
third-party complaint failed to state a claim, the district court
granted the motion to dismiss.
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Vlach and Victory Lake moved for summary judgment as to
the allegations in the amended complaint, and thereafter, the
parties agreed to bifurcate the legal issue of Summer Haven’s
authority to enact and enforce its own rules and regulations
from the factual issue of whether Vlach and/or Victory Lake
violated the rules. The district court determined that the share-
holder agreement was executed by Vlach personally and as
authorized representative of Victory Lake, and as such, both
entities were bound by its terms. In addition, the court con-
cluded that the State Boat Act, see Neb. Rev. Stat. §§ 37-1201
to 37-12,110 (Reissue 2016) (the Act), does not conflict with
or govern the issues in the present case, and therefore, the
shareholder agreement controls and is enforceable against the
shareholders. The court deemed Summer Haven’s rules and
regulations to be restrictive covenants, which Summer Haven
is entitled to enforce along with their associated penalties.
After holding a trial on the remaining factual issues, the
district court incorporated its previous rulings on the legal
issues into its order and concluded that the undisputed evi-
dence established that Vlach violated Summer Haven’s rules
and regulations by operating a pontoon boat outside of the
allowed hours and operating a boat that exceeded the maxi-
mum length restrictions. The court therefore granted the
equitable relief sought by Summer Haven and enjoined Vlach
from further violating Summer Haven’s rules and regula-
tions and upheld the 120-day suspension of Vlach’s lake
privileges. The district court ruled, however, that there was no
evidence that Victory Lake violated the rules and regulations
and dismissed all claims against it. The court subsequently
granted Summer Haven’s motion for attorney fees in the
amount of $5,000. Vlach timely appeals, and Summer Haven
cross-appeals.
ASSIGNMENTS OF ERROR
Vlach assigns, restated and renumbered, that the trial court
erred in (1) denying Vlach’s motion for summary judgment,
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(2) determining that provisions of the Act did not control and
govern, (3) finding that Vlach was bound by and had violated
Summer Haven’s rules and regulations, (4) finding in favor
of Summer Haven with regard to its claims and granting
an injunction, (5) dismissing Vlach’s counterclaim and third-
party complaint, and (6) awarding attorney fees in favor of
Summer Haven.
On cross-appeal, Summer Haven assigns that the district
court erred in dismissing the action against Victory Lake and
failing to award attorney fees in the amount of $16,600.
STANDARD OF REVIEW
[1] An action for injunction sounds in equity. On appeal
from an equity action, an appellate court tries 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 conclu-
sion reached by the trial court. ConAgra Foods v. Zimmerman,
288 Neb. 81, 846 N.W.2d 223 (2014).
ANALYSIS
Shareholder Agreement.
We first address the claims with respect to the capacity in
which the shareholder agreement was signed. The district court
concluded that the shareholder agreement was executed by
Vlach in his personal capacity and as representative of Victory
Lake. Vlach argues that there was no evidence that he agreed
to be personally bound by the agreement. No one contests
the court’s determination that Vlach executed the agreement
as representative of Victory Lake; thus, we do not address
this issue.
The issue before us with respect to the shareholder agree-
ment in the present case is whether Vlach is personally bound
to the obligations contained therein. We conclude that he is.
The agreement is the same agreement signed by other
shareholders, except for the name of the proposed shareholder
and the lot number. There are two separate lines reserved
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for the signature of the shareholder of Summer Haven. The
top line is labeled “Shareholder” and is designated for the
signature of Victory Lake by its president. The bottom line
is labeled only as “Shareholder.” It is apparent that the name
of Victory Lake and the word “President” were typed into the
standard shareholder agreement separately, because they are
typed using a different font. Vlach elected to sign only on the
bottom line, which was designated for shareholder but left
blank the space designated for the signature of the president
of Victory Lake.
[2] At the bottom of the shareholder agreement signature
page appears an acknowledgment, wherein the shareholder
of Summer Haven acknowledges having received a copy of
Summer Haven’s rules and regulations and agrees to abide by
them. Underneath the acknowledgment appears a signature
block which is identical to the spaces for the shareholder’s
signatures in the agreement. In other words, the acknowledg-
ment also contains two lines designated for the signature(s)
of the shareholder(s) of Summer Haven. Vlach again elected
to sign only the bottom line reserved for the shareholder but
not the top line reserved for the representative of Victory
Lake. In so signing, Vlach agreed to bind himself person-
ally to the terms of the agreement and the rules governing
Summer Haven. See 780 L.L.C. v. DiPrima, 9 Neb. Ct. App.
333, 611 N.W.2d 637 (2000) (explaining that if agent intends
to bind his principal, agent must not only name principal,
but must express by some form of words that writing is
act of principal). Where, as here, two signature lines were
available, one in which Vlach could have signed in a rep-
resentative capacity, and another in which he could sign in
his individual capacity, and he chose to sign the latter, he is
bound individually.
[3,4] Vlach argues that testimony contained in his depo-
sition and affidavit offered into evidence at the summary
judgment hearing establish that he did not intend to bind
himself personally, but, rather, he only intended to enter into
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the shareholder agreement as representative of Victory Lake.
However, neither party contends that the shareholder agree-
ment is ambiguous, and extrinsic evidence is not permitted
to explain the terms of a contract that is not ambiguous. See
Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist., 291 Neb.
642, 868 N.W.2d 67 (2015). When a contract is unambiguous,
the intentions of the parties must be determined from the con-
tract itself. Id. Because no one contends that the shareholder
agreement is ambiguous, nor do we find it to be ambiguous,
we do not consider parol evidence such as Vlach’s deposition
or affidavit to determine the meaning of the contract.
[5] The Nebraska Supreme Court has stated that the inter-
pretation given to a contract by the parties themselves while
engaged in the performance of it is one of the best indications
of true intent and should be given great, if not controlling,
influence. See Linscott v. Shasteen, 288 Neb. 276, 847 N.W.2d
283 (2014). Here, Vlach resided at Summer Haven Lake and
served on Summer Haven’s board of directors. The bylaws
specifically provide that the board is to be composed of share-
holders. There is no indication that Vlach served on the board
in his representative capacity as president of Victory Lake
or that his residency there was in any way tied to his corpo-
rate position.
After reviewing the evidence, we find no error in the court’s
conclusion that Vlach executed the shareholder agreement
in his individual capacity. Accordingly, we find no merit to
Vlach’s argument that evidence was lacking to support the
district court’s decision that he personally bound himself to the
terms and conditions of the shareholder agreement.
Concluding that Vlach was personally bound under the
shareholder agreement, the district court denied Vlach’s motion
for summary judgment, finding that material issues of fact
remained which could not be resolved by summary judgment.
Vlach does not challenge this conclusion on appeal; rather,
his argument is based on his claim that he was not personally
bound under the shareholder agreement. Having rejected that
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argument, we affirm the denial of Vlach’s motion for sum-
mary judgment.
On cross-appeal, Summer Haven contends that the district
court erred in dismissing the claims against Victory Lake,
because Victory Lake and Vlach were one and the same. In
its amended complaint, Summer Haven alleged that Victory
Lake was the alter ego of Vlach and that Vlach used Victory
Lake “merely as an instrumentality in conducting his own per-
sonal business.” Thus, Summer Haven asserts that the claims
against the corporation should not have been dismissed. We
do not agree.
[6,7] Victory Lake is a Nebraska corporation, and a cor-
poration will be looked upon as a legal entity as a general
rule, and until sufficient reason to the contrary appears. See
Medlock v. Medlock, 263 Neb. 666, 642 N.W.2d 113 (2002).
However, in equity, the corporate entity may be disregarded
and held to be the mere alter ego of a shareholder or share-
holders in various circumstances where necessary to prevent
fraud or other injustice. Id. Among the factors which are
relevant in determining to disregard the corporate entity are
diversion by the shareholder or shareholders of corporate
funds or assets to their own or improper uses and the fact that
the corporation is a mere facade for the personal dealings of
the shareholder and that the operations of the corporation are
carried on by the shareholder in disregard of the corporate
entity. Id.
There was no evidence presented in the case at hand to
establish that Victory Lake was a mere alter ego of Vlach.
There was also no evidence presented that Vlach violated the
rules and regulations violations while acting in his capac-
ity as president of Victory Lake. Summer Haven’s assigned
error as to the dismissal of the claims against Victory Lake
is based solely upon its position that Victory Lake is the
alter ego of Vlach. Having rejected this argument, we affirm
the district court’s decision dismissing the claims against
Victory Lake.
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State Boat Act.
Vlach next argues that Summer Haven lacked the authority
to enact and enforce its own rules and regulations, because
the Act controls and governs conduct on the lake. We agree
that the Act controls and governs Summer Haven Lake; how-
ever, we conclude that Summer Haven has the authority to
enact and enforce its own administrative rules and regulations
provided they do not conflict with the Act or provisions of
the Nebraska Administrative Code enacted by the Game and
Parks Commission.
[8,9] The Act was enacted to promote safety for persons and
property in and connected with the use, operation, and equip-
ment of vessels and to promote uniformity of laws relating
thereto. § 37-1201. The Act applies to any waters within the
territorial limits of Nebraska. § 37-1206.
[10,11] The provisions of the Act and of other applicable
laws govern the operation, equipment, numbering, and all other
matters relating thereto whenever any vessel shall be operated
on the waters of Nebraska or when any activity regulated by
the Act shall take place thereon. § 37-1264. The Act permits
the adoption of any ordinance or local law relating to operation
and equipment of vessels so long as the provisions of which
are and continue to be identical to the provisions of the Act or
rules or regulations issued thereunder. § 37-1264.
[12-14] In addition to this restriction, the Act specifically
authorizes the Game and Parks Commission to make special
rules and regulations with reference to the operation of ves-
sels on any specific water or waters within the territorial
limits of Nebraska. See § 37-1266. Pursuant to this authority,
the Game and Parks Commission prescribed certain boating
regulations contained in title 163, chapter 3, of the Nebraska
Administrative Code. Among these regulations are special
rules and regulations for nonpublic lake associations. See 163
Neb. Admin. Code, ch. 3, § 015 (2006). These special rules
and regulations govern operation of vessels, including water-
skiing and other related activities, on waters administratively
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controlled by nonpublic lake associations. 163 Neb. Admin.
Code, ch. 3, § 015.01 (2006). A nonpublic lake association is
defined as an organization of lakeside residents with adminis-
trative control over nonpublic waters of this state. § 015.01A1.
Included in the rules for nonpublic lake associations are spe-
cific rules prescribed for Summer Haven Lake. See 163 Neb.
Admin. Code, ch. 3, § 015.020 (2006). There are separate rules
which govern operation of vessels on waters administratively
controlled by subdivisions of this state. See 163 Neb. Admin.
Code, ch. 3, § 016 (2004).
[15,16] Stated another way, the Act grants the Game and
Parks Commission the authority to enact special rules and
regulations governing boating. Pursuant to this authority, the
Game and Parks Commission prescribed rules governing enti-
ties such as Summer Haven Lake, which it recognized are
administratively controlled by their lakeside residents. In other
words, the Game and Parks Commission recognizes that the
shareholders of Summer Haven have administrative control
over their lake. Therefore, the shareholders have the author-
ity to enact and enforce their own rules and regulations, pro-
vided the rules do not conflict with the terms of the Act or
the Nebraska Administrative Code. And because neither the
Act nor the Game and Parks Commission’s rules and regula-
tions addresses hours of operation for pontoon boats or boat
size, Summer Haven’s rules and regulations do not conflict.
Therefore, Summer Haven is not prohibited from requiring that
its shareholders abide by additional rules and regulations so
long as the rules and regulations do not violate public policy
or conflict with state law. See, Devney v. Devney, 295 Neb. 15,
886 N.W.2d 61 (2016) (any contract which is clearly contrary
to public policy is void); Rath v. City of Sutton, 267 Neb. 265,
673 N.W.2d 869 (2004) (party cannot, by contractual agree-
ment with another party, obtain power to do something that
state law forbids).
Vlach argues that not only may Summer Haven’s rules and
regulations not conflict with the Act, they must be identical
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to the provisions of the Act. We agree that the Act requires
that any ordinance or local law adopted under the Act be
identical to the provisions of the Act or rules or regulations
issued thereunder. See § 37-1264. However, Summer Haven’s
rules are not ordinances or local laws, and they therefore do
not fall under this requirement.
[17] Vlach also argues that in order to enact its own rules,
Summer Haven was first required to obtain permission from
the Game and Parks Commission. But the Act requires only
such permission from subdivisions of the state. Any subdivi-
sion of this state may at any time make formal application to
the Game and Parks Commission for special rules and regula-
tions with reference to the operation of vessels on any waters
within its territorial limits and shall set forth therein the rea-
sons which make such special rules or regulations necessary or
appropriate. § 37-1265. Under the boating regulations of the
Nebraska Administrative Code, however, Summer Haven is
not a subdivision of the state but is a nonpublic lake associa-
tion. In addition, the Nebraska Administrative Code recognizes
that lake associations, such as Summer Haven, have adminis-
trative control over their own waters. As such, Summer Haven
was not required to obtain permission before enacting its own
rules. We therefore find that Summer Haven has the authority
to enact and enforce its own administrative rules governing
conduct on its lake.
Rules Violations.
Vlach contends that the district court erred in determining
that he violated Summer Haven’s rules and regulations. And
he claims that because evidence of any rules violations was
lacking, the extraordinary remedy of issuing an injunction was
erroneous. We find no merit to these arguments.
In an equity action, an appellate court tries factual ques-
tions de novo on the record and, as to questions of both fact
and law, is obligated to reach a conclusion independent of
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the conclusion reached by the trial court. ConAgra Foods v.
Zimmerman, 288 Neb. 81, 846 N.W.2d 223 (2014).
In his deposition, Vlach admitted that on or around August
6, 2012, he operated a pontoon boat on Summer Haven Lake
before 8 p.m. In addition, the president of the Summer Haven
board of directors at the time of the violations testified that
at a board of directors’ meeting on August 6, Vlach acknowl-
edged that he committed the violations he was charged with
committing—operating a pontoon boat before 8 p.m. and
having a boat that exceeded the maximum size limitation at
his shore station. Moreover, meeting minutes from a board
of directors’ meeting held September 23 indicate that Vlach
self-reported the violation of hours of operating a pontoon
boat. Accordingly, we hold that the evidence was sufficient
to conclude that Vlach committed the violations with which
he was charged. Although we note that the court’s order of
April 22, 2016, states that “Vlach operated a motor boat on
the lake which exceeded the length restrictions of the Rules
and Regulations,” it is clear from the record that the charged
violation was for having a boat that exceeded the size limita-
tion in Vlach’s shore station. We find no prejudicial error in
the court’s statement because either scenario is a violation of
Summer Haven’s rules.
[18-20] The question then becomes whether an injunction
was the proper remedy. An injunction is an extraordinary rem-
edy, and it ordinarily should not be granted unless the right
is clear, the damage is irreparable, and the remedy at law is
inadequate to prevent a failure of justice. ConAgra Foods
v. Zimmerman, supra. The party seeking an injunction must
establish by a preponderance of the evidence every contro-
verted fact necessary to entitle him or her to relief. Id. A man-
datory injunction is an appropriate remedy for a breach of a
restrictive covenant. Beaver Lake Assn. v. Sorensen, 231 Neb.
75, 434 N.W.2d 703 (1989).
Vlach argues that the extraordinary remedy of an injunc-
tion was not warranted by the facts of the case because the
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record does not support a finding that he was personally
bound by Summer Haven’s rules or that he violated the rules.
Having rejected those arguments, we conclude that entering an
injunction enjoining Vlach from further violations of Summer
Haven’s rules was not in error. Not only did the evidence sup-
port a finding that Vlach violated the rules in August 2012,
but the undisputed evidence establishes that he continued to
operate a boat during the 120-day suspension period imposed
by Summer Haven’s board of directors. And when initially
confronted with his violations, Vlach’s defense was his belief
that Summer Haven lacked the authority to enact and enforce
its rules. Thus, Summer Haven was left with little choice other
than legal proceedings to force Vlach’s compliance with its
rules. Accordingly, we conclude that the district court did not
err in granting Summer Haven’s requested relief in the form of
an injunction.
Vlach’s Counterclaim and
Third-Party Complaint.
Vlach asserts that the district court erred in dismissing his
counterclaim and third-party complaint. We disagree.
We first observe that Vlach notes the “irregular proceed-
ings” in which the motion to dismiss was granted. Brief for
appellant at 45. The district court initially denied the motion
to dismiss from the bench and in a subsequent written order
dated February 18, 2015. Thereafter, the court held a hear-
ing on a pending motion for summary judgment, and in its
order denying summary judgment dated July 31, 2015, the
court reversed its previous decision and granted Summer
Haven’s motion to dismiss the counterclaim and third-party
complaint, ruling that the complaint failed to state a claim
for relief. Although Vlach does not specifically challenge the
court’s authority to reverse its ruling on its own motion, we
recognize that the court does have the power to do so. See,
Fitzgerald v. Fitzgerald, 286 Neb. 96, 835 N.W.2d 44 (2013)
(in civil cases, court of general jurisdiction has inherent
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power to vacate or modify its own judgment at any time
during term in which court issued it); Frerichs v. Nebraska
Harvestore Sys., 226 Neb. 220, 410 N.W.2d 487 (1987) (no
abuse of discretion in trial court acting sua sponte to correct
earlier order which court determined was conclusively shown
to be incorrect).
[21] The question then becomes whether the district court
erred in granting the motion to dismiss. Vlach argues that
he should have been permitted to join the individual direc-
tors as third-party defendants because they knew or should
have known that the institution of legal proceedings against
Vlach and Victory Lake exceeded their corporate author-
ity and permitting commencement of the suit constituted a
breach of trust and fiduciary obligations owed by the direc-
tors to the shareholders. As we determined above, however,
the decision to grant Summer Haven’s request for injunction
and enjoin Vlach from further violations of Summer Haven’s
rules as well as upholding the 120-day suspension is sup-
ported by the evidence. We therefore reject Vlach’s claim
that the directors breached the duty owed to the shareholders
by commencing the present action. We note that Vlach does
not specifically argue it was error to dismiss his counter-
claim, and we therefore do not address that issue. See Mock
v. Neumeister, 296 Neb. 376, 892 N.W.2d 569 (2017) (to be
considered by appellate court, error must be both specifically
assigned and specifically argued in brief of party assert-
ing error). Consequently, we conclude that the district court
did not err in dismissing Vlach’s counterclaim and third-
party complaint.
Attorney Fees Award.
Finally, Vlach asserts that the district court erred in award-
ing attorney fees to Summer Haven, and on cross-appeal,
Summer Haven contends that the fees award should have been
$16,600 rather than $5,000. We find no abuse of discretion in
the fees awarded.
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[22,23] Attorney fees and expenses may be recovered only
where provided for by statute or when a recognized and
accepted uniform course of procedure has been to allow recov-
ery of attorney fees. SBC v. Cutler, 23 Neb. Ct. App. 939, 879
N.W.2d 45 (2016). Customarily, attorney fees and costs are
awarded only to prevailing parties, or assessed against those
who file frivolous suits. Id.
[24] Here, Summer Haven based its request for attorney
fees on Neb. Rev. Stat. § 25-824(2) (Reissue 2016), which
provides:
Except as provided in subsections (5) and (6) of this sec-
tion, in any civil action commenced or appealed in any
court of record in this state, the court shall award as part
of its judgment and in addition to any other costs other-
wise assessed reasonable attorney’s fees and court costs
against any attorney or party who has brought or defended
a civil action that alleges a claim or defense which a
court determines is frivolous or made in bad faith.
Summer Haven’s motion for attorney fees specifically
alleged that an attorney fees award was appropriate because
Vlach’s defense was frivolous and because his refusal to
admit certain matters in his deposition and discovery responses
necessitated proof of such matters.
[25,26] The term “frivolous” connotes an improper motive
or legal position so wholly without merit as to be ridiculous.
SBC v. Cutler, supra. On appeal, a trial court’s decision allow-
ing or disallowing attorney fees for frivolous or bad faith
litigation will be upheld in the absence of an abuse of discre-
tion. Id.
At the hearing on the request for attorney fees, Summer
Haven’s counsel testified that although he did not believe
Vlach’s defense regarding the Act was frivolous, the numer-
ous motions filed by Vlach as well as his attempt to insti-
tute a counterclaim and third-party complaint were frivolous.
Counsel’s position was therefore that Vlach should be required
to reimburse Summer Haven for time spent and fees incurred
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for the matters that were frivolous in nature. Counsel then testi-
fied that he spent 56.4 hours on frivolous matters and that the
rate charged to Summer Haven was $200 per hour. Counsel
acknowledged, however, that he entered into an agreement
with Summer Haven to represent it in this matter for a total
sum of $5,000.
On appeal, Vlach argues that his defense to Summer Haven’s
action was not frivolous. And despite Summer Haven’s coun-
sel’s concession at the attorney fees hearing, on appeal, Summer
Haven asserts that not only was the defense frivolous, but a
fees award is appropriate because of the vexatious manner in
which the case was defended.
Based on the record before us, we cannot find that the attor-
ney fees award constitutes an abuse of discretion. Summer
Haven’s counsel admitted that Vlach’s defense based on the
Act was not frivolous; thus, attorney fees on those grounds
would be unwarranted. Summer Haven’s counsel testified that
he expended time valued at approximately $11,280 on mat-
ters he considered frivolous and unrelated to the allegations in
the complaint requesting an injunction for Vlach’s violations
of Summer Haven’s rules and regulations. These included
responding to multiple motions to dismiss and the counter-
claim and third-party complaint. Despite the total sum to
which counsel testified, the court elected to order the payment
of only $5,000. The court did not set forth the basis upon
which it calculated this amount. Although the award is equal
to the amount of fees agreed upon by Summer Haven and its
counsel, it would be speculation on our part to conclude that
the court found it was limited by that agreement. Based upon
the evidence presented and the concession that Vlach’s defense
was in part not frivolous, we find no abuse of discretion in the
award of $5,000 for attorney fees.
CONCLUSION
We conclude that Summer Haven has the authority to enact
its own rules and regulations governing conduct on Summer
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Haven Lake provided that such rules do not conflict with the
Act or regulations issued thereunder. We also conclude that
Vlach personally bound himself under the shareholder agree-
ment and that therefore, he was subject to enforcement of
Summer Haven’s rules. The evidence was sufficient to estab-
lish that he violated those rules and that an injunction was an
appropriate remedy. Because the evidence does not support
a finding that Vlach violated the rules and regulations in his
capacity as president of Victory Lake, the claims against it
were properly dismissed. Finally, we find no abuse of discre-
tion in the amount of attorney fees awarded to Summer Haven.
As a result, we affirm the order of the district court.
A ffirmed.