Klingelhoefer v. Parker, Grossart ( 2013 )

Decisions of the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 825
Cite as 20 Neb. Ct. App. 825
305 N.W.2d at 877. To suggest that the State can sign an
acceptance of revocation 6 years after it has been provided to
it does not comport with “prompt and strict compliance with
the statute.”
If parents are required to revoke their relinquishments
within a reasonable time, so, too, should the placement agency
be required to accept the relinquishment within a reasonable
time. Under the facts of this case, however, I agree that Ida is
precluded from revoking her relinquishment at this late date.
Although it does not appear from our record that Ida’s relin-
quishment documents were filed with the court, copies of the
documents are included in the record. On June 17, 2009, upon
the representation of Ida’s prior counsel that Ida had signed
relinquishments and that DHHS had accepted the relinquish-
ments, the court dismissed allegations against Mario Sr. and
dismissed case No. JV06-470. Thereafter, DHHS, Ida, and the
court acted for several years as though an acceptance existed.
Under these facts, I concur that the policy reasons expressed
by the majority require the result ultimately reached.
Donald G. K lingelhoefer, individually, as beneficiary
of the Constance K. K lingelhoefer R evocable
Trust, and as representative of Constance
K lingelhoefer, L.L.C., appellant, v.
Parker, Grossart, Bahensky &
Beucke, L.L.P., appellee.
___ N.W.2d ___
Filed June 4, 2013. No. A-12-477.
1. Appeal and Error. An appellate court addresses only issues assigned and argued.
2. Standing: Jurisdiction. Standing requires that a litigant have a personal stake
in the outcome of a controversy that warrants invocation of a court’s jurisdiction
and justifies exercise of the court’s remedial powers on the litigant’s behalf.
3. Standing: Claims: Parties: Proof. To have standing, a litigant must assert its
own rights and interests and demonstrate an injury in fact, which is concrete in
both a qualitative and temporal sense.
4. Corporations: Derivative Actions. A member of a limited liability company
bringing a derivative action must set forth in the complaint what actions were
taken to comply with Neb. Rev. Stat. § 21-165 (Reissue 2012).
Decisions of the Nebraska Court of Appeals
826 20 NEBRASKA APPELLATE REPORTS
5. Trusts: Actions. Beneficiaries of a trust may generally enforce a cause of action
that the trustee has against a third party only if the trustee cannot or will not
do so.
6. Corporations: Actions: Parties. As a general rule, a shareholder may not bring
an action in his or her own name to recover for wrongs done to the corporation
or its property. Such a cause of action is in the corporation and not the sharehold-
ers. The right of a shareholder to sue is derivative in nature and normally can be
brought only in a representative capacity for the corporation.
7. Corporations: Actions: Parties: Proof. If a shareholder can establish an indi-
vidual cause of action because the harm to the corporation also damaged the
shareholder in his or her individual capacity, then the individual can pursue his or
her claims.
8. Corporations: Actions: Parties: Proof: Words and Phrases. In order to estab-
lish an individual harm, the shareholder must allege a separate and distinct injury
or a special duty owed by the party to the individual shareholder. A “special duty”
is a duty owed to the shareholder separate and distinct from the duty owed to
the entity.
9. Corporations: Actions: Parties: Damages. Even if a shareholder establishes
that there was a special duty, he or she may only recover for damages suffered in
his or her individual capacity, and not injuries common to other shareholders.
10. Corporations: Trusts: Actions: Parties. The duty a third person owes to an
individual trust beneficiary or member of a limited liability company must
be separate and distinct from the duty owed to the trust or the limited liabil-
ity company.
11. Attorney and Client: Parties: Negligence: Liability. The Nebraska Supreme
Court set out factors the court is to examine to determine the extent of an
attorney’s duty, if any, to a third party. These factors include: (1) the extent to
which the transaction was intended to affect the third party, (2) the foreseeability
of harm, (3) the degree of certainty that the third party suffered injury, (4)
the closeness of the connection between the attorney’s conduct and the injury
suffered, (5) the policy of preventing future harm, and (6) whether recogni-
tion of liability under the circumstances would impose an undue burden on
the profession.
12. Appeal and Error. In the absence of plain error, an appellate court considers
only claimed errors which are both assigned and discussed.
Appeal from the District Court for Buffalo County: James E.
Doyle IV, Judge. Affirmed.
David J. Lanphier, of Broom, Clarkson, Lanphier &
Yamamoto, for appellant.
Anne Marie O’Brien, of Lamson, Dugan & Murray, L.L.P.,
for appellee.
Sievers, Pirtle, and Riedmann, Judges.
Decisionsof the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 827
Cite as 20 Neb. Ct. App. 825
Riedmann, Judge.
I. INTRODUCTION
Donald G. Klingelhoefer appeals the decision of the dis-
trict court for Buffalo County granting summary judgment in
favor of Parker, Grossart, Bahensky & Beucke, L.L.P. (Parker
Grossart), and denying Donald’s motion to alter or amend the
judgment. The district court found Donald lacked standing
to bring this professional malpractice action because Parker
Grossart owed no duty to Donald as a member of Constance
Klingelhoefer, L.L.C. (LLC); as a beneficiary of the Constance
K. Klingelhoefer Revocable Trust (Trust); or as one of the heirs
of his mother, Constance K. Klingelhoefer. Because we find no
merit to the issues raised on appeal, we affirm.
II. BACKGROUND
Donald is one of the 11 children of Constance. In 1996,
Constance hired Damon Bahensky, an attorney and member
of Parker Grossart, to assist her in developing and implement-
ing a comprehensive estate plan. Constance’s goals were to
reduce estate taxes, avoid the need for probate, and ensure
that her three sons who were actively engaged in farming had
the opportunity to purchase some or all of the real estate she
owned in Buffalo County.
To reduce estate taxes, Constance created the LLC and
transferred her real estate into the LLC. She gave interests
in the LLC to each of her 11 children and kept an interest
for herself. To avoid the need for probate, Constance created
the Trust, of which she was the initial trustee, and trans-
ferred her personal property into the Trust. Constance also
executed a will, directing that upon her death, any remaining
real or personal property in her possession be transferred to
the Trust. Constance died on March 19, 2006. Donald filed
his initial complaint on October 29, 2009. He brought the
action solely in his name. Parker Grossart filed a motion to
dismiss for failure to state a claim, primarily raising the issue
of Donald’s standing to bring an action in his own name for
injuries he allegedly sustained as a member of the LLC and as
a beneficiary of the Trust. Instead of granting the motion to
dismiss, the district court allowed Donald 30 days to amend
Decisions of the Nebraska Court of Appeals
828 20 NEBRASKA APPELLATE REPORTS
his complaint. The court noted that Donald was suing, in part,
as a member of the LLC and that as such, he could bring a
derivative action if it was properly alleged. The court granted
Donald leave to file an amended complaint containing proper
allegations for a derivative suit and otherwise clarifying his
allegations. Particularly, the court noted that to properly assert
a derivative action, Donald either must assert that he requested
that the manager or appropriate member institute the action or
explain why such request would be futile.
Donald filed an amended complaint, changing the caption
to reflect himself individually and as “Beneficiary of [the
Trust] and as Representative of [the LLC].” He inserted an
allegation stating that he did not
secure an initiation of this action against [the] LLC by
the manager of the LLC and certain other members,
because the same would be futile since the acting man-
ager and certain other named members . . . were ben-
eficiaries of the misconduct alleged in this Amended
Complaint, and further were previously represented by
[Parker Grossart].
(Emphasis supplied.) Donald did not include an allegation that
he had requested that the LLC file the present action or why
such request would be futile.
After Donald filed the amended complaint, Parker Grossart
moved for summary judgment. The district court granted the
motion, concluding that Donald lacked standing to maintain a
professional negligence action against Parker Grossart based
on his status as an heir of Constance or as a member of the
LLC. The court further concluded that Parker Grossart owed no
duty to Donald as a beneficiary of the Trust.
Donald filed a motion for a new trial, arguing that the
district court should reconsider its previous ruling in light of
Sickler v. Kirby, 19 Neb. Ct. App. 286, 805 N.W.2d 675 (2011),
an opinion this court released just prior to the district court’s
grant of summary judgment. The district court, treating the
motion as one to alter or amend, denied the motion. In a
lengthy order, the court addressed its prior ruling as it related
to Donald’s status as a member of the LLC and as a benefi-
ciary of the Trust. The court determined that Donald did not
Decisions of the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 829
Cite as 20 Neb. Ct. App. 825
challenge the court’s finding regarding his lack of standing to
sue as Constance’s heir. Expanding on its prior order, the court
stated that Donald had no standing either as a member of the
LLC or as a beneficiary of the Trust and that Parker Grossart
owed Donald no duty in either of these capacities. This timely
appeal followed.
III. ASSIGNMENTS OF ERROR
Donald assigns, restated and renumbered, that the district
court erred in (1) granting Parker Grossart’s motion for sum-
mary judgment based on a finding that Donald lacked standing,
(2) denying Donald’s motion to alter or amend the court’s pre-
vious ruling, and (3) requiring Donald to amend his complaint
to allege a derivative action and then failing to allow him to
present evidence as to damages.
IV. STANDARD OF REVIEW
Summary judgment is proper when the pleadings and evi-
dence admitted at the hearing disclose no genuine issue regard-
ing any material fact or the ultimate inferences that may be
drawn from those facts and that the moving party is entitled to
judgment as a matter of law. Wolski v. Wandel, 275 Neb. 266,
746 N.W.2d 143 (2008). In reviewing a summary judgment, an
appellate court views the evidence in the light most favorable
to the party against whom the judgment is granted and gives
such party the benefit of all favorable inferences deducible
from the evidence. Id.
V. ANALYSIS
[1] The record establishes that Constance employed
Bahensky to assist her with legal matters relating to her estate.
Donald does not allege he employed Bahensky; rather, his
complaint seeks recovery on his status as a beneficiary of the
Trust, an heir of the estate, and a member of the LLC to assert
that Bahensky owed him a duty of reasonable care. Because
Donald only assigns, and does not argue, that his status as an
heir of the estate gives him standing, we do not address this
assigned error. See Hass v. Neth, 265 Neb. 321, 657 N.W.2d
11 (2003) (appellate court addresses only issues assigned
and argued).
Decisions of the Nebraska Court of Appeals
830 20 NEBRASKA APPELLATE REPORTS
1. Standing to Sue
[2,3] Donald argues the district court erred in granting
Parker Grossart’s motion for summary judgment, because
Bahensky owed a duty to members of the LLC and benefi-
ciaries of the Trust and therefore he had standing to bring this
action. Standing requires that a litigant have a personal stake
in the outcome of a controversy that warrants invocation of a
court’s jurisdiction and justifies exercise of the court’s reme-
dial powers on the litigant’s behalf. Butler Cty. Sch. Dist. v.
Freeholder Petitioners, 283 Neb. 903, 814 N.W.2d 724 (2012).
To have standing, a litigant must assert its own rights and
interests and demonstrate an injury in fact, which is concrete
in both a qualitative and temporal sense. Id.
(a) Donald Did Not Plead
Derivative Action
Donald purports to bring this action individually and as
a “representative” of the LLC and beneficiary of the Trust.
For reasons set forth below, we determine that Donald’s
claims were individual claims and were not pled as a deriva-
tive action.
[4,5] Neb. Rev. Stat. § 21-164 (Reissue 2012) allows for
a direct action by a member of a limited liability company
against only the limited liability company itself, its man-
ager, or another member; however, Neb. Rev. Stat. § 21-165
(Reissue 2012) allows for derivative actions if the member
makes a demand upon the manager of the limited liability
company to institute the action unless such demand would
be futile. A member bringing a derivative action must set
forth in the complaint what actions were taken to comply
with § 21-165. See Neb. Rev. Stat. § 21-167 (Reissue 2012).
Similarly, beneficiaries of a trust may generally enforce a
cause of action that the trustee has against a third party only
if the trustee cannot or will not do so. 90A C.J.S. Trusts
§ 581 (2013).
We note that in response to Bahensky’s motion to dismiss,
the court allowed Donald 30 days to amend his complaint to
meet the statutory requirements of § 21-167 and to clarify his
allegations as a trust beneficiary. The trial court determined
Decisions of the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 831
Cite as 20 Neb. Ct. App. 825
that the amended complaint did not properly allege a derivative
action, and we agree.
In his amended complaint, Donald did not aver that he
requested the manager of the LLC to institute this professional
negligence action; rather, he stated it would have been futile
to request that the manager initiate an action against the LLC.
Even construing this to be an attempt to comply with § 21-167,
Donald does not allege anywhere in the amended complaint
that his claims were brought on behalf of the LLC or on behalf
of the Trust.
Furthermore, Donald’s amended complaint references a prior
action filed by the successor trustee and manager of the LLC
against Donald and his siblings, seeking a declaration as to the
proper interpretation of documents of the Trust and the LLC.
This court determined that the successor trustee and manager’s
interpretation of the documents conformed to Constance’s
intent in establishing the Trust and the LLC. See Klingelhoefer
v. Monif, No. A-11-056, 2012 WL 148730 (Neb. App. Jan. 17,
2012) (selected for posting to court Web site). In the present
action, Donald now seeks damages from Bahensky based on
an interpretation of the Trust and the LLC that we rejected in
the prior lawsuit. By doing so, Donald is, in essence, taking a
position adverse to the established intent of the Trust and the
LLC. It is clear that Donald’s personal interests are at the fore-
front of this litigation, which is inconsistent with a derivative
action to further the interests of the entity on whose behalf the
action is brought. See Ferer v. Erickson, Sederstrom, 272 Neb.
113, 718 N.W.2d 501 (2006).
Given that Donald’s amended complaint cannot properly be
construed as a derivative action, we address Donald’s standing
to bring a professional malpractice action as a member of the
LLC and as a beneficiary of the Trust.
(b) Donald Lacks Standing to Sue
Parker Grossart as Member of
LLC or Beneficiary of Trust
[6] The Nebraska Supreme Court has treated an attorney
malpractice action by a member of a limited liability company
identically to an action by a shareholder of a corporation. See
Decisions of the Nebraska Court of Appeals
832 20 NEBRASKA APPELLATE REPORTS
Freedom Fin. Group v. Woolley, 280 Neb. 825, 792 N.W.2d
134 (2010). As a general rule, a shareholder may not bring
an action in his or her own name to recover for wrongs done
to the corporation or its property. Such a cause of action is
in the corporation and not the shareholders. The right of a
shareholder to sue is derivative in nature and normally can
be brought only in a representative capacity for the corpora-
tion. Id.
[7-9] If, however, a shareholder can establish an individual
cause of action because the harm to the corporation also dam-
aged the shareholder in his or her individual capacity, then the
individual can pursue his or her claims. Id. In order to estab-
lish an individual harm, the shareholder must allege a separate
and distinct injury or a special duty owed by the party to the
individual shareholder. Id. A “special duty” is a duty owed to
the shareholder separate and distinct from the duty owed to
the entity. See id. Even if a shareholder establishes that there
was a special duty, he or she may only recover for damages
suffered in his or her individual capacity, and not injuries com-
mon to other shareholders. Id. In the present case, Donald does
not allege any injury or damages he sustained separate and
distinct from the harm allegedly suffered by other nonfarming
members of the LLC and beneficiaries of the Trust. In fact,
his argument is that Bahensky’s actions benefited the three
farming members of the LLC over the nonfarming members
and beneficiaries of the Trust, which means his injury is not
separate and distinct.
[10] Having failed to prove a separate and distinct injury,
Donald must prove Bahensky owed him a special duty. This
duty must be separate and distinct from the duty owed to the
Trust or the LLC. See Freedom Fin. Group v. Woolley, supra.
Donald does not allege any special duty; rather, his claim is
that the duty that arose in representing the Trust and the LLC
extended to him. No separate duty is claimed. Therefore,
we conclude that the trial court did not err in ruling that
Donald did not have standing to bring this action for injuries
he sustained as a member of the LLC or as a beneficiary of
the Trust.
Decisions of the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 833
Cite as 20 Neb. Ct. App. 825
2. Motion to Alter or Amend
Donald argues the district court erred in denying his motion
to alter or amend, because our decision in Sickler v. Kirby, 19
Neb. Ct. App. 286, 805 N.W.2d 675 (2011), governs the outcome
of this case. Sickler was released just prior to the court’s grant
of summary judgment and focuses on the factors set forth in
Perez v. Stern, 279 Neb. 187, 777 N.W.2d 545 (2010), to deter-
mine whether an attorney owes a duty to individual sharehold-
ers of a closely held corporation.
[11] In Perez v. Stern, supra, the Nebraska Supreme Court
set out factors the court is to examine to determine the extent
of an attorney’s duty, if any, to a third party. These fac-
tors include:
(1) the extent to which the transaction was intended to
affect the third party, (2) the foreseeability of harm, (3)
the degree of certainty that the third party suffered injury,
(4) the closeness of the connection between the attorney’s
conduct and the injury suffered, (5) the policy of prevent-
ing future harm, and (6) whether recognition of liability
under the circumstances would impose an undue burden
on the profession.
Id. at 192-93, 777 N.W.2d at 550-51.
In Sickler v. Kirby, supra, we applied these factors to hold
that an attorney’s duty extended to the two individual share-
holders of a closely held corporation. The attorney was hired
by the corporation, but we concluded that given the closely
held nature of the corporation and the commonality of inter-
ests between the corporation and its two shareholders, protec-
tion via legal representation of the corporation was, for all
intents and purposes, protection of the individual owners. Id.
Thus, we found the owners were the intended beneficiaries
of the attorney’s representation, because whatever affected
the corporation affected the owners in a direct and substantial
way. Id.
The present case is distinguishable. First, Sickler v. Kirby,
supra, involved a husband and wife who were the sole share-
holders of a closely held corporation. In such a situation,
whatever affects the corporation has a profound effect on
Decisions of the Nebraska Court of Appeals
834 20 NEBRASKA APPELLATE REPORTS
the two shareholders. In the present action, Constance was
the sole “founder” of the LLC and the Trust. Changes within
these entities will have varying effects on Donald and his 10
siblings. Second, in Sickler, communication to the corporation
was through only the two shareholders. In the present action,
communication was via Constance initially, and then through
the trustee and manager, without any contact with the other
siblings. Third, unlike Sickler, where the corporation and the
shareholders joined in the action, Donald brings this action as
an individual beneficiary and member, with neither the Trust
nor the LLC joining in the action. Fourth, unlike the corpo-
ration in Sickler, where the two shareholders participated in
the preparation of the corporate documents, Donald and his
siblings had no role in preparing documentation for the Trust
or the LLC. Bahensky was retained solely by Constance, and
it was Constance’s interests that Bahensky was representing in
his drafting of the estate planning documents. The interests of
Donald and his siblings were not necessarily aligned with those
of Constance, as evidenced by her intent to include special pro-
visions for her farming sons.
Moreover, were we to extend Bahensky’s duty to Donald
as a member of the LLC or beneficiary of the Trust, that duty
would necessarily extend to Donald’s siblings as well, creating
conflicting loyalties. This is evidenced by Donald’s allegations
that Bahensky engaged in actions with respect to the estate
plan which were to the benefit of three of Donald’s siblings
and to the detriment of the other members of the LLC and ben-
eficiaries of the Trust. But Bahensky was charged with drafting
the documents and carrying out their provisions through repre-
sentation of Constance, the trustee, regardless of the beneficial
or detrimental effect it had on the individual beneficiaries of
the Trust or members of the LLC. We therefore find the dis-
trict court did not err in determining Sickler v. Kirby, 19 Neb.
App. 286, 805 N.W.2d 675 (2011), did not apply and denying
Donald’s motion to alter or amend.
3. Amended Complaint
Donald asserts the district court erred in requiring him to
amend his complaint to allege a derivative action and then
Decisions of the Nebraska Court of Appeals
KLINGELHOEFER v. PARKER, GROSSART 835
Cite as 20 Neb. Ct. App. 825
failing to grant a new trial and allow him to produce evidence
of damages in accordance with Sickler v. Kirby, supra.
The crux of Donald’s argument is difficult to discern, but
to the extent Donald is arguing that his amended complaint
brought his claims within the purview of Sickler v. Kirby,
supra, we have distinguished Sickler above. We find no error
in the court’s dismissal of his amended complaint.
4. R emaining Arguments
[12] Donald also argues evidentiary errors, application of
claim preclusion, and the trial court’s finding that there was
no professional negligence, but did not assign these arguments
as errors. In the absence of plain error, an appellate court
considers only claimed errors which are both assigned and
discussed. Walz v. Neth, 17 Neb. Ct. App. 891, 773 N.W.2d 387
(2009). Because our resolution on the issue of standing is dis-
positive of the case, we need not address Donald’s remaining
arguments for plain error. See Kelly v. Kelly, 246 Neb. 55, 516
N.W.2d 612 (1994) (appellate court is not obligated to engage
in analysis which is not needed to adjudicate case and contro-
versy before it).
VI. CONCLUSION
We conclude Donald does not have standing to bring this
action. We also find that the relationship between Donald and
the LLC and the Trust is distinguishable from the relationship
shareholders have with a closely held corporation, because
legal representation of Constance did not equal protection for
Donald and his siblings. Finally, we conclude the district court
did not err in denying Donald a new trial to present evidence
as to damages.
Affirmed.