Schmidt v. Sportsman's Gallery ( 2022 )

IN THE NEBRASKA COURT OF APPEALS
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
(Memorandum Web Opinion)
SCHMIDT V. SPORTSMAN’S GALLERY
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
LESLIE L. SCHMIDT, INDIVIDUALLY AND AS TRUSTEE OF THE LES SCHMIDT
REVOCABLE TRUST, APPELLEE AND CROSS-APPELLANT,
V.
SPORTSMAN’S GALLERY, LLC, A NEBRASKA LIMITED LIABILITY COMPANY,
ET AL., APPELLANTS AND CROSS-APPELLEES.
Filed January 4, 2022. No. A-21-008.
Appeal from the District Court for Red Willow County: DAVID W. URBOM, Judge.
Affirmed as modified.
Timothy P. Brouillette, of Brouillette, Dugan, Troshynski & Bellew, P.C., L.L.O., for
appellants.
Cindy R. Volkmer, of Kelley, Scritsmier & Byrne, P.C., L.L.O., for appellee.
MOORE, BISHOP, and ARTERBURN, Judges.
ARTERBURN, Judge.
I. INTRODUCTION
Gothenburg State Bank loaned money to Sportsman’s Gallery, LLC, pursuant to three
separate promissory notes. The original members of Sportsman’s Gallery--Leslie L. Schmidt,
Nancy M. Schmidt, C. Douglas Breinig, and Debra A. Breinig--were guarantors on the loans.
Sportsman’s Gallery ultimately defaulted on the loans, and Gothenburg State Bank notified Leslie,
as a guarantor, that it was exercising its right to accelerate the debt pursuant to the promissory
notes. Leslie, although no longer a member of Sportsman’s Gallery, paid the loans in full and the
bank assigned to him the promissory notes.
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Leslie filed suit against Sportsman’s Gallery and the Breinigs. The district court granted
summary judgment in favor of Leslie and against Sportsman’s Gallery and the Breinigs on Leslie’s
claim of breach of the promissory notes and of the guarantor agreement. Leslie was awarded
one-half of what he had paid to Gothenburg State Bank, plus accrued interest. The Breinigs and
Sportsman’s Gallery appealed, and Leslie cross-appealed. Based on the reasons that follow, we
affirm as modified.
II. BACKGROUND
In April 2012, the Schmidts and the Breinigs formed Sportsman’s Gallery, a limited
liability company. Pursuant to the operating agreement, the Leslie L. Schmidt and Nancy M.
Schmidt Revocable Living Trust owned a one-half interest in the company. The Breinigs each
individually owned one-fourth of the company. According to Leslie, it was intended that the
Schmidts would own one-half of the company and the Breinigs would own one-half of the
company.
In the months following the formation of Sportsman’s Gallery, Nancy became ill. She died
in October 2012. While Leslie, through the trust, continued to own one-half of the company, he
“had very little involvement with the business” after Nancy’s death. Ultimately, in August 2014,
Leslie, acting as trustee, assigned the trust’s ownership interest in the company to the Breinigs.
According to Leslie, at the time of the assignment, he “was assured by [the Breinigs] that [his]
involvement and liability in the business would be over.” However, a copy of the written
assignment does not specifically indicate any such release of liability. Instead, such documentation
indicates that Leslie assigned his interest in Sportsman’s Gallery to the Breinigs “[f]or good and
valuable consideration.”
In May 2012, at a time when the Schmidts (through the trust) and the Breinigs still each
owned one-half of the company, Leslie, Nancy, Doug, and Debra individually executed unlimited
personal guarantees for any indebtedness Sportsman’s Gallery incurred with Gothenburg State
Bank. Specifically, the guaranty provided that it was “an absolute unconditional and continuing
guaranty of payment of the Indebtedness [of Sportsman’s Gallery] and shall continue to be in force
and be binding upon the Undersigned, whether or not all Indebtedness is paid in full, until this
guaranty is revoked by written notice actually received by the Lender.” Moreover, the guaranty
explained that the guarantors agreed to ensure “the payment and performance of each and every
debt, liability and obligation of every type and description which [Sportsman’s Gallery] may now
or at any time hereafter owe to [Gothenburg State Bank].”
In July 2012, a few months after the Schmidts and the Breinigs signed the guaranty,
Sportsman’s Gallery executed two promissory notes with Gothenburg State Bank. The first such
promissory note (#------11010), was in the principal amount of $64,900. Pursuant to the language
of the promissory note, the payment terms were as follows:
I agree to pay this note on demand, but if no demand is made, I agree to pay this Note in
20 payments. This Note is amortized over 40 payments. I will make 19 payments of
$2,128.61 beginning on January 1, 2013, and on the same day in each third month
thereafter. A single “balloon payment” of the entire unpaid balance of Principal and interest
will be due on October 1, 2017.
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The note further provided for the acceleration of the entire debt upon the failure to make any
payment.
The second promissory note executed in July 2012 (#------11020), was in the principal
amount of $45,000. The payment terms of this note were similar to the payment terms of the first
note:
I agree to pay this note on demand, but if no demand is made, I agree to pay this Note in
40 payments. I will make 39 payments of $1,475.93 beginning January 1, 2013 and on the
same day of each 3rd month thereafter. A single, final payment of the entire unpaid balance
of Principal and interest will be due October 1, 2022.
Again, similar to the first note, the second note provided for the acceleration of the entire debt
upon the failure to make any payment.
In July 2013, Sportsman’s Gallery executed a third promissory note with Gothenburg State
Bank. At the time this note was executed, Nancy was deceased, but the trust still owned a one-half
interest in the company. This third note (#------12010) permitted Sportsman’s Gallery to borrow
up to $10,000. Initially, Sportsman’s Gallery borrowed $100 under this promissory note. However,
pursuant to the terms of the note, the company borrowed an additional $700 and later an additional
$9,300, for a total debt of $10,100. The note explained the payment terms as follows:
I agree to pay this note on demand, but if no demand is made, I agree to pay all accrued
interest on the balance outstanding from time to time in regular payments beginning
December 28, 2013, then on the same day in each 6th month thereafter. A final payment
of the entire unpaid outstanding balance of Principal and interest will be due July 1, 2014.
Again, similar to the other two promissory notes, the third note provided for the acceleration of
the entire debt upon the failure to make any payment.
On February 5, 2015, 6 months after Leslie assigned his interest in Sportsman’s Gallery to
the Breinigs, he received a letter notifying him that Sportsman’s Gallery had defaulted under the
terms of the promissory notes it had executed with Gothenburg State Bank. Sportsman’s Gallery
owed to the bank $117,497.36. The letter went on to state: “The purpose of this letter is to make
demand upon you for payment of the guaranty. In the event that this amount is not paid by you
within the next ten (10) days, the Bank will begin collection efforts against both of you and
Sportsman’s Gallery, LLC.” Ultimately, on February 10, Leslie agreed to pay to the bank the entire
amount owed by Sportsman’s Gallery, which, after calculating the interest due through February
10 totaled $117,532.29. In exchange for Leslie’s payment, the bank assigned to him each of the
promissory notes previously executed by Sportsman’s Gallery.
Exactly 4 years after paying off Sportsman’s Gallery’s debt, on February 10, 2019, Leslie
filed a complaint in the district court naming the Breinigs and Sportsman’s Gallery as defendants.
In the complaint, Leslie asserted multiple causes of action and theories for relief. He first alleged
that the Breinigs and Sportsman’s Gallery were liable to him for the total amount he paid to
Gothenburg State Bank on the promissory notes plus accrued interest because of Sportsman’s
Gallery’s breach of the terms of the promissory notes and the Breinigs’ breach of the terms of the
guaranty. He alleged that, in the alternative, the Breinigs were liable to him for at least one-half of
the amount he paid to Gothenburg State Bank, as a result of the Breinigs’ one-half ownership of
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Sportsman’s Gallery at the time the promissory notes and guaranty were executed. Leslie also
alleged that the Breinigs owed him an unspecified amount of damages due to their breach of the
company’s operating agreement; their misappropriation of company assets; their breach of
fiduciary duties; their engaging in conversion of company assets; and their constructively
fraudulent misrepresentations. Leslie also asked the district court to order an accounting of
Sportsman’s Gallery’s currently existing assets and debts.
The Breinigs and Sportsman’s Gallery filed an answer in which they generally denied
owing Leslie any portion of the amount he paid to Gothenburg State Bank or any other damages.
They affirmatively alleged, among other defenses, that Leslie’s claims were barred by the relevant
statute of limitations. Additionally, the Breinigs and Sportsman’s Gallery raised a “counterclaim,”
asserting that Leslie owed them damages for his “portion of the [the Breinigs’ and Sportsman’s
Gallery’s] expense for time and labor in operating the business and payment of rent in excess of
$120,000 without any contribution from [Leslie].”
Subsequent to filing their answer and counterclaim, the Breinigs and Sportsman’s Gallery
filed a motion for summary judgment asking the district court to dismiss the entirety of Leslie’s
complaint with prejudice. Leslie also filed a motion for summary judgment. In his motion, he asked
the district court to award summary judgment in his favor on his claim that both the Breinigs and
Sportsman’s Gallery breached the terms of the promissory notes and the guaranty. He also asked
that the district court dismiss the counterclaim as being filed beyond the relevant statute of
limitations.
A hearing was held on the motions for summary judgment in October 2020. At the hearing,
the parties offered into evidence the pleadings; answers to discovery requests; and affidavits from
the Breinigs, Leslie, and the president of Gothenburg State Bank.
On December 9, 2020, the district court entered an order granting summary judgment in
favor of Leslie and against the Breinigs and Sportsman’s Gallery on Leslie’s claim that the
Breinigs and Sportsman’s Gallery breached the terms of the promissory notes and the guaranty. In
so finding, the district court concluded that the statute of limitations had not passed on this
particular claim, because the limitations period did not begin to run until February 5, 2015, the day
that Leslie received notification that the bank was exercising its option to accelerate. To the
contrary, the district court found that the statute of limitations had run on each of Leslie’s other
claims and on the Breinigs’ and Sportsman’s Gallery’s counterclaim. As such, the court sustained
the Breinigs’ and Sportsman’s Gallery’s motion for summary judgment as to all but Leslie’s first
cause of action and sustained Leslie’s motion for summary judgment as to the counterclaim filed
by the Breinigs and Sportsman’s Gallery.
The district court entered judgment in favor of Leslie and against the Breinigs and
Sportsman’s Gallery in the amount of $76,271.96, which equated to one-half of the $117,532.29
paid by Leslie to Gothenburg State Bank plus the interest that had accrued since Leslie’s payment.
Such interest was calculated using the contracted-for rates in the promissory notes. The district
court also ordered the Breinigs and Sportsman’s Gallery to pay interest at the judgment rate after
December 10, 2020.
The Breinigs and Sportsman’s Gallery appeal from the district court’s order. Leslie
cross-appeals.
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III. ASSIGNMENTS OF ERROR
On appeal, the Breinigs and Sportsman’s Gallery assign, restated, that the district court
erred in granting Leslie summary judgment on his claims of breach of the promissory notes and
breach of the guarantor agreement and that the district court erred in finding that their counterclaim
was barred by the relevant statute of limitations.
On cross-appeal, Leslie assigns and argues that the district court erred in (1) failing to find
that Sportsman’s Gallery was liable for the entire debt to Gothenburg State Bank pursuant to the
promissory notes; (2) treating him as a coguarantor rather than as a creditor with regard to his
claim of breach of the guaranty; (3) finding that the Breinigs owed him only one-half of the amount
he paid on the promissory notes, rather than two-thirds; (4) calculating the amount of interest owed
to him; and (5) finding that the statute of limitations barred his claims for indemnification and
unjust enrichment as to the Breinigs.
IV. STANDARD OF REVIEW
Summary judgment is proper if the pleadings and admissible evidence offered at the
hearing show that there is no genuine issue as to any material facts or as to the ultimate inferences
that may be drawn from those facts and that the moving party is entitled to judgment as a matter
of law. Village of Filley v. Setzer, 22 Neb. App. 575, 858 N.W.2d 258 (2014).
V. ANALYSIS
1. APPEAL
(a) Statute of Limitations on Claim for Breach
of Promissory Notes and Guaranty
In the district court’s December 9, 2020, order, it found that Leslie’s claim for breach of
the promissory notes and the guaranty was filed within the relevant statute of limitations period.
Specifically, the court found that the statute of limitations period was 5 years and that such period
began to run on February 5, 2015, when Gothenburg State Bank indicated to Leslie its intent to
accelerate payment of the debt which was owed pursuant to the promissory notes. Because Leslie
filed his claim approximately 4 years later, on February 10, 2019, the filing was within the 5-year
statute of limitations period.
On appeal, the Breinigs and Sportsman’s Gallery challenge the district court’s
determination that Leslie filed his claim for breach of the promissory notes and the guaranty within
the statute of limitations. While they agree with the district court’s finding that the relevant statute
of limitations period is 5 years, they disagree with the court’s determination of the date when the
period began to run. The Breinigs and Sportsman’s Gallery contend that, at the latest, the statute
of limitations period began to run on July 1, 2013, when the final promissory note was executed
by Sportsman’s Gallery. Thus, the statute of limitations period would have ended on July 1, 2018,
or more than 7 months before Leslie filed his claim.
Upon our review, we agree with the district court that Leslie filed his claim for breach of
the promissory notes and the guaranty within the statute of limitations. Neb. Rev. Stat. § 25-205(Reissue 2016), provides, in relevant part, that an action upon any agreement, contract, or promise
in writing must be commenced within 5 years of accrual of a cause of action. The contracts at issue
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in the present case are the three promissory notes executed by Sportsman’s Gallery and the
guaranty signed by the Schmidts and the Breinigs.
In their brief on appeal, the Breinigs and Sportsman’s Gallery assert that the promissory
notes constituted “demand notes,” whereby the entire debt was due and owing whenever
Gothenburg State Bank demanded payment. However, our careful review of the language of these
promissory notes reveals that they are actually installment contracts with an optional acceleration
clause. The promissory notes are installment contracts because the agreements’ payment
provisions obligated Sportsman’s Gallery to make regular installment payments to Gothenburg
State Bank. The promissory notes also contained an optional acceleration clause, which clause
granted the bank, upon Sportsman’s Gallery’s default, and the bank’s providing adequate notice,
to accelerate the debt and declare the entire amount immediately due. Notably, if the promissory
notes were payable on demand, as alleged by the Breinigs and Sportsman’s Gallery, then there
would be no practical need for the acceleration clause. We also note that the promissory notes
contain a specific maturity date, which further demonstrates that they are not demand notes as
suggested by the Breinigs and Sportsman’s Gallery. See Erickson v. Newell, 183 Neb. 641, 163
N.W.2d 286 (1968) (reiterating that instruments which are payable on demand include those in
which no time for payment is stated.)
Our determination that the promissory notes are installment contracts with an acceleration
clause is significant because this affects when the five-year statute of limitations began to run.
With regard to installment contracts, the Nebraska Supreme Court has previously held that in the
absence of a contractual provision allowing acceleration, where an obligation is payable by
installments, the statute of limitations runs against each installment individually from the time it
becomes due. City of Lincoln v. Hershberger, 272 Neb. 839, 725 N.W.2d 787 (2007). However,
when a contract contains an option to accelerate, the statute of limitations for an action on the
whole indebtedness due begins to run from the time the creditor takes positive action indicating
that the creditor has elected to exercise the option. Id.Here, Gothenburg State Bank sent Leslie a letter on February 5, 2015, informing him that
Sportsman’s Gallery had defaulted on its debt and that the bank had decided to exercise its right
to accelerate the whole debt such that it was immediately due and payable. As such, the statute of
limitations began to run on Leslie’s claim for breach of the promissory notes on February 5, 2015,
the date the bank sent its letter to Leslie indicating its intent to exercise its right to accelerate. We
note that February 5, 2015, is also the date upon which the statute of limitations began to run on
the guaranty. Although the Breinigs are guarantors who are asserting a statute of limitations
defense, the same rules apply equally to the original debtor and the guarantor of the same debt.
See City of Lincoln v. Hershberger, supra. Under these circumstances, a guarantor steps into the
shoes of the original debtor and has all the same obligations and defenses of the original debtor.
Id.Leslie filed his complaint on February 10, 2019, 4 years and 5 days after he received the
bank’s letter indicating its intent to accelerate the debt. Accordingly, Leslie filed the complaint
within the 5-year statute of limitations provided by § 25-205. The Breinigs’ and Sportsman’s
Gallery’s assertions to the contrary are without merit.
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(b) Debt Added After Guaranty Was Signed
As a part of their assertion that the district court erred in failing to dismiss Leslie’s claim
of breach of the guaranty, the Breinigs briefly argue on appeal that they should not be held liable
for any debt that was acquired by Sportsman’s Gallery after the guaranty was signed. And, because
all three promissory notes were executed after the guaranty was signed in May 2012, they argue
they should not be liable for any of the debt associated with those promissory notes. Specifically,
the Breinigs assert, “[A]dding $125,000 worth of debt after the personal guarant[y] was signed
when there was no debt according to the evidence, substantially changes the liability of the parties,
without their consent.” Brief for appellants at 11.
We find no support for the Breinigs’ assertion. The language of the guaranty specifically
requires the Schmidts and the Breinigs to pay “every debt, liability, and obligation of every type
and description which [Sportsman’s Gallery] may now or at any time hereafter owe to [the bank.]”
By signing the guaranty, the Breinigs agreed to guaranty both present and future debts of
Sportsman’s Gallery. They cannot now claim that the addition of new debt after the signing of the
guaranty somehow altered their liability under the agreement.
(c) Statute of Limitations for Counterclaim
In its December 2020 order, the district court concluded that the Breinigs’ and Sportsman’s
Gallery’s counterclaim for rent and other expenses incurred in operating the business was barred
by the relevant statute of limitations. The court found that because there was no written agreement
between the parties as to the allocation of such expenses, that the statute of limitations was 4 years.
The court next found that because Leslie had assigned all of his interest in Sportsman’s Gallery to
the Breinigs on August 27, 2014, that, at the latest, the statute of limitations would have begun to
run on that day. However, the Breinigs and Sportsman’s Gallery did not file their counterclaim
until September 20, 2019, more than 5 years later.
The Breinigs and Sportsman’s Gallery assign as error the district court’s decision finding
their counterclaim to have been filed outside of the statute of limitations period. However, their
argument in support of this assigned error is insufficient. They do not explain how the court erred
in its determination that the statute of limitations barred the counterclaim. Specifically, they do not
argue that the statute of limitations was longer than the 4-year period found by the district court
nor do they assert that the limitations period began to run at a different time than that found by the
court. Essentially, their argument consists of a few sentences which do nothing more than restate
the assignment of error regarding their counterclaim. These statements do not constitute the
required argument in support of the assigned error. Errors that are assigned but not argued will not
be addressed by an appellate court. See Livingston v. Metropolitan Utilities Dist., 269 Neb. 301,
692 N.W.2d 475 (2005).
2. CROSS-APPEAL
(a) Amount of Sportsman’s Gallery’s Liability
In the district court’s order, judgment was entered in favor of Leslie and against the
Breinigs and Sportsman’s Gallery in the amount of $76,271.96, which the district court explained
was one-half of the amount Leslie paid to Gothenburg State Bank in order to pay off the promissory
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notes executed by Sportsman’s Gallery, plus interest which had accrued from the date of Leslie’s
payment. On cross-appeal, Leslie asserts that the district court erred in finding that Sportsman’s
Gallery was only liable to him for one-half of the payoff amount. We find Leslie’s assertion to
have merit.
Sportsman’s Gallery was the original debtor on the promissory notes. As such, it was
obligated to pay the entirety of its debt to Gothenburg State Bank. Sportsman’s Gallery defaulted
on its obligation to pay, which gave rise to Leslie’s obligation to pay the debt of Sportsman’s
Gallery pursuant to the terms of the guaranty. After Leslie paid off the debt, Gothenburg State
Bank assigned to him the promissory notes. Pursuant to Leslie’s current ownership of the
promissory notes in addition to his payment of Sportsman’s Gallery’s debt, Sportsman’s Gallery
is liable to Leslie for the full amount that he paid to Gothenburg State Bank plus accrued interest.
See Mandolfo v. Chudy, 5 Neb. App. 792, 564 N.W.2d 266 (1997) (appellants, as purchasers and
assignees of note, have every right to recover full amount of note from original debtor).
Because Sportsman’s Gallery is liable to Leslie for the entire amount of the debt he paid to
Gothenburg State Bank, we modify the district court’s order to provide that judgment is entered in
favor of Leslie and against Sportsman’s Gallery in the amount of $152,544.62. Such amount was
computed based upon the amount Leslie paid on February 10, 2015, to Gothenburg State Bank
($117,532.29) plus the amount of interest owed from February 10 through the date of the district
court’s order, based upon the contracted for rates in the promissory notes ($35,012.33).
(b) Leslie is Coguarantor of Promissory Notes
In his brief on cross-appeal, Leslie argues that the Breinigs are also liable to him for the
entire amount he paid to Gothenburg State Bank on the promissory notes, rather than just for
one-half of the amount. Leslie bases his argument on the fact that he assigned his interest in
Sportsman’s Gallery to the Breinigs prior to the time he paid off the debt on the promissory notes.
Leslie explains, “[B]ecause [he] assigned his interest in Sportsman’s [Gallery] over to the Breinigs
prior to his purchase of the notes, he was not in a similar position as the Breinigs and, therefore,
he should be treated as a creditor of the [Breinigs] and not simply a coguarantor.” Brief for
cross-appellant at 24. Leslie’s assertion is simply not supported by our record.
Language contained within the guaranty provides as follows:
This is an absolute, unconditional and continuing guaranty of payment of the Indebtedness
and shall continue to be in force and be binding upon the Undersigned, whether or not all
Indebtedness is paid in full, until this guaranty is revoked by written notice actually
received by the Lender, and such revocation shall not be effective as to Indebtedness
existing or committed for at the time of actual receipt of such notice by the Lender[.]
We first note that the promissory notes were executed in July 2012 and July 2013, prior to
Leslie assigning his interest in Sportsman’s Gallery to the Breinigs in August 2014. So, to the
extent that this assignment in any way affected Leslie’s future liability as a guarantor for
Sportsman’s Gallery’s debts, he would still have been liable for Sportsman’s Gallery’s default on
the existing promissory notes. The language of the guaranty clearly provides that a written
revocation of liability will not be effective as to already existing indebtedness.
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Moreover, there is no evidence in our record to suggest that Leslie or the Breinigs ever
provided Gothenburg State Bank written notice that Leslie would no longer be liable as a
guarantor. While Leslie asserted in his affidavit that the Breinigs “assured” him that his liability
with regard to the business was over after he assigned his interest to them, the actual written
assignment does not reflect such a waiver of liability. In fact, Leslie appears to concede in his
appellate brief that no written notice of his revocation of the guaranty was provided to the bank:
“[Leslie] acknowledged his guaranty of the notes was not revoked or removed.” Brief for
cross-appellant at 23.
Leslie signed the guaranty as an individual, not as a member or owner of Sportsman’s
Gallery. As such, his liability under the guaranty was distinct from his trust’s membership or
ownership of the company. Leslie remained a coguarantor on the promissory notes even after he
assigned his interest in the company to the Breinigs.
(c) Proportionate Shares of Coguarantors
The Supreme Court has explained that where an assignment of a promissory note was
obtained by one of several coguarantors after full payment was made on the note, recovery against
a coguarantor is limited to the coguarantor’s contributory share. See Mandolfo v. Chudy, 253 Neb.
927, 573 N.W.2d 135 (1998). Here, the district court determined that there were four guarantors,
the Schmidts and the Breinigs, and that, as such, the Breinigs owed Leslie one-half of the full
payment he made on the promissory notes. On cross-appeal, Leslie asserts that because Nancy
Schmidt died shortly after signing the guaranty, that there were only three remaining coguarantors
at the time of his payment to Gothenburg State Bank and he should be awarded two-thirds of the
full payment he made on the promissory notes.
As a general rule, it is necessary to collect equally and ratably from guarantors who are
solvent, and if some of the guarantors are insolvent, those who are solvent must contribute their
portion of the amount which the insolvent guarantors would have been required to pay. See
Mandolfo v. Chudy, 5 Neb. App. 792, 564 N.W.2d 266 (1997). In this case, Leslie provided
evidence to demonstrate that Nancy Schmidt died in October 2012. No other party contested the
fact or the timing of Nancy’s death. As a result of Nancy’s death, she is not currently capable of
making payments to a creditor, just as if she was insolvent.
However, despite Nancy’s death after signing the guaranty, the language of the guaranty
provides as follows: “The death or incompetence of the Undersigned shall not revoke this guaranty,
except upon actual receipt of written notice thereof by Lender and then only as to the decedent or
the incompetent and only prospectively, as to future transactions, as herein set forth.” Given this
language, Nancy’s obligations under the guaranty are clearly not revoked for the first two
promissory notes, which were executed prior to Nancy’s death and thus cannot be considered
“prospective” or future transactions. Additionally, we can find no evidence in our record to suggest
that Nancy’s obligations under the guaranty are revoked for the third promissory note, which was
executed after her death. Specifically, there is nothing in the record which demonstrates that notice
of Nancy’s death was ever provided to Gothenburg State Bank, which would have triggered the
revocation of Nancy’s obligations under the guaranty for any future transactions. In fact, while the
president of the bank authored an affidavit which was admitted into evidence at the summary
judgment hearing, such affidavit made no mention of the bank ever receiving notice of Nancy’s
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death. Moreover, while we recognize that given the length of time that has passed since Nancy’s
death in October 2012, it is unlikely that her estate is still solvent, there was no evidence presented
which demonstrated the estate’s insolvency.
Based upon the specific language of the guaranty regarding the continuing obligations of a
deceased guarantor, we cannot find that the district court erred in determining that there were four
guarantors who were liable for the payment of the promissory notes, Leslie and Nancy and the
Breinigs. Accordingly, we affirm the district court’s decision finding that the Breinigs owed Leslie
one-half, rather than two-thirds, of the full payment he made on the promissory notes.
(d) District Court’s Calculation of Interest
In his cross-appeal, Leslie next argues that the district court erred in calculating both
prejudgment and postjudgment interest. We address each assertion in turn.
(i) Incorrect Calculation of Prejudgment Interest
As to the amount of prejudgment interest awarded to Leslie by the district court, Leslie
asserts that the court made a mathematical error in its calculations.
Upon our review, we conclude that the district court did make a very minor error in its
mathematical calculations. While the district court calculated that the amount of prejudgment
interest owed to Leslie by the Breinigs totaled $582.91, our calculations reveal that the actual
amount of prejudgment interest owed to Leslie by the Breinigs totaled $583.26, a difference of 35
cents. Based upon our correction of this minor error, we modify the district court’s order to provide
judgment against the Breinigs and in favor of Leslie in the amount of $76,272.31.
(ii) Ordering Postjudgment Interest at Judgment Rate
Rather Than Contract Rate
Leslie argues that the district court erred in awarding postjudgment interest at the
“judgment rate” rather than at the agreed upon contract rate. We find merit to Leslie’s argument.
Neb. Rev. Stat. § 45-103 (Reissue 2010) provides an explanation for how to calculate
interest on decrees and judgments for the payment of money. However, the statutory section also
provides that this interest rate shall not apply to “An action founded upon an oral or written contract
in which the parties have agreed to a rate of interest other than that specified in this section.” Here,
each of the three promissory notes executed by Sportsman’s Gallery in favor of Gothenburg State
Bank includes an agreed-upon interest rate for the unpaid principal balance. The two promissory
notes that were executed on July 9, 2012, provide for an interest rate of 5.25 percent. The third
promissory note, executed on July 10, 2013, provides for an interest rate of 5.73 percent. The
district court should have awarded postjudgment interest based upon these agreed upon interest
rates, rather than upon the judgment rate set forth in § 45-103. As such, we modify the district
court’s order such that from the date the judgment was entered, December 9, 2020, the judgments
against the Breinigs and Sportsman’s Gallery shall continue to bear interest at the agreed upon
rates delineated in the terms of each promissory note.
(e) Leslie’s Claim for Indemnification
Leslie argues that the district court erred in determining that his claim for indemnification
against the Breinigs was barred by the statute of limitations. Ultimately, we need not decide
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whether the relevant statute of limitations barred Leslie’s indemnification claim. Because we are
affirming the district court’s decision to grant summary judgment in favor of Leslie and against
the Breinigs on his claim of breach of the guaranty, Leslie is entitled to receive all of the damages
that may be awarded to him under his alternative theory of indemnification.
Under Nebraska law, indemnification is available when one party is compelled to pay
money which in justice another ought to pay, or has agreed to pay, unless the party making the
payment is barred by the wrongful nature of his or her conduct. See Cerny v. Todco Barricade Co.,
273 Neb. 800, 733 N.W.2d 877 (2007). Although Leslie asserts in his brief on cross-appeal that he
is entitled to indemnification from the Breinigs for the total amount he paid on the promissory
notes, as we have discussed above, Leslie is not entitled to the whole amount. See Mandolfo v.
Chudy, 253 Neb. 927, 573 N.W.2d 135 (1998) (holding that recovery against coguarantor is limited
to coguarantor’s contributory share). As a coguarantor of the promissory notes, Leslie is entitled
only to the Breinigs’ proportionate share of the payment. He was awarded that amount pursuant to
his claim for breach of the guaranty. In fact, in Leslie’s complaint, he only asks for his
proportionate share under the guaranty to be awarded to him pursuant to his indemnification claim.
(f) Leslie’s Claim for Unjust Enrichment
In his complaint, Leslie asserts a claim of unjust enrichment against the Breinigs.
Specifically, he asserted that the Breinigs have used or sold assets of Sportsman’s Gallery for their
own benefit, instead of using those assets to pay the company’s debt to Gothenburg State Bank.
Leslie argues that the Breinigs have been enriched by their use of the company’s assets and that
such enrichment has come “at the expense of [Leslie.]” Leslie believes that “[i]t would be unjust
and inequitable for the Breinigs to retain the benefit received through the use or sale of Sportsman’s
[Gallery’s] assets.”
In its order, the district court found that the statute of limitations barred Leslie’s claim of
unjust enrichment. The court found that the limitations period was 4 years and that the period had
begun to run on August 27, 2014, when Leslie assigned away his rights to Sportsman’s Gallery
and, thus, to any profits from the company. Because Leslie did not file his complaint until February
10, 2019, his claim was barred by the 4-year statute of limitations.
In his cross-appeal, Leslie asserts that the district court used the wrong triggering date for
the statute of limitations to begin to run. He believes that the 4-year statute of limitations period
began to run on February 10, 2015, the date he paid off the promissory notes and the date the
Breinigs were “unjustly enriched.” Brief for cross-appellant at 28. Because he filed his complaint
exactly 4 years later on February 10, 2019, his unjust enrichment claim was not time barred.
Upon our review, we agree with the determination of the district court that Leslie’s claim
for unjust enrichment against the Breinigs was barred by the statute of limitations. Neb. Rev. Stat.
§ 25-212 (Reissue 2016) provides, “An action for relief not otherwise provided for in Chapter 25
can only be brought within 4 years after the cause of action shall have accrued.” We determine, as
did the district court, that the 4-year time period in § 25-212 applies to Leslie’s unjust enrichment
claim. Leslie does not argue any other statute of limitations applies. We must now determine when
the 4-year statute of limitations began to run.
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
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will not be set aside by an appellate court unless clearly wrong. Manker v. Manker, 263 Neb. 944,
644 N.W.2d 522 (2002). Unjust enrichment has been defined to mean a transfer of a benefit
without adequate legal ground. See, e.g., Abante, LLC v. Premier Fighter, 21 Neb. App. 53, 836
N.W.2d 374 (2013). We do not find that the district court was clearly wrong in deciding that the
limitations period for Leslie’s claim of unjust enrichment began to run on the date he assigned his
interest in Sportsman’s Gallery to the Breinigs. At that point, he no longer had any right to be
involved in the decisions of the company, including financial decisions. In addition, he no longer
had the right to claim any further profits earned by the company.
To the extent that Leslie suggests in his brief on appeal that the Breinigs owed him a duty
to use the company’s profits to pay off the promissory notes after he assigned his rights in
Sportsman’s Gallery to them, such assertion was not raised in his complaint or at any point during
the lower court proceedings. As such, we do not consider such argument on appeal. Eletech, Inc.
v. Conveyance Consulting Group, 308 Neb. 733, 956 N.W.2d 692 (2021) (appellate court will not
consider argument or theory that is raised for first time on appeal).
Leslie did not file his complaint until February 10, 2019, approximately 4 years and 5
months after August 27, 2014, when he assigned his rights in Sportsman’s Gallery to the Breinigs
and, thus, when his unjust enrichment claim began to accrue. As such, his claim was barred by the
statute of limitations.
VI. CONCLUSION
Upon our review, we find no error in the district court’s decision which concluded that
Leslie’s claim for breach of the promissory notes and breach of the guaranty was not barred by the
relevant statute of limitations. We also find no error in the district court’s decision which concluded
that the Breinigs’ counterclaim and Leslie’s claim for unjust enrichment were barred by the statute
of limitations.
However, we modify the district court’s order such that judgment is entered against
Sportsman’s Gallery in the amount of $152,644.62, which is the total amount paid by Leslie to
Gothenburg State Bank pursuant to the promissory notes plus accrued interest. We also modify
the judgement entered against the Breinigs to correct a minor mathematical error. The Breinigs are
required to pay to Leslie the amount of $76,272.31, which represents one-half of the total amount
paid by Leslie to Gothenburg State Bank plus accrued interest. Finally, we modify the district
court’s order to reflect that from the date the judgment was entered, December 9, 2020, the
judgments against the Breinigs and Sportsman’s Gallery shall continue to bear interest at the
agreed upon rates delineated in the terms of each promissory note, rather than at the judgment rate
provided by § 45-103.
AFFIRMED AS MODIFIED.
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