deNourie & Yost Homes v. Frost , 295 Neb. 912 ( 2017 )

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Nebraska Supreme Court A dvance Sheets
295 Nebraska R eports
deNOURIE & YOST HOMES v. FROST
Cite as 295 Neb. 912
deNourie & Yost Homes, LLC, Nebraska limited
a
liability company, appellant, v.Joe Frost and
A my Frost, husband and wife, and Security
State Bank, doing business as Dundee Bank,
a Nebraska corporation, appellees.
___ N.W.2d ___
Filed February 24, 2017. No. S-16-014.
1. Judgments: Jurisdiction: Appeal and Error. Determination of a juris-
dictional issue which does not involve a factual dispute is a matter of
law which requires an appellate court to reach its conclusions indepen-
dent from a trial court.
2. Appeal and Error. The construction of a mandate issued by an appel-
late court presents a question of law.
3. Election of Remedies. Whether the election of remedies doctrine applies
is a question of law.
4. Judgments: Estoppel: Appeal and Error. An appellate court reviews a
court’s application of judicial estoppel to the facts of a case for abuse of
discretion and reviews its underlying factual findings for clear error.
5. Actions: Appeal and Error. The law-of-the-case doctrine reflects the
principle that an issue litigated and decided in one stage of a case should
not be relitigated at a later stage.
6. Appeal and Error. Under the law-of-the-case doctrine, an appellate
court’s holdings on issues presented to it conclusively settle all matters
ruled upon, either expressly or by necessary implication.
7. ____. The law-of-the-case doctrine applies with greatest force when an
appellate court remands a case to an inferior tribunal.
8. Judgments: Appeal and Error. Upon remand, a district court may not
render a judgment or take action apart from that which the appellate
court’s mandate directs or permits.
9. ____: ____. The general rule is that a reversal of a judgment and the
remand of a cause for further proceedings not inconsistent with the opin-
ion, without specific direction to the trial court as to what it shall do, is
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deNOURIE & YOST HOMES v. FROST
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a general remand and the parties stand in the same position as if the case
had never been tried.
10. ____: ____. Under the mandate branch of the law-of-the-case doctrine,
a decision made at a previous stage of litigation, which could have
been challenged in the ensuing appeal but was not, becomes the law of
the case; the parties are deemed to have waived the right to challenge
that decision.
11. Waiver: Appeal and Error. An issue is not considered waived if a
party did not have both an opportunity and an incentive to raise it in a
previous appeal.
12. Election of Remedies. The election of remedies doctrine is an affirma-
tive defense.
13. Pleadings. A party must specifically plead an affirmative defense for the
court to consider it.
14. Contracts: Fraud. A contract is voidable by a party if his or her
manifestation of assent is induced by either a fraudulent or a material
misrepresentation by the other party upon which he or she is justified
in relying.
15. Contracts. A voidable contract can be affirmed by the injured party.
16. Election of Remedies. The election of remedies doctrine generally
applies in two instances: when a party seeks inconsistent remedies
against another party or persons in privity with the other party or when
a party asserts several claims against several parties for redress of the
same injury.
17. Damages. A party may not have double recovery for a single injury, or
be made more than whole by compensation which exceeds the actual
damages sustained.
18. Actions. Where several claims are asserted against several parties for
redress of the same injury, only one satisfaction can be had.
19. Contracts: Fraud: Election of Remedies. A party fraudulently induced
to enter into a contract has an election of remedies: either to affirm the
contract and sue for damages or to disaffirm the contract and be rein-
stated to the induced party’s position which existed before entry into
the contract.
20. Election of Remedies. The election of remedies doctrine does not pre-
clude a plaintiff from pursuing two causes of action, such as breach of
contract and fraud, where each action arose out of different obligations
and different operative facts.
21. Contracts: Fraud: Election of Remedies. A party who fraudulently
induces another to contract and then also refuses to perform the contract
commits two separate wrongs, so that the same transaction gives rise to
distinct claims that may be pursued to satisfaction consecutively.
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deNOURIE & YOST HOMES v. FROST
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22. Equity: Estoppel. Judicial estoppel is an equitable doctrine that a court
invokes at its discretion to protect the integrity of the judicial process.
23. Estoppel. The doctrine of judicial estoppel protects the integrity of the
judicial process by preventing a party from taking a position inconsistent
with one successfully and unequivocally asserted by the same party in a
prior proceeding.
24. Estoppel: Intent. Fundamentally, the intent behind the doctrine of judi-
cial estoppel is to prevent parties from gaining an advantage by taking
one position in a proceeding and then switching to a different position
when convenient in a later proceeding.
Appeal from the District Court for Douglas County: Gary
B. R andall, Judge. Reversed and remanded for further
proceedings.
Jerrold L. Strasheim for appellant.
Christopher J. Tjaden, Michael J. Whaley, and Adam J.
Wachal, of Gross & Welch, P.C., L.L.O., for appellee Security
State Bank.
Kristopher J. Covi and Jay D. Koehn, of McGrath, North,
Mullin & Kratz, P.C., L.L.O., for appellees Joe Frost and
Amy Frost.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
Cassel, J.
INTRODUCTION
We address a second appeal from an action by a contrac-
tor seeking damages arising out of its construction of a house.
Following our remand, the district court determined that the
election of remedies doctrine and judicial estoppel required a
dismissal of the contractor’s claims. Because the claims were
consistently premised on the existence of a contract, no elec-
tion was required. And because the claims were based on dif-
ferent facts and obligations, both could be pursued. We there-
fore reverse, and remand for further proceedings.
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Nebraska Supreme Court A dvance Sheets
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deNOURIE & YOST HOMES v. FROST
Cite as 295 Neb. 912
BACKGROUND
New Home Construction
In 2004, Joe Frost and Amy Frost obtained two loans for the
construction of a new home. Security State Bank, doing busi-
ness as Dundee Bank (the bank), was not the lender on either
loan. In 2005, construction on the new home stopped. In 2007,
the Frosts entered into a “Project Completion Agreement”
with deNourie & Yost Homes, LLC (D&Y), under which they
agreed to pay D&Y $325,630 in return for completion of the
new home construction. At that time, Joe had a business rela-
tionship with the bank, in which the bank loaned Joe money.
The Frosts defaulted on payments owed to D&Y and on both
loans. Ultimately, the house was sold at foreclosure, and the
Frosts filed for bankruptcy with no assets.
Proceedings on Fourth
A mended Complaint
D&Y filed a fourth amended complaint against the Frosts
and the bank. It alleged five causes of action: breach of con-
tract against the Frosts; fraud, concealment, and nondisclosure
against the Frosts; civil conspiracy against the Frosts and the
bank; equitable estoppel against the bank; and promissory
estoppel against the bank.
The bank moved for summary judgment, and the Frosts
moved for partial summary judgment on the fraud and civil
conspiracy causes of action. The district court sustained the
motions as to D&Y’s claims of fraudulent concealment and
conspiracy. Because the court found that the fraudulent con-
cealment claim against the Frosts failed as a matter of law,
the court determined that there could be no conspiracy claim
against the Frosts. With regard to the civil conspiracy claim
against the bank, the court stated that “D&Y did not assert
a cause of action for the underlying tort of fraudulent con-
cealment against [the bank], and therefore, it cannot sus-
tain a cause of action for conspiracy.” This left remaining
the claim against the Frosts for breach of contract and the
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claims against the bank for equitable estoppel and promis-
sory estoppel.
At the commencement of a bench trial on the remaining
issues, the Frosts made an oral motion to confess judgment on
D&Y’s breach of contract claim in the amount of $245,000.
The district court entered an order granting a judgment in favor
of D&Y and against the Frosts in the amount of $245,000 and
dismissing the Frosts as parties. Following the trial, the court
found in favor of the bank and dismissed the fourth amended
complaint with prejudice.
First A ppeal
D&Y appealed. In deNourie & Yost Homes v. Frost (Frost I),1
we determined that the district court erred in granting summary
judgment on D&Y’s fraud and conspiracy claims. In the back-
ground section of the opinion, we stated that “[i]n April 2013,
at the start of the bench trial, the Frosts confessed judgment
for $245,000 on D&Y’s breach of contract claim.”2 We held
as follows:
• The court erred in granting summary judgment to the
Frosts on D&Y’s fraud claim because genuine issues of
material fact existed whether the Frosts had intention-
ally made false or misleading representations that they
could pay for D&Y’s work.
• The court erred in granting summary judgment to the
bank on D&Y’s civil conspiracy claim because the com-
plaint was sufficient to put the bank on notice that the
claim rested on the bank’s alleged conspiracy to com-
mit fraud.
• The court erred in granting summary judgment to the
Frosts on D&Y’s civil conspiracy claim because its rul-
ing rested on its incorrect judgment that D&Y’s fraud
claim failed as a matter of law and because it failed to
1
deNourie & Yost Homes v. Frost, 289 Neb. 136, 854 N.W.2d 298 (2014).
2
Id. at 146, 854 N.W.2d at 309.
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deNOURIE & YOST HOMES v. FROST
Cite as 295 Neb. 912
consider that D&Y alleged two separate instances of
fraudulent conduct.
• In the bench trial, the court did not err in finding that
D&Y had failed to prove by clear and convincing
evidence that the bank promised to finance D&Y’s
construction contract and to pay these funds directly
to D&Y.3
With regard to the civil conspiracy claim against the bank, we
“conclude[d] only that the court erred in granting summary
judgment for its stated reason.”4 We reversed the summary
judgment orders and “remand[ed] the cause to the court to
conduct further proceedings on D&Y’s claims of fraud and
civil conspiracy.”5
Proceedings A fter R emand
After remand, D&Y filed a fifth amended complaint,
which differed from the fourth amended complaint in several
respects. The second cause of action, for “Fraud/Concealment/
Nondisclosure,” incorporated by reference all allegations of
the third cause of action and contained numerous additional
factual allegations. The new complaint set forth five rep-
resentations that D&Y claimed were false and alleged that
D&Y finished construction after it received assurance of pay-
ment from Joe and the president of the bank. The fifth
amended complaint alleged that the failure of the Frosts to
pay the $245,000 owed for completion of the construction
“destroyed D&Y’s business which is no longer functioning.” It
claimed that D&Y “suffered damages consisting of the unpaid
$245,000 plus approximately $2,400,000 for the destruction of
D&Y’s business or the total of $2,645,000.” In contrast, the
fourth amended complaint sought damages of $242,500, “plus
3
Id. at 139-40, 854 N.W.2d at 305.
4
Id. at 157, 854 N.W.2d at 316.
5
Id. at 163, 854 N.W.2d at 320.
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damages in an undetermined amount for the destruction of
D&Y’s construction business.”
D&Y also modified the third cause of action of the fifth
amended complaint. D&Y alleged that there was a civil con-
spiracy between Joe and the bank to defraud D&Y, that the
bank aided and abetted the Frosts’ actions to defraud D&Y,
and that Joe aided and abetted the acts of the bank to defraud
D&Y. The third cause of action also included a number of new
factual allegations, including specific acts and omissions dem-
onstrating the alleged conspiracy.
The Frosts moved to dismiss the fifth amended complaint or,
alternatively, moved for summary judgment. During a hearing
on the motion, the bank stated that it would join in the Frosts’
motion for summary judgment. The bank believed that if the
Frosts were granted summary judgment, there would be no
underlying action upon which the conspiracy action against the
bank could be based. D&Y’s counsel responded that the bank
could support the Frosts’ motion for summary judgment, but
that it could not join it without filing and serving a motion.
The district court agreed, stating, “I think he probably has to
plead it, too, and have a separate hearing, if that’s, in fact, what
happens.” No party adduced evidence during the hearing, but
the Frosts requested that the court take judicial notice of the
court’s file. After the hearing, the bank filed an answer to the
fifth amended complaint.
On November 25, 2015, the district court entered an order
on the Frosts’ alternative motions. First, the court denied the
motion to dismiss, noting that the fifth amended complaint was
filed before the deadline contained in the scheduling order.
With regard to the motion for summary judgment, the court
determined that the fraud claim was barred by the election of
remedies. The court explained:
In its Fifth Amended Complaint, D&Y claims that the
Frosts breached the agreement or, in the alternative, they
committed fraud in inducing [D&Y] to enter into and/or
continue work under the contract. The Court finds that
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either a contract exists and is enforceable, or there was
fraud and the contract is void. Here, D&Y chose to take
a judgment on the breach of contract claim. In doing so,
D&Y elected breach of contract as a remedy which now
forecloses D&Y from proceeding on any fraud claims.
The breach of contract claim is predicated on the
existence of the contract. The fraud claim is based on
allegations that D&Y would not have entered into the
cont[r]act but for the alleged fraud and therefore the con-
tract is void. Essentially, the damages D&Y sought (and
obtained a judgment for) with respect to its breach of
contract claim are to put [D&Y] in the position had the
contract been fulfilled as agreed. Conversely, the dam-
ages D&Y seeks with respect to its fraud claim are to put
D&Y in the position had the contract never occurred. It
is clear that these remedies may not co-exist.
The district court also found that the doctrine of judicial
estoppel “prevented” D&Y’s fraud claim. The court stated that
because D&Y had already reduced its breach of contract claim
to judgment which was premised on the existence of a valid
contract, judicial estoppel barred D&Y from now proceeding
on a fraud claim based on a theory that the contract was not
valid. The court therefore granted the Frosts’ motion for sum-
mary judgment with respect to D&Y’s fraud claim.
The district court also granted the Frosts’ motion for sum-
mary judgment as to the civil conspiracy claim. The court stated:
[A]ny claims for fraudulent misrepresentations or con-
cealment . . . would be premised on the lack of a contract.
Once again, the damages D&Y sought (and obtained a
judgment for) with respect to its breach of contract claim
are to put D&Y in the position had the contract been
fulfilled as agreed. Conversely, the damages D&Y seeks
with respect to its conspiracy claim are to put D&Y in
the position had the contract never occurred. It is clear
that these remedies may not co-exist. Consequently, the
Court finds that the doctrine of election of remedies and
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doctrine of judicial estoppel bar[] D&Y’s civil conspiracy
claim for the same reasons that the doctrines bar D&Y’s
fraud claim.
On December 10, 2015, the district court entered an “order
nunc pro tunc.” The order stated that the November 25 order
was intended to be a final order dismissing all claims against
all defendants.
On December 23, 2015, D&Y filed a notice of appeal. The
bank subsequently moved for summary dismissal of the civil
conspiracy claim, asserting that we lacked jurisdiction over the
claim. We overruled the motion, but reserved the issue until
plenary submission of the appeal.
ASSIGNMENTS OF ERROR
D&Y assigns that the district court erred in (1) failing to
apply the law-of-the-case doctrine in accordance with our
mandate, (2) failing to find that the Frosts and the bank waived
the defense of election of remedies by not raising it in the
earlier appeal, (3) granting summary judgment to the Frosts
and the bank on the theory of election of remedies when that
defense was never pled, (4) failing to hold that election of
remedies “comes into play” after trial, (5) failing to hold that
the purported confession of judgment was not an election of
remedies, (6) failing to recognize that the purported confession
of judgment was not entitled to be treated as a judgment with
respect to merger and bar, (7) granting the Frosts and the bank
summary judgment and dismissing D&Y’s fraud and civil con-
spiracy claims without any evidence or any new evidence, (8)
granting the bank summary judgment even though it had not
filed a motion for summary judgment or followed the statutes
providing for summary judgment, and (9) denying D&Y its
right to trial and due process with respect to its fraud and civil
conspiracy claims.
STANDARD OF REVIEW
[1] Determination of a jurisdictional issue which does not
involve a factual dispute is a matter of law which requires an
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appellate court to reach its conclusions independent from a
trial court.6
[2] The construction of a mandate issued by an appellate
court presents a question of law.7
[3] Whether the election of remedies doctrine applies is a
question of law.8
[4] An appellate court reviews a court’s application of judi-
cial estoppel to the facts of a case for abuse of discretion and
reviews its underlying factual findings for clear error.9
ANALYSIS
Jurisdiction
The bank challenges our jurisdiction in this matter. It asserts
that D&Y voluntarily dismissed its conspiracy claim against
the bank in order to convert a nonfinal order of summary judg-
ment in favor of the Frosts into a final, appealable order.
We have stated that a party may not dismiss without preju-
dice a cause of action in order to create finality and confer
appellate jurisdiction where there would normally be none.10
This is because one who has been granted that which he or she
sought has not been aggrieved, and only a party aggrieved by
an order or judgment can appeal.11
Lack of clarity in the record complicates resolution of what
should be a simple question. The bank asserts that D&Y orally
6
City of Springfield v. City of Papillion, 294 Neb. 604, 883 N.W.2d 647
(2016).
7
Liljestrand v. Dell Enters., 287 Neb. 242, 842 N.W.2d 575 (2014).
8
See, American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321 (5th
Cir. 2008); In re Estate of Koellen, 167 Kan. 676, 208 P.2d 595 (1949);
Wickenhauser v. Lehtinen, 302 Wis. 2d 41, 734 N.W.2d 855 (2007).
9
Cleaver-Brooks, Inc. v. Twin City Fire Ins. Co., 291 Neb. 278, 865 N.W.2d
105 (2015).
10
See Smith v. Lincoln Meadows Homeowners Assn., 267 Neb. 849, 678
N.W.2d 726 (2004).
11
See id.
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moved to voluntarily dismiss its conspiracy claim against the
bank. D&Y, on the other hand, contends that the district court
granted the bank summary judgment on that claim. The bill
of exceptions does not contain any proceedings on the oral
motion. Both parties rely on the court’s purported order nunc
pro tunc, which, as it appears in our transcript, stated:
On the oral motion of [D&Y] through its counsel to
clarify the finality of this court’s November 25, 2015
Order on Defendants’ Motion to Dismiss Fifth Amended
Complaint or in the alternative Motion For Summary
Judgment (“November 25 Order”), it is hereby ordered
nunc pro tunc that the November 25 Order is intended
to be and is a final order dismissing all claims of [D&Y]
against all Defendants, and to the extent necessary, if
any, decides against [D&Y] on all of [D&Y’s] claims for
relief against all Defendants, and dismisses this action in
its entirety.
The bank claims that the order nunc pro tunc documents D&Y’s
oral motion to dismiss. But D&Y denies voluntarily dismissing
the claim, and such dismissal is not plainly contained in the
record. The order’s reference to D&Y’s “oral motion” does
not compel an inference that D&Y orally moved to dismiss its
claim against the bank.
Even if the district court intended the order as something
else, it appears on its face to have been an order modifying a
previous order made within the same term.12 The order clearly
dismissed all claims against both the Frosts and the bank. Thus,
there is a final, appealable order. We conclude that we have
jurisdiction over all of the parties.
Law- of-the-Case Doctrine
[5-8] The law-of-the-case doctrine is occasionally invoked
in cases following a remand by an appellate court. The
law-of-the-case doctrine reflects the principle that an issue
12
See Neb. Rev. Stat. § 25-2001(1) (Reissue 2016).
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litigated and decided in one stage of a case should not be
relitigated at a later stage.13 Under this doctrine, an appellate
court’s holdings on issues presented to it conclusively settle
all matters ruled upon, either expressly or by necessary impli-
cation.14 The doctrine applies with greatest force when an
appellate court remands a case to an inferior tribunal.15 Upon
remand, a district court may not render a judgment or take
action apart from that which the appellate court’s mandate
directs or permits.16
D&Y advances three reasons why it believes the law-of-the-
case doctrine precluded the district court from entering sum-
mary judgment. We find no merit to any of them.
First, D&Y asserts that “[s]ummary [j]udgment is barred
under the law-of-the-case doctrine.”17 D&Y’s argument is based
upon our reversal of summary judgment on the fraud and civil
conspiracy claims in Frost I. According to D&Y, we “implic-
itly” held that D&Y was entitled to a trial on those claims.18 It
draws this conclusion from our statements that preponderance
of evidence standards would apply, that a fact finder could
determine Joe colluded with a banker in December 2007 to
make fraudulent misrepresentations about the availability of
funding, and that a fact finder could reasonably believe D&Y’s
evidence. D&Y reads too much into our mandate.
[9] Our opinion and mandate did not specify any particular
action to be taken by the district court. The general rule is
that a reversal of a judgment and the remand of a cause for
further proceedings not inconsistent with the opinion, without
specific direction to the trial court as to what it shall do, is a
13
Bauermeister Deaver Ecol. v. Waste Mgmt. Co., 290 Neb. 899, 863
N.W.2d 131 (2015).
14
Id.
15
Id.
16
Id.
17
Brief for appellant at 13.
18
Id. at 14.
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general remand and the parties stand in the same position as if
the case had never been tried.19 But there is an exception—if
the undisputed facts are such that but one judgment could be
rendered, the trial court should enter such judgment, notwith-
standing the mandate did not so direct.20 The exception does
not apply here. Our opinion in Frost I left open a number of
possible actions upon remand. A trial on the claims for fraud
and civil conspiracy was one possibility. But other possible
actions include opening the case for the reception of additional
evidence or deciding the case without receiving additional
evidence.21 We conclude that the law-of-the-case doctrine did
not require a trial on D&Y’s fraud and civil conspiracy claims.
Instead, our general remand returned the parties to the same
position as though summary judgment had not been entered
against D&Y on those claims. Proceedings on whether the
doctrines of election of remedies or judicial estoppel apply
were within the scope of our broad mandate.
[10,11] Second, D&Y contends that the Frosts waived the
right to raise election of remedies or judicial estoppel by not
raising them in the first appeal. We disagree. Under the man-
date branch of the law-of-the-case doctrine, a decision made
at a previous stage of litigation, which could have been chal-
lenged in the ensuing appeal but was not, becomes the law
of the case; the parties are deemed to have waived the right
to challenge that decision.22 But an issue is not considered
waived if a party did not have both an opportunity and an
incentive to raise it in a previous appeal.23 The Frosts had no
incentive to raise those potential defenses in Frost I, because
the trial court had entered summary judgment in their favor
19
Master Laboratories, Inc. v. Chesnut, 157 Neb. 317, 59 N.W.2d 571
(1953).
20
See Bohmont v. Moore, 141 Neb. 91, 2 N.W.2d 599 (1942).
21
See 5 C.J.S. Appeal and Error § 1139 (2007).
22
Bauermeister Deaver Ecol. v. Waste Mgmt. Co., supra note 13.
23
Id.
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and the Frosts did not challenge any action taken by the court.
Further, it would not have been proper to raise election of rem-
edies in Frost I when it had not been raised at the trial court
level. This follows from the rule that an appellate court will
not consider an issue on appeal that was not presented to or
passed upon by the trial court.24
Third, D&Y claims that an exception to application of the
law-of-the-case doctrine does not apply. The doctrine does not
apply in subsequent proceedings when the petitioner presents
materially and substantially different facts.25 D&Y points out
that the Frosts offered no new evidence at the summary judg-
ment hearing following remand. Thus, it argues, the exception
does not apply. This argument compares apples and oranges.
The Frosts asserted the new defenses of election of remedies
and judicial estoppel. And, if applicable, those defenses would
have the effect of barring further proceedings on the fraud and
conspiracy claims.
Election of R emedies
The heart of D&Y’s appeal is that the district court erred
in granting summary judgment to the Frosts on the basis that
D&Y’s claims were barred by the election of remedies doc-
trine. We agree that the court erred in granting summary judg-
ment on this basis. Before reaching the merits of this matter,
we address two preliminary matters.
[12,13] We first address D&Y’s assignment that the district
court erred in granting summary judgment on the election of
remedies defense where it was never pled. The election of
remedies doctrine is an affirmative defense.26 A party must
specifically plead an affirmative defense for the court to con-
sider it.27
24
See Hargesheimer v. Gale, 294 Neb. 123, 881 N.W.2d 589 (2016).
25
Money v. Tyrrell Flowers, 275 Neb. 602, 748 N.W.2d 49 (2008).
26
Weitz Co. v. Hands, Inc., 294 Neb. 215, 882 N.W.2d 659 (2016).
27
Id.
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The Frosts asserted the defense in a motion directed to a
pleading that ceased to serve as the operative pleading. In
a motion for summary judgment responsive to the fourth
amended complaint, the Frosts asserted they were entitled to
judgment on the basis of election of remedies. But nearly 1
month later, D&Y filed its fifth amended complaint. At that
point, the fourth amended complaint no longer operated as a
pleading. An amended pleading supersedes the original plead-
ing, whereupon the original pleading ceases to perform any
office as a pleading.28
The Frosts did not reassert the defense of election of rem-
edies in their motions responsive to the fifth amended com-
plaint. The Frosts filed a motion to dismiss the fifth amended
complaint under Neb. Ct. R. Pldg. § 6-1112(b)(6) for failure
to state a claim upon which relief can be granted. An affirm­
ative defense may be asserted in a motion filed pursuant to
§ 6-1112(b)(6) when the defense appears on the face of the
complaint.29 But the operative complaint made no mention of
the confession of judgment or otherwise showed that an elec-
tion of remedies had allegedly been made. The Frosts alterna-
tively moved for summary judgment, but they did not refer to
the election of remedies doctrine.
However, in an objection to the Frosts’ motions, D&Y
responded to the Frosts’ “defense that the . . . [c]onfession
of [j]udgment [f]or [b]reach of [c]ontract is a bar to [D&Y’s]
causes of action.” Based upon D&Y’s response, we assume,
without deciding, that the defense was properly before the dis-
trict court.
[14,15] We next address an erroneous statement by the dis-
trict court. The court stated that “either a contract exists and
is enforceable, or there was fraud and the contract is void.” A
contract is voidable by a party if his or her manifestation of
28
State v. Armendariz, 289 Neb. 896, 857 N.W.2d 775 (2015).
29
Weeder v. Central Comm. College, 269 Neb. 114, 691 N.W.2d 508 (2005).
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assent is induced by either a fraudulent or a material misrep-
resentation by the other party upon which he or she is justi-
fied in relying.30 And a voidable contract can be affirmed by
the injured party.31 Thus, when a party has been fraudulently
induced to enter a contract, the contract is not void but void-
able. Having disposed of the preliminary matters, we turn our
focus to the election of remedies doctrine.
[16-18] We first recall general principles concerning the
doctrine. The election of remedies doctrine generally applies
in two instances: when a party seeks inconsistent remedies
against another party or persons in privity with the other
party or when a party asserts several claims against several
parties for redress of the same injury.32 A party may not have
double recovery for a single injury, or be made more than
whole by compensation which exceeds the actual damages
sustained.33 Where several claims are asserted against several
parties for redress of the same injury, only one satisfaction
can be had.34
[19] D&Y did not assert inconsistent theories of recovery
or seek inconsistent remedies. Certainly, a party cannot pro-
ceed on a theory of recovery which is premised upon the exis-
tence of a contract and at the same time proceed alternatively
on a theory which is premised on the lack of a contract.35 But
contrary to the district court’s determination, D&Y did not
do so. A party fraudulently induced to enter into a contract
has an election of remedies: either to affirm the contract and
sue for damages or to disaffirm the contract and be reinstated
30
InterCall, Inc. v. Egenera, Inc., 284 Neb. 801, 824 N.W.2d 12 (2012).
31
See First Nat. Bank v. Guenther, 125 Neb. 807, 252 N.W. 395 (1934).
32
In re 2007 Appropriations of Niobrara River Waters, 278 Neb. 137, 768
N.W.2d 420 (2009).
33
Genetti v. Caterpillar, Inc., 261 Neb. 98, 621 N.W.2d 529 (2001).
34
Id.
35
Tobin v. Flynn & Larsen Implement Co., 220 Neb. 259, 369 N.W.2d 96
(1985).
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to the induced party’s position which existed before entry
into the contract.36 Thus, rescission is not the only remedy
available. A defrauded party may affirm the contract and seek
damages. And doing so is entirely consistent with a breach
of contract action, which necessarily affirms the existence of
the contract.
D&Y did not seek to rescind the contract. Indeed, rescis-
sion would not have been proper. The purpose of rescission is
to place the parties in a status quo, that is, return the parties
to their position which existed before the rescinded contract.37
But here, the parties could not be placed in a status quo. D&Y
completed construction on the Frosts’ home, and in doing
so without payment from the Frosts, it allegedly suffered a
destruction of its business. Since that time, the Frosts’ home
was sold at foreclosure and the Frosts filed for bankruptcy
without assets.
Instead, D&Y sought damages for both its breach of con-
tract claim and its fraud claims. The proper measure of dam-
ages in a contract action is the losses sustained by reason of
a breach.38 In an action for fraud, a party may recover such
damages as will compensate him or her for the loss or injury
actually caused by the fraud and place the defrauded party in
the same position as he or she would have been in had the
fraud not occurred.39 We invoked this precise rule in a case
where the plaintiff chose to affirm the contract and sue for
damages.40 We have stated that “there is nothing inconsistent
36
See InterCall, Inc. v. Egenera, Inc., supra note 30.
37
Bauermeister v. McReynolds, 253 Neb. 554, 571 N.W.2d 79 (1997).
38
Bachman v. Easy Parking of America, 252 Neb. 325, 562 N.W.2d 369
(1997).
39
Streeks v. Diamond Hill Farms, 258 Neb. 581, 605 N.W.2d 110 (2000),
overruled in part on other grounds, Knights of Columbus Council 3152 v.
KFS BD, Inc., 280 Neb. 904, 791 N.W.2d 317 (2010).
40
See Forker Solar, Inc. v. Knoblauch, 224 Neb. 143, 396 N.W.2d 273
(1986).
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in seeking to recover damages arising by virtue of having
been induced to enter into a contract by fraud and seeking to
recover damages because express and implied warranties were
allegedly breached,” because “[a]ll three theories rest upon
the premise that a contract came into being which resulted in
damages.”41 Similarly, where a plaintiff affirmed the contract
on his fraud-based theories rather than requesting rescission,
we stated that “it is entirely consistent for him to also assert a
claim based on breach of its terms.”42 Because D&Y affirmed
the contract and sought damages for both the breach of con-
tract and fraud claims, the election of remedies doctrine is
not applicable.
[20,21] Nor does the election of remedies doctrine preclude
a plaintiff from pursuing two causes of action, such as breach
of contract and fraud, where each action arose out of differ-
ent obligations and different operative facts.43 “‘A party who
fraudulently induces another to contract and then also refuses
to perform the contract commits two separate wrongs, so that
the same transaction gives rise to distinct claims that may be
pursued to satisfaction consecutively.’”44
D&Y’s causes of action were based on different facts
and obligations. D&Y based its breach of contract action on
the Frosts’ failure to pay amounts due under the contract. It
alleged that “[a]s a proximate result of the Frosts’ failures to
perform their payment obligations, D&Y and its principals
were denied $250,000 necessary for business operating capital
41
Tobin v. Flynn & Larsen Implement Co., supra note 35, 220 Neb. at 261,
369 N.W.2d at 98-99.
42
Gibb v. Citicorp Mortgage, Inc., 246 Neb. 355, 374, 518 N.W.2d 910, 923
(1994).
43
See General Ins. v. Mammoth Vista Owners Ass’n, 174 Cal. App. 3d 810,
220 Cal. Rptr. 291 (1985).
44
Davis v. Cleary Building Corp., 143 S.W.3d 659, 669 (Mo. App. 2004).
See, also, Acadia Partners, L.P. v. Tompkins, 673 So. 2d 487 (Fla. App.
1996).
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essential for D&Y to perform its business function and to
pursue any future business opportunity.” On the other hand,
D&Y premised its fraudulent concealment cause of action on
the Frosts’ false representations upon which D&Y relied in
entering into the contract and in subsequently completing the
construction of the home. Its fraud action alleged that “[t]he
Frosts induced D&Y to enter into the [contract] by concealing
from D&Y and not disclosing that the Frosts were insolvent
and that more likely than not the Frosts could not pay and
would not be able to pay . . . .” The causes of action arose at
different points of time from the violation of separate obliga-
tions. Because the causes of action were based on different
obligations and were not repugnant to one another, D&Y could
pursue both. Thus, the purported confession of judgment on
the breach of contract claim did not bar D&Y from pursuing
its fraud claims.
In summary, the district court erred in granting summary
judgment to the Frosts on the basis of election of remedies.
D&Y did not assert inconsistent claims or inconsistent rem-
edies. Both its breach of contract and its fraud claims were
based on the existence of a contract, and both sought damages.
Further, the claims were based on different facts and different
obligations, such that recovery could potentially be had on
both. And because the court’s entry of summary judgment on
the civil conspiracy claim was premised on the same erroneous
belief that the remedies sought may not coexist, it, too, must
be reversed.
Judicial Estoppel
The district court also found that “D&Y’s fraud claim is
prevented by the doctrine of judicial estoppel.” We disagree,
for reasons similar to those discussed with respect to election
of remedies.
[22-24] Judicial estoppel is an equitable doctrine that a court
invokes at its discretion to protect the integrity of the judicial
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process.45 The doctrine of judicial estoppel protects the integ-
rity of the judicial process by preventing a party from taking
a position inconsistent with one successfully and unequivo-
cally asserted by the same party in a prior proceeding.46
Fundamentally, the intent behind the doctrine of judicial estop-
pel is to prevent parties from gaining an advantage by taking
one position in a proceeding and then switching to a different
position when convenient in a later proceeding.47
Judicial estoppel does not apply, because D&Y has not
asserted an inconsistent position. The district court found that
judicial estoppel barred D&Y from proceeding on a fraud
claim based on a theory that the contract was not valid. But
as discussed above, D&Y’s fraud claim was premised on
the existence of a contract, which is not inconsistent with a
claim for breach of contract. Accordingly, the court abused
its discretion in finding that the doctrine of judicial estop-
pel applied.
Judgment
in Favor
Bank
of the
D&Y assigns that the district court erred in granting the
bank summary judgment. It points out that the bank did not
file a motion for summary judgment or follow the statutes
providing for summary judgment. However, the record does
not demonstrate that the court granted summary judgment to
the bank. The November 2015 order clearly granted summary
judgment to the Frosts only. And the purported order nunc
pro tunc merely stated that the court “to the extent necessary,
if any, decides against [D&Y] on all of [D&Y’s] claims for
relief against” the Frosts and the bank. But because judgment
may have been entered in the bank’s favor based on the erro-
neous entry of summary judgment in the Frosts’ favor on the
45
Cleaver-Brooks, Inc. v. Twin City Fire Ins. Co., supra note 9.
46
Id.
47
Id.
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civil conspiracy claim, we must reverse, and remand for fur-
ther proceedings.
CONCLUSION
We conclude that under the law-of-the-case doctrine, our
general remand for further proceedings in Frost I did not
preclude the district court from entering summary judgment.
However, because an election of remedies was not required,
the court erred in granting summary judgment to the Frosts on
that basis. And because D&Y did not assert inconsistent posi-
tions, the court abused its discretion in finding that the doctrine
of judicial estoppel barred D&Y’s fraud and conspiracy claims.
The court further erred in entering judgment in favor of the
bank. We reverse the order granting summary judgment to the
Frosts and the purported “order tunc pro tunc,” and remand the
cause for further proceedings.
R eversed and remanded for
further proceedings.