Denali Real Estate v. Denali Custom Builders

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/07/2019 09:07 AM CDT
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Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
Denali R eal Estate, LLC, a Nebraska limited liability
company, doing business as Denali Construction and
Denali Homes, appellee, v. Denali Custom Builders,
Inc., a Nebraska corporation, appellant.
___ N.W.2d ___
Filed April 25, 2019. No. S-18-287.
1. Injunction: Equity. An action for injunction sounds in equity.
2. Equity: Appeal and Error. On appeal from an equity action, an appel-
late court decides factual questions de novo on the record and, as to
questions of both fact and law, is obligated to reach a conclusion inde-
pendent of the trial court’s determination.
3. ____: ____. On appeal from an equity action, when credible evidence
is in conflict on material issues of fact, the court considers and may
give weight to the fact that the trial court observed the witnesses and
accepted one version of the facts over another.
4. Statutes: Appeal and Error. Statutory interpretation is a question of
law, which an appellate court resolves independently of the trial court.
5. Rules of the Supreme Court: Pleadings. Nebraska courts will look to
federal decisions interpreting corresponding federal rules for guidance in
interpreting similar Nebraska civil pleading rules.
6. Rules of the Supreme Court: Motions to Dismiss: Moot Question.
Generally, the denial of a motion to dismiss under Neb. Ct. R. Pldg.
§ 6-1112(b)(6) becomes moot after trial.
7. Pleadings: Judgments: Appeal and Error. A party who unsuccessfully
moves for judgment on the pleadings must either file additional plead-
ings or go to trial on the issues joined by the original pleadings, and,
by saving exception to the action of the trial court in overruling his or
her motion, obtain a review thereof on appeal from the final judgment,
if adverse.
8. Pleadings: Judgments. Even when a party does not move to amend
pleadings, a court may constructively amend pleadings on unpleaded
issues in order to render a decision consistent with the trial.
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302 Nebraska R eports
DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
9. Directed Verdict: Waiver: Appeal and Error. A defendant who moves
for a directed verdict at the close of the plaintiff’s evidence and, upon
the overruling of such motion, proceeds with trial and introduces evi-
dence, waives any error in the ruling on the motion.
10. Names: Words and Phrases. A designation is “used” as a trade name
when the designation is displayed or otherwise made known to prospec-
tive purchasers in the ordinary course of business in a manner that asso-
ciates the designation with the goods, services, or business of the user.
11. Names: Proof. In a case for trade name infringement, the plaintiff has
the burden to prove by a preponderance of the evidence the existence of
(1) a valid trade name entitled to protection and (2) a substantial simi-
larity between the plaintiff’s and the defendant’s names, which would
result in either actual or probable deception or confusion by ordinary
persons dealing with ordinary caution.
12. Names. The evil sought to be eliminated by trade name protection
is confusion.
13. Names: Proof. The likelihood of confusion in the use of trade names
can be shown by presenting circumstances from which courts might
conclude that persons are likely to transact business with one party
under the belief they are dealing with another party. If the similarity is
such as to mislead purchasers or those doing business with the company,
acting with ordinary and reasonable caution, or if the similarity is calcu-
lated to deceive the ordinary buyer in ordinary conditions, it is sufficient
to entitle the one first adopting the name to relief.
14. Names. Among the considerations for determining whether trade name
confusion exists are (1) degree of similarity in the products offered for
sale; (2) geographic separation of the two enterprises and the extent to
which their trade areas overlap; (3) extent to which the stores are in
actual competition; (4) duration of use without actual confusion; and
(5) the actual similarity, visually and phonetically, between the two
trade names.
15. Corporations: Names. Under Neb. Rev. Stat. § 87-302 (Cum. Supp.
2018), a corporation engages in a deceptive trade practice when, in the
course of its business, it causes the likelihood of confusion or of mis-
understanding as to the source, sponsorship, approval, or certification
of goods or services or affiliation, connection, or association with, or
certification by, another.
16. Claims: Names: Deceptive Trade Practices. While a claim for the mis-
use of a trade name considers only the trade name seeking protection, a
claim for a deceptive trade practice expands the consideration to issues
of image and trade dress.
17. Torts: Intent: Proof. To succeed on a claim for tortious interference
with a business relationship or expectancy, a plaintiff must prove (1) the
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
existence of a valid business relationship or expectancy, (2) knowledge
by the interferer of the relationship or expectancy, (3) an unjustified
intentional act of interference on the part of the interferer, (4) proof that
the interference caused the harm sustained, and (5) damage to the party
whose relationship or expectancy was disrupted.
18. ____: ____: ____. One of the basic elements of tortious interference
with a business relationship requires an intentional act that induces or
causes a breach or termination of the relationship or expectancy.
19. Actions: Names: Injunction. Neb. Rev. Stat. § 87-217 (Reissue 2014)
authorizes a registrant of a trade name to proceed by suit to enjoin the
use or display of imitations of its trade name.
20. Deceptive Trade Practices: Injunction. Neb. Rev. Stat. § 87-303(a)
(Cum. Supp. 2018) authorizes a court to grant an injunction against a
person committing a deceptive trade practice.
21. Equity. In an equitable action, the district court is vested with broad
equitable powers and discretion to fashion appropriate relief.
22. Jurisdiction: Appeal and Error. Once an appellate court acquires
equity jurisdiction, it can adjudicate all matters properly presented and
grant complete relief to the parties.
Appeal from the District Court for Lancaster County: Robert
R. Otte, Judge. Affirmed.
Matt Catlett, of Law Office of Matt Catlett, for appellant.
Joseph C. Byam, of Byam & Hoarty, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Cassel, J.
I. INTRODUCTION
A company using registered trade names obtained a perma-
nent injunction, statutory damages, and attorney fees against a
corporation using a similar name. The corporation appeals, con-
tending that it used only its legal corporate name. But because
evidence showed otherwise and actual confusion resulted, the
corporation’s central argument fails. We first consider whether
the denials of the corporation’s pretrial motions to dismiss
and for judgment on the pleadings survive the trial, reaching
only the latter motion. Upon de novo review, we uphold the
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
judgment on the company’s claims of trade name infringement
and deceptive trade practices, but not its claim for intentional
interference with a business relationship. Otherwise finding no
merit to the appeal, we affirm the judgment.
II. BACKGROUND
1. Parties
Denali Real Estate, LLC (DRE), doing business as Denali
Construction and Denali Homes, is a Nebraska limited liability
company with an office in Omaha, Nebraska. It filed a cer-
tificate of organization with the Nebraska Secretary of State in
2014. In September 2015, DRE registered with the Secretary
of State the trade names “Denali Construction” and “Denali
Homes.” That same month, it began building, advertising, and
selling new homes under the name “Denali Homes.” DRE
markets its homes in eastern Nebraska and has built homes in
Douglas, Lancaster, and Sarpy Counties.
Denali Custom Builders, Inc. (DCB), is a Nebraska corpo-
ration with an office in Lincoln, Nebraska. It filed articles of
incorporation and commenced business on February 29, 2016.
It builds new homes in Lancaster County.
2. Lawsuit
In July 2016, DRE demanded that DCB stop using the name
“Denali Custom Builders, Inc.” in its business. DCB contin-
ued to use the name, and DRE filed suit in the district court
in October.
DRE alleged misuse of trade name, claiming that DCB’s
“use of the trade name ‘Denali Custom Builders, Inc.’ has
caused confusion, mistake, and deception among purchasers
and potential purchasers of homes in Nebraska.” DRE sought
injunctive relief and damages attributable to DCB’s “wrongful
use of [DRE’s] trade name,” including lost profits and reason-
able attorney fees.1
1
See Neb. Rev. Stat. § 87-217 (Reissue 2014).
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
DRE also alleged deceptive trade practices in violation of
the Uniform Deceptive Trade Practices Act.2 It alleged that
DCB’s use of DRE’s trade name caused confusion and misun-
derstanding as to DCB’s affiliation with DRE. On this claim,
DRE sought an injunction and costs.3
Finally, DRE alleged interference with a business relation-
ship. It claimed that DCB was “deceiving the members of the
public” into believing that DCB’s advertising was that of DRE,
thereby interfering with DRE’s “business relationships with the
public generally.”
3. Pretrial Proceedings
DCB responded by filing a motion to dismiss, alleging that
the complaint failed to state a claim upon which relief may be
granted. The district court denied the motion.
After the denial of DCB’s motion to dismiss, DCB filed
an answer. As an affirmative defense, it alleged that “[t]he
Complaint fails to state a claim upon which relief can be granted
because ‘Denali Custom Builders, Inc.’ is [DCB’s] legal name,
not [DCB’s] trade name.”
After the close of the pleadings, DCB moved for judgment
on the pleadings. The court overruled the motion. In doing so,
the court stated that “there is a reasonable dispute as to whether
there’s a misuse of the trade name or of the names used by
[DCB]” and that the factual allegations in the complaint were
sufficient to support the causes of action.
Forty-nine days after a pretrial conference, DRE moved to
amend its complaint and the joint pretrial conference memo-
randum. DRE sought to add Roger Watton, a potential home-
buyer, as a witness and to add as exhibits two bills from a
Lincoln utility. DCB filed an objection, noting that the trial
was set to begin in 13 days and that DRE had had more than
1 year to amend its complaint. DCB also alleged that it would
2
Neb. Rev. Stat. §§ 87-301 to 87-306 (Reissue 2014 & Cum. Supp. 2018).
3
See § 87-303.
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
be prejudiced by any amendment to the complaint. During a
hearing on the motion to amend and the objection, DRE repre-
sented that neither the utility bills nor the testimony of Watton
were known to DRE at the time of completing the pretrial
conference memorandum “because this has just occurred in the
last couple weeks.” The court overruled the motion to amend
the complaint, but sustained the motion to add the witness and
exhibits to the pretrial joint conference memorandum.
Two days before trial, DCB moved for attorney fees under
Neb. Rev. Stat. § 25-824(2) and (4) (Reissue 2016). It alleged
that the action was frivolous and was brought to harass DCB.
4. Trial
The court bifurcated the trial, with the initial portion of the
trial addressing liability and a second portion being reserved
for consideration of remedies.
By the time of trial, DRE had built approximately 10 homes.
It was building a home “within half a mile” of a home that
DCB was building. DCB’s signage and its website identified it
as “Denali Custom Builders” and, according to DRE’s manag-
ing partner, used the same fonts and colors as DRE.
DRE adduced evidence demonstrating confusion regard-
ing DRE and DCB. Internet searches for “denali construction
nebraska” or “denali home construction nebraska” directed
the searcher to DCB’s website. DRE received a document
from a lumber company with which it frequently transacted
business that identified DRE as both “Denali Custom Homes”
and “Denali Custom Builders.” A bill from a utility for
one of DRE’s projects identified the customer as “Denali
Custom Builders.” Another time, DRE returned materials to
an Omaha furniture store but the store gave the credit to DCB.
An employee testified that there was confusion as to which
entity should get the credit. An appliance sales associate
for the same furniture store testified that an order belonging
to DRE ended up in the store’s system under DCB, which
caused confusion. Watton testified that in September 2017,
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
he and his wife met with representatives of DRE in Omaha
to discuss the process for building a home. The following
weekend, Watton and his wife toured some homes in Lincoln
and there was a home built by an entity containing the name
“Denali.” After touring the home, Watton did not know what
entity had built it. Watton subsequently spoke with a repre-
sentative of DRE, who clarified that DRE had not built that
particular house.
After DRE presented its case in chief, it asked that the
pleadings be amended to conform to the evidence presented.
Specifically, DRE wanted the complaint to be amended to
show that DCB used names other than its true legal name.
DCB objected. The court overruled the motion, because “this
is already incorporated into the allegations that have been
made and consistent with the matters that we’ve addressed
before.” DCB moved for a directed verdict, which the court
denied. The only evidence DCB offered was an attorney
fee affidavit.
5. Interlocutory Order
and Final Judgment
After the first phase of the trial, the court entered an order
finding in favor of DRE on the issue of liability. The court
found that DRE and DCB were operating the same type of
business, which generally consisted of building new homes.
It found that both businesses advertised on social media, that
they were building homes in Lincoln within a half mile of each
other, and that they have signs using “Denali.”
Significantly, the court determined that DCB generally did
not use its corporate name when conducting business, but,
rather, typically removed “‘Inc.’” and used “‘Denali Custom
Builders.’”
The court also determined that DRE’s evidence provided a
reasonable basis for concluding that there was confusion and
that it was likely for such confusion to exist in the future. The
court found that DRE’s right to use “‘Denali’” was superior
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
to that of DCB, noting that DRE used and registered the trade
name for a home construction business first and that it had
used the trade name in the ordinary course of business in a
manner that associated its business with that name. The court
concluded that DRE had met its burden of proof and estab-
lished its claim for relief for misuse of a trade name.
The court also found that DRE met its burden of proof and
established its claim for relief against DCB for engaging in
deceptive trade practices. The court noted that both parties
were in the home construction business, that both parties trans-
acted business and advertised in Lancaster County, and that
there had been actual confusion by suppliers and the consum-
ing public. The court observed that DCB used similar colors,
type fonts, images, and design as those used by DRE.
Finally, with regard to interference with business relation-
ships, the court found that DCB’s use of “‘Denali’” interfered
with DRE’s business relationships. The court found that DRE
had a valid business relationship with its suppliers and an
expect­ancy of a business relationship with the consuming public.
The court stated that DCB’s “failure to terminate the use of the
name after being aware of [DRE’s] use creates intentional inter-
ference under the law.”
Following the second phase of the trial, the court entered
judgment. It permanently enjoined DCB from using or display-
ing “‘Denali’” in its business in any manner and gave it a set
amount of time to remove “‘Denali’” from anywhere it used
or displayed that word, including “registration of its corporate
name or trade name with the Nebraska Secretary of State and
from any signage, website, advertising, social media (including
but not limited to Facebook and Twitter).” The court awarded
DRE statutory damages of $1,000 under § 87-217, awarded
$10,561.45 in attorney fees incurred by DRE, and ordered
DCB to pay all of the costs.
Nine days later, DCB filed a number of motions. It moved
(1) to suspend the injunction, (2) for a new trial, (3) to set
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
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aside the judgment, (4) to alter or amend the judgment, and
(5) to determine the amount for a supersedeas bond. The court
granted the motion to determine supersedeas, but denied the
other motions.
DCB filed a timely appeal, and our record does not reveal
whether it posted the specified supersedeas bond.
III. ASSIGNMENTS OF ERROR
DCB assigns 17 errors. For the sake of clarity, we group
them in three categories.
With regard to pretrial matters, DCB alleges that the court
erred in denying its pretrial motion to dismiss and its motion
for judgment on the pleadings.
DCB assigns several errors relating to the court’s determina-
tions on liability, relief, and attorney fees. It alleges that the
court erred in (1) denying its motion for directed verdict and
in finding for DRE as to its claims, (2) awarding statutory
damages and attorney fees to DRE and in enjoining DCB from
using or displaying the name “Denali,” and (3) failing to award
attorney fees to DCB.
DCB assigns 12 errors related to evidentiary issues, which
we consolidate and restate. DCB asserts that the court erred
in (1) overruling its relevancy objections; (2) overruling its
hearsay objections, including to the testimony of a furniture
store appliance sales associate and to exhibits 12 through 14,
21 through 24, and 28 through 30; (3) overruling its foun-
dation objections, including to the testimony of furniture
store employees and to exhibits 21 through 25 and 27; (4)
overruling its authentication objections, including to exhibits
21 through 24 and 27; (5) permitting DRE’s managing part-
ner to give opinion testimony and to answer the questions
what he was “‘asking the court to do today’” and “‘why’”
he was asking for it; and (6) permitting Watton to testify
and in overruling the various objections made during his
examination.
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DENALI REAL ESTATE v. DENALI CUSTOM BUILDERS
Cite as 302 Neb. 984
IV. STANDARD OF REVIEW
[1-4] An action for injunction sounds in equity.4 On appeal
from an equity action, an appellate court decides factual ques-
tions de novo on the record and, as to questions of both fact
and law, is obligated to reach a conclusion independent of the
trial court’s determination.5 And in such an appeal, when cred-
ible evidence is in conflict on material issues of fact, the court
considers and may give weight to the fact that the trial court
observed the witnesses and accepted one version of the facts
over another.6 Statutory interpretation is a question of law,
which an appellate court resolves independently of the trial
court.7 These standards are central to our review of this appeal,
but we set forth other applicable standards below.
V. ANALYSIS
1. Denial of Pretrial Motions
DCB challenges the district court’s overruling of its two pre-
trial motions attacking the pleadings: its motion to dismiss the
complaint for failure to state a claim, filed before its answer,
and its motion for judgment on the pleadings, filed after the
pleadings were completed. A district court’s denial of a motion
to dismiss is reviewed de novo.8 A motion for judgment on the
pleadings is properly granted when it appears from the plead-
ings that only questions of law are presented.9 An appellate
court independently decides questions of law.10
But we question whether, after a trial on the merits, a
party may appeal the denial of a motion to dismiss for failure
4
Christiansen v. County of Douglas, 288 Neb. 564, 849 N.W.2d 493
(2014).
5
Junker v. Carlson, 300 Neb. 423, 915 N.W.2d 542 (2018).
6
Id.
7
Gerber v. P & L Finance Co., 301 Neb. 463, 919 N.W.2d 116 (2018).
8
D.M. v. State, 25 Neb. Ct. App. 596, 911 N.W.2d 621 (2018).
9
In re Trust Created by Hansen, 274 Neb. 199, 739 N.W.2d 170 (2007).
10
Burnham v. Pacesetter Corp., 280 Neb. 707, 789 N.W.2d 913 (2010).
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to state a claim under Neb. Ct. R. Pldg. § 6-1112(b)(6) or
a motion for judgment on the pleadings under § 6-1112(c).
These appear to be issues of first impression in Nebraska.
Both of these motions have some similarity to a motion
for summary judgment, the denial of which is neither review-
able nor appealable after the conclusion of a case.11 All three
attack the sufficiency of the pleadings and are applications for
an order intended to result in a judgment.12 Whether a motion
for summary judgment should have been granted generally
becomes moot after trial. This is because the overruling of such
a motion does not decide any issue, but merely indicates that
the trial court was not convinced that the moving party was
entitled to judgment as a matter of law. After trial, the merits
should be judged in relation to the fully developed trial record,
not whether a different judgment may have been warranted on
the record at summary judgment.13 Bearing this similarity in
mind, we turn to each motion.
(a) Motion to Dismiss
A motion to dismiss under § 6-1112(b)(6) is generally con-
sidered the equivalent of a demurrer under our former code
pleading system.14 And under that jurisprudence, the rule was
clear: Where a party answered after an adverse ruling on his or
her motion or demurrer, and went to trial on the merits of an
issue that party elected to join, he or she waived error, if any,
in such ruling.15
11
See State ex rel. Peterson v. Creative Comm. Promotions, ante p. 606, 924
N.W.2d 664 (2019).
12
See 71 C.J.S. Pleading § 600 (2011).
13
Guinn v. Murray, 286 Neb. 584, 837 N.W.2d 805 (2013).
14
See Weeder v. Central Comm. College, 269 Neb. 114, 691 N.W.2d 508
(2005).
15
See, Ivins v. Ivins, 171 Neb. 838, 108 N.W.2d 99 (1961); Dinkel v.
Hagedorn, 156 Neb. 419, 56 N.W.2d 464 (1953). See, also, Buck v. Reed,
27 Neb. 67, 42 N.W. 894 (1889).
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[5] Federal decisions provide some guidance regarding our
current rule. Nebraska courts will look to federal decisions
interpreting corresponding federal rules for guidance in inter-
preting similar Nebraska civil pleading rules.16 Of course, Fed.
R. Civ. P. 12(b)(6) is similar to our § 6-1112(b)(6).
Two decisions are helpful. One federal circuit court declared
that as a general rule, a defendant may not, after a plaintiff has
prevailed at trial, appeal from the pretrial denial of a motion to
dismiss for failure to state a claim, but must instead challenge
the legal sufficiency of the plaintiff’s claim through a motion
for judgment as a matter of law.17 Another circuit reasoned
that when a plaintiff has prevailed after a full trial on the
merits, a trial court’s denial of a motion to dismiss becomes
moot.18 At that point, “[t]he plaintiff has proved, not merely
alleged, facts sufficient to support relief.”19
[6] We hold that generally, the denial of a motion to dis-
miss under § 6-1112(b)(6) becomes moot after trial. Here, the
district court overruled DCB’s motion to dismiss for failure
to state a claim upon which relief may be granted and DRE
prevailed following a trial on the merits. We conclude that
DCB’s challenge to the overruling of its motion to dismiss
is moot.
(b) Motion for Judgment on Pleadings
A motion for judgment on the pleadings has long been
available in Nebraska. It existed under our former code plead-
ing system20 and is retained in § 6-1112(c) under our notice
16
Blinn v. Beatrice Community Hosp. & Health Ctr., 270 Neb. 809, 708
N.W.2d 235 (2006).
17
See Clearone Communications, Inc. v. Biamp Systems, 653 F.3d 1163
(10th Cir. 2011).
18
See Bennett v. Pippin, 74 F.3d 578 (5th Cir. 1996). See, also, In re Will of
McFayden, 179 N.C. App. 595, 635 S.E.2d 65 (2006); Simon v. Jackson,
855 So. 2d 1026 (Ala. 2003).
19
Bennett v. Pippin, supra note 18, 74 F.3d at 585.
20
See Johnson v. State, 270 Neb. 316, 700 N.W.2d 620 (2005).
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p­ leading system. Formerly, we said: “‘A motion for judgment
on the pleadings is in the nature of a demurrer. It is in substance
both a motion and a demurrer.’”21 Like a demurrer, a motion for
judgment on the pleadings admits the truth of all well-pleaded
facts in the opposing party’s pleadings, together with all reason-
able inferences to be drawn therefrom, and the moving party
admits, for the purpose of the motion, the untruth of his own
allegations insofar as they have been controverted.22
Our former jurisprudence on such motions, however, was
inconsistent regarding the survival of an adverse ruling after
trial. Long ago, we stated that, as with a demurrer, any error
on the overruling of a motion for judgment on the pleadings is
waived “where the party . . . after motion and waiving demur-
rer, answers over and goes to trial on the merits of the issue
which he has elected to join.”23 But in at least two cases, we
considered whether a trial court properly overruled a motion
for judgment on the pleadings even though the matter had pro-
ceeded to trial.24
[7] It appears to be generally accepted elsewhere that the
denial of a motion for judgment on the pleadings is reviewable
following a trial and decision on the merits.25 Most jurisdictions
adhere to the view that a party who unsuccessfully moves for
judgment on the pleadings “must either file additional plead-
ings or go to trial on the issues joined by the original plead-
ings, and, by saving exception to the action of the trial court in
overruling his motion, obtain a review thereof on appeal from
21
Vaughan v. Omaha Wimsett System Co., 143 Neb. 470, 473, 9 N.W.2d 792,
794 (1943).
22
Mueller v. Union Pacific Railroad, 220 Neb. 742, 371 N.W.2d 732 (1985).
23
Becker v. Simonds, 33 Neb. 680, 684, 50 N.W. 1129, 1131 (1892).
24
See, Board of Educational Lands & Funds v. Gillett, 158 Neb. 558, 64
N.W.2d 105 (1954); Gilbert v. First National Bank, 154 Neb. 404, 48
N.W.2d 401 (1951).
25
See 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 1372 (3d ed. 2004 & Supp. 2018).
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the final judgment, if adverse.”26 The Eighth Circuit deter-
mined that after a jury verdict in favor of the plaintiff, it was
required to review the assertion that the trial court erroneously
denied the defendant’s rule 12(c) motion.27
But a treatise has suggested a better solution:
In most situations the evidence at trial will depart from
the pleadings and, in view of Rule 15(b), the pleadings
will be deemed amended to conform to the evidence,
absent a showing of prejudice to the other party, and
the original judgment on the pleadings motion probably
rendered moot. When the evidence is consistent with the
pleadings, the appellate court should order a judgment
entered for the defendant on the ground that the facts
elicited at trial demonstrated a good defense to the action
rather than because of the defect in the pleadings.28
[8] Neb. Ct. R. Pldg. § 6-1115(b) is substantially identical to
Fed. R. Civ. P. 15(b).29 Our rule explicitly provides that
amendment of the pleadings as may be necessary to cause
them to conform to the evidence and to raise these issues
may be made upon motion of any party at any time, even
after judgment; but failure so to amend does not affect the
result of the trial of these issues.30
We have recognized that even when a party does not move to
amend pleadings, a court may constructively amend pleadings
on unpleaded issues in order to render a decision consistent
with the trial.31
Under the circumstances here, DCB’s motion for judg-
ment on the pleadings is essentially moot. DRE moved to
amend its complaint to conform to the evidence that DCB
26
Annot., 14 A.L.R. 2d 460, 466 (1950).
27
See Sinclair Refining Co. v. Stevens, 123 F.2d 186 (8th Cir. 1941).
28
5C Wright & Miller, supra note 25, § 1372 at 278.
29
See Blinn v. Beatrice Community Hosp. & Health Ctr., supra note 16.
30
§ 6-1115(b) (emphasis supplied).
31
See Zelenka v. Pratte, 300 Neb. 100, 912 N.W.2d 723 (2018).
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used names other than its true legal name, but the district
court overruled the motion because the court believed the
matter had already been incorporated into the allegations
made. The issue of whether DCB used a trade name other
than its true name was tried, and under § 6-1115(b), the fail-
ure to amend did not affect the result of the trial on the issue.
Therefore, DCB’s argument premised upon the complaint’s
allegation became moot. Although the district court’s expla-
nation was not precisely tied to § 6-1115(b), the net effect
was the same. The result of the trial was not affected by
the original allegation that DCB was using the trade name
“Denali Custom Builders, Inc.” This assignment of error
lacks merit.
2. Motion for Directed Verdict
DCB alleges that the district court erred in overruling its
motion for directed verdict. A directed verdict is proper at the
close of all the evidence only when reasonable minds cannot
differ and can draw but one conclusion from the evidence, that
is, when an issue should be decided as a matter of law.32
[9] DCB moved for directed verdict at the close of DRE’s
evidence, but it did not renew the motion after it rested. We
have long held that a defendant who moves for a directed
verdict at the close of the plaintiff’s evidence and, upon the
overruling of such motion, proceeds with trial and introduces
evidence, waives any error in the ruling on the motion.33 But
here, we conclude the error is not waived, because DCB’s evi-
dence—an attorney fee affidavit—was directed not to DRE’s
case in chief, but only to its own motion for attorney fees.
Nonetheless, our analysis of this issue merges into that of the
court’s finding in favor of DRE on the merits. So we turn to
that issue.
32
Armstrong v. Clarkson College, 297 Neb. 595, 901 N.W.2d 1 (2017).
33
Bradley T. & Donna T. v. Central Catholic High Sch., 264 Neb. 951, 653
N.W.2d 813 (2002). See, also, Boardman v. McNeff, 177 Neb. 534, 129
N.W.2d 457 (1964).
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3. Finding in Favor of DRE on Merits
DCB quarrels with the court’s ultimate judgment in favor of
DRE on each of its three causes of action. We begin with the
statutory definition of two key terms. Neb. Rev. Stat. § 87-208
(Reissue 2014) provides:
As used in sections 87-208 to 87-219.01, unless the
context otherwise requires:
....
(2) Person means an individual, corporation, govern-
ment or governmental subdivision or agency, business
trust, estate, trust, partnership, limited liability company,
unincorporated association, or two or more of the forego-
ing having a joint or common interest or any other legal
or commercial entity;
....
(4) Trade name means every name under which any
person does or transacts any business in this state other
than the true name of such person.
Based on these definitions, DCB argues that “Denali Custom
Builders, Inc.” is not a trade name because it is the corpora-
tion’s true name. DCB’s argument—that by using only its
true legal name, it cannot be liable for misuse of DRE’s trade
names—does not necessarily comport with Neb. Rev. Stat.
§ 87-216 (Reissue 2014). But, here, it is not necessary to
decide that question.
[10] Here, the evidence showed that DCB did not limit
itself to its legal corporate name: DCB also held itself out to
be “Denali Custom Builders.” At trial, the court heard evi-
dence that DCB displayed that name on its advertising, social
media, website, and signs. In White v. Board of Regents,34 we
adopted the following definition for “use” of a trade name from
the Restatement (Third) of Unfair Competition: “‘[A] designa-
tion is “used” as a . . . trade name . . . when the designation is
34
White v. Board of Regents, 260 Neb. 26, 36, 614 N.W.2d 330, 338 (2000),
quoting Restatement (Third) of Unfair Competition § 18 (1995).
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displayed or otherwise made known to prospective purchasers in
the ordinary course of business in a manner that associates the
designation with the goods, services, or business of the user . .
. .’” We noted in White that at common law, the use of a trade
name may be established by its appearance on signs, documents
employed in conducting business, mail solicitations, or adver-
tising.35 The evidence showed that DCB used “Denali Custom
Builders” on signs and advertising. Under § 87-208(4), “Denali
Custom Builders” is a trade name: It is a name under which
DCB transacted business, and it is not DCB’s true name.
Thus, DCB’s central theme of defense failed. We now turn
to DRE’s respective claims.
(a) Trade Name Infringement
Under Neb. Rev. Stat. § 87-209(6) (Reissue 2014), protec-
tion is given to trade names registered in this state.36 DRE
registered two trade names in Nebraska: “Denali Construction”
and “Denali Homes.”
[11] In a case for trade name infringement, the plaintiff
has the burden to prove by a preponderance of the evidence
the existence of (1) a valid trade name entitled to protection
and (2) a substantial similarity between the plaintiff’s and the
defendant’s names, which would result in either actual or prob-
able deception or confusion by ordinary persons dealing with
ordinary caution.37 This analysis requires two steps.
[12] The first step is to determine whether DRE’s trade
names are entitled to protection. We disagree with DRE and the
district court that “Denali” alone is a valid trade name entitled
to protection. The evil sought to be eliminated by trade name
protection is confusion.38 We doubt one would confuse “Denali
35
See id.
36
Prime Home Care v. Pathways to Compassion, 283 Neb. 77, 809 N.W.2d
751 (2012).
37
Id.
38
Id.
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Burgers” or “Denali Clothing” with “Denali Construction” or
“Denali Homes.” And generic words, whose primary meaning
is merely descriptive of the business to which they are applied
or which are such as are in common use for that purpose, can-
not be exclusively appropriated as a trade name.39 But each
of DRE’s trade names, “Denali Construction” and “Denali
Homes,” is sufficiently distinctive.
The next step is to determine whether there has been an
infringement on DRE’s trade names. Likelihood of confusion
is key.
[13] The likelihood of confusion in the use of trade names
can be shown by presenting circumstances from which courts
might conclude that persons are likely to transact business with
one party under the belief they are dealing with another party.
If the similarity is such as to mislead purchasers or those doing
business with the company, acting with ordinary and reason-
able caution, or if the similarity is calculated to deceive the
ordinary buyer in ordinary conditions, it is sufficient to entitle
the one first adopting the name to relief.40
[14] Among the considerations for determining whether
trade name confusion exists are (1) degree of similarity in the
products offered for sale; (2) geographic separation of the two
enterprises and the extent to which their trade areas overlap;
(3) extent to which the stores are in actual competition; (4)
duration of use without actual confusion; and (5) the actual
similarity, visually and phonetically, between the two trade
names.41 So, what did the evidence show on these factors?
The answer is clear: DRE’s evidence showed confusion
between DCB’s “Denali Custom Builders” and DRE’s regis-
tered trade names of “Denali Construction” or “Denali Homes.”
The entities build new homes, similar in style. They operate
in eastern Nebraska, including Lincoln. Businesses building
39
Nebraska Irrigation, Inc. v. Koch, 246 Neb. 856, 523 N.W.2d 676 (1994).
40
Prime Home Care v. Pathways to Compassion, supra note 36.
41
Id.
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similar new homes in the same city are likely to be in competi-
tion with one another. Within 8 months of DCB’s incorpora-
tion, actual confusion about the entities arose, and DRE filed
its complaint.
Confusion can be of a customer and also those likely to
do business with the entity, including wholesalers, banks,
utility providers, et cetera.42 Evidence of misdirected mail,
including bills from suppliers, is sufficient to indicate actual
confusion from similarity of trade names.43 DRE adduced evi-
dence of actual confusion on the part of a potential purchaser
(Watton), a lumber company, two employees of a furniture
store, and a utility provider. Further, the names implicate busi-
nesses in the home-building industry. Denali Custom Builders
sends much the same message as Denali Construction or
Denali Homes.
The presence of actual confusion distinguishes this case
from previous decisions. In Dahms v. Jacobs,44 we were unable
to find that “‘The Depot’” and “‘The Denim Depot’”—both
clothing stores—were so alike as to be likely to cause con-
fusion in the minds of the public. We specifically held that
“the plaintiff in this case has failed to show, as he must,
either actual or probable confusion.”45 Similarly, in Nebraska
Irrigation, Inc. v. Koch,46 in determining that the plaintiff did
not prove a clear right to injunctive relief concerning the trade
names “‘Nebraska Irrigation’” and “‘Nebraska Irrigation Sales
& Equipment,’” we noted the absence of any specific instances
of confusion. The Nebraska Court of Appeals concluded that a
42
See Hong’s, Inc. v. Grand China Buffet, 19 Neb. Ct. App. 331, 805 N.W.2d 90
(2011).
43
See Powder River Oil v. Powder River Petroleum, 830 P.2d 403 (Wyo.
1992).
44
Dahms v. Jacobs, 201 Neb. 745, 748, 272 N.W.2d 43, 45 (1978).
45
Id.
46
Nebraska Irrigation, Inc. v. Koch, supra note 39, 246 Neb. at 862, 523
N.W.2d at 681.
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plaintiff failed to meet its burden to show actual confusion in
the use of the trade names “‘China Buffet’” and “‘Grand China
Buffet.’”47 But here, DRE showed, by the greater weight of the
evidence, actual confusion. Accordingly, DRE was entitled to
relief on its trade name infringement claim.
(b) Deceptive Trade Practices
[15] Section 87-302 enumerates deceptive trade practices.
As relevant to the facts of this case, a corporation engages in
a deceptive trade practice when, in the course of its business,
it causes the likelihood of confusion or of misunderstanding as
to “the source, sponsorship, approval, or certification of goods
or services” or “affiliation, connection, or association with, or
certification by, another.”48
[16] As set forth above, the evidence showed that DCB’s
use of “Denali Custom Builders” in the course of its business
caused confusion regarding the source of goods or services and
its affiliation or association with DRE’s entities. And within 5
months of DCB’s incorporation, attorneys for DRE sent a let-
ter notifying DCB that it was infringing on DRE’s trade names
and that such infringement was likely to cause confusion in
the marketplace. Further, while a claim for the misuse of a
trade name considers only the trade name seeking protection,
a claim for a deceptive trade practice expands the consider-
ation to issues of image and trade dress.49 DRE’s managing
partner testified that DCB’s signage and its website used the
same fonts and colors as those used by DRE. And, indeed, our
examination of the exhibits reveals that these similarities are
47
See Hong’s, Inc. v. Grand China Buffet, supra note 42, 19 Neb. Ct. App. at
338, 805 N.W.2d at 97.
48
See § 87-302(a)(2) and (3).
49
See Powder River Oil v. Powder River Petroleum, supra note 43. See,
also, Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 209,
120 S. Ct. 1339, 146 L. Ed. 2d 182 (2000) (“‘trade dress’” originally
included only product’s packaging but had been expanded by lower courts
to encompass product’s design).
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particularly striking. We conclude that DRE met its burden of
proof to show that DCB engaged in deceptive trade practices.
On this claim, DRE was also entitled to relief.
(c) Interference With Business
Relationship
[17,18] To succeed on a claim for tortious interference with
a business relationship or expectancy, a plaintiff must prove
(1) the existence of a valid business relationship or expectancy,
(2) knowledge by the interferer of the relationship or expect­
ancy, (3) an unjustified intentional act of interference on the
part of the interferer, (4) proof that the interference caused the
harm sustained, and (5) damage to the party whose relation-
ship or expectancy was disrupted.50 One of the basic elements
of tortious interference with a business relationship requires an
intentional act that induces or causes a breach or termination
of the relationship or expectancy.51
The district court did not make any explicit finding regard-
ing a breach or termination of a business relationship or
expect­ancy. It found that DRE “had a valid business rela-
tionship with its suppliers and an expectancy of a business
relationship with the consuming public.” It then reasoned that
DCB “knew or had knowledge that using the trade name could
cause interference and that interference was substantially cer-
tain to result.” The court found that DCB’s “use of ‘Denali’
interfered with the business relationships of [DRE] in the ways
claimed by [DRE].”
Our review of the record failed to uncover evidence that
DCB’s use of “Denali” or “Denali Custom Builders” induced
or caused a breach or termination of a business relationship
or expectancy. Confusion about identity alone did not satisfy
50
Thompson v. Johnson, 299 Neb. 819, 910 N.W.2d 800 (2018).
51
See, Recio v. Evers, 278 Neb. 405, 771 N.W.2d 121 (2009); Pettit v.
Paxton, 255 Neb. 279, 583 N.W.2d 604 (1998); Miller Chemical Co., Inc.
v. Tams, 211 Neb. 837, 320 N.W.2d 759 (1982), disapproved on other
grounds, Matheson v. Stork, 239 Neb. 547, 477 N.W.2d 156 (1991).
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this element. There was no evidence that the confused lumber
supplier, furniture store, or utility ceased its relationship with
DRE due to the confusion. Similarly, although Watton and his
wife—prospective customers—were confused about whether
DRE built a home that they toured, there was no evidence that
this confusion led them to end a potential relationship with
DRE. We have stated that “when the defendant’s interference
is directed toward the third party, with whom the plaintiff
has contracted, and the interference did not cause the third
party to breach the contract, it is difficult to conceive how the
plaintiff would prove causation.”52 Here, the record is void of
evidence that a business relationship or expectancy of DRE
was breached or terminated due to DCB’s use of “Denali
Custom Builders.”
Upon our de novo review, we conclude that DRE failed to
establish its claim for interference with a business relation-
ship. But this makes no real difference: The relief ultimately
granted was amply supported by DRE’s claims for trade name
infringement and deceptive trade practices. We turn to the spe-
cific elements of this relief.
4. Awarding DRE Statutory Damages
and Attorney Fees
A statute sets forth the remedies available for misuse of a
trade name. It specifically authorizes damages of $1,000 and
reasonable attorney fees:
Any registrant of a trade name may proceed by suit
to enjoin the use, display, or sale of any counterfeits or
imitations thereof, and a court of competent jurisdiction
may restrain such use, display, or sale on terms which
the court deems just and reasonable and may require the
defendants to pay to the registrant (1) all profits attribut-
able to the wrongful use, display, or sale, (2) all damages
caused by the wrongful use, display, or sale, or (3) both
52
Pettit v. Paxton, supra note 51, 255 Neb. at 288, 583 N.W.2d at 610.
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such profits and damages, and reasonable attorney’s fees.
In lieu of the remedies available in subdivisions (1), (2),
and (3) of this section, the court may require the defend­
ants to pay statutory damages of one thousand dollars
and reasonable attorney’s fees. The court may order that
any counterfeits or imitations in the possession or under
the control of any defendant be delivered to an officer of
the court, or to the complainant, to be destroyed.53
As DCB highlights, § 87-217 does not require a court to make
such an award. Nonetheless, the statute clearly permitted the
court’s award of statutory damages of $1,000 and payment
of reasonable attorney fees. And DCB does not contest the
amount of fees awarded. The court properly awarded damages
and attorney fees. Upon our de novo review, we reach the
same conclusion regarding this relief.
5. Injunction
DCB also quarrels with the injunction entered by the court.
The court enjoined DCB from “using or displaying the name
‘Denali’ in its business in any manner whatsoever.” Once
again, upon de novo review, we reach the same conclusion.
[19,20] DRE proved both misuse of a trade name and
deceptive trade practices. Section 87-217 authorizes a reg-
istrant of a trade name—which DRE is—to proceed by suit
to enjoin the use or display of imitations of its trade name.
Similarly, § 87-303(a) authorizes a court to grant an injunction
against the person committing the deceptive trade practice.
Eliminating “Denali” from “Denali Custom Builders” should
suffice to eliminate the confusion between DCB and DRE’s
trade names.
DCB also challenges the court’s order that it “remove the
name ‘Denali’ from any registration of its corporate name or
trade name with the Nebraska Secretary of State.” It asserts
that such an order is “not exactly an injunction” and that “[i]t
53
See § 87-217 (emphasis supplied).
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is one thing to prohibit [DCB] from doing an act, but quite
another to require it affirmatively do an act.”54
[21,22] However, § 87-303(a) permits a court to “order
such additional equitable relief as it deems necessary to
protect the public from further violations.” In an equitable
action, the district court is vested with broad equitable pow-
ers and discretion to fashion appropriate relief.55 And once an
appellate court acquires equity jurisdiction, it can adjudicate
all matters properly presented and grant complete relief to
the parties.56
Upon our de novo review and in light of the relief specifi-
cally authorized by § 87-303(a), we conclude this equitable
relief is necessary to grant complete relief to DRE. Contrary
to DCB’s argument, we are not compelling a new and dis-
tinct affirmative act. Rather, we are prohibiting DCB from
perpetuating the confusion resulting from its registration of
one name and its later operation under a variant deceptively
similar to DRE’s previously registered trade names. Under
these circumstances, permitting DCB to revert to using only
its legal corporate name would reward it for its deceptive
conduct. Under the circumstances here, we find no merit to
DCB’s argument.
6. R emaining Assignments of Error
We have considered DCB’s remaining claims—that the court
erred in denying its request for attorney fees and in admitting
evidence over objections—and find them to be without merit.
A point-by-point rejection of each contention would need-
lessly lengthen our decision without enhancing our existing
54
Brief for appellant at 33.
55
See State on behalf of Lockwood v. Laue, 24 Neb. Ct. App. 909, 900 N.W.2d
582 (2017). See, also, Strunk v. Chromy-Strunk, 270 Neb. 917, 708
N.W.2d 821 (2006) (action in equity vests trial court with broad powers
authorizing any judgment under pleadings).
56
See In re Estate of McKillip, 284 Neb. 367, 820 N.W.2d 868 (2012).
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jurisprudence. Upon our de novo review, we find no error or
abuse of discretion in the respects alleged.
VI. CONCLUSION
We summarize our conclusions. The denial of DCB’s
motion to dismiss under § 6-1112(b)(6) is moot. Its argument
regarding the denial of its motion under § 6-1112(c) lacks
merit. DRE met its burden of proof regarding its claims for
trade name infringement and deceptive trade practices, but it
did not establish tortious interference with a business relation-
ship or expectancy. DRE was entitled to statutory damages,
attorney fees, and injunctive relief, and this relief is unaf-
fected by our determination that DRE proved only two of
its three causes of action. Having found no error or abuse of
discretion in the other respects alleged, we affirm the district
court’s judgment.
A ffirmed.