Fisher v. Heirs & Devisees of T.D. Lovercheck

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Nebraska A dvance Sheets
291 Nebraska R eports
FISHER v. HEIRS & DEVISEES OF T.D. LOVERCHECK
Cite as 291 Neb. 9
David Fisher and Pamela W. Fisher, husband and wife,
and David Fisher and Pamela W. Fisher, Trustees,
appellants, v. The H eirs and Devisees of
T.D. Lovercheck et al., appellees.
___ N.W.2d ___
Filed June 5, 2015. No. S-14-529.
1. Equity: Appeal and Error. On appeal from an equity action, an appel-
late court tries factual questions de novo on the record and reaches an
independent conclusion.
2. Statutes: Appeal and Error. The meaning and interpretation of
a statute are questions of law, which an appellate court indepen-
dently reviews.
3. Pleadings: Parties: Limitations of Actions. Under Neb. Rev. Stat.
§ 25-301 (Reissue 2008), an amendment joining the real parties in inter-
est relates back to the date of the original pleading.
4. Garnishment: Statutes: Appeal and Error. An appellate court applies
the ordinary rules of interpretation to statutes in chapter 25 of the
Nebraska Revised Statutes.
Appeal from the District Court for Banner County: Derek C.
Weimer, Judge. Reversed and remanded with directions.
Philip M. Kelly and Jerald L. Ostdiek, of Douglas, Kelly,
Ostdiek & Ossian, P.C., for appellants.
Leslie A. Shaver and John F. Simmons, of Simmons Olsen
Law Firm, P.C., for appellees.
Heavican, C.J., Wright, Connolly, Stephan, Miller-Lerman,
and Cassel, JJ.
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FISHER v. HEIRS & DEVISEES OF T.D. LOVERCHECK
Cite as 291 Neb. 9
Connolly, J.
SUMMARY
David Fisher and Pamela W. Fisher sued, among others,
U.S. Bank National Association (US Bank) to terminate sev-
ered mineral interests. The Fishers filed their complaint as
“Husband and Wife” and alleged that they had owned the land
since 1986. In its answer, US Bank noted that in 2001, the
Fishers conveyed the land to themselves as trustees for the
David and Pamela Fisher Living Trust. Thus, US Bank argued
that the Fishers, as husband and wife, were not the real parties
in interest.
Before the Fishers filed an amended complaint adding
themselves in their capacity as trustees as plaintiffs, US Bank
recorded a verified claim of mineral interest. Because US Bank
did not otherwise publicly exercise its right of ownership,
whether it recorded a claim of interest before the Fishers com-
menced the action was the decisive issue. The court held that
the amended complaint did not relate back to the original com-
plaint and sustained US Bank’s motion for summary judgment.
As a matter of first impression, we conclude that the amended
complaint relates back under Neb. Rev. Stat. § 25-301 (Reissue
2008) because it joined the real parties in interest. We reverse,
and remand with directions.
BACKGROUND
In 1986, “DAVID FISHER and PAMELA W. FISHER,
husband and wife,” received by warranty deed 400 acres in
Banner County, Nebraska, as joint tenants. In 2001, the Fishers
quitclaimed the land to “DAVID FISHER and PAMELA
W. FISHER, TRUSTEES OF THE DAVID AND PAMELA
FISHER LIVING TRUST.” David and Pamela Fisher are the
initial trustees and beneficiaries of the trust.
US Bank is the trustee of the L.T. Lovercheck Trust.
US Bank claims that the corpus of the Lovercheck trust
includes an undivided one-quarter interest in the minerals pro-
duced on the land in question.
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FISHER v. HEIRS & DEVISEES OF T.D. LOVERCHECK
Cite as 291 Neb. 9
The parties generally agree that the mineral estate has not
been active. David averred that since he and Pamela acquired
the land in 1986, no well drilling occurred and no mineral
leases were executed. US Bank admitted that, to its knowledge,
no drilling activity occurred on the land and that it had not
filed a claim of interest before this litigation.
On March 4, 2013, “DAVID FISHER and PAMELA W.
FISHER, Husband and Wife,” filed a complaint to terminate
severed mineral interests. The defendants included US Bank as
the trustee of the Lovercheck trust. To succeed, the Fishers had
to prove three negatives. Generally, they had to show that the
record owners of the severed mineral interests did not, in the
23 years before the Fishers filed suit, publicly exercise their
ownership rights by (1) transferring, leasing, or encumber-
ing their interest; (2) drilling for or removing minerals; or (3)
recording a verified claim of interest.1
On May 2, 2013, US Bank filed an answer alleging that
the Fishers did not bring suit in the name of the real party in
interest, i.e., the trustees of their trust. On the same day, US
Bank recorded a verified claim of mineral interest. On May 29,
US Bank filed another claim of interest to “further clarify the
ownership of title.”
On June 14, 2013, the Fishers moved for leave to file an
amended complaint. The court sustained their motion, and
the Fishers filed an amended complaint that added “DAVID
FISHER and PAMELA W. FISHER, Trustees,” as plaintiffs.
The amended complaint did not change the substance of the
Fishers’ claims. In its answer to the amended complaint,
US Bank alleged that it recorded a claim of interest before the
Fishers filed their amended complaint.
US Bank and the Fishers filed cross-motions for summary
judgment. The court sustained the Fishers’ motion for a default
judgment against all defendants except US Bank.
1
See Neb. Rev. Stat. § 57-229 (Reissue 2010).
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FISHER v. HEIRS & DEVISEES OF T.D. LOVERCHECK
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In its order disposing of the cross-motions for summary
judgment, the court stated that US Bank recorded a valid
claim of interest after the Fishers filed the original complaint
but before they filed the amended complaint. So, the “critical
conclusion” was whether the amended complaint related back
to the original complaint. Because the Fishers’ trust owned the
surface estate, the court stated that “[t]he real parties in interest
in this matter are David and Pamela Fisher, as trustees of the
trust, not as husband and wife.”
After deciding that the general relation-back statute, Neb.
Rev. Stat. § 25-201.02 (Reissue 2008), does not apply to
amendments that add plaintiffs, the court turned to § 25-301,
the real party in interest statute. Section 25-301 provides that
joinder of the real party in interest “shall have the same effect
as if the action had been commenced by the real party in inter-
est.” The court stated that § 25-301 “can be used to ‘save’
cases that might otherwise be dismissed due to the statute of
limitations.” But the court determined that § 25-301 must be
read in the context of “the interplay between the general rules
related to civil procedure and those specific rules related to
dormant mineral interests.” Reasoning that equity abhors for-
feitures and that the dormant mineral interest statutes must be
strictly construed, the court decided that the Fishers’ amended
complaint did not relate back to the original complaint under
§ 25-301. The court sustained US Bank’s motion for sum-
mary judgment.
ASSIGNMENTS OF ERROR
The Fishers assign, restated and consolidated, that the court
erred by (1) deciding that the amended complaint did not
relate back to the original complaint, (2) sustaining US Bank’s
motion for summary judgment, and (3) overruling the Fishers’
motion for summary judgment.
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Nebraska A dvance Sheets
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FISHER v. HEIRS & DEVISEES OF T.D. LOVERCHECK
Cite as 291 Neb. 9
STANDARD OF REVIEW
[1] On appeal from an equity action, an appellate court tries
factual questions de novo on the record and reaches an inde-
pendent conclusion.2
[2] The meaning and interpretation of a statute are questions
of law.3 An appellate court independently reviews questions
of law.4
ANALYSIS
The Fishers offer two theories for why the amended com-
plaint relates back to the original: First, they contend that it
relates back under § 25-201.02 because the claims asserted
in the original and amended complaints arose out of the same
transaction. Second, they argue that the amended complaint
relates back under § 25-301 because it merely joins the real
parties in interest. US Bank responds that § 25-201.02 does
not apply to amendments that add plaintiffs and that § 25-301
“says nothing about relation back.”5
As an initial matter, we note that the court found that the
Fishers as trustees, and not as husband and wife, were the
real parties in interest. Thus, the court implicitly decided
that the beneficiaries of a revocable trust are not “owners of
the surface” under Neb. Rev. Stat. § 57-228 (Reissue 2010).
The focus of the real party in interest inquiry is standing to
sue.6 If the statute that creates the cause of action specifies
the persons who have standing to sue, those persons are the
real parties in interest.7 The Fishers do not argue that they are
“owners” in their capacity as beneficiaries. So, the meaning
2
See Gibbs Cattle Co. v. Bixler, 285 Neb. 952, 831 N.W.2d 696 (2013).
3
See DMK Biodiesel v. McCoy, 290 Neb. 286, 859 N.W.2d 867 (2015).
4
Id.
5
Brief for appellee at 9.
6
Manon v. Orr, 289 Neb. 484, 856 N.W.2d 106 (2014).
7
See Polk County v. Wombacher, 229 Neb. 239, 426 N.W.2d 266 (1988).
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of “owners” in § 57-228 is not before us.8 We do not review
the court’s conclusion that the Fishers as beneficiaries are not
real parties in interest.
Turning to the civil procedure statutes, § 25-201.02 gener-
ally provides that an amendment relates back if it arises out of
the same transaction set forth in the original pleading. Under
§ 25-201.02(2), if the amendment “changes the party or the
name of the party against whom a claim is asserted,” the pro-
ponent of the amendment must also show that the party in the
amended pleading had, within the relevant limitations period,
(1) notice of the action such that it will not be prejudiced and
(2) notice that the action would have been brought against it
absent some mistake. Section 25-201.02 is substantially similar
to Fed. R. of Civ. P. 15(c).9 So, we have looked to federal deci-
sions for guidance.10
Section 25-301, Nebraska’s real party in interest statute,
provides:
Every action shall be prosecuted in the name of the
real party in interest . . . . An action shall not be dis-
missed on the ground that it is not prosecuted in the
name of the real party in interest until a reasonable time
has been allowed after objection for joinder or substitu-
tion of the real party in interest. Joinder or substitution
of the real party in interest shall have the same effect
as if the action had been commenced by the real party
in interest.
Before a 1999 amendment,11 § 25-301 simply provided that,
subject to an exception not applicable here, “[e]very action
8
See Breci v. St. Paul Mercury Ins. Co., 288 Neb. 626, 849 N.W.2d 523
(2014).
9
See, Gibbs Cattle Co. v. Bixler, supra note 2; Reid v. Evans, 273 Neb. 714,
733 N.W.2d 186 (2007).
10
Gibbs Cattle Co. v. Bixler, supra note 2. See, also, Zyburo v. Board of
Education, 239 Neb. 162, 474 N.W.2d 671 (1991); West Omaha Inv. v.
S.I.D. No. 48, 227 Neb. 785, 420 N.W.2d 291 (1988).
11
1999 Neb. Laws, L.B. 48.
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must be prosecuted in the name of the real party in interest
. . . .”12 The added language is substantially similar to Fed. R.
Civ. P. 17,13 particularly to rule 17 as it existed before a 2007
stylistic amendment.14 Because § 25-301 is similar to rule 17,
we may look to federal decisions for guidance.15
The Fishers amended their complaint to join the real parties
in interest, so we look first to § 25-301. As noted, whether an
amendment joining the real party in interest relates back to the
original pleading under § 25-301, as amended in 1999, is an
issue of first impression.
Most courts have concluded that amendments “in the nature
of a substitution of the real party in interest” can relate back
to the original pleading.16 Similarly, there is “general agree-
ment” that amendments changing the plaintiff’s capacity relate
back.17 Among federal courts, some have based relation back
for added or substituted real parties in interest under rule 15.18
Others have applied rules 15 and 17 in tandem.19 Many recog-
nize that rule 17 alone includes a relation-back principle.20
Rule 17(a)(3) provides that after the real party in interest
ratifies, joins, or is substituted into the action, “the action
12
§ 25-301 (Reissue 1995).
13
Compare § 25-301 (Reissue 2008), with federal rule 17(a)(3).
14
See 4 James Wm. Moore, Moore’s Federal Practice § 17App.04[1] (Daniel
R. Coquillette et al. eds., 3d ed. 2015).
15
See Gibbs Cattle Co. v. Bixler, supra note 2.
16
61B Am. Jur. 2d Pleading § 828 at 123 (2010).
17
Id. at 122. See, e.g., Mo., Kans. & Tex. Ry. v. Wulf, 226 U.S. 570, 33 S. Ct.
135, 57 L. Ed. 355 (1913).
18
See, e.g., Warpar Mfg. Corp. v. Ashland Oil, Inc., 102 F.R.D. 749 (N.D.
Ohio 1983).
19
See, e.g., Crowder v. Gordons Transports, Inc., 387 F.2d 413 (8th Cir.
1967). See, also, Hayward v. Valley Vista Care Corp., 136 Idaho 342, 33
P.3d 816 (2001).
20
See, e.g., Scheufler v. General Host Corp., 126 F.3d 1261 (10th Cir. 1997).
See, also, Preston v. Kindred Hospitals West, L.L.C., 226 Ariz. 391, 249
P.3d 771 (2011).
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proceeds as if it had been originally commenced by the real
party in interest.” This language reflects the policy that “the
choice of a party at the pleading stage ought not have to be
made at the risk of a final dismissal of the action should it later
appear that there had been an error.”21 Before a stylistic 2007
amendment, rule 17 provided that joinder of the real party in
interest “shall have the same effect as if the action had been
commenced in the name of the real party in interest.”22 The
drafters of the federal rules intended this language to codify
relation-back rules applied by courts.23 State courts have inter-
preted rules with language similar to rule 17 to allow rela-
tion back.24
[3] We conclude that the Fishers’ amended complaint relates
back under the plain language of § 25-301. The last sentence
of § 25-301 provides: “Joinder or substitution of the real party
in interest shall have the same effect as if the action had been
commenced by the real party in interest.” Here, the Fishers
filed the original complaint before US Bank recorded a claim
of interest. They filed the amended complaint after US Bank
recorded a claim of interest. If the amended complaint has the
same effect as the original complaint, then we must treat it as
if it also preceded US Bank’s claim of interest. That is, the
amended complaint relates back to the original.
The district court seemed to decide that the last sentence of
§ 25-301 usually requires relation back, but that the amended
complaint in this case should not relate back for two rea-
sons. First, the dormant mineral interest statutes should be
strictly construed. Second, relation back would be inequitable
21
6A Charles Alan Wright et al., Federal Practice and Procedure § 1555 at
569 (3d ed. 2010).
22
4 Moore, supra note 14, § 17App.04[1] at 17App.-4 (emphasis omitted).
23
See, Esposito v. U.S., 368 F.3d 1271 (10th Cir. 2004); 28 U.S.C. app. rule
17 (2012), advisory committee notes on 1966 amendment.
24
See, Preston v. Kindred Hospitals West, L.L.C., supra note 20; Watford v.
West, 78 P.3d 946 (Okla. 2003); Miller v. Jackson Hosp. and Clinic, 776
So. 2d 122 (Ala. 2000).
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because it would cause the forfeiture of US Bank’s severed
mineral interest.
For the rule of strict construction, the court cited our decision
in Gibbs Cattle Co. v. Bixler.25 There, we addressed two ques-
tions of statutory interpretation: (1) The meaning of “record
owner” in § 57-229 of the dormant mineral interest statutes and
(2) the meaning of “changes the party or the name of the party”
in § 25-201.02(2). As to “record owner,” we declined to adopt
a rule of liberal or strict interpretation of the dormant mineral
interest statutes. But we noted that an action to terminate sev-
ered mineral interests sounds in equity and that equity abhors
forfeitures. Thus, we reasoned that if doubt remained about the
meaning of “record owner,” it should be construed against for-
feiture. We did not use the maxim that equity abhors forfeitures
in our analysis of § 25-201.02—which is not a dormant mineral
interest statute.
[4] Here, we are interpreting a civil procedure statute, not a
dormant mineral interest statute. We apply the ordinary rules of
interpretation to statutes in chapter 25 of the Nebraska Revised
Statutes.26 Contrary to US Bank’s argument, we do not strictly
construe § 25-301 to the extent that it derogates the common
law. Neb. Rev. Stat. § 25-2218 (Reissue 2008) provides: “The
rule of the common law that statutes in derogation thereof
are to be strictly construed has no application to this code.”
Furthermore, the maxim that equity abhors a forfeiture is tem-
pered by another: Equity follows the law.27 We strictly apply
the latter maxim if the law is clear.28
US Bank argues that even if the Fishers’ amended com-
plaint would relate back for statute of limitations purposes, it
does not do so here because the 23-year period under § 57-229
is part of the Fishers’ substantive claim. We are aware that
25
Gibbs Cattle Co. v. Bixler, supra note 2.
26
See ML Manager v. Jensen, 287 Neb. 171, 842 N.W.2d 566 (2014).
27
Jeffrey B. v. Amy L., 283 Neb. 940, 814 N.W.2d 737 (2012).
28
See id.
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courts differ in how far they extend the reach of relation-back
rules.29 But the Legislature did not place any limits on rela-
tion back under § 25-301, which unambiguously directs that
an amendment joining the real party in interest “shall have the
same effect as if the action had been commenced by the real
party in interest.” Nothing in the plain language of § 25-301
suggests that it does not apply to the 23-year period under the
dormant mineral interest statutes. We will not read into a stat-
ute a meaning that is not there.30
Nor does § 25-301 condition relation back on factors such
as notice or prejudice to the opposing party. Before the 1999
amendment to § 25-301, we stated that an amendment sub-
stituting the real party in interest should not relate back if
doing so would prejudice the defendant.31 Some federal courts
relate an amendment back under rule 17 only if the plaintiff’s
mistake was “understandable.”32 But if the Legislature wanted
courts to consider factors such as prejudice it would have said
so, as it did in § 25-201.02(2). Furthermore, § 25-301 states
that an amendment “shall have the same effect.” Generally,
the word “shall” in a statute is mandatory.33 If an exception
to this mandate exists, the facts before us do not warrant
its application.
29
Compare Farber v. Wards Co., Inc., 825 F.2d 684 (2d Cir. 1987), In re
Franklin Mut. Funds Fee Litigation, 478 F. Supp. 2d 677 (D.N.J. 2007),
and Zalkind v. Ceradyne, Inc., 194 Cal. App. 4th 1010, 124 Cal. Rptr. 3d
105 (2011), with Corbin v. Blankenburg, 39 F.3d 650 (6th Cir. 1994), and
Erickson v. Wright Welding Supply, Inc., 485 N.W.2d 82 (Iowa 1992).
30
Butler Cty. Sch. Dist. v. Freeholder Petitioners, 283 Neb. 903, 814 N.W.2d
724 (2012).
31
See New Light Co. v. Wells Fargo Alarm Servs., 252 Neb. 958, 567
N.W.2d 777 (1997).
32
See, e.g., Wieburg v. GTE Southwest Inc., 272 F.3d 302, 308 (5th Cir.
2001). See, also, Fujimoto v. Au, 95 Haw. 116, 19 P.3d 699 (2001). But
see, e.g., Esposito v. U.S., supra note 23. See, also, Preston v. Kindred
Hospitals West, L.L.C., supra note 20.
33
Christiansen v. County of Douglas, 288 Neb. 564, 849 N.W.2d 493 (2014).
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Finally, US Bank argues that it “did not seek dismissal
because the action was not brought in the name of the real
party in interest.”34 Therefore, it contends that § 25-301 is
not relevant. We disagree. In its answer to the original com-
plaint, US Bank prayed for dismissal and alleged that the
“[Fishers’] Complaint is not brought in the name of the real
party in interest.”
Because the amended complaint relates back under § 25-301,
we need not decide whether the same result could be reached
under § 25-201.02. And, again, we express no opinion whether
the beneficiaries of a trust—often said to hold equitable title35—
can be “owners of the surface” under § 57-228.
Our conclusion that the amended complaint relates back
to the original complaint means that the Fishers are entitled
to summary judgment. US Bank admitted that it recorded its
claims of interest after the Fishers filed the original complaint.
There is no evidence that US Bank otherwise publicly exer-
cised its right of ownership as described in § 57-229. Thus,
the court should have sustained the Fishers’ motion for sum-
mary judgment.
CONCLUSION
The Fishers amended their complaint to join the real par-
ties in interest. Therefore, the amended complaint relates back
to the original complaint under § 25-301. Because US Bank
did not publicly exercise its right of ownership during the
23 years preceding the original complaint, the Fishers are
entitled to summary judgment. We reverse, and remand with
directions to enter a judgment terminating any severed min-
eral interest in the subject property of which US Bank is the
record owner.
R eversed and remanded with directions.
McCormack, J., participating on briefs.
34
Brief for appellee at 9.
35
See 90 C.J.S. Trusts § 265 (2010).