Kelliher v. Soundy

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898 288 NEBRASKA REPORTS
vehicle matching that description in the area where the caller
said the vehicle was headed. Taken together, this is sufficient
to create a reasonable suspicion to support Kleensang’s stop of
Rodriguez’ vehicle. I would affirm.
Cassel, J., joins in this dissent.
Michael E. K elliher, appellant, v.
Travis Soundy et al., appellees.
___ N.W.2d ___
Filed August 29, 2014. No. S-13-538.
1. Judgments: Jurisdiction. When a jurisdictional question does not involve a
factual dispute, the issue is a matter of law.
2. Judgments: Appeal and Error. An appellate court reviews questions of law
independently of the lower court’s conclusion.
3. Statutes: Appeal and Error. Statutory interpretation is a question of law that
an appellate court resolves independently of the trial court.
4. Jurisdiction: Appeal and Error. Before reaching the legal issues presented for
review, an appellate court must determine whether it has jurisdiction over the
matter before it.
5. Jurisdiction: Final Orders: Appeal and Error. For an appellate court to
acquire jurisdiction of an appeal, there must be a final order entered by the court
from which the appeal is taken; conversely, an appellate court is without juris-
diction to entertain appeals from nonfinal orders.
6. Final Orders: Appeal and Error. To fall within the collateral order doctrine,
an order must (1) conclusively determine the disputed question, (2) resolve an
important issue completely separate from the merits of the action, and (3) be
effectively unreviewable on appeal from a final judgment.
7. ____: ____. The requirement that a court order must resolve an important issue
completely separate from the merits of the action prevents piecemeal review.
8. ____: ____. Court orders which involve considerations that are enmeshed
in the factual and legal issues of the cause of action are not immediately
reviewable.
9. Property: Sales: Intent. The scope of the lis pendens statute is determined by
its end and purpose. The purpose of the lis pendens statute is to prevent third
persons, during the pendency of the litigation, from acquiring interests in the land
which would preclude the court from granting the relief sought.
10. Actions: Property: Notice. Cancellation of a notice of lis pendens is completely
separate from the merits of the underlying action.
Nebraska Advance Sheets
KELLIHER v. SOUNDY 899
Cite as 288 Neb. 898
11. Actions: Property: Notice: Time: Appeal and Error. “Good cause” to cancel a
notice of lis pendens under Neb. Rev. Stat. § 25-531 (Cum. Supp. 2012) does not
include a consideration of the merits of the underlying action.
12. Property: Title: Notice. A court may cancel a notice of lis pendens if the face
of the complaint shows that the underlying action does not involve title to
real property.
13. Property: Sales: Notice. The existence of a prospective purchaser who wants to
buy the property free of the pending litigation is not good cause to cancel a notice
of lis pendens.
Appeal from the District Court for Buffalo County: John P.
Icenogle, Judge. Reversed.
Justin R. Herrmann and Nicholas R. Norton, of Jacobsen,
Orr, Lindstrom & Holbrook, P.C., L.L.O., for appellant.
Brian R. Symington, of Parker, Grossart, Bahensky, Beucke
& Bowman, L.L.P., for appellee Schijohn, L.L.C.
Heavican, C.J., Wright, Connolly, Stephan, McCormack,
and Miller-Lerman, JJ.
Connolly, J.
SUMMARY
Michael E. Kelliher appeals from the district court’s order
canceling a notice of lis pendens he filed against property in
which he claimed title. His business partner, Travis Soundy,
sold the property to Schijohn, L.L.C. Kelliher then filed suit,
alleging that Soundy did not have authority to sell the property
without Kelliher’s consent and that the owners of Schijohn
knew that he claimed an interest in it.
The first issue is jurisdictional. Kelliher concedes the district
court’s June 2013 order canceling the notice of lis pendens is
not a final order. But he contends that review is proper under
the collateral order doctrine. The second issue is whether
the court erred in canceling the notice of lis pendens before
Kelliher has had an opportunity to appeal the summary judg-
ment order denying him relief. We conclude that we have juris-
diction under the collateral order doctrine and that the district
court erred by canceling the notice of lis pendens.
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BACKGROUND
Factual History
In 2006, Kelliher and Soundy filed articles of organization
for Clover Investments, L.L.C. (Clover), in which they made
equal contributions and had equal membership rights. About 3
months later, Clover purchased a bar in Kearney, which was its
sole asset. In March 2007, Soundy purchased Kelliher’s inter-
est in Clover.
In July 2008, Soundy and Kelliher negotiated an oral agree-
ment for Kelliher to earn back his 50-percent interest in Clover.
According to Kelliher, he agreed to manage the bar and inject
his own funds into the operations, which duties he fulfilled.
According to Soundy, the oral agreement required Kelliher to
successfully manage the bar, including “restoring and main-
taining the amortization of loans” to Clover and keeping cur-
rent all of Clover’s obligations. In November 2009, Soundy
terminated the management agreement. He contends that he
was the sole owner of Clover. In March 2010, Clover sold the
bar to Schijohn.
P rocedural History
Kelliher sued Soundy, Clover, and Schijohn. He alleged
that in July 2008, after Soundy had unsuccessfully tried to sell
Clover’s property, Soundy contacted Kelliher to see if he would
be interested in repurchasing an interest. Kelliher alleged that
he agreed to do this by making capital improvements and had
fulfilled that duty. Kelliher’s general allegations asserted four
claims for relief. First, he claimed that he had unsuccessfully
demanded access to Clover’s records, which were in Soundy’s
sole possession, and sought an accounting. Second, he sought
a judicial dissolution of Clover. Third, he alleged that Soundy
had breached a duty of care and loyalty to Clover and himself,
and sought damages. Fourth, he claimed that Soundy lacked
authority to sell Clover’s property and asked the court to quiet
title in him.
Schijohn moved for summary judgment on Kelliher’s quiet
title claim. The court granted the motion, concluding, as a
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KELLIHER v. SOUNDY 901
Cite as 288 Neb. 898
matter of law, that Schijohn was entitled to rely on the apparent
authority of Soundy to convey the property.
Kelliher moved to vacate or modify the judgment and, alter-
natively, to certify the order as appealable under Neb. Rev.
Stat. § 25-1315(1) (Reissue 2008). The court denied the motion
to vacate its order but granted the certification request. In case
No. A-11-612, the Nebraska Court of Appeals dismissed the
appeal without opinion on September 9, 2011.
Kelliher did not seek further review. On remand, Schijohn
moved to cancel Kelliher’s notice of lis pendens against the
property. Its attorney stated that Schijohn was trying to sell
the building and needed clear title. Kelliher argued that he had
not yet had an opportunity to appeal and that the majority of
courts in other jurisdictions have held it is improper to release
a notice of lis pendens until after an appeal or after the time to
seek review has passed.
In a June 2013 order, the court ruled on various motions and
noted that a trial was scheduled for August. Nonetheless, the
court canceled the notice of lis pendens, based on its earlier
dismissal of the claim against Schijohn.
ASSIGNMENT OF ERROR
Kelliher assigns, restated, that the district court erred by
granting Schijohn’s motion to cancel the notice of lis pendens.
STANDARD OF REVIEW
[1,2] When a jurisdictional question does not involve a
factual dispute, the issue is a matter of law.1 An appellate
court reviews questions of law independently of the lower
court’s conclusion.2
[3] Statutory interpretation is a question of law that an
appellate court resolves independently of the trial court.3
1
VKGS v. Planet Bingo, 285 Neb. 599, 828 N.W.2d 168 (2013).
2
Id.
3
ML Manager v. Jensen, 287 Neb. 171, 842 N.W.2d 566 (2014).
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ANALYSIS
Jurisdiction
[4,5] Before reaching the legal issues presented for review,
an appellate court must determine whether it has jurisdiction
over the matter before it.4 For an appellate court to acquire
jurisdiction of an appeal, there must be a final order entered
by the court from which the appeal is taken; conversely, an
appellate court is without jurisdiction to entertain appeals from
nonfinal orders.5
[6] Kelliher concedes that the June 2013 order canceling the
notice of lis pendens was not a final order. But Kelliher argues
that this court has jurisdiction under the collateral order doc-
trine. To fall within the collateral order doctrine, an order must
(1) conclusively determine the disputed question, (2) resolve
an important issue completely separate from the merits of the
action, and (3) be effectively unreviewable on appeal from a
final judgment.6
The June 2013 order satisfied the first and third elements
of the collateral order doctrine. The order conclusively deter-
mined the validity of the notice.7 Furthermore, the order will
be effectively unreviewable on appeal from a final judgment
because, if review is so delayed, the property might be sold
in the interim to a third party whose rights are not affected by
the judgment.8
[7,8] The jurisdictional dispute centers on the second ele-
ment of the collateral order doctrine: Whether the release of
the notice was completely separate from the merits of the
underlying action. The requirement that a court order must
resolve an important issue completely separate from the merits
of the action prevents piecemeal review.9 Orders which involve
c
­onsiderations that are enmeshed in the factual and legal
4
Hallie Mgmt. Co. v. Perry, 272 Neb. 81, 718 N.W.2d 531 (2006).
5
Id.
6
Big John’s Billiards v. State, 283 Neb. 496, 811 N.W.2d 205 (2012).
7
See Suess v. Stapp, 407 F.2d 662 (7th Cir. 1969).
8
See Keith v. Bratton, 738 F.2d 314 (8th Cir. 1984).
9
4 Am. Jur. 2d Appellate Review § 105 (2007).
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Cite as 288 Neb. 898
issues of the cause of action are not immediately reviewable.10
Because our collateral order doctrine has its source in decisions
of the U.S. Supreme Court,11 we review cases decided by the
federal courts for guidance.
Federal courts hold that whether the cancellation of a
notice of lis pendens is completely separate from the merits
depends on the language of the relevant statute. When the
lis pendens statute is silent as to the grounds for release or
includes grounds other than the merits of the underlying suit,
an order canceling a notice of lis pendens is independent of
the merits of the underlying suit.12 But the cancellation of a
notice of lis pendens is not independent of the merits where
the statute directs courts to consider the probability of the
plaintiff’s success in the underlying action.13 Thus, whether
the district court’s order canceling Kelliher’s notice of lis
pendens is within the collateral order doctrine depends on
whether Nebraska’s lis pendens statute makes the probable
merits of the underlying action relevant to the cancellation of
a notice.
Neb. Rev. Stat. § 25-531 (Cum. Supp. 2012), the lis pen-
dens statute, allows a court to cancel a notice of lis pendens
any time after the complaint is filed “on good cause shown.”
Section 25-531, in relevant part, provides:
The court in which such action was commenced or any
judge thereof may at any time thereafter on the applica-
tion of any person aggrieved, on good cause shown, and
on such notice as the court or judge may determine, order
the notice to be canceled by the clerk or register of deeds
10
Id.
11
See Hallie Mgmt. Co. v. Perry, supra note 4.
12
See, U.S. v. Parrett, 530 F.3d 422 (6th Cir. 2008); Keith v. Bratton, supra
note 8; Chrysler Corp. v. Fedders Corp., 670 F.2d 1316 (3d Cir. 1982);
Beefy King International, Inc. v. Veigle, 464 F.2d 1102 (5th Cir. 1972);
Suess v. Stapp, supra note 7; Preston v. United States, 284 F.2d 514 (9th
Cir. 1960). See, also, Hill v. Department of Air Force, 884 F.2d 1321 (10th
Cir. 1989).
13
See, Orange Cty. v. Hongkong & Shanghai Banking Corp., 52 F.3d 821
(9th Cir. 1995); Demenus v. Tinton 35 Inc., 873 F.2d 50 (3d Cir. 1989).
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904 288 NEBRASKA REPORTS
of any county in which the notice may have been filed or
recorded by filing a notice of release.
Although § 25-531 does not expressly make the merits of the
underlying action relevant to a motion to cancel a notice of lis
pendens, the phrase “good cause” is potentially broad enough
to include this consideration. So, we consider whether the
“good cause” requirement includes the perceived merits (or
lack thereof) of the pending litigation.
Under the common-law doctrine of lis pendens (literally “[a]
pending lawsuit”14), the mere pendency of a suit affecting title
to real property was constructive notice to the world of the
disputed claim.15 Before 1887, Nebraska’s lis pendens statute
“was a legislative adoption of the equity rule of lis pendens
that had existed from time immemorial.”16 Under the rule then
in effect that a suit was not commenced until the service of
summons, the traditional application of the doctrine proved
problematic.17 Persons aware of the filing of a complaint but
not yet served with a summons could freely alienate the prop-
erty and preclude a court from awarding the relief requested
in the complaint.18 To address this problem, the Legislature
amended the lis pendens statute in 1887 to permit a plaintiff
to record a notice of lis pendens with the register of deeds
and thereby bind any subsequent purchaser to the outcome of
the proceedings.19 The 1887 act also permitted any aggrieved
person to petition for the cancellation of the notice “in good
cause shown.”20
14
Black’s Law Dictionary 1073 (10th ed. 2014).
15
White v. Wensauer, 702 P.2d 15 (Okla. 1985).
16
Sheasley v. Keens, 48 Neb. 57, 63, 66 N.W. 1010, 1012 (1896), overruled
on other grounds, Munger v. Beard & Bro., 79 Neb. 764, 113 N.W. 214
(1907).
17
See, Munger v. Beard & Bro., supra note 16; Sheasley v. Keens, supra
note 16.
18
See id.
19
Id.
20
1887 Neb. Laws, ch. 92, § 1, p. 645.
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KELLIHER v. SOUNDY 905
Cite as 288 Neb. 898
The development of Nebraska’s lis pendens statute is
instructive. As one court has noted, statutes did not create the
lis pendens doctrine, but instead limit its application by requir-
ing the plaintiff to record a notice that complies with statutory
requirements.21 Although lis pendens statutes are designed to
provide a better form of notice to third parties, they generally
do so without conferring any additional substantive rights.22
Traditionally, the application of the lis pendens doctrine does
not depend on the merits of the underlying action.23 We find
no express or implied legislative intent to alter this aspect of
the rule.
We decided a similar issue concerning the lis pendens stat-
ute in Merrill v. Wright.24 In that case, an action was brought
in 1892 to foreclose a tax lien but the sale did not occur until
1902. In the interim, the appellant received a tax deed for
the same property for taxes assessed after those on which the
foreclosure suit was based. The purchaser from the foreclo-
sure sale sought to eject the appellant, arguing that the appel-
lant had taken title subject to the outcome of the foreclosure
action. The issue presented was whether the lis pendens statute
applied to a deed that was not derived from or dependent on
the titles of any parties to the pending litigation. To answer
this question, we interpreted the lis pendens statute in the con-
text of the preexisting common-law doctrine:
Counsel contends that [the lis pendens statute] is broader
than the general rule, and must constrain us to extend it
so as to include all interests acquired by third persons
21
White v. Wensauer, supra note 15.
22
See id.
23
See 54 C.J.S. Lis Pendens § 40 (2010). See, also, Richard J. Zitz, Inc.
v. Pereira, 965 F. Supp. 350 (E.D.N.Y. 1997); Boca Petroco, Inc. v.
Petroleum Realty II, 292 Ga. App. 833, 666 S.E.2d 12 (2008); Bonded
Concrete Inc. v. Johnson, 280 A.D.2d 758, 720 N.Y.S.2d 227 (2001);
Utsunomiya v. Moomuku Country Club, 75 Haw. 480, 866 P.2d 951
(1994); Jay Jenkins Co. v. Financial Planning &c., Inc., 256 Ga. 39, 343
S.E.2d 487 (1986).
24
Merrill v. Wright, 65 Neb. 794, 91 N.W. 697 (1902).
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pending suit, whatever their nature or source. While the
language of that section, “no interest can be acquired
by third persons in the subject-matter thereof, as against
the plaintiff’s title,” is very broad, we are satisfied that
it should be construed with reference to the pre-existing
equity rule, which it evidently intended to adopt, and the
obvious reason and principle behind it.25
Because “the scope of the lis pendens rule must be confined to
the interests and estates sought to be subjected,” we held that it
did not extend to “independent and adverse titles.”26
[9] Interpreting “good cause” to include a perceived weak-
ness in the merits of the pending action would also be con-
trary to the purpose of the lis pendens statute. We have recog-
nized that “[t]he scope of the [lis pendens] rule is determined
by its end and purpose.”27 The lis pendens statute serves to
hold the property within the court’s jurisdiction until the
parties’ rights are finally determined: “‘The purpose of the
rule as to lis pendens is to prevent third persons, during the
pendency of the litigation, from acquiring interests in the
land which would preclude the court from granting the relief
sought.’”28 Here, the district court canceled Kelliher’s notice
of lis pendens “[b]ased upon the prior rulings of the court
finding that defendant Schijohn was an innocent purchaser
of property and dismissing it from these proceedings . . . .”
Kelliher, however, has not had the opportunity to appeal the
dismissal of his quiet title claim. If the court cancels the
notice of lis pendens and Schijohn conveys the property to a
third party, any subsequent appeals by Kelliher would “prove
mere idle ceremonies.”29
25
Id. at 798, 91 N.W. at 699.
26
Id.
27
Id. at 797, 91 N.W. at 699.
28
Coffin v. Old Line Life Ins. Co., 138 Neb. 857, 865, 295 N.W. 884, 889
(1941). See, Hadley v. Corey, 137 Neb. 204, 288 N.W. 826 (1939); Lincoln
Rapid Transit Co. v. Rundle, 34 Neb. 559, 52 N.W. 563 (1892).
29
See Lincoln Rapid Transit Co. v. Rundle, supra note 28, 34 Neb. at 566,
52 N.W. at 566.
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[10,11] We conclude that we have jurisdiction over the
appeal under the collateral order doctrine. The court’s order
canceling the notice of lis pendens conclusively determined the
validity of the notice and would be effectively unreviewable on
appeal from a final judgment. We also determine that the can-
cellation of the notice is completely separate from the merits
of the underlying action. “Good cause” to cancel a notice of lis
pendens under § 25-531 does not include a consideration of the
merits of the underlying action.
Cancellation of Notice
The substantive issue raised by this appeal is whether good
cause existed for the court to cancel the notice of lis pendens.
Kelliher argues that the court’s order was contrary to the pur-
pose of the lis pendens statute and, more broadly, that a court
may never cancel a notice of lis pendens if time for appeal
remains. Schijohn contends that § 25-531 confers on courts
a wide discretion and that the order was justified by the dis-
missal of Kelliher’s quiet title action and the existence of a
prospective buyer. We conclude that there was not good cause
to cancel the notice of lis pendens.
As an initial matter, we reject Kelliher’s argument that a
court may never cancel a notice of lis pendens unless the time
for appeal has expired. We reach this decision for two reasons.
First, the plain language of § 25-531 permits an aggrieved
person to move to cancel a notice “any time” after the com-
mencement of the action. The lis pendens statute, as amended
by the 1887 act, permitted a person to petition for cancellation
only after the action was “settled, discontinued or abated.”30 In
1959, the Legislature removed this language.31
[12] Second, a bright-line rule that a court could never can-
cel a notice of lis pendens if time for appeal remains would
extend the lis pendens statute beyond its legislative purpose.
Although it is true that the right to appeal usually extends
the time for which property is subject to the lis pendens
30
1887 Neb. Laws, ch. 92, § 1, p. 645.
31
1959 Neb. Laws, ch. 140, § 1, p. 545.
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doctrine,32 a court may cancel a notice of lis pendens if the
face of the complaint shows that the underlying action does not
involve title to real property.33 Section 25-531 allows a plaintiff
to file a notice of lis pendens only if the action is “brought to
affect the title to real property.” This requirement would not be
met if, for example, a plaintiff files an action for breach of a
land sale contract but the only relief requested in the complaint
is damages.34 In such a case, a notice of lis pendens would not
be necessary to permit courts to grant the relief sought and
would needlessly burden the record owner’s title.
[13] Here, Kelliher’s quiet title claim clearly sought to affect
title to real property and we hold that good cause to cancel the
notice of lis pendens did not exist. In its June 2013 order, the
court stated that the notice should be canceled because it had
dismissed Kelliher’s quiet title action against Schijohn. As we
explained above, however, the perceived merits of the underly-
ing action are not good cause to cancel a notice while time for
appeal remains. In its motion to cancel the notice, Schijohn
also stated that it had a buyer who wanted to purchase the
property. But neither is the existence of a prospective purchaser
who wants to buy the property free of the pending litigation
good cause to cancel a notice. The very purpose of the lis pen-
dens statute is to prevent third parties from acquiring interest
in the property that would preclude a court from granting the
relief sought.35
CONCLUSION
We conclude that we have jurisdiction over the appeal
under the collateral order doctrine and that it was error to
32
51 Am. Jur. 2d Lis Pendens § 67 (2011). See, State ex rel. Bannister v.
Goldman, 265 S.W.3d 280 (Mo. App. 2008); Zweber v. Melar Ltd., Inc.,
276 Wis. 2d 156, 687 N.W.2d 818 (Wis. App. 2004); Group Purchases,
Inc. v. Lance Investments, 685 S.W.2d 729 (Tex. App. 1985). But see,
UFG, LLC v. Southwest Corp., 784 N.E.2d 536 (Ind. App. 2003); Kirkley
v. Jones, 250 Ga. App. 113, 550 S.E.2d 686 (2001).
33
See, e.g., 54 C.J.S., supra note 23, § 32.
34
See, e.g., id., § 11.
35
See Coffin v. Old Line Life Ins. Co., supra note 28.
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cancel the notice of lis pendens. If time for appeal remains,
the merits of the underlying action affecting the title to real
property are not relevant to whether good cause to cancel
a notice of lis pendens exists. Nor does the existence of a
prospective purchaser of the subject property amount to good
cause. Accordingly, we reverse the district court’s order can-
celing Kelliher’s notice of lis pendens.
R eversed.
Cassel, J., not participating.
David Brock, appellant, v. Tim Dunning, sheriff,
individually and in his official capacity,
and Douglas County, a political
subdivision, appellees.
___ N.W.2d ___
Filed August 29, 2014. No. S-13-647.
1. Summary Judgment: Appeal and Error. An appellate court will affirm a lower
court’s grant of summary judgment if the pleadings and admitted evidence show
that there is no genuine issue as to any material facts or as to the ultimate infer-
ences that may be drawn from the facts and that the moving party is entitled to
judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, an appellate court views the
evidence in the light most favorable to the party against whom the judgment was
granted and gives that party the benefit of all reasonable inferences deducible
from the evidence.
3. Summary Judgment: Proof. The party moving for summary judgment has the
burden to show that no genuine issue of material fact exists and must produce
sufficient evidence to demonstrate that the moving party is entitled to judgment
as a matter of law.
4. Summary Judgment: Evidence: Proof. After the movant for summary judg-
ment makes a prima facie case by producing enough evidence to demonstrate
that the movant is entitled to judgment if the evidence was uncontroverted at
trial, the burden to produce evidence showing the existence of a material issue
of fact that prevents judgment as a matter of law shifts to the party opposing
the motion.
5. Summary Judgment. In the summary judgment context, a fact is material only
if it would affect the outcome of the case.
6. ____. Summary judgment proceedings do not resolve factual issues, but instead
determine whether there is a material issue of fact in dispute.