Foundation One Bank v. Svoboda

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/19/2019 08:07 AM CDT
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
Foundation One Bank, a banking corporation,
appellant, v. Jason Svoboda, an individual,
et al., appellees, and Lehr, I nc.,
intervenor-appellee.
___ N.W.2d ___
Filed July 12, 2019. No. S-18-784.
1. Judgments: Pleadings. A motion for judgment on the pleadings is prop-
erly granted when it appears from the pleadings that only questions of
law are presented.
2. Jury Instructions: Proof: Appeal and Error. To establish reversible
error from a court’s failure to give a requested jury instruction, an appel-
lant has the burden to show that (1) the tendered instruction is a correct
statement of the law, (2) the tendered instruction was warranted by the
evidence, and (3) the appellant was prejudiced by the court’s failure to
give the requested instruction.
3. Jury Instructions: Appeal and Error. Where jury instructions are
claimed deficient on appeal and such issue was not raised at trial, an
appellate court reviews for plain error.
4. Appeal and Error: Words and Phrases. Plain error exists where there
is an error, plainly evident from the record but not complained of at
trial, which prejudicially affects a substantial right of a litigant and is of
such a nature that to leave it uncorrected would cause a miscarriage of
justice or result in damage to the integrity, reputation, and fairness of the
judicial process.
5. Directed Verdict: Appeal and Error. 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.
6. Rules of the Supreme Court: Pleadings: Moot Question. A denial
of a motion for judgment on the pleadings under Neb. Ct. R. Pldg.
§ 6-1112(c) is generally moot on appeal after the case has been tried on
the merits.
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
7. Fraud: Proof. A proper fraudulent misrepresentation claim requires a
party to prove that (1) a representation was made; (2) the representation
was false; (3) when made, the representation was known to be false or
made recklessly without knowledge of its truth and as a positive asser-
tion; (4) the representation was made with the intention that the plaintiff
should rely on it; (5) the plaintiff did so rely on it; and (6) the plaintiff
suffered damage as a result.
8. Directed Verdict. In a motion for directed verdict, the moving party
admits the truth of all well-pleaded facts, together with all reasonable
inferences to be drawn therefrom.
9. Replevin: Damages. In a replevin case, when a defendant or interve-
nor is found to have ownership and right of possession of property, the
replevin statutes necessarily place the issue of damages at issue.
Appeal from the District Court for Platte County: Robert R.
Steinke, Judge. Affirmed.
Aaron F. Smeall and Jacob A. Acers, of Smith, Slusky,
Pohren & Rogers, L.L.P., for appellant.
Brian J. Brislen, Eric W. Tiritilli, and Karson S. Kampfe, of
Lamson, Dugan & Murray, L.L.P., for intervenor-appellee.
No appearance for appellees.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Miller-Lerman, J.
I. NATURE OF CASE
The plaintiff, Foundation One Bank (Foundation One),
appeals from the judgment entered by the district court
for Platte County upon the verdict of the jury in favor of
defendant-intervenor, Lehr, Inc. Foundation One sought
­
replevin of two motor vehicles pledged by Jason Svoboda
as collateral to secure payment of a loan. Lehr intervened in
the case and sought possession of the motor vehicles. The
jury determined that Lehr was entitled to possession of two
disputed motor vehicles, and because Foundation One had
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
sold one of the vehicles for $95,000, the jury awarded Lehr
$95,000. Foundation One claims that the district court erred
in several respects in connection with its jury instructions
and when it denied Foundation One’s motions for judgment
on the pleadings and for a directed verdict. We affirm and,
in so doing, reiterate that in a replevin case, a defendant or
intervenor’s general denial and assertion of ownership neces-
sarily place the questions of possession, ownership, and dam-
ages before the jury under Neb. Rev. Stat. § 25-1093 et seq.
(Reissue 2016).
II. STATEMENT OF FACTS
In 2016, Svoboda sought a commercial loan from Foundation
One for his struggling automobile business. Svoboda had been
in the automobile business before, operating as RPM Motors,
Inc., an entity which had become an inactive Nebraska cor-
poration. Svoboda claimed he needed a loan to consolidate
debt from that business. On March 25, 2016, Svoboda and
Foundation One executed a promissory note and commer-
cial security agreement for a $200,000 loan. Svoboda offered
various motor vehicles as collateral to secure the loan, and
purported to grant Foundation One a security interest in that
property, including a 2005 Mack CV 713 Truck (2005 Mack)
and a 2014 Mack GU 800 Conventional Cab (2014 Mack). The
present dispute between the parties concerns only the 2005
Mack and the 2014 Mack.
Svoboda provided Foundation One with a manufacturer’s
certificate of origin (MCO) for the 2005 Mack and a certifi-
cate of title for the 2014 Mack. The MCO for the 2005 Mack
showed the original transfer from Dallas Mack Sales, L.P., to
Lehr on February 24, 2005, followed by an undated transfer
from RPM Motors to “RPM Motors/Jason Svoboda.” Notably,
the MCO contained a gap; the assignments on the MCO did not
include a transfer from Lehr to RPM Motors. The title for the
2014 Mack indicated it had been purchased by Svoboda from
RPM Motors on December 30, 2013.
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
In an attempt to protect its priority to a lien on the vehicles,
and as part of the $200,000 loan between Foundation One and
Svoboda individually, Foundation One paid off other liens on
the disputed motor vehicles totaling $85,141.40.
Svoboda soon defaulted on the promissory note. After
receiving numerous reports of fraudulent behavior, the
Nebraska Motor Vehicle Industry Licensing Board closed
RPM Motors in March 20l6. Svoboda was ultimately con-
victed of title fraud for obtaining a second MCO on a vehicle
and pledging both MCO’s to separate banks as collateral to
secure loans.
Foundation One filed a replevin action in the district court
for Platte County to recover the collateral pledged as secu-
rity for the loan to Svoboda. Lehr was not named among the
defendants. The district court determined that Foundation One
was entitled to possession of the property and entered an order
of delivery.
At this point, Lehr moved to intervene, alleging that “at all
relevant times herein, . . . Lehr . . . was the owner of record
and in possession of: 2014 Mack and 2005 Mack.” Lehr fur-
ther alleged that Svoboda had fraudulently claimed title on the
vehicles when he pledged them to Foundation One as collateral
for the loan.
The district court permitted Lehr to intervene and partially
granted its motion to reconsider the order of replevin. The
district court vacated its order with regard to the 2005 Mack,
but overruled Lehr’s motion with regard to the 2014 Mack and
other collateral. Foundation One replevied the 2014 Mack and
sold it for $95,000.
Prior to trial, Foundation One filed a motion for judg-
ment on the pleadings against all defendants. With regard
to Lehr, Foundation One generally argued that Lehr could
not obtain relief on its complaint in intervention, because
within the body of the pleading, Lehr sought declaratory
relief and the 2014 Mack had already been sold. The district
court granted judgment on the pleadings regarding the original
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
defendants and denied the motion with regard to Lehr’s com-
plaint in intervention.
A jury trial was held in May 2018. Evidence submitted at
trial showed that Lehr is a corporation owned by the Lehr
family and operates a feeding and livestock business in Platte
County. With respect to the 2005 Mack, on February 24,
2005, Lehr purchased the 2005 Mack from Dallas Mack Sales.
Dallas Mack Sales transferred title to the 2005 Mack to Lehr
through an MCO, and Lehr obtained a title to the 2005 Mack.
This title was dated before the sale and issuance date of the
Foundation One “title” it received from Svoboda. With respect
to the 2014 Mack, on June 12, 2013, Lehr purchased the 2014
Mack from RPM Motors, the auto business formerly owned
by Svoboda and for which Lance Lehr (Lance) was working
at the time as a salesperson. Lehr received a title to the 2014
Mack showing RPM Motors as the seller and Lehr as the
purchaser. Lance and his father testified that they never gave
Svoboda the title to the 2014 Mack after they received it and
did not give Svoboda any rights or interest in either the 2005
Mack or the 2014 Mack.
Lance testified that the 2005 Mack and the 2014 Mack
remained in Lehr’s possession on its premises and were used
by the family at the feedlot every day. In particular, to feed
their cattle, Lehr attached auger mixing containers, known as
boxes, to the trucks’ chassis.
At the close of evidence, Lehr and Foundation One each
moved for a directed verdict. The court overruled both motions.
No evidence was submitted thereafter.
Both Foundation One and Lehr submitted proposed jury
instructions, but only one of Foundation One’s requested
instructions is relevant to this appeal. Foundation One
requested an instruction that Lehr had the burden of proof to
show Svoboda committed fraud against Lehr by pledging the
vehicles. However, Lehr’s position throughout the case has
been that Svoboda committed fraud only against Foundation
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
One. The court rejected all of the proposed jury instructions
and used its own instructions.
The jury determined that Lehr was entitled to possession of
the two disputed motor vehicles and was entitled to damages in
the amount of $95,000 as a result of Foundation One’s sale of
the 2014 Mack. The district court entered judgment according
to the verdict.
Foundation One appeals.
III. ASSIGNMENTS OF ERROR
On appeal, Foundation One claims, restated, that the district
court erred when it rejected its proposed instruction regard-
ing fraud, failed to instruct the jury on various issues, and
failed to grant its motions for judgment on the pleadings and
for a directed verdict. With regard to the jury instructions,
Foundation One contends, inter alia, that the jury should have
received information on (1) the weight given to a certificate of
title or MCO, (2) when a party may receive an offset for dam-
ages for a special benefit conferred, (3) the burden of proof for
an affirmative defense of fraud, and (4) which party must suf-
fer the loss between two innocent victims of fraud.
IV. STANDARDS OF REVIEW
[1] A motion for judgment on the pleadings is properly
granted when it appears from the pleadings that only questions
of law are presented. Denali Real Estate v. Denali Custom
Builders, 302 Neb. 984, 926 N.W.2d 610 (2019).
[2] To establish reversible error from a court’s failure to
give a requested jury instruction, an appellant has the burden
to show that (1) the tendered instruction is a correct statement
of the law, (2) the tendered instruction was warranted by the
evidence, and (3) the appellant was prejudiced by the court’s
failure to give the requested instruction. Armstrong v. Clarkson
College, 297 Neb. 595, 901 N.W.2d 1 (2017).
[3,4] Where jury instructions are claimed deficient on
appeal and such issue was not raised at trial, an appellate
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
court reviews for plain error. See Kuhnel v. BNSF Railway
Co., 287 Neb. 541, 844 N.W.2d 251 (2014). Plain error exists
where there is an error, plainly evident from the record but not
complained of at trial, which prejudicially affects a substan-
tial right of a litigant and is of such a nature that to leave it
uncorrected would cause a miscarriage of justice or result in
damage to the integrity, reputation, and fairness of the judicial
process. Id.
[5] A directed verdict is proper at the close of all the evi-
dence 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. Denali Real Estate v.
Denali Custom Builders, supra.
Appellate courts independently decide questions of law. Id.
V. ANALYSIS
As explained below, we find no merit to Foundation One’s
assignments of error regarding denial of its pretrial motion
for judgment on the pleadings, its four claims regarding jury
instructions, and denial of its motion for a directed verdict.
1. Motion For Judgment
on the Pleadings
[6] Foundation One claims that the district court erred when
it denied its pretrial motion for judgment on the pleadings
with respect to Lehr. A denial of a motion for judgment on
the pleadings under Neb. Ct. R. Pldg. § 6-1112(c) is generally
moot on appeal after the case has been tried on the merits. See
Denali Real Estate v. Denali Custom Builders, supra. That
principle applies here, and this assignment of error is with-
out merit.
The thrust of Foundation One’s argument seems to be
that Lehr’s mention of declaratory relief in its “Complaint
in Intervention” precluded the relief of possession and dam-
ages. As we discuss below in our analysis of the denial of the
directed verdict, the issues of possession and damages were
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
integral to the resolution of the case after Lehr intervened. See
School District v. Shoemaker, 5 Neb. 36 (1876).
2. Jury Instructions
(a) Proposed Jury Instruction on
“Affirmative Defense of Fraud”
Foundation One claims that the district court erred when
it rejected its proposed jury instruction to the effect that Lehr
had the burden of proof to establish that Svoboda committed a
fraud on Foundation One. In this case, Lehr had no such bur-
den and, even if it did, Foundation One’s proposed instruction
was an incorrect statement of the law.
As stated above, to establish reversible error from a court’s
failure to give a requested jury instruction, an appellant has the
burden to show that (1) the tendered instruction is a correct
statement of the law, (2) the tendered instruction was warranted
by the evidence, and (3) the appellant was prejudiced by the
court’s failure to give the requested instruction. Armstrong v.
Clarkson College, supra.
Foundation One’s proposed instruction stated, inter alia, that
Lehr has the burden of proving, by the greater weight of the
evidence, each and all of the following:
1. That Svododa made the claimed representation [to
Foundation One];
2. That the representation was false;
3. That the representation was made fraudulently;
4. That when Svoboda made the representation, he
intended it would be relied upon;
5. That this representation substantially contributed to
[Foundation One’s] decision to enter into the Promissory
Note and Security Agreement.
[7] This suggested instruction omits several elements neces-
sary to the assertion of a fraudulent misrepresentation claim. A
proper fraudulent misrepresentation claim requires a party to
prove that (1) a representation was made; (2) the representa-
tion was false; (3) when made, the representation was known
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
to be false or made recklessly without knowledge of its truth
and as a positive assertion; (4) the representation was made
with the intention that the plaintiff should rely on it; (5) the
plaintiff did so rely on it; and (6) the plaintiff suffered dam-
age as a result. See Cullinane v. Beverly Enters. - Neb., 300
Neb. 210, 912 N.W.2d 774 (2018). With respect to element (5)
above, the reliance by the plaintiff on the representation must
be justifiable. InterCall, Inc. v. Egenera, Inc., 284 Neb. 801,
824 N.W.2d 12 (2012). Foundation One’s proposed instruction
omitted the elements of reasonable reliance by and damages to
the plaintiff and was not a correct statement of the law.
Even if the claims alleged in the complaint in intervention
or the evidence admitted at trial could have supported a fraud-
ulent misrepresentation instruction in this case, Foundation
One’s proffered instruction is not a correct statement of the
law. Accordingly, the district court properly rejected the fraud
instruction proposed by Foundation One.
(b) Other Jury Instructions
Foundation One next claims that the district court erred by
failing to instruct the jury (1) that possession of a title is prima
facie evidence of ownership, (2) that the jury could consider
Foundation One’s payments on the vehicles’ liens when it
calculated damages, or (3) on the law regarding fraud perpetu-
ated against two innocent parties. None of these instructions
were requested by Foundation One. Because Foundation One
raises issues regarding these instructions for the first time on
appeal, we review for plain error. See Kuhnel v. BNSF Railway
Co., 287 Neb. 541, 844 N.W.2d 251 (2014). We do not find
plain error.
With regard to the instruction pertaining to the effect of the
MCO and title to the vehicles, the evidence was undisputed
that neither Svoboda nor Foundation One had possession of the
2005 Mack or the 2014 Mack. Under Neb. Rev. Stat. § 60-140
(Cum. Supp. 2008), in the absence of physical possession of
the vehicles, Foundation One did not gain an interest or right to
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
the vehicles through the MCO and title it offered at trial. The
relevant portion of § 60-140(1) provides:
[No] person acquiring a vehicle from the owner thereof
. . . shall acquire any right, title, claim, or interest in or
to such vehicle until the acquiring person has had deliv-
ered to him or her physical possession of such vehicle
and (a) a certificate of title or a duly executed manufac-
turer’s or importer’s certificate with such assignments as
are necessary to show title in the purchaser . . . .
According to the evidence, on its face, the MCO for the 2005
Mack showed a break in the chain of ownership between Lehr
and Svoboda and did not show clear title in Foundation One.
For the several reasons recited above, an instruction on the
effect of entitlement by virtue of a title was not warranted by
the evidence.
With regard to Foundation One’s assignment of error
regarding calculation of damages, we find no prejudice. The
jury was provided all the evidence it needed to calculate
damages if it was so inclined. The jury received evidence
of the 2014 Mack’s purchase price, replacement value, and
sale value; the value of the box; and the liens paid on both
vehicles as part of the terms of the loan to Svoboda. The
jury ultimately made special findings with regard to dam-
ages and “how much money it will take to compensate Lehr
for the conversion of the 2014 Mack.” Because the jury had
all the evidence related to the financial consequences related
to the vehicle, Foundation One was not prejudiced by pur-
ported omission of further instructions on the calculation
of damages.
With respect to Foundation One’s assertion that the district
court should have instructed the jury about the law when fraud
is perpetrated against two innocent parties, this instruction is
not warranted by the evidence. Although Lehr asserted that
Foundation One was defrauded, Lehr did not allege nor was
there evidence that Lehr was also a victim of fraud. Thus, the
proposed instruction would not have been appropriate.
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Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
We find no plain error in the district court’s purported
failure to give the jury instructions first proposed on appeal,
because they were not supported by the evidence or did not
prejudice any party.
3. Motion for Directed Verdict
Finally, Foundation One contends that the district court
erred when it overruled its motion for a directed verdict,
because it claims the complaint in intervention sought a decla-
ration of the rights of the parties but did not seek appropriate
relief. The factual basis for Foundation One’s position was
the fact that the 2014 Mack had already been replevied and
sold by Foundation One. Foundation One thus claims a mere
declaration of rights would be meaningless relief. Foundation
One misconstrues the “Complaint in Intervention” and the
law of replevin. It was not error to overrule the motion for a
directed verdict.
[8] As stated above, 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.
Denali Real Estate v. Denali Custom Builders, 302 Neb. 984,
926 N.W.2d 610 (2019). In a motion for directed verdict,
the moving party admits the truth of all well-pleaded facts,
together with all reasonable inferences to be drawn there-
from. See id.
Taken together, the pleadings properly placed possession
and ownership of the 2005 Mack and the 2014 Mack, along
with damages for the sale of the 2014 Mack, before the jury.
Under our replevin statutes, § 25-1093 et seq., a plaintiff may
initially obtain delivery of claimed property, but a defendant
who succeeds at trial will obtain the return of his or her prop-
erty and damages. See § 25-10,103. Further, in a situation like
the one presented here, where the property is no longer in the
possession of the plaintiff, § 25-10,104(1) provides that the
judgment “shall be for a return of the property or the value
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FOUNDATION ONE BANK v. SVOBODA
Cite as 303 Neb. 624
thereof in case a return cannot be had, or the value of the
possession of the same, and for damages for withholding said
property and costs of suit.”
[9] We have long held that in a replevin case, when a
defend­ant or intervenor is found to have ownership and right of
possession of property, the replevin statutes necessarily place
the issue of damages at issue. In School District v. Shoemaker,
5 Neb. 36 (1876), we considered a case where a defendant in
a replevin action had not specifically prayed for damages. We
noted that under an earlier version of the replevin statute, the
law places before the jury both the questions of who possesses
the property and what are the just and proper damages for the
defendant. Id. We held that it remained the law that a general
denial by a party in a replevin action is sufficient to require
the fact finder to consider damages upon finding that a party
is entitled to the possession of property. Id. The principle logi-
cally applies to a party appearing by intervention. Regarding
the issues before the jury in School District v. Shoemaker, we
summarized the law and stated:
[The] law is mandatory, and therefore the jury are “bound
to inquire into the right of property, and the right of pos-
session of the defendant, and if they shall find him enti-
tled to either, they shall assess such damages as are right
and proper.” Under the statute both these questions are
in issue and are subjects of inquiry by the jury, whether
the defendant pleads a general denial, or new matter as a
defense, or a demand for damages.
5 Neb. at 38. See § 25-10,103.
The factual allegations in Lehr’s complaint in intervention
mandated that the jury consider both possession and damages
once Lehr asserted ownership of the property in this replevin
action. See § 25-10,103. Resolving every controverted fact in
Lehr’s favor and giving it the benefit of every inference, rea-
sonable minds could conclude Lehr was entitled to ownership
and possession of the 2005 Mack and the 2014 Mack. Such
findings would be sufficient to entitle Lehr to relief, including
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FOUNDATION ONE BANK v. SVOBODA
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damages, plus “the value of [its] possession,” since the 2014
Mack could not be returned. See § 25-10,104(1). The district
court did not err when it overruled Foundation One’s motion
for a directed verdict in its favor.
VI. CONCLUSION
Following a jury trial, judgment was entered in favor of
Lehr. Foundation One’s pretrial motion for judgment on the
pleadings is moot under the circumstances. Foundation One’s
proposed instruction regarding fraud was not a correct state-
ment of the law, and Foundation One was not prejudiced by
the district court’s rejection of the instruction. With regard
to jury instructions suggested for the first time on appeal, we
find no plain error. Finally, because of the nature of a replevin
action, under § 25-1093 et seq., the jury in this case necessarily
decided issues of possession of the contested vehicles and, on
finding in favor of Lehr, damages. The district court did not err
as a matter of law when it overruled Foundation One’s motion
for a directed verdict in its favor. Accordingly, we affirm the
judgment of the district court.
A ffirmed.