Ryan v. Streck, Inc.

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/09/2021 01:09 AM CDT
- 98 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98Stacy Ryan, appellant, v. Streck, Inc.,
a Nebraska corporation, appellee.
___ N.W.2d ___
Filed April 29, 2021. No. S-20-457.
1. Motions to Dismiss: Pleadings: Appeal and Error. A district court’s
grant of a motion to dismiss on the pleadings is reviewed de novo,
accepting the allegations in the complaint as true and drawing all rea-
sonable inferences in favor of the nonmoving party.
2. Statutes: Appeal and Error. Statutory interpretation presents a question
of law, for which an appellate court is obligated to reach an independent
conclusion irrespective of the decision made by the court below.
3. Courts: Jurisdiction. Under 28 U.S.C. § 1367 (2018), federal courts
may exercise supplemental jurisdiction over claims not otherwise within
their adjudicatory authority.
4. Actions: Words and Phrases. A cause of action consists of the fact or
facts which give one a right to judicial relief against another.
5. Breach of Contract. A breach of contract action consists of a promise,
its breach, damages, and compliance with any conditions precedent.
6. Statutes. A court determines a statute’s meaning based on its text, con-
text, and structure.
7. ____. A court must attempt to give effect to all parts of a statute, and if
it can be avoided, no word, clause, or sentence will be rejected as super-
fluous or meaningless.
8. Statutes: Words and Phrases. The word “may” generally carries a
permissive and discretionary meaning; and, when used in a statute, it
usually implies some degree of discretion.
9. Courts: Jurisdiction: Claims. A federal court has subject matter juris-
diction over specified state law claims, which it may (or may not)
choose to exercise.
10. Courts: Appeal and Error. In deciding whether to remand a matter
back to the state court, federal courts consider factors such as judicial
economy, convenience, fairness, and comity.
- 99 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 9811. Limitations of Actions: Words and Phrases. Tolling under 28 U.S.C.
§ 1367(d) (2018) means to hold it in abeyance, i.e., to stop the clock.
12. Appeal and Error. An appellate court is not obligated to engage in an
analysis which is not needed to adjudicate the controversy before it.
Appeal from the District Court for Sarpy County: Nathan
B. Cox, Judge. Reversed and remanded for further proceedings.
Bonnie M. Boryca and Cory R. Wilson, of Erickson &
Sederstrom, P.C., for appellant.
Victoria H. Buter and Thomas H. Dahlk, of Kutak Rock,
L.L.P., for appellee.
Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ.
Funke, J.
This appeal involves a breach of contract claim filed against
Streck, Inc., by one of its former shareholders, Stacy Ryan.
Ryan alleged that Streck breached its contractual obligation
to redeem her shares at fair market value. Litigation com-
menced in state court, then proceeded to federal court. The
case returned to state court, where the court dismissed the case
on statute of limitations grounds. Ryan appeals and argues the
statute of limitations on her breach of contract claim was tolled
either by 28 U.S.C. § 1367(d) (2018) or by Neb. Rev. Stat.
§ 25-201.01 (Reissue 2016). We agree that § 1367(d) tolled the
statute of limitations on Ryan’s breach of contract claim and
that as a result, the claim was timely filed. We reverse, and
remand for further proceedings.
I. BACKGROUND
In 1985, Ryan was gifted shares of Streck. In 2012, pursu-
ant to a revised redemption agreement, Streck repurchased
Ryan’s shares for over $9 million. The revised redemption
agreement set forth that the value of Ryan’s shares would
be based upon the most recent valuation completed by Juris
- 100 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98Valuation Advisors, LLC (JVA). In June 2015, Ryan filed suit
for breach of contract in the district court for Sarpy County,
alleging that Streck violated the revised redemption agreement
by undervaluing the stock. Ryan voluntarily dismissed the
action without prejudice.
1. Federal District Court
In August 2015, Ryan filed suit in federal district court,
alleging a violation of the Securities Exchange Act of 1934.
Ryan’s complaint also included several state law claims,
including the breach of contract claim for Streck’s alleged vio-
lation of the revised redemption agreement. Streck moved to
dismiss the complaint, alleging a failure to state a claim upon
which relief could be granted. On February 18, 2016, the fed-
eral district court granted the motion and dismissed the entire
complaint. In particular, as to the breach of contract claim,
the federal district court noted that the “[r]evised [p]urchase
[a]greement stated that the fair market value of the stock would
be the one ‘set forth in the most recent valuation prepared by
[JVA] immediately preceding the date of the written notifica-
tion of the option [to redeem] exercised by [Streck] . . . .’”
The court noted that Ryan’s complaint did not dispute that the
price she received for her shares was the amount set forth in
the most recent valuation immediately preceding her redemp-
tion. As a result, the court found that Ryan had not alleged that
Streck breached any term in the agreement, and it dismissed
her complaint for failure to state a claim upon which relief can
be granted.
On March 17, 2016, Ryan filed a motion to alter or amend
the judgment or to file an amended complaint based on newly
discovered evidence. The motion alleged that a professional
appraisal completed in 2014 showed that on March 28, 2012,
Streck falsely represented that its voting and nonvoting shares
were worth $3.49 and $3.32 per share, respectively, when
the fair market value of the shares were in fact worth $8.33
and $8.09 per share, respectively. The motion alleged that
- 101 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98on April 12, Streck falsely represented that Ryan’s stock was
valued at approximately $9.5 million, when the 2014 appraisal
revealed the stock was worth a total of $23 million as of
March 7, 2013. The motion further alleged the discovery of
new evidence which showed that JVA’s 2011 appraisal was
not the most recent JVA appraisal for purposes of the revised
redemption agreement. Ryan alleged that the most recent JVA
appraisal was completed on July 27, 2012, and showed that
the voting shares were worth $4.42 per share and that the non-
voting shares were worth $4.21 per share. Streck opposed the
motion to alter and amend.
On June 14, 2016, the federal district court denied Ryan’s
motion to alter and amend, and denied her request to file an
amended complaint. In particular, the court stated:
In its Order and Judgment, the Court dismissed all of
Stacy Ryan’s claims, finding that her allegation that she
was not paid the fair market value of her stock failed to
state a claim upon which relief could be granted. This was
because the Court determined that Stacy Ryan alleged that
she was paid an amount calculated in accordance with the
[r]edemption [a]greement. In other words, although Stacy
Ryan alleged that the price she received for the stock did
not reflect the actual fair market value at that time of
redemption, she did not dispute that the price reflected
the fair market value as calculated by the 2011 [JVA]
valuation, which she admitted was the most recent [JVA]
valuation at the time. Because this was all the [r]edemp-
tion [a]greement required Streck to pay to redeem the
stock, Stacy Ryan could not establish that any wrongful
conduct by Defendants caused her to incur a loss, nor that
Defendants breached the [r]edemption [a]greement. This
finding proved fatal to all of her claims, and the Court
granted Defendants’ Motion to Dismiss. 1
1
Ryan v. Ryan, No.8:15CV312, 2016 WL 3264236 *2 (D. Neb. May 7,
2018), reversed in part 889 F.3d 499 (8th Cir. 2018).
- 102 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 982. Eighth Circuit Court
On July 12, 2016, Ryan filed a second motion to alter or
amend the judgment, arguing that she had become aware of
previously sealed deposition testimony from another litigation
matter involving Streck, which, she alleged, supported her
contention that inaccurate information was provided to JVA
by Streck. The next day, Ryan appealed the denial of the first
motion to alter or amend to the U.S. Court of Appeals for the
Eighth Circuit. Subsequently, the federal district court denied
Ryan’s second motion to alter or amend on the basis that the
filing of the notice of appeal conferred jurisdiction on the
appellate court and divested the district court of its control of
those aspects of the case involved in the appeal. 2
In May 2018, the Eighth Circuit entered an order affirm-
ing the dismissal of Ryan’s federal and state securities law
claims, as well as her state law claims of fraudulent misrepre-
sentation and inducement, breach of fiduciary duty, and share-
holder oppression. The Eighth Circuit further concluded that on
appeal, Ryan had not “meaningfully argued that the remaining
claims—conversion, tortious interference, unjust enrichment,
and breach of contract—were improperly dismissed” and as
such, challenges to the dismissal of those claims were waived. 3
Although the Eighth Circuit affirmed the district court’s order
dismissing the complaint, it remanded the matter “for further
consideration of whether [Ryan’s] post-dismissal motion to
alter or amend presented newly discovered evidence warrant-
ing alteration of the order dismissing her breach of contract
claim.” 4 In particular, the Eighth Circuit noted:
Here, the record reflects that a document in Defendants’
custody and control that contradicts the factual basis for
their motions to dismiss the breach of contract claim
was first discovered after briefing and submission of
2
See id.
3
Ryan, supra note 1, 889 F.3d at 507.
4
Id. at 502.
- 103 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98those motions. Given “the Rule 15(a)(2) considerations
that favor affording parties an opportunity to test their
claims on the merits,” . . . we are not prepared to rule
categorically that this evidence may not qualify as newly
discovered for purposes of reconsidering Rule 12(b)(6)
dismissal of the breach of contract claim. Further inquiry
is required. 5
3. Federal District Court on Remand
On remand, in a September 24, 2018, order, the federal dis-
trict court noted that the decision before it was “whether it will
continue to exercise supplemental jurisdiction over the only
claim remaining in this case.” The court noted that at the outset
of the case, the court had supplemental jurisdiction over Ryan’s
breach of contract claim under § 1367 and that “‘[a] district
court’s decision whether to exercise [supplemental] jurisdiction
after dismissing every claim over which it had original juris-
diction is purely discretionary.’”
The federal district court indicated:
In considering the factor of fairness, the Court recog-
nizes that it must be cognizant of the applicable statute
of limitations. To the extent that the limitations period
is a concern, . . . § 25-201.01 affords [Ryan] additional
time [6 months] to file her breach-of-contract claim in
Nebraska state court following this Court’s decision to
decline supplemental jurisdiction.
Ultimately, the federal district court declined to exercise
supplemental jurisdiction over the breach of contract claim,
concluding that after the affirmance of the dismissal, no claims
remained giving jurisdiction to the federal courts. However,
the court clarified, in a footnote, that it was not dismiss-
ing the breach of contract claim for any reason provided in
§ 25-201.01(2), but that it was exercising its discretion to
decline supplemental jurisdiction over the claim.
5
Id. at 509.
- 104 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 984. Sarpy County District Court
On March 22, 2019, Ryan filed a new complaint for breach
of contract in the district court for Sarpy County, followed by
an amended complaint on August 27. Streck moved to strike
various allegations in the amended complaint, arguing that it
went beyond the limited remand allowed by the Eighth Circuit.
Streck also moved to dismiss the amended complaint for fail-
ure to state a claim upon which relief can be granted.
On November 4, 2019, the court heard Streck’s motions.
Streck argued that the amended complaint contained allega-
tions beyond the breach of contract claim and sought an
amended pleading. In response, Ryan detailed the history of
the case and noted that on remand to the federal district court,
the federal district court dismissed the complaint for lack of
jurisdiction and opted to not exercise supplemental jurisdic-
tion because it was merely a breach of contract claim under
state law. Ryan also argued to the court that she was allowed
to refile her claim in state court under the savings provision for
the statute of limitations.
The district court for Sarpy County entered an order on
May 22, 2020, which granted Streck’s motion to dismiss.
According to the order, after the November 4, 2019, hear-
ing, the court had instructed the parties to brief the issue
of whether the statute of limitations had run on the breach
of contract claim. In dismissing the case, the district court
first rejected Ryan’s argument that the court could not con-
sider the issue regarding the statute of limitations sua sponte
when Streck had not raised such an affirmative defense in its
motion to dismiss. The court cited Welsch v. Graves, 6 where
this court stated that “[w]hen it is apparent from the face of
the petition that the action is barred by a statute of limita-
tions, the petition fails to state a cause of action and is subject
to a demurrer.”
6
Welsch v. Graves, 255 Neb. 62, 65, 582 N.W.2d 312, 325 (1998).
- 105 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98The court then noted that under Neb. Rev. Stat. § 25-205
(Reissue 2016), the statute of limitations for a breach of con-
tract claim is 5 years. The court also noted that the breach
of contract claim accrued in August 2012 and that the first
action was filed and voluntarily dismissed in August 2015.
Because there is no tolling under § 25-201.01 for a volun-
tary dismissal, the court determined the voluntary dismissal
did not affect the statute of limitations that would expire in
August 2017.
The court then went on to explain that it agreed with Streck
that the federal district court did not exercise supplemental
jurisdiction over the breach of contract claim upon remand
from the Eighth Circuit. The court reasoned that “[b]ecause
the Eighth Circuit affirmed the dismissal of the federal claim
that provided the [federal district court] with subject matter
jurisdiction, there could not have been an exercise of supple-
mental jurisdiction over the precise breach of contract claim
remanded on the basis of alleged newly discovered evidence.”
The court found the breach of contract claim was not tolled
under § 1367(d) and dismissed the action as untimely.
Ryan appeals. We moved the case to our docket on our
own motion.
II. STANDARD OF REVIEW
[1] A district court’s grant of a motion to dismiss on the
pleadings is reviewed de novo, accepting the allegations in
the complaint as true and drawing all reasonable inferences in
favor of the nonmoving party. 7
[2] Statutory interpretation presents a question of law, for
which an appellate court has an obligation to reach an inde-
pendent conclusion irrespective of the decision made by the
court below. 8
7
Patterson v. Metropolitan Util. Dist., 302 Neb. 442, 923 N.W.2d 717(2019).
8
Id.- 106 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98III. ASSIGNMENTS OF ERROR
Ryan assigns, restated, that the district court erred in (1)
finding that the federal district court did not exercise supple-
mental jurisdiction over her breach of contract claim, (2) find-
ing that § 1367(d) did not toll the statute of limitations on her
2012 breach of contract action while it was pending in federal
court, (3) finding that § 25-201.01 did not toll the statute of
limitations on her 2012 breach of contract action while it was
pending in federal court, and (4) raising the affirmative defense
of statute of limitations sua sponte and dismissing her amended
complaint for failure to state a claim upon which relief can
be granted.
IV. ANALYSIS
1. Supplemental Jurisdiction
[3] Ryan contends that the district court erred in determin-
ing that the federal district court did not exercise supplemen-
tal jurisdiction over her state law breach of contract claim.
Ryan argues that the federal supplemental jurisdiction statute,
§ 1367, enables federal district courts to entertain claims not
otherwise within their adjudicatory authority.
Streck argues that the state district court correctly found
that, because the Eighth Circuit affirmed the dismissal of
Ryan’s federal claims, the federal district court could not
have exercised supplemental jurisdiction over “the precise
breach of contract claim remanded on the basis of alleged
newly discovered evidence.” However, Streck sets forth no
case law or statutory authority, nor do we find any, to support
this contention.
Section 1367 provides:
(a) Except as provided in subsections (b) and (c) or
as expressly provided otherwise by Federal statute, in
any civil action of which the district courts have original
jurisdiction, the district courts shall have supplemen-
tal jurisdiction over all claims that are so related to
- 107 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98claims in the action within such original jurisdiction that
they form part of the same case or controversy under
Article III of the United States Constitution. Such supple-
mental jurisdiction shall include claims that involve the
joinder or intervention of additional parties.
....
(c) The district courts may decline to exercise supple-
mental jurisdiction over a claim under subsection (a) if—
(1) the claim raises a novel or complex issue of
State law,
(2) the claim substantially predominates over the
claim or claims over which the district court has origi-
nal jurisdiction,
(3) the district court has dismissed all claims over
which it has original jurisdiction, or
(4) in exceptional circumstances, there are other com-
pelling reasons for declining jurisdiction.
Neither party disputes that under § 1367, the federal district
court initially had supplemental jurisdiction over Ryan’s state
law breach of contract claim because that claim formed part of
the same case or controversy as her claims under the Securities
Exchange Act of 1934. Although the federal district court dis-
missed both the federal and state claims, Ryan timely filed her
motion to amend in which she raised the issue of newly discov-
ered evidence to support her breach of contract claim. When
the federal district court overruled the motion to amend, Ryan
then timely appealed.
On appeal, the Eighth Circuit determined that one piece of
the allegedly newly discovered evidence may tend to show
one or more material issues of disputed fact as to Ryan’s
breach of contract claim, which merited a limited remand. 9
The Eighth Circuit also determined that there was no need
to amend Ryan’s complaint, because the federal district
9
Ryan, supra note 1.
- 108 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98court, with comparable foundation, could take judicial notice
of the 2012 per share values, just as it did with the 2011 per
share values. 10
It is clear that upon remand, the federal district court con-
tinued to have supplemental jurisdiction over the case and
maintained the authority to consider the merits of the breach
of contract claim. The federal district court intimated as much
when it framed the issue before it as to “whether [the court
would] continue to exercise supplemental jurisdiction over the
only claim remaining in this case.”
[4,5] Additionally, the record supports Ryan’s contention
that the federal district court had supplemental jurisdiction
over the state breach of contract claim from the beginning and
that it continued to have jurisdiction over the state breach of
contract claim until it chose to dismiss it on remand. A cause
of action consists of the fact or facts which give one a right
to judicial relief against another. 11 A breach of contract action
consists of a promise, its breach, damages, and compliance
with any conditions precedent. 12 Here, Ryan’s breach of con-
tract claim arose out of the set of facts alleging that Streck
failed to pay Ryan the fair value of her stocks as required
under the revised redemption agreement. The newly discov-
ered evidence did not create a new cause of action, but merely
provided Ryan additional evidence to support her breach of
contract claim.
The federal district court’s determination to dismiss the case
after remand does not diminish its exercise of supplemental
jurisdiction to that point. Under § 1367(c)(3), the federal dis-
trict court may decline to exercise supplemental jurisdiction
over a claim if the district court has dismissed all claims over
which it has original jurisdiction.
10
Id.
11
Saunders Cty. v. City of Lincoln, 263 Neb. 170, 638 N.W.2d 824 (2002).
12
See Kotrous v. Zerbe, 287 Neb. 1033, 846 N.W.2d 122 (2014).
- 109 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98[6-8] A court determines a statute’s meaning based on its
text, context, and structure. 13 A court must attempt to give
effect to all parts of a statute, and if it can be avoided, no word,
clause, or sentence will be rejected as superfluous or mean-
ingless. 14 Federal courts have recognized that the word “may”
generally carries a permissive and discretionary meaning. 15 In
fact, the U.S. Supreme Court has acknowledged that the word
“may,” when used in a statute, usually implies some degree of
discretion. 16 Additionally, the Eighth Circuit has held that the
decision to exercise supplemental jurisdiction over remaining
state law claims, after dismissing every claim over which it
had original jurisdiction, is purely discretionary. 17 The Eighth
Circuit has also stated that “‘[i]t is within the district court’s
discretion to exercise supplemental jurisdiction after dismissal
of the federal claim.’” 18
[9,10] In Crest Const. II, Inc. v. Doe, 19 plaintiffs filed a
complaint against several defendants in federal district court,
alleging violations of the federal Racketeer Influenced and
Corrupt Organizations Act, in addition to state law claims for
breach of contract, fraud, conversion, and civil conspiracy.
Subsequently, the court granted the defendants’ motion to
13
See In re Application Obtain Discovery in Foreign Pro., 939 F.3d 710 (6th
Cir. 2019). See, also, Ash Grove Cement Co. v. Nebraska Dept. of Rev.,
306 Neb. 947, 947 N.W.2d 731 (2020).
14
Ash Grove Cement Co., supra note 13. See Hibbs v. Winn, 542 U.S. 88,
124 S. Ct. 2276, 159 L. Ed. 2d 172 (2004).
15
See Haroun v. U.S. Dept. of Homeland Sec., 929 F.3d 1007 (8th Cir.
2019) (citing Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 112-15 (2012)).
16
See United States v. Rodgers, 461 U.S. 677, 103 S. Ct. 2132, 76 L. Ed. 2d
236 (1983).
17
See Crest Const. II, Inc. v. Doe, 660 F.3d 346 (8th Cir. 2011).
18
Glorvigen v. Cirrus Design Corp., 581 F.3d 737, 749 (8th Cir. 2009)
(quoting Quinn v. Ocwen Federal Bank FSB, 470 F.3d 1240 (8th Cir.
2006)).
19
Crest Const. II, Inc., supra note 17.
- 110 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98dismiss the federal claim and declined to exercise supple-
mental jurisdiction over the remaining state law claims. 20 On
appeal, the Eighth Circuit noted that a federal court has sub-
ject matter jurisdiction over specified state law claims, which
it may (or may not) choose to exercise. 21 The Eighth Circuit
ultimately found that the federal district court did not abuse its
discretion in declining to exercise supplemental jurisdiction,
noting that a federal district court is afforded broad discre-
tion in determining whether to exercise supplemental jurisdic-
tion. 22 Exercising this discretionary authority, federal courts, in
deciding whether to remand a matter back to the state court,
consider factors such as judicial economy, convenience, fair-
ness, and comity. 23
In the present case, on remand, the federal district court’s
decision whether to continue exercising supplemental juris-
diction over Ryan’s state law breach of contract claim was a
purely discretionary one. The federal district court’s September
24, 2018, order acknowledged its broad discretionary authority
and, in determining whether to continue exercising supplemen-
tal jurisdiction over the breach of contract claim, considered
the factors of judicial economy, convenience, fairness, and
comity. Although the federal district court ultimately dismissed
the breach of contract claim, it made it clear that it was not dis-
missing the claim for any reason under § 25-201.01(2), but that
it was merely exercising its discretion to decline supplemental
jurisdiction over the claim.
At the time Ryan refiled her breach of contract claim in
state district court, the issue of supplemental jurisdiction had
already been resolved in the affirmative and was no longer an
issue. The only issue before the state district court was whether
Ryan’s claim was tolled by either federal or state statute.
20
Id.
21
Id.
22
Id. (citing Green v. Ameritrade, Inc., 279 F.3d 590 (8th Cir. 2002)).
23
See, Glorvigen, supra note 18; Quinn, supra note 18.
- 111 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98Therefore, the state district court erred in finding that the fed-
eral district court did not continue to exercise supplemental
jurisdiction over Ryan’s breach of contract claim.
2. Tolling Statutes
(a) Federal Law
Ryan next argues that the state district court erred in deter-
mining that § 1367(d) did not toll the statute of limitations
on her breach of contract action while it was pending in fed-
eral court.
The state district court found that the breach of contract
claim was “never tolled” under § 1367(d) based on the rea-
soning that the federal district court could not have exercised
supplemental jurisdiction over Ryan’s breach of contract claim.
Since we have concluded that the federal district court did
exercise supplemental jurisdiction over Ryan’s breach of con-
tract claim upon remand, we must consider the effect of § 1367
on Ryan’s second action in the state district court.
Section 1367(d) states:
The period of limitations for any claim asserted under
subsection (a), and for any other claim in the same action
that is voluntarily dismissed at the same time as or after
the dismissal of the claim under subsection (a), shall be
tolled while the claim is pending and for a period of 30
days after it is dismissed unless State law provides for a
longer tolling period.
In Artis v. District of Columbia, 24 the U.S. Supreme Court
discussed whether the word “tolled,” as used in § 1367, meant
that the state limitations period is suspended during the pend­
ency of the federal suit or whether the word “tolled” meant
that, although the state limitations period continues to run,
a plaintiff is accorded a grace period of 30 days to refile in
state court after dismissal of the federal case. In December
24
Artis v. District of Columbia, ___ U.S. ___, 138 S. Ct. 594, 199 L. Ed. 2d
473 (2018).
- 112 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 982011, Stephanie Artis sued her employer in the U.S. District
Court for the District of Columbia, alleging that she had suf-
fered employment discrimination in violation of title VII of the
Civil Rights Act of 1964. She also asserted three allied claims
under District of Columbia law. 25
In June 2014, the federal district court dismissed Artis’ title
VII claim and declined to exercise supplemental jurisdiction
over Artis’ state law claims. 26 The district court noted that Artis
would not be prejudiced because § 1367(d) provided for “‘a
tolling of the statute of limitations during the period the case
was here and for at least 30 days thereafter.’” 27 Artis then filed
her state law claims in the District of Columbia Superior Court
59 days after the dismissal of her federal suit. 28
[11] The superior court dismissed Artis’ claims on the basis
that they were filed 29 days too late, because when Artis first
filed her claims in the federal district court, nearly 2 years
remained on the applicable 3-year statute of limitations. 29
However, 21⁄2 years had passed before the federal district court
relinquished jurisdiction. 30 The superior court rejected Artis’
argument that § 1367(d) tolled the statute of limitations on
her claims, and it reasoned that Artis could have protected her
state law claims by “‘pursuing [them] in a state court while
the federal court proceeding [was] pending.’” 31 On appeal,
the District of Columbia Court of Appeals affirmed the deci-
sion of the Superior Court and agreed that § 1367(d) did not
stop the clock, but merely provided a 30-day grace period
for Artis to refile her state law claims in state court. 32 On
25
Id.
26
Id.
27
Id., 138 S. Ct. at 599-600.
28
Artis, supra note 24.
29
Id.
30Id.
31Id., 138 S. Ct. at 600.
32
Artis, supra note 24.
- 113 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98s­ ubsequent appeal to the U.S. Supreme Court, the Supreme
Court disagreed and held that § 1367(d)’s instruction to toll
a state limitations period meant to hold it in abeyance, i.e., to
stop the clock. 33 As a result, the Court found that Artis’ claim
was not barred by the statute of limitations. 34
Here, Ryan’s breach of contract claim accrued in August
2012. She then filed her action in federal district court in
August 2015. After Ryan spent nearly 3 years actively litigat-
ing in the federal court system, the federal district court ulti-
mately declined to exercise supplemental jurisdiction over her
breach of contract claim and dismissed the same in September
2018. Then, in March 2019, Ryan refiled her action in state
district court.
Although § 25-205 provides a 5-year statute of limitations
on breach of contract claims, following the U.S. Supreme
Court’s holding in Artis, § 1367(d) tolled the state statute of
limitations on Ryan’s breach of contract claim during the time
the claim was being litigated in federal court. In other words,
because the federal district court was exercising supplemental
jurisdiction over Ryan’s breach of contract claim, the clock
stopped on the state limitations period in August 2015 when
she first filed her cause of action in federal court. When the
federal district court dismissed Ryan’s breach of contract claim
in September 2018, Ryan still had over 2 years to refile her
breach of contract claim in state district court. Thus, when
Ryan refiled her claim in state district court in March 2019,
such claim was timely.
(b) State Law
[12] Ryan also argues that the state district court erred in
determining that her breach of contract claim was not tolled
by § 25-201.01. Streck, in turn, argues that Ryan could have
filed her claim in state district court within the statute of
33
Id.
34
See id. See, also, Puetz v. Spectrum Health Hospitals, 324 Mich. App. 51,
919 N.W.2d 439 (2018).
- 114 -
Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
RYAN v. STRECK, INC.
Cite as 309 Neb. 98limitations, citing our decision in Brodine v. Blue Cross Blue
Shield. 35 However, because we conclude that the limitations
period for Ryan’s breach of contract claim was tolled under
§ 1367(d), we need not consider other reasons why the limita-
tions period may have been tolled. An appellate court is not
obligated to engage in an analysis which is not needed to adju-
dicate the controversy before it. 36
3. Remaining Issues
Ryan also argues the state district court erred in raising
the affirmative defense of statute of limitations sua sponte.
Similarly, because we have concluded that Ryan’s state law
breach of contract claim was effectively tolled by § 1367(d),
we decline to consider this assignment of error.
V. CONCLUSION
The state district court erred in dismissing Ryan’s breach
of contract claim. The federal district court employed its
discretionary authority in declining to continue to exercise
supplemental jurisdiction over the breach of contract claim.
It was erroneous for the state district court to determine that
the federal district court could not have continued to exer-
cise supplemental jurisdiction over the claim. Additionally,
because the federal district court was exercising supplemental
jurisdiction over the claim, under federal law, the statute of
limitations on Ryan’s breach of contract claim was tolled dur-
ing the pendency of the federal case. Ryan’s claim was timely
filed within the 5-year limitations period. The judgment of
dismissal is reversed and the matter is remanded for further
proceedings.
Reversed and remanded for
further proceedings.
Miller-Lerman, J., not participating.
35
Brodine v. Blue Cross Blue Shield, 272 Neb. 713, 724 N.W.2d 321 (2006).
36
City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147, 917
N.W.2d 826 (2018).