Hand Cut Steaks Acquisitions v. Lone Star Steakhouse

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/06/2018 09:17 AM CDT
- 705 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
H and Cut Steaks Acquisitions, Inc., an A rkansas
corporation, appellant and cross-appellee,
v. Lone Star Steakhouse & Saloon of
Nebraska, Inc., a Nebraska corporation,
appellee and cross-appellant, and
LSF5 Cactus, L.L.C., a Delaware
limited liability company, appellee.
___ N.W.2d ___
Filed January 19, 2018. No. S-16-1005.
1. Evidence: Stipulations: Appeal and Error. In a case in which the facts
are stipulated, an appellate court reviews the case as if trying it origi-
nally in order to determine whether the facts warranted the judgment.
2. Judgments: Jurisdiction: Appeal and Error. When a jurisdictional
question does not involve a factual dispute, determination of a jurisdic-
tional issue is a matter of law which requires an appellate court to reach
a conclusion independent from the trial court’s.
3. Landlord and Tenant: Abandonment. An abandonment of leased
premises by the tenant constitutes an offer to terminate the lease.
4. Landlord and Tenant: Abandonment: Intent. Whether there has been
an acceptance by the landlord of the tenant’s abandonment of the prem-
ises is largely a matter of intention, and such an acceptance may be
inferred from acts of the landlord inconsistent with the continuance of
the lease.
5. Landlord and Tenant. Whether a surrender and acceptance of leased
premises occurred is a question of fact.
6. Landlord and Tenant: Abandonment: Damages. After a tenant aban-
dons leased property, a landlord may mitigate its damages not only by
reletting the property to another tenant, but also by selling the property.
7. Landlord and Tenant: Abandonment: Intent. Like retaking and relet-
ting leased property, the act of attempting to sell and selling the property
by a landlord after a tenant abandons it is equivocal and can evince an
- 706 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
intent to mitigate the landlord’s damages just as easily as it can evince
an intent to accept the tenant’s surrender.
8. Landlord and Tenant: Abandonment: Damages: Intent:
Presumptions. Where a landlord’s actions are not inconsistent with an
intent to mitigate its damages, a court will not presume that the landlord
intended to accept the tenant’s surrender of the leased premises and ter-
minate the lease.
9. Landlord and Tenant: Abandonment: Damages. A landlord may not
unreasonably refuse to accept a qualified and suitable substitute ten-
ant for the purpose of mitigating the damages recoverable from a ten-
ant who has abandoned the leased premises prior to the expiration of
the term.
10. ____: ____: ____. A landlord has a duty to relet the premises in order
to mitigate damages when a tenant abandons the premises prior to the
expiration of a lease. This duty to mitigate requires that the landlord take
all reasonable steps to reduce his damages.
11. Landlord and Tenant: Abandonment: Damages: Proof. In a land-
lord’s action to recover unpaid rent upon a tenant’s abandonment of the
premises prior to the end of the lease term, the tenant has the burden
to show that the landlord unreasonably failed to relet the premises and
mitigate damages.
12. Landlord and Tenant: Abandonment: Damages. After a tenant has
abandoned leased premises, a landlord may satisfy its duty to mitigate
damages by retaking the premises and making reasonable efforts to relet
the premises on the tenant’s account, to sell the property, or both.
13. Landlord and Tenant: Leases: Breach of Contract: Damages: Sales:
Time. A landlord may generally recover unpaid rent and expenses due
under a lease from the time of the tenant’s breach through the time a
sale of the property is completed, plus any commercially reasonable
expenses incurred in order to procure a new tenant or buyer.
14. Landlord and Tenant: Abandonment: Damages. A landlord’s efforts
to mitigate its damages after a tenant abandons the leased property must
be commercially reasonable under the circumstances.
15. Landlord and Tenant: Abandonment: Damages: Time. A landlord’s
duty to mitigate its damages arises when the tenant abandons or surren-
ders the property.
16. Landlord and Tenant: Abandonment: Damages. Until there is an
abandonment or tender of property by a tenant, a landlord has no duty
to mitigate its damages by reletting or selling the property.
17. Landlord and Tenant: Abandonment: Damages: Sales: Time. If a
landlord’s efforts to mitigate its damages by selling abandoned property
are reasonable under all the circumstances—including reasonable in
time—damages will ordinarily run until the date of sale.
- 707 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
18. Jurisdiction: Words and Phrases. Personal jurisdiction is the power
of a tribunal to subject and bind a particular person or entity to its
decisions.
19. Constitutional Law: Jurisdiction: Due Process: Service of Process:
States. Courts’ ability to validly exercise personal jurisdiction is not
without limit. The Due Process Clause of the 14th Amendment to the
U.S. Constitution bars a court from exercising personal jurisdiction over
an out-of-state defendant, served with process outside the state, unless
that defendant has sufficient ties to the forum state.
20. Constitutional Law: Jurisdiction: Statutes: Due Process: States. A
two-step analysis is used to determine whether a Nebraska court may
validly exercise personal jurisdiction over an out-of-state defendant.
First, a court must consider whether Nebraska’s long-arm statute—Neb.
Rev. Stat. § 25-536 (Reissue 2016)—authorizes the exercise of personal
jurisdiction over the defendant. Second, a court must consider whether
the exercise of personal jurisdiction over the defendant comports with
the Due Process Clause.
21. Constitutional Law: Jurisdiction: Statutes: Due Process. If a
Nebraska court’s exercise of personal jurisdiction would comport with
the Due Process Clause of the 14th Amendment, it is authorized by the
long-arm statute—Neb. Rev. Stat. § 25-536(2) (Reissue 2016).
22. Constitutional Law: Jurisdiction: Due Process: States: Words and
Phrases. To satisfy the Due Process Clause, a court may only exercise
personal jurisdiction over a defendant that is not present in the forum
state if that defendant has “minimum contacts” with the forum such that
the exercise of jurisdiction does not offend traditional notions of fair
play and substantial justice. To constitute sufficient minimum contacts
with the forum, a defendant’s conduct and connection with the forum
state must be such that he or she should reasonably anticipate being
haled into court there.
23. Jurisdiction: States. Whether a defendant’s contacts with the forum
state are sufficient to support the exercise of personal jurisdiction will
vary with the quality and nature of the defendant’s activity, but it is
essential in each case that there be some act by which the defendant
purposefully avails itself of the privilege of conducting activities
within the forum state, thus invoking the benefits and protections of
its laws.
24. ____: ____. Personal jurisdiction is proper where the defendant’s con-
tacts proximately result from actions by the defendant himself or herself
that create a substantial connection with the forum state.
25. ____: ____. In the minimum contacts analysis, courts will consider the
burden on a defendant in light of considerations such as (1) the forum
state’s interest in adjudicating the dispute, (2) the plaintiff’s interest
- 708 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
in obtaining convenient and effective relief, (3) the interstate judicial
system’s interest in obtaining the most efficient resolution of contro-
versies, and (4) the shared interest of the several states in furthering
fundamental substantive social policies. Consideration of these factors
may sometimes serve to establish the reasonableness of jurisdiction
upon a lesser showing of minimum contacts than would otherwise
be required.
26. ____: ____. The nature and quality of a defendant’s contacts with
the forum state necessary to support the exercise of personal jurisdic-
tion depend on the connection between the contacts and the claim
being asserted.
27. Jurisdiction: States: Words and Phrases. General, or all-purpose,
jurisdiction is jurisdiction arising where a defendant’s affiliations with a
state are so continuous and systematic as to render the defendant essen-
tially at home in the forum state.
28. Jurisdiction. Where a court has general personal jurisdiction over a
defendant, it can adjudicate any claim against the defendant—even a
claim that arises outside the forum state and bears no connection to the
defendant’s contacts with the forum.
29. Jurisdiction: Words and Phrases. Specific, or case-linked, jurisdiction
requires that a claim arise out of or relate to the defendant’s contacts
with the forum.
30. Jurisdiction. A defendant need not be at home in the forum to be sub-
ject to specific personal jurisdiction, but, rather, there must be an affili-
ation between the forum and the underlying controversy.
31. Jurisdiction: Words and Phrases. Specific personal jurisdiction is
confined to adjudication of issues deriving from, or connected with, the
very controversy that establishes jurisdiction. There must be a substan-
tial connection between the defendant’s contacts and the operative facts
of the litigation.
32. Jurisdiction: Due Process: Contracts. For purposes of personal juris-
diction, it is sufficient for purposes of due process that a suit be based
on a contract which has substantial connection with that state.
33. Jurisdiction: States. Personal jurisdiction may not be avoided merely
because a defendant did not physically enter the forum state.
34. Jurisdiction: States: Contracts. To determine whether a defendant’s
contract supplies the contacts necessary for personal jurisdiction in a
forum state, a court is to consider the parties’ prior negotiations and
future contemplated consequences, along with the terms of the contract
and the parties’ actual course of dealing.
35. States: Real Estate. Generally, a state has a unique interest in adjudicat-
ing transactions affecting its land.
- 709 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
36. Landlord and Tenant: Guaranty: States. While a guaranty of a
personal debt generally bears no intrinsic connection to any particular
location, a guaranty to pay and perform a tenant’s obligations under a
lease of real property uniquely affects the state in which the premises
are located.
37. Jurisdiction: Due Process: States: Real Estate. While the Due Process
Clause’s personal jurisdiction analysis no longer bears a rigidly territo-
rial focus, states nevertheless, as coequal sovereigns in a federal system,
have a special interest in adjudicating disputes relating to the real prop-
erty with their borders.
38. Jurisdiction: Guaranty: States. Where a guarantor takes on obliga-
tions that are uniquely tied to and uniquely affect a particular location, it
is not unreasonable for courts of that state to exercise personal jurisdic-
tion over the guarantor in connection with claims arising from or related
to those obligations.
39. Jurisdiction: States: Contracts. While the minimum contacts personal
jurisdiction analysis is distinct from a choice-of-law analysis, a choice-
of-law contractual provision in favor of the forum state’s law is a rel-
evant contact with the forum.
40. Contracts: Attorney Fees: Public Policy. In the absence of a uniform
course of procedure or authorization by statute, contractual agree-
ments for attorney fees are against public policy and will not be judi-
cially enforced.
Appeal from the District Court for Douglas County: Leigh
A nn R etelsdorf, Judge. Affirmed in part, and in part reversed
and remanded for further proceedings.
David L. Welch and Jeffrey A. Nix, of Pansing, Hogan,
Ernst & Bachman, L.L.P., for appellant.
Michael S. Degan, of Kutak Rock, L.L.P., for appellees.
Heavican, C.J., Cassel, Stacy, K elch, and Funke, JJ.
Cassel, J.
I. INTRODUCTION
When a tenant abandons leased property, a landlord may
either accept the abandonment, thereby terminating the lease,
or attempt to relet or sell the property. Here, after the ten-
ant stopped paying rent and the landlord sued, the tenant
- 710 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
surrendered the property. The landlord rejected offers by pro-
spective tenants and instead, after lengthy negotiations, sold
the property.
Following a bench trial on stipulated facts, the district court
awarded damages to the date the landlord reached a tentative
agreement to sell rather than to an actual sale date. And the
court dismissed the tenant’s out-of-state guarantor for lack
of jurisdiction.
On appeal, we affirm the district court’s damages award
because, although the landlord did not terminate the lease, the
duration of finalizing the sale was not reasonable. But because
the guaranty established sufficient connections to Nebraska, we
reverse the dismissal of the guarantor.
II. BACKGROUND
1. Parties
The tenant, Lone Star Steakhouse & Saloon of Nebraska,
Inc. (Lone Star), is a Nebraska corporation. Lone Star leased
property in west Omaha, Nebraska, to use for the operation of
a steakhouse restaurant from the landlord, Hand Cut Steaks
Acquisitions, Inc. (HCS), an Arkansas corporation. LSF5
Cactus L.L.C. (Cactus), a Delaware limited liability company
doing business in Texas, is a subsidiary of Lone Star’s parent
company. Cactus guaranteed the performance of Lone Star’s
obligations under the lease.
2. Property and Lease
to Lone Star
In 2010, HCS hired an agent to list and market the property.
He did so, eventually securing Lone Star as a tenant. Lone
Star leased the property for a 66-month term, to run from 2010
through 2016. The lease began with 6 months of free rent,
followed by rent increasing incrementally. Lone Star was also
responsible for paying property taxes, property insurance, and
common area maintenance costs.
The lease contained an attorney fee provision: “In the event
of litigation between the parties to enforce this Lease, the
- 711 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
prevailing party in any such action shall be entitled to recover
reasonable costs and expenses of suit, including, without limi-
tation, court costs, attorneys’ fees, and discovery costs.”
The lease also contained a choice-of-law provision: “This
Lease shall be construed, interpreted, and enforced pursu-
ant to the applicable laws of the state in which the Premises
are located.”
Cactus executed a guaranty of the lease which provided
that
[Cactus], in consideration of the direct and material ben-
efits that will accrue to [it], and for the purpose of induc-
ing [HCS] to enter into [the lease] with Lone Star . . . ,
a subsidiary of [Cactus], absolutely and unconditionally
guarantees the payment and performance of, and agrees
to pay and perform as primary obligor, all liabilities, obli-
gations, and duties (including but not limited to payment
of rent) imposed upon [Lone Star] under the terms of the
. . . Lease.
And the lease acknowledged the guaranty signed by Cactus:
“As an inducement to [HCS] to enter into this Lease, [Lone
Star] agrees and acknowledges that its obligations under this
Lease shall be guaranteed . . . by its parent corporation,
[Cactus], a Delaware limited liability company . . . .” Cactus
was also an insured under a general liability and workers’ com-
pensation and employers’ liability insurance policy covering
Lone Star’s restaurant in Omaha.
3. R estaurant Closes
and HCS Sues
In October 2012, Lone Star notified HCS that it planned to
shut down its restaurant in 3 weeks. Lone Star continued pay-
ing rent through February 2013, but then stopped. In March
2013, HCS served a notice of default on Lone Star. In April,
HCS filed suit against Lone Star and Cactus. Later in April,
HCS demanded that Lone Star surrender the premises. Its
demand letter stated, “This Notice shall in no way be con-
strued as a termination of [the] Lease or as a relinquishment
- 712 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
or waiver by [HCS] as to any rental amounts or other amounts
due under [the] Lease . . . .” Lone Star surrendered the prem-
ises in early May, and the parties executed an acknowledgment
of tender and receipt of premises agreement.
4. Interest From
Prospective Tenants
Shortly after Lone Star notified HCS that it planned to close
the restaurant, HCS began receiving inquiries about the avail-
ability of the property.
According to the parties’ trial stipulation, “[HCS] relied
upon [the agent] to relay communications for purposes of sell-
ing or reletting the Premises.” But the parties also stipulated
that HCS did not hire the agent or anyone else as a broker
for the purpose of reletting the premises, before or after HCS
regained control of the premises in May 2013. The agent did
not do any marketing or list the property for HCS as was done
in 2010, when he secured Lone Star’s tenancy.
From October 2012 through February 2013, the agent and
HCS’ owner, Pat Boyd, corresponded with a broker represent-
ing a pizza firm about leasing or purchasing the property. The
broker told HCS that the pizza firm “[w]ants the [p]roperty”
and made multiple offers for a sale or lease. Boyd said in his
deposition that he was not interested in the pizza firm because
he did not find any of its offers acceptable and because he “was
not interested in their concept.” Boyd also said that he made up
his mind that he was not interested in the pizza firm as a tenant
as early as November 2012.
HCS also received two offers in May 2013 from a broker
on behalf of a restaurant proprietor interested in starting a
crab restaurant. Regarding the crab restaurant, Boyd testified,
“This particular concept, we — we weren’t interested in put-
ting in our building.” Boyd also said that he was not interested
because he learned that the proprietor previously had several
other restaurant concepts that failed.
- 713 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
5. Negotiations With
Ultimate Buyer
Discussions with the ultimate buyer began in December
2012. In January 2013, the buyer sent HCS an offer to purchase
the property. HCS rejected the offer and expressed its interest
in negotiating a lease rather than a sale. They continued to
negotiate, and in May, the buyer made another offer to pur-
chase the property. Boyd told the buyer he was more interested
in a lease than a sale of the property. The buyer told Boyd,
“‘We are too far apart to make a ground lease work here[,
but w]e can be much more aggressive . . .’” in negotiating a
purchase. The buyer asked HCS to make a counteroffer for
the sale of the property. After further negotiations, a letter of
intent (LOI) outlining the terms of the sale of the property for
$1.715 million was executed in June 2013. However, it took
until September 2013 for the parties to finalize the purchase
agreement for the property and, due to some issues with title
insurance, until April 2014 to close on the sale.
6. Pretrial Motions and Orders
Before trial, the district court granted a motion of Cactus,
the guarantor of Lone Star’s lease, to dismiss it for lack of
personal jurisdiction. But the court later granted HCS’ motion
to reconsider its order and allowed limited discovery with
regard to Cactus’ contacts with Nebraska. After discovery was
conducted, the court denied Cactus’ renewed motion to dismiss
and reserved ruling on the issue until trial. The district court
also granted in part and denied in part HCS’ pretrial motion for
summary judgment, granting summary judgment on the issue
of Lone Star’s breach of the lease.
A bench trial was held on stipulated facts on the issue of
damages, after which the district court issued a “Bench Trial
Order.” The court concluded that HCS had not accepted Lone
Star’s surrender of the lease, because HCS’ “actions were
consistent with a landlord attempting to mitigate its dam-
ages.” The court also concluded that “[HCS] took reasonable
- 714 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
steps to mitigate its damages after Lone Star’s breach of
the Lease.”
The district court also addressed the issue of whether a land-
lord may mitigate its damages by selling, rather than reletting,
the property:
The Court does not find it reasonable to fault Lone
Star for the lengthy closing process in the negotiations
between [HCS] and [the buyer]. Under the theory of con-
tracts, the breaching party is not to be punished for [its]
breach, but rather, the non-breaching party is to be made
whole. It would indeed be a punishment for Lone Star to
pay nearly a year’s worth of damages because the closing
period between [HCS] and [the buyer] was such a drawn-
out negotiation. Therefore, for purposes of mitigation
and damages, the Court finds that the accrual of damages
ended when [HCS] signed its [LOI] to sell the Premises
to [the buyer] on June 13, 2013.
The district court awarded money damages against Lone Star
in the amount of $49,415.27.
The district court also concluded that it lacked personal
jurisdiction over Cactus and dismissed HCS’ claims against it.
The district court’s order reserved the issue of attorney fees
for a later hearing. After the order, HCS moved for attorney
fees, based on the provision in the lease that attorney fees be
awarded to the prevailing party in the event of litigation over
the lease, and moved for a new trial. Lone Star also moved
for a new trial. The district court overruled HCS’ motions and
overruled Lone Star’s motion as untimely. HCS filed a timely
appeal, and Lone Star asserted a cross-appeal.
III. ASSIGNMENTS OF ERROR
HCS claims that the district court erred by (1) “overruling
the Motion for New Trial and awarding an insufficient amount
of damages to” HCS, (2) “overruling the Motion for New
Trial and ruling that . . . Cactus . . . was properly dismissed
from the action,” and (3) “overruling [HCS’] Motion for attor-
ney’s fees.”
- 715 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
Lone Star claims that the district court erred by (1) “fail-
ing to find that [HCS] accepted Lone Star’s surrender of its
tenancy, thereby terminating the lease”; (2) “failing to find
that [HCS] failed to mitigate damages, thereby excusing Lone
Star’s obligations under the lease”; (3) “finding that Lone Star
breached the lease”; (4) “awarding damages to [HCS]”; and (5)
“failing to enter judgment in favor of Lone Star.”
IV. STANDARD OF REVIEW
[1] In a case in which the facts are stipulated, an appellate
court reviews the case as if trying it originally in order to deter-
mine whether the facts warranted the judgment.1
[2] When a jurisdictional question does not involve a factual
dispute, determination of a jurisdictional issue is a matter of
law which requires an appellate court to reach a conclusion
independent from the trial court’s.2
V. ANALYSIS
1. Surrender and Termination
of Lease
Lone Star argues that HCS accepted its surrender of the
lease, thereby terminating the lease, by retaking the property
for HCS’ own benefit and selling the property. Lone Star
claims that the district court’s finding to the contrary was erro-
neous. HCS claims that it retook possession of the property in
order to relet the property on Lone Star’s account in order to
mitigate its damages. We agree with the district court that when
Lone Star surrendered the property, HCS did not accept Lone
Star’s offer to terminate the lease.
[3-5] We have held that “‘[a]n abandonment of leased
premises by the tenant constitutes an offer to terminate the
lease . . .’” and that “‘whether there has been an acceptance
1
Klein v. Oakland/Red Oak Holdings, 294 Neb. 535, 883 N.W.2d 699
(2016).
2
Quality Pork Internat. v. Rupari Food Servs., 267 Neb. 474, 675 N.W.2d
642 (2004).
- 716 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
by the landlord of the tenant’s abandonment of the premises
is largely a matter of intention, and such an acceptance may
be inferred from acts of the landlord inconsistent with the
continuance of the lease.’”3 And “[w]hether a surrender and
acceptance occurred is a question of fact . . . .”4
The relevant evidence of HCS’ intent is its conduct after
Lone Star surrendered the premises. To a lesser extent, HCS’
conduct before Lone Star’s surrender may also be relevant to
show its intent. The act of retaking possession is itself equivo-
cal as to a lessor’s intent.5 Such conduct could show an intent
to accept the tenant’s abandonment, or could show an intent
to relet the property on the tenant’s account in order to miti-
gate damages.6
[6-8] None of HCS’ actions were inconsistent with retak-
ing the property for the purpose of reletting it on Lone Star’s
account in order to mitigate its damages. Lone Star argues that
“[t]he act of selling, or attempting to sell, the leased premises
is an act wholly and entirely inconsistent with continuation of
the lease”7 and thus shows that HCS accepted Lone Star’s sur-
render. But as we discuss below, a landlord may mitigate its
damages not only by reletting the property to another tenant,
but also by selling the property. Thus, like retaking and relet-
ting the premises, the act of attempting to sell and selling the
property is equivocal. A sale can evince an intent to mitigate
the landlord’s damages just as easily as it can evince an intent
to accept the tenant’s surrender. Our review of the record
shows no actions by HCS that are inconsistent with an intent
3
Waite Lumber Co., Inc. v. Masid Bros., Inc., 189 Neb. 10, 21, 200 N.W.2d
119, 126 (1972); 50 C.J.S. Landlord & Tenant §§ 213 and 218 (2006).
4
Signal Management Corp. v. Lamb, 541 N.W.2d 449, 451 (N.D. 1995).
5
Id.; First Wisconsin Trust Co. v. L. Wiemann Co., 93 Wis. 2d 258, 286
N.W.2d 360 (1980).
6
See, Signal Management Corp. v. Lamb, supra note 4; First Wisconsin
Trust Co. v. L. Wiemann Co., supra note 5.
7
Brief for appellee Lone Star on cross-appeal at 17.
- 717 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
to mitigate its damages by retaking and reletting or selling the
property. Where a landlord’s actions are not inconsistent with
an intent to mitigate its damages, we will not presume that the
landlord intended to accept the tenant’s surrender and terminate
the lease.8
Moreover, in divining HCS’ intent with regard to the surren-
der of the lease, we can look to its own words. HCS expressly
stated that it was not terminating the lease when it demanded
that Lone Star surrender the property. In the notice to quit,
HCS wrote that its notice “shall in no way be construed as a
termination of [the] Lease or as a relinquishment or waiver by
[HCS] as to any rental amounts or other amounts due under
[the] Lease for the remainder of the term, or until [HCS] is able
to obtain a satisfactory tenant . . . .” HCS’ own words were
unequivocal that its demand for the surrender of the property
was not a termination of the lease.
Because HCS’ actions were not inconsistent with an intent
to retake the property for the purpose of mitigating its dam-
ages after Lone Star’s breach by reletting or selling the prop-
erty, and because HCS expressly stated that it did not intend
to terminate the lease, we conclude that HCS did not accept
Lone Star’s offer to terminate the lease through its abandon-
ment of the property. We affirm the district court’s conclusion
on this issue.
2. Mitigation of Damages
HCS argues that the district court erred in awarding it dam-
ages only through the date that HCS and the buyer executed
the LOI for the sale of the property. HCS argues that this is
inconsistent with the court’s conclusion that it acted reason-
ably to mitigate its damages. Lone Star argues that HCS failed
to make reasonable efforts to relet the property in order to
mitigate its damages when it rejected bona fide offers to lease
the property and instead sought to sell the property—which
took a considerable time to consummate.
8
See Signal Management Corp. v. Lamb, supra note 4.
- 718 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
[9-11] This court has held that “a landlord may not unrea-
sonably refuse to accept a qualified and suitable substitute ten-
ant for the purpose of mitigating the damages recoverable from
a tenant who has abandoned the leased premises prior to the
expiration of the term.”9 We have also explained:
A landlord has a duty to relet the premises in order to
mitigate damages when a tenant abandons the premises
prior to the expiration of a lease. . . . This duty to miti-
gate requires that the landlord take all reasonable steps to
reduce his damages. . . . In a landlord’s action to recover
unpaid rent upon a tenant’s abandonment of the premises
prior to the end of the lease term, the tenant has the bur-
den to show that the landlord unreasonably failed to relet
the premises and mitigate damages.10
This case presents a related question: If a landlord must
make reasonable efforts to mitigate damages after a tenant’s
abandonment by seeking to relet the leased premises, may the
landlord instead seek to mitigate by selling the property? While
we suggested that selling is a viable option for mitigation in
our opinion in Properties Inv. Group v. JBA, Inc.,11 wherein we
approved of a landlord’s mitigation efforts and said that “[the
landlord’s] evidence shows that all of the steps it took to sell or
lease the property were reasonable,” we have yet to explicitly
decide the question.
[12,13] Courts in other jurisdictions have concluded that a
landlord may mitigate after a tenant abandons by selling the
9
Bernstein v. Seglin, 184 Neb. 673, 677, 171 N.W.2d 247, 250 (1969).
10
Hilliard v. Robertson, 253 Neb. 232, 237, 570 N.W.2d 180, 183 (1997).
See, also, Bachman v. Easy Parking of America, 252 Neb. 325, 562
N.W.2d 369 (1997); Middagh v. Stanal Sound Ltd., 234 Neb. 576, 452
N.W.2d 260 (1990), supplemented 235 Neb. 433, 455 N.W.2d 762; S.N.
Mart, Ltd. v. Maurices Inc., 234 Neb. 343, 451 N.W.2d 259 (1990).
11
Properties Inv. Group v. JBA, Inc., 242 Neb. 439, 446, 495 N.W.2d 624,
629 (1993) (emphasis supplied).
- 719 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
property.12 The theory behind allowing a sale to mitigate the
damages in a breach of a lease by an abandoning tenant is that
“the sale price approximate[s] the value of the future rentals.”13
We agree with these authorities and hold that after a tenant has
abandoned the leased premises, a landlord may satisfy its duty
to mitigate damages by retaking the premises and making rea-
sonable efforts to relet the premises on the tenant’s account, to
sell the property, or both. And a landlord may generally recover
unpaid rent and expenses due under the lease from the time
of the tenant’s breach through the time the sale of the prop-
erty is completed, plus any commercially reasonable expenses
incurred in order to procure a new tenant or buyer.14
[14,15] But a landlord’s efforts must be commercially
reasonable under the circumstances.15 In order to determine
whether HCS’ efforts to lease or sell the property were reason-
able, we will look at its conduct beginning at the time its duty
to mitigate arose, when Lone Star surrendered the property
to HCS.16
[16] We need not, and do not, address the adequacy of
HCS’ efforts to find a new tenant between the time Lone Star
informed HCS that it would be ceasing operation of its res-
taurant in October 2012 and the time HCS retook possession
of the property in May 2013. Lone Star continued to pay rent
12
See, e.g., Krasne v. Tedeschi and Grasso, 436 Mass. 103, 762 N.E.2d
841 (2002); McGuire v. City of Jersey City, 125 N.J. 310, 593 A.2d 309
(1991).
13
McGuire v. City of Jersey City, supra note 12, 125 N.J. at 320, 593 A.2d
at 314.
14
Middagh v. Stanal Sound Ltd., supra note 10; Noble v. Kerr, 123 Ga. App.
319, 180 S.E.2d 601 (1971), disapproved on other grounds, Continental
Cas. Co. v. Union Camp Corp., 230 Ga. 8, 195 S.E.2d 417 (1973). See,
also, Lu v. Grewal, 130 Cal. App. 4th 841, 30 Cal. Rptr. 3d 623 (2005).
15
Tech Center 2000, LLC v. Zrii, LLC, 363 P.3d 566 (Utah App. 2015);
Geller v. Kinney, 980 N.E.2d 390 (Ind. App. 2012).
16
Miller v. Burnett, 54 Kan. App. 2d 228, 397 P.3d 448 (2017). See, also,
Hilliard v. Robertson, supra note 10.
- 720 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
until March 2013 and remained in possession of the property
until May. Until there was an abandonment or tender of the
property by Lone Star, HCS had no duty to mitigate its dam-
ages by reletting or selling the property.17
HCS and Lone Star executed an acknowledgment of tender
and receipt, a formal acknowledgment of Lone Star’s surrender
of the property to HCS, on May 2, 2013. Through the month
of May, HCS was engaged in active negotiations with the ulti-
mate buyer to lease or sell the property. They negotiated and
executed an LOI by mid-June. We conclude that HCS’ initial
efforts to mitigate its damages by leasing or selling the prop-
erty, through the date of the LOI, were reasonable.
But it took another 10 months from that time until the sale
was completed in April 2014. The rent that accumulated during
this 10-month period is approximately $90,000, not to men-
tion other expenses. HCS argues that these delays were not its
fault, claiming that “[a]ny delays were the result of [the buyer],
which is notorious for delays in transactions such as these.”18
But choosing to sell the property to a buyer that in HCS’ own
words was “notorious” for delays, to the exclusion of pursuing
other bona fide offers to lease the property, was not a com-
mercially reasonable way to mitigate damages. Instead, these
delays were attributable to HCS’ choice to pursue a deal with
that buyer. And HCS chose this lengthy path with the knowl-
edge that it had bona fide offers to lease the property from
other suitors.
Under our de novo standard of review of this bench trial on
stipulated facts,19 we conclude that HCS’ initial efforts to lease
or sell the property were reasonable, but that the delay after the
execution of the LOI was not reasonable. This conclusion is
driven by the specific facts presented.
17
See Miller v. Burnett, supra note 16. See, also, Hilliard v. Robertson,
supra note 10.
18
Brief for appellant at 19.
19
Klein v. Oakland/Red Oak Holdings, supra note 1.
- 721 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
[17] To be clear, we are not establishing a legal rule that
where a landlord mitigates its damages after a tenant’s aban-
donment by selling the property, damages stop accruing at the
time the landlord executes an LOI for the sale of the property.
If the landlord’s efforts to mitigate are reasonable under all the
circumstances—including reasonable in time—damages will
ordinarily run until the date of sale.20 Our conclusion is simply
that on the facts of this case, HCS’ efforts to mitigate were rea-
sonable only up to a certain point. Thus, we affirm the district
court’s award of damages for unpaid rent.
We also affirm the district court’s award of damages based
on amounts due under the lease for common area maintenance,
utilities, repairs and maintenance, taxes, and insurance. The
calculation of these damages turns on the date at which the
damages under the lease stopped accruing. Because we affirm
the district court’s conclusion that damages ran through June
13, 2013, the date of the LOI for sale to the ultimate buyer,
we affirm the district court’s calculation of these expenses
as well.
We also affirm the district court’s denial of damages for
HCS’ “[l]andlord [c]ontribution” under the lease of 6 months’
free rent at the beginning of the term. Providing this free rent
at the beginning of the term was part of the bargained-for
exchange that HCS agreed to under the lease. As the district
court pointed out, nothing in the lease provides that Lone Star
must repay the value of this free rent in the event it breached
the lease. To allow HCS to recover damages for the value of
this free rent in addition to damages for the rent due under
the lease would be to allow a double recovery, putting it in
a better position than it would have been had Lone Star not
breached the contract. We affirm the district court’s award
of damages.
20
McGuire v. City of Jersey City, supra note 12; Noble v. Kerr, supra
note 14.
- 722 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
3. Personal Jurisdiction
HCS claims the district court erred in concluding that the
court lacked personal jurisdiction over Cactus and consequently
dismissing its claim against Cactus.
In the guaranty, Cactus “absolutely and unconditionally
guarantee[d] the payment and performance of, and agree[d]
to pay and perform as primary obligor, all liabilities, obliga-
tions, and duties (including but not limited to payment of rent)
imposed upon [Lone Star] under the terms of the . . . Lease.”
The guaranty stated that it was made by Cactus “in consid-
eration of the direct and material benefits that will accrue to
[Cactus], and for the purpose of inducing [HCS] to enter into”
the lease with Lone Star.
The lease itself acknowledged the guaranty, providing that
“[a]s an inducement to [HCS] to enter into this Lease, [Lone
Star] agrees and acknowledges that its obligations under this
Lease shall be guaranteed . . .” by Cactus. The lease provided
that it “shall be construed, interpreted, and enforced pursuant
to the applicable laws of the state in which the Premises are
located,” i.e., Nebraska law. Cactus was also a subsidiary of
Lone Star’s parent company. And Cactus was a named insured
in a certificate of liability insurance covering the property and
operation of the Lone Star restaurant.
HCS argues that these contacts by Cactus with Nebraska are
sufficient for the exercise of personal jurisdiction over Cactus
in Nebraska and that the district court erred in dismissing its
claim against Cactus. We agree.
(a) Minimum Contacts Analysis
[18,19] Personal jurisdiction is the power of a tribunal to
subject and bind a particular person or entity to its decisions.21
Courts’ ability to validly exercise personal jurisdiction is not
without limit. The Due Process Clause of the 14th Amendment
21
Quality Pork Internat. v. Rupari Food Servs., supra note 2. See, generally,
Larry L. Teply & Ralph U. Whitten, Civil Procedure, ch. 3 (5th ed. 2013)
(discussing personal jurisdiction generally).
- 723 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
to the U.S. Constitution bars a court from exercising personal
jurisdiction over an out-of-state defendant, served with process
outside the state,22 unless that defendant has sufficient ties to
the forum state.23
[20] A two-step analysis is used to determine whether a
Nebraska court may validly exercise personal jurisdiction over
an out-of-state defendant.24 First, a court must consider whether
Nebraska’s long-arm statute25 authorizes the exercise of per-
sonal jurisdiction over the defendant.26 Second, a court must
consider whether the exercise of personal jurisdiction over the
defendant comports with due process.27
[21] Nebraska’s long-arm statute authorizes courts to exer-
cise personal jurisdiction over any person “[w]ho has any . . .
contact with or maintains any . . . relation to this state to afford
a basis for the exercise of personal jurisdiction consistent with
the Constitution of the United States.”28 Thus, if a Nebraska
court’s exercise of personal jurisdiction would comport with
the Due Process Clause of the 14th Amendment, it is autho-
rized by the long-arm statute.29 Although in its brief HCS also
asserted authorization under § 25-536(1)(f), at oral argument, it
abandoned that argument.
[22-24] To satisfy the Due Process Clause, a court may
only exercise personal jurisdiction over a defendant that is
not present in the forum state if that defendant has “minimum
contacts” with the forum such that the exercise of jurisdiction
22
See Burnham v. Superior Court of Cal., Marin County, 495 U.S. 604, 110
S. Ct. 2105, 109 L. Ed. 2d 631 (1990) (instate service of process).
23
See Internat. Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L.
Ed. 95 (1945).
24
See Quality Pork Internat. v. Rupari Food Servs., supra note 2.
25
Neb. Rev. Stat. § 25-536 (Reissue 2016).
26
Quality Pork Internat. v. Rupari Food Servs., supra note 2.
27
Id.
28
§ 25-536(2).
29
See, id.; Quality Pork Internat. v. Rupari Food Servs., supra note 2.
- 724 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
“does not offend ‘traditional notions of fair play and sub-
stantial justice.’”30 To constitute sufficient minimum contacts,
“the defendant’s conduct and connection with the forum State
[must be] such that he [or she] should reasonably anticipate
being haled into court there.”31 Whether a defendant’s contacts
with the forum state are sufficient to support the exercise of
personal jurisdiction “will vary with the quality and nature
of the defendant’s activity, but it is essential in each case that
there be some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its laws.”32
Thus, “[j]urisdiction is proper . . . where the [defendant’s] con-
tacts proximately result from actions by the defendant [him-
self or herself] that create a ‘substantial connection’ with the
forum State.”33
Two primary purposes are served by the requirement of
minimum contacts with the forum.34 First, “[i]t protects the
defendant against the burdens of litigating in a distant or
inconvenient forum.”35 The burden on the defendant is always
of “primary concern.”36 And second, the minimum contacts
inquiry “acts to ensure that the States, through their courts, do
not reach out beyond the limits imposed on them by their status
as coequal sovereigns in a federal system.”37
30
Internat. Shoe Co. v. Washington, supra note 23, 326 U.S. at 316.
31
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct.
559, 62 L. Ed. 2d 490 (1980).
32
Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283
(1958).
33
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 85
L. Ed. 2d 528 (1985). See, also, Walden v. Fiore, ___ U.S. ___, 134 S. Ct.
1115, 188 L. Ed. 2d 12 (2014).
34
See World-Wide Volkswagen Corp. v. Woodson, supra note 31.
35
Id., 444 U.S. at 292.
36
Id.
37
Id. See, also, Bristol-Myers Squibb v. Superior Ct. of CA, ___ U.S. ___,
137 S. Ct. 1773, 198 L. Ed. 2d 395 (2017).
- 725 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
[25] In the minimum contacts analysis, courts will consider
the burden on a defendant in light of other considerations, such
as (1) “the forum State’s interest in adjudicating the dispute,”
(2) “the plaintiff’s interest in obtaining convenient and effec-
tive relief,” (3) “the interstate judicial system’s interest in
obtaining the most efficient resolution of controversies,” and
(4) “the shared interest of the several States in furthering fun-
damental substantive social policies.”38 Consideration of these
factors may “sometimes serve to establish the reasonableness
of jurisdiction upon a lesser showing of minimum contacts than
would otherwise be required.”39
[26] The nature and quality of a defendant’s contacts with
the forum state necessary to support the exercise of personal
jurisdiction depend on the connection between the contacts and
the claim being asserted.40 The U.S. Supreme Court has identi-
fied two categories of personal jurisdiction, “general jurisdic-
tion” and “specific jurisdiction.”41
[27,28] General, or all-purpose, jurisdiction is jurisdiction
arising where a defendant’s “‘affiliations with the State are
so “continuous and systematic” as to render [the defendant]
essentially at home in the forum State.’”42 Where a court has
general personal jurisdiction over a defendant, it can adjudi-
cate any claim against the defendant—even a claim that arises
38
World-Wide Volkswagen Corp. v. Woodson, supra note 31, 444 U.S. at
292.
39
Burger King Corp. v. Rudzewicz, supra note 33, 471 U.S. at 477.
40
See, generally, Arthur T. von Mehren & Donald T. Trautman, Jurisdiction
to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121 (1966)
(general and specific jurisdiction).
41
See Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37, 137 S. Ct.
at 1780.
42
Id., 137 S. Ct. at 1785 (Sotomayor, J., dissenting). See, also, Goodyear
Dunlop Tires Operations, S. A. v. Brown, 564 U.S. 915, 131 S. Ct. 2846,
180 L. Ed. 2d 796 (2011); Helicopteros Nacionales de Colombia v. Hall,
466 U.S. 408, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984); Quality Pork
Internat. v. Rupari Food Servs., supra note 2.
- 726 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
outside the forum state and bears no connection to the defend­
ant’s contacts with the forum.43
[29-31] By contrast, specific, or case-linked, jurisdiction
requires that a claim “‘aris[e] out of or relat[e] to the defend­
ant’s contacts with the forum.’”44 A defendant need not be
“‘at home’” in the forum to be subject to specific personal
jurisdiction, but, rather, there “must be ‘an affiliation between
the forum and the underlying controversy . . . .’”45 “‘[S]pecific
[personal] jurisdiction is confined to adjudication of issues
deriving from, or connected with, the very controversy that
establishes jurisdiction.’”46 Thus, “there must be a substantial
connection between [the defendant’s] contacts and the opera-
tive facts of the litigation.”47
Cactus, a Delaware limited liability company doing business
in Texas, clearly did not have “‘“continuous and systematic”’”
contacts with Nebraska; nor was it “‘essentially at home’” in
Nebraska.48 Rather, HCS asserts that the district court had spe-
cific personal jurisdiction over Cactus. Thus, the relevant ties
between Cactus and Nebraska are those that bear some relation
to this case. Cactus’ unrelated contacts with Nebraska, or lack
thereof, have no bearing on our specific personal jurisdic-
tion analysis.
43
See Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37.
44
Id., 137 S. Ct. at 1780 (emphasis in original). See, also, Daimler AG v.
Bauman, ___ U.S. ___, 134 S. Ct. 746, 187 L. Ed. 2d 624 (2014); Quality
Pork Internat. v. Rupari Food Servs., supra note 2.
45
Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37, 137 S. Ct. at
1780. See, also, Goodyear Dunlop Tires Operations, S. A. v. Brown, supra
note 42.
46
Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37, 137 S. Ct. at
1780 (quoting Goodyear Dunlop Tires Operations, S. A. v. Brown, supra
note 42).
47
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).
48
See Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37, 137 S. Ct.
at 1785 (Sotomayor, J., dissenting).
- 727 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
Two U.S. Supreme Court cases provide guidance for ana-
lyzing minimum contacts for specific personal jurisdiction in
cases involving contract claims. In McGee v. International
Life Ins. Co.,49 the Court concluded that a California court
could exercise personal jurisdiction over a Texas life insur-
ance company for a claim arising from a life insurance con-
tract issued to a California resident. A California resident
purchased a life insurance policy from an Arizona i­nsurer.50
Several years later, a Texas insurer assumed all of the
Arizona company’s life insurance obligations.51 The Texas
insurer sent a reinsurance certificate to the California resi-
dent, offering to insure him under the same terms as his prior
policy, which he accepted.52 The California resident contin-
ued to pay his insurance premiums by mail to the insurer’s
office in Texas.53 The Texas insurer did no other business
in California and had no agents or offices in California.54
When the California resident died, the Texas insurer refused
to pay the beneficiary under the policy.55 The beneficiary
sued the Texas insurer in California state court.56 The insurer
contended the California court lacked personal jurisdiction
over it.57
[32] In spite of the Texas insurer’s lack of other connec-
tions to California, the Court concluded that “[i]t is sufficient
for purposes of due process that the suit was based on a
49
McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed.
2d 223 (1957).
50
Id.
51
Id.
52
Id.
53
Id.
54
Id.
55
Id.
56
Id.
57
Id.
 - 728 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
contract which had substantial connection with that State.”58
The Court reasoned:
The contract was delivered in California, the premiums
were mailed from there and the insured was a resident
of that State when he died. It cannot be denied that
California has a manifest interest in providing effective
means of redress for its residents when their insurers
refuse to pay claims.59
The Court concluded that the California court’s exercise of
personal jurisdiction did not violate the Due Process Clause.60
[33] In Burger King Corp. v. Rudzewicz,61 the Court con-
cluded that a Florida court could validly exercise personal
jurisdiction over a Michigan defendant.62 The defendant oper-
ated a restaurant franchise in Michigan.63 The franchising
corporation, which maintained its headquarters in Florida,
sued the Michigan franchisee for breach of the franchise
agreement in Florida court.64 The franchisee argued that the
Florida court could not validly exercise personal jurisdiction
over him; after all, he maintained no offices in Florida and
had never even visited Florida.65 But the Court rejected this
argument, reasoning that “this franchise dispute grew directly
out of ‘a contract which had a substantial connection with that
State.’”66 The Court said that personal jurisdiction “may not be
avoided merely because the defendant did not physically enter
the forum State.”67 By seeking and obtaining a franchise
58
Id., 355 U.S. at 223.
59
Id.
60
McGee v. International Life Ins. Co., supra note 49.
61
Burger King Corp. v. Rudzewicz, supra note 33.
62
Id.
63
Id.
64
Id.
65
Id.
66
Id., 471 U.S. at 479 (emphasis in original).
67
Id., 471 U.S. at 476 (emphasis in original).
- 729 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
agreement with the corporation, the Court said, the defendant
“deliberately ‘reach[ed] out beyond’ Michigan and negoti-
ated with a Florida corporation for the purchase of a long-
term franchise and the manifold benefits that would derive
from affiliation with a nationwide organization.”68 Thus, the
Court concluded that the exercise of personal jurisdiction by a
Florida court did not violate the Due Process Clause.69
(b) Cactus’ Contacts With Nebraska
Several reasons support our conclusion that Cactus
“‘reach[ed] out’”70 to Nebraska and “purposefully avail[ed]
itself of the privilege of conducting activities within”71
Nebraska, “thus invoking the benefits and protections of its
laws,”72 such that it “should reasonably anticipate being haled
into court”73 in Nebraska in connection with claims arising
from the lease and guaranty.
First, as both the guaranty and lease expressly acknowl-
edged, the purpose of Cactus’ guaranty was to induce HCS to
enter into the agreement with Lone Star, a Nebraska corpora-
tion, to lease the Nebraska property for the operation of a busi-
ness in Nebraska. Unlike a contract that merely has incidental
effects in a particular state, Cactus executed this guaranty for
the express purpose of inducing the lease of Nebraska property
to a Nebraska business.
In Quality Pork Internat. v. Rupari Food Servs.,74 we con-
cluded that the defendant had sufficient minimum contacts
with Nebraska to justify the exercise of personal jurisdiction.
68
Id., 471 U.S. at 479-80.
69
Burger King Corp. v. Rudzewicz, supra note 33.
70
See id., 471 U.S. at 479.
71
See Hanson v. Denckla, supra note 32, 357 U.S. at 253.
72
See id.
73
See World-Wide Volkswagen Corp. v. Woodson, supra note 31, 444 U.S. at
297.
74
Quality Pork Internat. v. Rupari Food Servs., supra note 2.
- 730 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
Under the oral contract at issue in that case, the defendant, a
Florida food business, arranged for the plaintiff, a Nebraska
producer of pork products, to ship products to a Texas food
distributor.75 The Nebraska plaintiff had previously done busi-
ness with the Texas food distributor, but stopped selling to it
after its account became delinquent.76 The Nebraska plaintiff
agreed to ship products to the Texas food distributor because of
the Florida defendant’s agreement to pay for the orders.77 After
paying for the first two orders, the defendant failed to pay for
the third.78 The Nebraska plaintiff sued in Nebraska court, and
the Florida defendant objected to the court’s exercise of per-
sonal jurisdiction over it.79
[34] We concluded that the Florida defendant had suffi-
cient minimum contacts with Nebraska.80 We said that “[t]o
determine whether a defendant’s contract supplies the con-
tacts necessary for personal jurisdiction in a forum state, a
court is to consider the parties’ prior negotiations and future
contemplated consequences, along with the terms of the con-
tract and the parties’ actual course of dealing.”81 We noted
that “[the Florida defendant] induced [the Nebraska plain-
tiff] to ship products to [the Texas distributor]” with which
it had previously ceased doing business.82 We reasoned that
“[b]y purposefully conducting business with [the Nebraska
plaintiff], [the Florida defendant] could reasonably antici-
pate that it might be sued in Nebraska if it failed to pay for
products ordered from [the Nebraska plaintiff].”83 We said
75
Id.
76
Id.
77
Id.
78
Id.
79
Id.
80
Id.
81
Id. at 484, 675 N.W.2d at 651.
82
Id.
83
Id. at 485, 675 N.W.2d at 652.
- 731 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
that “[w]here a defendant who has purposefully directed his
activities at forum residents seeks to defeat jurisdiction, he
must present a compelling case that the presence of some other
consideration would render jurisdiction unreasonable,” and we
found no such compelling case.84
Cactus’ guaranty presents an inducement similar, though
not identical, to that in Quality Pork Internat.85 While in
Quality Pork Internat., the out-of-state defendant induced a
Nebraska business to do business with an out-of-state third
party, here Cactus induced an out-of-state business to lease
Nebraska property to a Nebraska business. But both here and
in Quality Pork Internat., the defendant purposefully reached
out to induce a particular action within the forum state. When
making such an inducement, Cactus should have reasonably
anticipated being haled into Nebraska courts in the event that
the Nebraska lessee of the Nebraska property failed to per-
form its obligations under the lease, the performance of which
Cactus guaranteed.
[35] Second, Nebraska has a significant interest in hav-
ing the dispute over this guaranty of the lease of Nebraska
property adjudicated in Nebraska courts. Unlike a situation in
which out-of-state parties agree for one party to guarantee the
personal debt of a third party who happens to be a Nebraska
resident, Nebraska has a unique interest in adjudicating trans-
actions affecting Nebraska land. And a “‘forum State’s interest
in adjudicating the dispute,’” among other considerations, may
“sometimes serve to establish the reasonableness of jurisdic-
tion upon a lesser showing of minimum contacts than would
otherwise be required.”86
Importantly, Cactus did not merely guarantee the payment
of rent due under the lease, but “agree[d] to pay and per-
form as primary obligor, all liabilities, obligations, and duties
84
Id.
85
See Quality Pork Internat. v. Rupari Food Servs., supra note 2.
86
Burger King Corp. v. Rudzewicz, supra note 33, 471 U.S. at 477.
- 732 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
(including but not limited to payment of rent) imposed upon”
Lone Star under the lease. Those additional duties—which
Cactus agreed to perform “as primary obligor”—included pay-
ment of utility services and real estate taxes; maintaining
property, liability, and workers’ compensation insurance; and
maintaining and repairing the entire premises, including land-
scaping, sidewalks, and parking area, in a “first class manner
and condition.”
[36,37] While a guaranty of a personal debt generally bears
no intrinsic connection to any particular location, a guaranty
to pay and perform a tenant’s obligations under a lease of real
property uniquely affects the state in which the premises are
located.87 Real property, of course, is always and inevitably
within the territorial borders of the state in which it lies. While
the Due Process Clause’s personal jurisdiction analysis no
­longer bears a “rigidly territorial focus,”88 states nevertheless,
as “coequal sovereigns in a federal system,”89 have a special
interest in adjudicating disputes relating to the real property
within their borders.90
[38] Where a guarantor takes on obligations that are uniquely
tied to and uniquely affect a particular location, it is not unrea-
sonable for courts of that state to exercise personal jurisdic-
tion over the guarantor in connection with claims arising from
or related to those obligations.91 Cactus guaranteed the per­
formance of Lone Star’s contractual obligations to pay rent
for the lease of Nebraska property, to pay Nebraska property
taxes, to maintain in good repair the Nebraska property, and
87
See, generally, Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed.
2d 683 (1977).
88
Daimler AG v. Bauman, supra note 44, 134 S. Ct. at 755.
89
World-Wide Volkswagen Corp. v. Woodson, supra note 31, 444 U.S. at 292.
See, also, Bristol-Myers Squibb v. Superior Ct. of CA, supra note 37.
90
See, generally, Shaffer v. Heitner, supra note 87.
91
See, generally, Burger King Corp. v. Rudzewicz, supra note 33; McGee v.
International Life Ins. Co., supra note 49.
- 733 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
to maintain property and liability insurance for the Nebraska
property and Lone Star’s Nebraska business. The guaranty
of these obligations was such that Cactus “should reasonably
anticipate being haled into court”92 in Nebraska in the event of
litigation over the guaranty and lease.
[39] Third, Cactus guaranteed the performance of Lone
Star’s obligations under the lease, which obligations were
governed by Nebraska law pursuant to the lease’s choice-of-
law provision. Cactus “agree[d] to pay and perform as primary
obligor, all liabilities, obligations, and duties” of the tenant
under a lease governed by Nebraska law. While the mini-
mum contacts personal jurisdiction analysis is distinct from a
choice-of-law analysis, a choice-of-law contractual provision
in favor of the forum state’s law is a relevant contact with
the forum.93
In Burger King Corp., the Court relied on the franchise
agreement’s choice-of-law provision to conclude that jurisdic-
tion was proper, stating that the provision “reinforced [the
defendant’s] deliberate affiliation with the forum State and the
reasonable foreseeability of possible litigation there.”94 The
Court further said that the choice-of-law provision showed
that the defendant “‘purposefully availed himself of the ben-
efits and protections of Florida’s laws’ by entering into con-
tracts expressly providing that those laws would govern fran-
chise disputes.”95
By “absolutely and unconditionally guarantee[ing] the pay-
ment and performance of, and agree[ing] to pay and perform
as primary obligor, all liabilities, obligations, and duties . . .
imposed upon [Lone Star] under the terms of the . . . Lease,”
which duties and obligations were governed by Nebraska
law, Cactus “purposefully avail[ed] itself of the privilege of
92
World-Wide Volkswagen Corp. v. Woodson, supra note 31, 444 U.S. at 297.
93
Burger King Corp. v. Rudzewicz, supra note 33.
94
Id., 471 U.S. at 482.
95
Id.
- 734 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
conducting activities within [Nebraska], thus invoking the ben-
efits and protections of [Nebraska’s] laws.”96
Finally, the fact that Cactus was a named insured on the
insurance policy covering the property and the Lone Star
business is a relevant, though less significant, contact with
Nebraska. But Cactus’ relationship with Lone Star as a subsid-
iary of Lone Star’s parent company is not a relevant contact
where there has been no attempt to “pierce the corporate veil”97
and impute Lone Star’s Nebraska residency or Nebraska con-
tacts to Cactus.
In sum, because Cactus guaranteed the full performance of
a Nebraska business’ obligations of a lease of Nebraska prop-
erty in order to induce HCS to enter into that lease, which was
governed by Nebraska law, Cactus has sufficient minimum
contacts with Nebraska to justify the exercise of personal juris-
diction over it by Nebraska’s courts. We reverse the district
court’s dismissal of Cactus and remand the cause for further
proceedings consistent with this opinion.
4. Attorney Fees
The lease between HCS and Lone Star provided for the
award of attorney fees to the prevailing party in the event of
litigation to enforce the lease. HCS claims that the district court
erred in overruling its motion for attorney fees. We disagree.
[40] Since the 1800’s, this court has refused to enforce
contractual provisions providing for the award of attorney
fees for the prevailing party, instead holding to the “American
Rule” that each party pay its own costs.98 And we recently
reaffirmed our position that “in the absence of a uniform
96
See Hanson v. Denckla, supra note 32, 357 U.S. at 253.
97
See, generally, Global Credit Servs. v. AMISUB, 244 Neb. 681, 686, 508
N.W.2d 836, 842 (1993).
98
See, Stewart v. Bennett, 273 Neb. 17, 727 N.W.2d 424 (2007); Parkert v.
Lindquist, 269 Neb. 394, 693 N.W.2d 529 (2005); Security Co. v. Eyer, 36
Neb. 507, 54 N.W. 838 (1893); Dow v. Updike, 11 Neb. 95, 7 N.W. 857
(1881).
- 735 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
HAND CUT STEAKS ACQUISITIONS v. LONE STAR STEAKHOUSE
Cite as 298 Neb. 705
course of procedure or authorization by statute, contractual
agreements for attorney fees are against public policy and
will not be judicially enforced.”99 We decline to depart from
our long-held jurisprudence, and we affirm the district court’s
overruling of HCS’ motion for attorney fees.
5. HCS’ Motion for New Trial
HCS’ appeal of the overruling of its motion for new trial is
premised on the same issues addressed in this opinion. Thus,
we need not address it separately.
VI. CONCLUSION
For the foregoing reasons, we affirm the district court’s
award of damages to HCS and the court’s denial of HCS’
requested attorney fees. We reverse the district court’s dis-
missal of Cactus and remand the cause for further proceedings
on HCS’ claim against Cactus.
A ffirmed in part, and in part reversed and
remanded for further proceedings.
Wright and Miller-Lerman, JJ., not participating.
99
Stew. v. Bennett, supra note 98, 273 Neb. at 22, 727 N.W.2d at 429.