AVG Partners I v. Genesis Health Clubs
307 Neb. 47
| Neb. | 2020Background
- AVG Partners I, LLC (AVG) sued Genesis Health Clubs of Midwest, LLC and 24 Hour Fitness USA, Inc. (Genesis) for breach of two commercial leases (North Circle and 145th Plaza) after Genesis vacated one facility and stopped paying rent and property taxes.
- AVG sent repeated notices of default (April 2017–April 2019); Genesis did not dispute breach or the base rents owed but asserted failures to mitigate and notice defenses.
- A jury returned special verdicts awarding unpaid rent, 5% contractual late charges, and unpaid real estate taxes (including county interest/advertising charges); the district court added prejudgment interest under Neb. Rev. Stat. § 45-104 and awarded AVG costs after Genesis’ last-minute discharge of counsel and request to continue trial.
- Genesis appealed, challenging AVG’s standing/assignment proof, evidentiary rulings, inclusion of tax penalties and late fees, prejudgment interest, and the sanctions award; AVG cross-appealed one hearsay ruling it lost below.
- The Nebraska Supreme Court affirmed: AVG had standing without producing a formal assignment deed; prejudgment interest under §45-104 was properly awarded; late charges and tax interest/advertising fees were recoverable under the leases; the court had authority to award AVG its actual expenses as a condition of granting the continuance.
Issues
| Issue | Plaintiff's Argument (AVG) | Defendant's Argument (Genesis) | Held |
|---|---|---|---|
| Standing / Assignment of leases | AVG: conduct, rent payments made to AVG, county tax notices, and chain-of-assignment documents established AVG as landlord and could enforce leases | Genesis: AVG failed to prove formal assignment/record title and thus lacked standing | Held: AVG had standing—formal assignment/deed not required; evidence (payments to AVG, notices, documents) supported AVG as landlord; any erroneous opinion testimony was harmless |
| Prejudgment interest (statutory & pleading) | AVG: §45-104 authorizes prejudgment interest on money due on written instruments (leases); interest was litigated at trial so pleading formality not fatal | Genesis: Weyh v. Gottsch announced after trial but before judgment should not apply retroactively; AVG failed to plead interest per court rule §6-1108(a) | Held: Applied Weyh; §45-104 authorizes prejudgment interest regardless of liquidated status; failure to state interest in complaint is not dispositive where statutory basis exists and defendant had notice and opportunity to be heard; award affirmed |
| Recovery of tax penalties and late charges | AVG: Leases broadly define "Real Property Taxes" and "rent/additional rent," making county interest and advertising fees and contractual 5% late charges recoverable as components of taxes and rent | Genesis: Tax interest/advertising are penalties and not recoverable; late charges are penalties or were not properly pleaded or conditioned on a default notice Genesis allegedly did not receive | Held: County interest and advertising are "charges" within lease definition and recoverable; late charges fall within "additional rent" in leases and are recoverable where notices were shown to have been received; no reversible or plain error shown |
| Award of costs when continuance granted (equitable award/sanctions) | AVG: incurred substantial actual out-of-pocket and attorney costs preparing for trial; equitable award of its actual expenses was appropriate because court conditioned continuance on Genesis paying AVG's preparation and travel costs | Genesis: District court lacked authority; Bordo affidavit was procedurally defective (jurat/acknowledgment issues); amount unreasonable and no de novo hearing on amount | Held: District court had inherent authority to award equitable relief; Genesis had opportunity to respond and did not timely seek hearing; jurat irregularity not prejudicial; award of $69,179.19 for actual expenses upheld as not an abuse of discretion |
Key Cases Cited
- Weyh v. Gottsch, 303 Neb. 280, 929 N.W.2d 40 (clarified that §45-104 and §45-103.02 provide independent bases for prejudgment interest)
- Prudential Ins. Co. v. Greco, 211 Neb. 342, 318 N.W.2d 724 (lease provisions determine right to recover taxes and related charges)
- Burgardt v. Burgardt, 304 Neb. 356, 934 N.W.2d 488 (no hierarchy of evidence; best-evidence rule not absolute)
- Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435 (standards for reviewing jury verdicts and motions for new trial)
- Putnam v. Scherbring, 297 Neb. 868, 902 N.W.2d 140 (abuse-of-discretion standard for trial-court rulings and reasonableness review)
- Johnson v. Neth, 276 Neb. 886, 758 N.W.2d 395 (procedural context for admission of affidavits and objection practice)