Gerber v. P & L Finance Co.
301 Neb. 463
| Neb. | 2018Background
- Elisa Gerber sued P & L Finance Co. and its directors (including Paul Gerber) seeking, among other things, issuance of a stock certificate; the district court granted summary judgment for defendants as the claim was time-barred.
- The Nebraska Court of Appeals affirmed the district court.
- After the appellate opinion, Paul (an appellee and P & L director) filed a "Motion for Attorney Fees" seeking an order requiring P & L to indemnify him for appellate attorney fees, citing P & L’s articles of incorporation and the Nebraska Model Business Corporation Act.
- Paul attached an affidavit of fees ($5,381.25) and relied on Neb. Rev. Stat. § 21-2,114 (director indemnification) and Rule 2-109(F) (appellate attorney-fee motions).
- The Court of Appeals denied the motion, ruling that Rule 2-109(F) does not authorize recovery of attorney fees from a co-party (non-adverse party). Paul petitioned for further review.
- The Nebraska Supreme Court held that Paul’s filing, despite its title, was substantively an application for indemnification under § 21-2,114 and that an appellate court conducting the proceeding may entertain such an application.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Paul’s post-opinion "Motion for Attorney Fees" should be treated as an application for indemnification under the Nebraska Model Business Corporation Act | Paul: the filing sought indemnification under § 21-2,114 based on his status as a director and P & L’s articles obligating indemnification | P & L: Rule 2-109(F) governs and authorizes awards only against adverse parties, not co-parties; thus relief is unavailable | The court held substance controls over title; the filing is an application for indemnification under § 21-2,114 |
| Whether "proceeding" in § 21-2,114 includes appeals, allowing indemnification for appellate fees | Paul: "proceeding" is defined broadly and includes appeals, so he may apply to the appellate court that conducted the appeal | P & L: argued forum should be district court; implicitly contended appellate court was not the proper forum | The court held "proceeding" includes appeals and the appellate court conducting the proceeding is a proper forum for a § 21-2,114 application |
| Whether the Court of Appeals properly denied the request as unauthorized by Nebraska appellate practice | Paul: the Model Business Corporation Act provides statutory authority independent of Rule 2-109(F) | P & L: Rule 2-109(F) controls appellate fee requests and precludes recovery from non-adverse parties | The court reversed the Court of Appeals, directing it to consider the filing as a § 21-2,114 indemnification application rather than a Rule 2-109(F) fee motion |
| Whether the Court of Appeals must refer indemnification issues to the district court | P & L: factual issues (e.g., capacity in which defendant was sued) may require trial-court factfinding | Paul: no disputed fact here; district court already found he was a director and had awarded district-level indemnity | The court held referral is not required where facts are settled and the appellate court can assess reasonableness of appellate fees; remanded for the Court of Appeals to consider indemnification merits |
Key Cases Cited
- Linda N. v. William N., 289 Neb. 607 (2014) (courts should treat pleadings according to substance rather than title)
- State v. Loyd, 269 Neb. 762 (2005) (how a motion is regarded depends on its substance, not title)
- Dugan v. State, 297 Neb. 444 (2017) (denial characterization depends on substance of motion)
- Witco Corp. v. Beekhuis, 38 F.3d 682 (3d Cir. 1994) (example where trial court factfinding was necessary for indemnification issues)
- Heffernan v. Pacific Dunlop GNB Corp., 965 F.2d 369 (7th Cir. 1992) (similar federal authority addressing forum and fact issues for indemnification)