Midwest Renewable Energy v. American Engr. Testing
894 N.W.2d 221
| Neb. | 2017Background
- Midwest Renewable Energy, LLC filed a quiet-title action in Lincoln County, Nebraska, attacking a judgment lien recorded there that stemmed from a California judgment obtained by Western Ethanol Company, LLC against Midwest Renewable.
- Western Ethanol transcribed the California judgment in Nebraska (2010) and filed a writ of execution (2011); it later filed articles of dissolution in Nevada (Nov. 12, 2013) effective Dec. 31, 2013, and its managing member Douglas Vind swore the company had distributed all assets to members.
- Midwest named Western Ethanol and “all persons having or claiming any interest” as defendants; Vind submitted an affidavit claiming he had been assigned Western Ethanol’s judgment but was never joined as an explicit party.
- The district court found (applying Nevada law) that Western Ethanol remained amenable and that the judgment (and lien) were valid and had been transferred to Vind; it dismissed Midwest’s claim against Western Ethanol with prejudice.
- Midwest appealed, arguing Western Ethanol lost capacity to be sued after winding up and that Vind was the true owner; Nebraska Supreme Court considered choice-of-law, assignability of judgments, and whether Vind was an indispensable party.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a dissolved foreign LLC (Western Ethanol) was amenable to suit in Nebraska | Western Ethanol completed winding up under Nebraska law and thus lacked capacity to be sued | Under Nevada law (state of formation), a dissolved LLC may be sued for 2 years after dissolution; Nevada law governs internal affairs | Nevada law applies under the internal-affairs doctrine for a fully dissolved LLC; Western Ethanol remained amenable because suit was within 2 years of dissolution filing |
| Whether Nevada or Nebraska survival statute controls (choice of law) | Apply Nebraska law to limit post-dissolution capacity | Apply Nevada law under internal affairs doctrine and Restatement §299 for fully dissolved entities | Internal affairs doctrine (Neb. Rev. Stat. §21-155) requires applying Nevada law (Restatement §299 governs after full dissolution) |
| Whether a judgment and its lien could be assigned and who owned the judgment | Midwest: Western Ethanol transferred the judgment to Vind on dissolution, so Western Ethanol no longer had an interest | Western Ethanol: transfer was not an assignment and a judgment is not an assignable asset | A judgment is a chose in action and is assignable; assignee (Vind) would have no greater rights than assignor and is the proper party to enforce/defend it |
| Whether the district court had jurisdiction to decide ownership and validity of the judgment/lien without Vind as a party | Midwest: Vind (as alleged assignee) was not joined, but naming "unknown" defendants sufficed | Western Ethanol proceeded and defended in its name; court could decide | Vind was an indispensable party whose rights would be directly affected; his absence deprived the court of subject-matter jurisdiction on ownership/validity issues; case vacated and remanded to join Vind |
Key Cases Cited
- Christensen v. Boss, 179 Neb. 429 (discusses common-law rule that a dissolved corporation generally cannot sue or be sued)
- Van Pelt v. Greathouse, 219 Neb. 478 (interprets effect of survival statutes on corporate existence and actions)
- Johnson v. Johnson, 272 Neb. 263 (explains internal-affairs doctrine and application of Restatement §302)
- Pestal v. Malone, 275 Neb. 891 (holds absence of indispensable party deprives court of jurisdiction and cannot be waived)