RM Campbell Indus. v. Midwest Renewable Energy
294 Neb. 326
Neb.2016Background
- Midwest Renewable Energy engaged KL Process to design/build an ethanol plant; KL Process (via Randall Kramer) contracted with RM Campbell Industrial to supply goods and services for phase 2 (Nov. 2006 purchase order, $2,411,431.02).
- Campbell initially invoiced KL Process, but later sent invoices to Midwest; Midwest’s controller approved and paid invoices to capture Nebraska tax incentives (L.B. 775).
- KL Process ceased work and later declared bankruptcy; Midwest acknowledged owing Campbell and sent partial payments but stopped paying, leading Campbell to sue Midwest for breach of contract seeking ~$158,011.
- A prior Lincoln County lien foreclosure (Avid Solutions) dismissed Campbell’s lien for failure to appear; Campbell then brought this separate contract action against Midwest in Douglas County.
- At trial a jury awarded Campbell $154,510.98; Midwest appealed raising res judicata/collateral estoppel, lack of Nebraska certificate of authority, agency (actual/apparent), substantial performance, proximate causation, choice of law (U.C.C. v. common law), and damages instruction errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prior Lincoln County lien foreclosure precludes Campbell’s contract suit (res judicata / collateral estoppel) | Campbell: foreclosure did not decide contract claim; it dismissed lien for nonappearance, not merits | Midwest: dismissal of lien in foreclosure bars relitigation | Court: No preclusion — Campbell didn’t litigate contract claim in foreclosure; no judgment on merits nor full/fair opportunity to litigate |
| Whether Campbell (foreign corp.) could sue without Nebraska certificate of authority | Campbell: transaction was interstate commerce; statutes read together exempt such suits | Midwest: Campbell lacked certificate so cannot maintain suit | Court: Campbell’s activities fell within interstate commerce exception; certificate not required |
| Whether Midwest is bound to contract given KL Process’s role (actual or apparent agency) | Campbell: Midwest paid invoices, acknowledged debt, controlled KL Process selection — agency existed | Midwest: contract terms disavowed agency; KL Process not authorized to bind Midwest | Court: Issue was factual and jury could find actual or apparent agency; jury instruction on apparent authority proper |
| Whether Campbell had to prove substantial performance / whether damages instructions were correct (UCC vs common law) | Campbell: partial performance provided substantial benefit; U.C.C. applies because predominant purpose was sale of goods | Midwest: Campbell failed to substantially perform; transaction was services-dominated so common law/quantum meruit applies | Court: Evidence showed substantial benefit and more-than-half of contract was goods → U.C.C. governs; damages and instructions proper |
Key Cases Cited
- Tilt-Up Concrete v. Star City/Federal, 261 Neb. 64 (Neb. 2001) (construction lien does not necessarily preclude separate contract action)
- Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (U.S. 1974) (Commerce Clause limits state restrictions on foreign corporations suing when interstate commerce involved)
- Koricic v. Beverly Enters.-Neb., 278 Neb. 713 (Neb. 2009) (agency principles; manifestations and control define agency)
- Mennonite Deaconess Home & Hosp. v. Gates Eng’g Co., 219 Neb. 303 (Neb. 1984) (test for whether U.C.C. sales provisions apply to mixed contracts)
- VRT, Inc. v. Dutton-Lainson Co., 247 Neb. 845 (Neb. 1994) (substantial performance rule for contract actions)