Schmid v. Simmons
311 Neb. 48
| Neb. | 2022Background
- Schmid, Simmons, and Masters were members of MAR14, an LLC formed to purchase and manage land; Schmid transferred $600,000 into an account controlled by Simmons used to close on the “Canyon Rim” tract.
- Dispute arose over the nature of Schmid’s $600,000 (capital contribution to MAR14 vs. separate investment) and over transfers and management; Schmid sued for quiet title, declaratory relief on membership/ownership percentages, an accounting, and judicial dissolution.
- Simmons and NRR counterclaimed (including breach of contract/estoppel and a claim for a resulting trust) and demanded a jury trial on legal claims; a progression order recorded the parties’ agreement the matter was equitable and would be tried to the court.
- The district court granted Schmid an accounting, declared him owner of a 53.57% undivided interest in the Canyon Rim tract and ordered conveyance; it found Schmid was not a financial/economic member and denied most other relief, including the jury demand, relying on the equitable cleanup doctrine.
- MAR14 later sought, for the first time in closing/posttrial filings, an order dissociating Schmid; the district court refused to consider dissociation because it was not pled or tried by consent.
- Simmons/NRR appealed the denial of a jury trial; MAR14 cross-appealed the court’s refusal to order dissociation. The Nebraska Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants (Simmons/NRR) were entitled to a jury on their legal counterclaims despite plaintiff’s equitable action | Schmid: action is equitable; no jury right on main equitable claim | Simmons/NRR: legal counterclaims (breach/assumpsit) entitle them to jury trial | Held: Action’s main object was equitable; equitable cleanup doctrine applies and defendants had no right to jury on their legal counterclaims |
| Whether Jacobson v. Shresta abrogated equitable cleanup doctrine | Schmid: Jacobson governs waiver, not doctrine | Simmons/NRR: Jacobson effectively abrogated or limited the doctrine | Held: Jacobson clarified jury-waiver rules under §25-1126 but did not abrogate equitable cleanup; doctrine remains good law |
| Whether the equitable cleanup doctrine is unconstitutional or should be abandoned | Schmid: doctrine consistent with Neb. Const. art. I, §6 (preserves common-law jury right) | Simmons/NRR: doctrine infringes constitutional jury right or is obsolete | Held: Doctrine consistent with the constitutional preservation of common-law distinctions; no principled reason to abandon it |
| Whether the trial court erred in failing to dissociate Schmid from MAR14 | MAR14: dissociation was raised in pleadings or tried by consent; court had authority under §21-147(b) | Schmid: dissociation was not pled or tried by consent; court had discretion and declined to act | Held: Court ruled on membership status; dissociation was not pled or tried by consent and court did not abuse discretion in declining to order dissociation |
Key Cases Cited
- Kuhlman v. Cargile, 200 Neb. 150, 262 N.W.2d 454 (1978) (equity court with jurisdiction may adjudicate all matters and grant legal or equitable relief)
- Jacobson v. Shresta, 288 Neb. 615, 849 N.W.2d 515 (2014) (clarified statutory standards for finding waiver of jury trial under §25-1126)
- State ex rel. Cherry v. Burns, 258 Neb. 216, 602 N.W.2d 477 (1999) (explains determining whether action is at law or in equity by main object of pleadings)
- Sechovec v. Harms, 187 Neb. 70, 187 N.W.2d 296 (1971) (equity court may grant incidental legal relief to avoid multiple litigation)
- Krumm v. Pillard, 104 Neb. 335, 177 N.W. 171 (1920) (historical statement that jury right did not exist in equitable proceedings)