Schmid v. Simmons
311 Neb. 48
| Neb. | 2022Background
- In 2014 Schmid, Simmons, and others purchased a tract called "Canyon Rim" held in the name MAR14, LLC; Schmid transferred $600,000 into an account controlled by Simmons, dispute arose over whether that was a capital contribution to MAR14 or a separate investment.
- MAR14 is member-managed; its operating agreement required unanimous consent for certain transfers; relations between Schmid and Simmons deteriorated and Schmid sought an accounting, declaratory relief, quiet title, and judicial dissolution.
- A telephonic progression order recorded the parties’ agreement that the matter was equitable and would be tried to the court; later Simmons/NRR amended to add a breach-of-contract/estoppel counterclaim and demanded a jury.
- The district court struck the jury demand, relying on the equitable "clean-up" doctrine, and proceeded with a 4-day bench trial; it declared Schmid owner of a 53.57% undivided interest, ordered conveyance, imposed a resulting trust for some parcels, and denied other legal claims.
- MAR14 later sought, first in closing/posttrial filings, dissociation of Schmid under Neb. Rev. Stat. §21-147(b); the trial court declined to grant dissociation because it was not pled or tried by consent.
- On appeal, Simmons/NRR challenged denial of a jury trial (arguing the equitable-cleanup doctrine is abrogated/should be abandoned); MAR14 cross-appealed the refusal to order Schmid’s dissociation. The Nebraska Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Simmons/NRR were entitled to a jury trial on their legal counterclaims | Schmid: the action’s main object was equitable and the equitable cleanup doctrine bars a jury on incidental legal claims | Simmons/NRR: they had a right to a jury on breach-of-contract/assumpsit claims and did not waive that right | Court: Denied jury demand; equitable cleanup applies where main object is equitable, so no right to jury on legal counterclaims |
| Whether Jacobson v. Shresta abrogated the equitable cleanup doctrine | Schmid: Jacobson only governs waiver rules, not the cleanup doctrine | Simmons/NRR: Jacobson effectively abrogated or undermined the doctrine | Court: Jacobson only clarified statutory jury-waiver standards and did not abrogate the equitable-cleanup doctrine |
| Whether the equitable cleanup doctrine should be abandoned or is unconstitutional | Schmid: doctrine is consistent with Neb. Const. art. I, §6 and promotes judicial efficiency | Simmons/NRR: doctrine is outdated/unconstitutional and deprives parties of jury rights | Court: doctrine is constitutional under Nebraska precedent and remains applicable; no compelling reason to abandon it |
| Whether the trial court erred by failing to order Schmid’s dissociation from MAR14 | MAR14: dissociation was adequately pleaded or was tried by consent and §21-147(b) permits alternative remedies to dissolution | Schmid: dissociation was not pled or tried by consent; court had discretion and did not abuse it | Court: Court had ruled on membership status; dissociation was not pled or tried by consent and trial court did not abuse its discretion in declining to order dissociation |
Key Cases Cited
- Kuhlman v. Cargile, 200 Neb. 150 (1978) (articulates equitable cleanup doctrine allowing equity courts to adjudicate related legal claims)
- Jacobson v. Shresta, 288 Neb. 615 (2014) (clarified statutory standards for valid jury-waiver conduct; did not abolish equitable cleanup)
- State ex rel. Cherry v. Burns, 258 Neb. 216 (1999) (explains distinction between law and equity and that pleadings/relief determine whether action is equitable)
- Krumm v. Pillard, 104 Neb. 335 (1920) (historical statement that jury trial right did not extend to equitable proceedings)