Summer Haven Lake Assn. v. Vlach
25 Neb. Ct. App. 384
| Neb. Ct. App. | 2017Background
- Summer Haven Lake Assn., a Nebraska nonpublic lake association, requires shareholders to sign a shareholder agreement and abide by the association’s rules (including boat length limits and pontoon-hour restrictions); Vlach signed the agreement on the individual shareholder line (not the corporate representative line).
- Vlach is sole shareholder and president of Victory Lake Marine, Inc.; Victory Lake was listed as the shareholder in the agreement, but Vlach signed personally.
- In August 2012 Summer Haven cited Vlach for operating a pontoon before permitted hours and for having a boat exceeding size limits at his shore station; the board imposed a 120-day suspension which shareholders upheld.
- Vlach operated boats during the suspension; Summer Haven sued for injunctive relief and enforcement of its rules; Vlach and Victory Lake counterclaimed and joined directors as third-party defendants.
- The district court ruled Vlach personally bound by the shareholder agreement, held Summer Haven’s rules valid so long as they do not conflict with the State Boat Act or administrative rules, found Vlach violated the rules, enjoined further violations and upheld the 120-day suspension, dismissed claims against Victory Lake, and awarded $5,000 in attorney fees to Summer Haven.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Vlach signed the shareholder agreement in his individual capacity | Summer Haven: signature on individual shareholder line binds Vlach personally | Vlach: intended only to bind Victory Lake, not himself personally | Court: Vlach signed on personal line; contract unambiguous; Vlach personally bound |
| Whether Summer Haven may enact/enforce lake rules given the State Boat Act | Summer Haven: as a nonpublic lake association it may adopt/administer rules unless they conflict with state law or Game & Parks regulations | Vlach: association rules must be identical to State Boat Act provisions or are invalid | Court: association may adopt rules for its waters so long as they do not conflict with the Act or administrative rules; Summer Haven’s rules did not conflict |
| Whether Vlach violated the rules and whether injunction was proper | Summer Haven: evidence (admissions, meeting minutes, observations) shows violations and continued noncompliance during suspension; injunction appropriate | Vlach: he was not personally bound and evidence insufficient; injunction is extraordinary and unwarranted | Court: evidence established violations and continued breaches during suspension; mandatory injunction appropriate to enforce restrictive covenant |
| Whether claims against Victory Lake or directors (alter-ego / breach of fiduciary duty) and attorney-fee award were proper | Summer Haven: Victory Lake is alter ego and fees recoverable for frivolous defenses | Vlach: Victory Lake not liable; dismissal and fee award erroneous | Court: no evidence to pierce corporate veil; dismissal against Victory Lake proper; fee award of $5,000 not an abuse of discretion (some conduct was frivolous) |
Key Cases Cited
- ConAgra Foods v. Zimmerman, 288 Neb. 81 (Neb. 2014) (standard of review in equity; de novo review on record)
- 780 L.L.C. v. DiPrima, 9 Neb. App. 333 (Neb. Ct. App. 2000) (agent must express words showing writing is act of principal to bind principal)
- Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist., 291 Neb. 642 (Neb. 2015) (extrinsic evidence not allowed to interpret unambiguous contract)
- Linscott v. Shasteen, 288 Neb. 276 (Neb. 2014) (parties’ course of performance is strong evidence of contract intent)
- Medlock v. Medlock, 263 Neb. 666 (Neb. 2002) (corporate entity generally respected; factors for disregarding corporate form)
- Devney v. Devney, 295 Neb. 15 (Neb. 2016) (contracts contrary to public policy are void)
- Beaver Lake Assn. v. Sorensen, 231 Neb. 75 (Neb. 1989) (mandatory injunction appropriate for breach of restrictive covenant)
- SBC v. Cutler, 23 Neb. App. 939 (Neb. Ct. App. 2016) (standards for awarding attorney fees for frivolous or bad-faith claims)