Attorneys Beware: Unprecedented Law Changing in Nebraska. Summary Judgment, Affirmative Defenses Andcity State Bank v. Holstine, 260 Neb. 578, 618 N.w.2d 704 (2000)

• Jurisdiction: Nebraska,United States
• Citation: Vol. 81
• Publication year: 2021

81 Nebraska L. Rev. 424. Attorneys Beware: Unprecedented Law Changing in Nebraska. Summary Judgment, Affirmative Defenses andCity State Bank v. Holstine, 260 Neb. 578, 618 N.W.2d 704 (2000)

424

Karin Elizabeth Iossi Anderson Note(fn*)

Attorneys Beware: Unprecedented Law Changing in Nebraska. Summary Judgment, Affirmative Defenses and City State Bank v. Holstine, 260 Neb. 578, 618 N.W.2d 704 (2000)

TABLE OF CONTENTS

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 424
II. Background . . . . . . . . . . . . . . . . . . . . . . . . . 425
A. Overview of Summary Judgment in Nebraska. . . . . . . . . 425
B. City State Bank v. Holstine . . . . . . . . . . . . . . . 427
III. Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 428
A. Previous Nebraska Cases . . . . . . . . . . . . . . . . . 429
B. The Authority in the Decision . . . . . . . . . . . . . . 431
C. Policy Implications . . . . . . . . . . . . . . . . . . . 434
D. Other Jurisdictions . . . . . . . . . . . . . . . . . . . 437
IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . 442

I. INTRODUCTION

City State Bank v. Holstine(fn1) fundamentally changed summary judgment law in Nebraska. The Holstine decision requires a moving plaintiff to show no genuine issues of material fact exist on the defendant's affirmative defenses.(fn2) This change has gone seemingly unnoticed by many attorneys and scholars throughout the state. Despite

This Note outlines the change Holstine had on the law and the implications the decision will have on future litigation. Part II presents an overview of summary judgment law in Nebraska and the Holstine decision. Part III addresses Nebraska law prior to Holstine and then analyzes the authority cited in the Holstine decision. Part III also considers the policy implications of the decision and concludes with a discussion of the approaches taken by courts in other jurisdictions. Overall, this Note demonstrates the Holstine decision will have detrimental effects on plaintiffs moving for summary judgment in Nebraska.

II. BACKGROUND

A. Overview of Summary Judgment in Nebraska

A brief overview of summary judgment law in Nebraska, with special attention focused on the burden of proof, is necessary to best understand the underlying situation presented in Holstine. The purpose of summary judgment is to "pierce sham pleadings and dispose of cases where there is no genuine claim or defense."3 The general procedure and requirements for a summary judgment motion are found in the Nebraska statutes.(fn4) Section 25-1332 provides that a summary judgment motion should be granted when there is not a genuine issue of material fact.(fn5) This statute also states pleadings and other supporting documents presented by the parties are used by the court to determine if a genuine issue exists on a material fact.(fn6) If there is not a genuine factual issue, the party that moved for summary judgment is entitled to judgment as a matter of law.(fn7) Therefore, summary judgment serves as a means to look beyond the allegations pled by the

426

parties. If a genuine issue of fact does not exist, summary judgment ensures the significant expense and time of trial are prevented.(fn8) Initially, the moving party has the burden to show that there is no genuine issue of material fact.(fn9) The movant "must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law."(fn10) In order to meet this burden, a movant must make a prima facie case for summary judgment "by producing enough evidence to demonstrate that the movant is entitled to a judgment if the evidence [remains] uncontroverted at trial."(fn11) While this initial burden is still on the movant, the nonmovant's inaction can result in a concession to certain issues. If a nonmovant does not disagree with or challenge a fact in a movant's affidavit, the court assumes that particular fact is not in dispute.(fn12) In other words, failure of a nonmovant to contradict a particular fact is viewed by the court as a concession. However, if an issue of fact depends on a witness' credibility, then summary judgment will not be granted and the case must proceed to trial.(fn13) Once the movant makes a prima facie summary judgment case, the burden then shifts to the nonmovant.(fn14)

The nonmovant must then show that there is a genuine issue of material fact that makes judgment as a matter of law improper.(fn15) If the

427

nonmovant fails to meet its burden of showing a factual issue exists, summary judgment will be granted in the movant's favor.(fn16)

The nonmovant has an advantage throughout the process of a summary judgment motion because the court looks at the evidence in a light most favorable to the nonmovant.(fn17) Since Holstine was an appeal, it is also important to note that on appeal, "a court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence."(fn18) Thus, the court gives the nonmoving party a benefit not available to the moving party in determining if a genuine issue of material fact exists.

B. City State Bank v. Holstine

Holstine involved a fairly straightforward case between a bank and a co-signer on a loan.(fn19) City State Bank ("Bank"), located in Clay County, Nebraska, issued a loan for over $100,000 to William B. Gorman, for which Ronald R. Holstine cosigned a promissory note.

Less than a year after the note was signed, it fell into default by reason of nonpayment. The Bank then sued Holstine in the District Court of Clay County seeking to recover the amount of the loan and interest. Holstine, a Colorado resident, answered with affirmative defenses; he claimed, among other things, that he was fraudulently induced by the Bank to cosign and that the note contained material misrepresentations.(fn20) Holstine made several specific allegations in his affirmative defense of fraudulent misrepresentation, such as the Bank did not tell him the purpose of the promissory note was to hold Holstine liable for debts from Gorman's partnership.(fn21)

428

The Bank denied the allegations in the affirmative defenses and moved for summary judgment. At the hearing there were exhibits entered onto the record,(fn22) and summary judgment was granted in the Bank's favor.(fn23) Holstine proceeded to move for a new trial, which was denied.(fn24) Holstine then appealed to the Nebraska Supreme Court. He claimed it was error to grant summary judgment in favor of the Bank, because his affirmative defenses raised genuine issues of material fact.

The Nebraska Supreme Court noted that the Bank did not produce evidence on Holstine's affirmative defenses.(fn25) The court then briefly outlined summary judgment procedure by citing various Nebraska cases.(fn26) According to the court, the "posture of the case" required the Bank, in showing they were entitled to judgment as a matter of law, to introduce evidence showing Holstine's affirmative defenses did not create a genuine issue of material fact.(fn27) The court held, in reference to Holstine's affirmative defenses, that the Bank "failed to meet its burden as the party moving for summary judgment to produce evidence which, if uncontroverted, would entitle it to judgment as a matter of law."(fn28) On that basis, the court held Holstine did not have the burden shifted to him.(fn29) Concluding that there was a genuine issue of fact due to the affirmative defenses raised in Holstine's answer, the court reversed the judgment for the Bank and remanded the case.(fn30)

III. ANALYSIS

In Holstine, the Nebraska Supreme Court changed summary judgment law. The decision changed the burden of proof on plaintiffs moving for summary judgment against defendants raising affirmative not disclose the relationship problems in Gorman's partnership, the partnership's inability to get more money without Holstine, and that the Bank stated there would never be a time Holstine would be liable to pay on the note. Id. at 581, 618 N.W.2d at 707.

429

defenses. In order to fully understand the Holstine decision, four points must be considered. First, Holstine is inconsistent with several previous cases. Second, the cases cited by the court in Holstine do not provide a strong basis for the court's decision. Third, this decision creates policy concerns because it will increase inefficiencies in future litigation and will lead to frivolous lawsuits. Finally, the approaches other jurisdictions take with respect to this procedural situation are important in understanding the Holstine decision.

A. Previous Nebraska Cases

Holstine fundamentally changed the standard established in previous cases wherein the plaintiff moved for summary judgment against a defendant claiming an affirmative defense. In Holstine, the court held the plaintiff had the initial burden to show the defendant's affirmative defenses did not present an issue of fact.(fn31) The cases that addressed this type of summary judgment situation prior to Holstine took a distinctively different approach. These cases put the initial burden on the defendant to show the affirmative defense presented an issue of fact.(fn32) Three cases best illustrate how Holstine changed Nebraska law: Bender v. James,(fn33) Farmers Cooperative Exchange v. Demerath Land Co.,(fn34) and Talle v. Nebraska Department of Social Services.(fn35)

In Bender, the plaintiff brought suit to quiet title.(fn36) The defendant claimed ownership by adverse possession, but the plaintiff held record ownership. The defendant appealed the district court's summary judgment ruling in favor of the plaintiff. In affirming summary judgment for the plaintiff, the Nebraska Supreme Court held:

The plaintiffs' evidence establishes undisputed record title...