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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

Kim Hawley, appellant, v. 

John Skradski, appellee.

___ N.W.2d ___

Filed November 15, 2019. No. S-18-849.

1. Judgments: Jurisdiction: Appeal and Error. When a jurisdictional 

issue does not involve a factual dispute, determination of a jurisdictional 

issue is a matter of law which requires an appellate court to reach a 

conclusion independent from the trial court’s; however, when a determination rests on factual findings, a trial court’s decision on the issue 

will be upheld unless the factual findings concerning jurisdiction are 

clearly incorrect.

2. Actions: Parties: Standing. Whether a party who commences an action 

has standing and is therefore the real party in interest presents a jurisdictional issue.

3. Jurisdiction: Standing. Because the requirement of standing is fundamental to a court’s exercise of subject matter jurisdiction, either a 

litigant or a court can raise the question of standing at any time.

4. Standing. The stage of the litigation in which a party claims that 

its opponent lacks standing affects how a court should dispose of 

the claim.

5. Standing: Pleadings: Words and Phrases. If a motion challenging 

standing is made at the pleadings stage, it is considered a “facial challenge” and a court will review the pleadings to determine whether there 

are sufficient allegations to establish the plaintiff’s standing.

6. Standing: Jurisdiction: Pleadings: Evidence: Proof: Words and 

Phrases. If a motion challenging standing, and thus the court’s subject 

matter jurisdiction, is raised after the pleadings stage and the court holds 

an evidentiary hearing and reviews evidence outside the pleadings, it is 

considered a “factual challenge” and the party opposing the challenge 

must offer evidence to support its burden of establishing subject matter jurisdiction.

7. Jurisdiction: Pleadings: Appeal and Error. Where the trial court’s 

decision on a question of subject matter jurisdiction is based on a factual 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

12/20/2019 09:07 AM CST
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HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

challenge, the court’s factual findings are reviewed under the clearly 

erroneous standard. But aside from any factual findings, the trial court’s 

ruling on subject matter jurisdiction is reviewed de novo, because it 

presents a question of law.

8. Actions: Parties. Neb. Rev. Stat. § 25-301 (Reissue 2016) establishes 

an absolute requirement that all actions be brought in the name of the 

real party in interest, and the only allowable exceptions to this rule are 

set forth in Neb. Rev. Stat. § 25-304 (Reissue 2016).

9. ____: ____. Construed together, Neb. Rev. Stat. § 25-304 (Reissue 

2016) and Neb. Rev. Stat. § 25-302 (Reissue 2016) permit an assignee 

of a chose in action to maintain an action thereon in the assignee’s own 

name when the assignment being sued upon is in writing.

10. Jurisdiction. Whether a court has subject matter jurisdiction is a threshold issue that should be resolved prior to an examination of the merits.

11. Actions: Parties: Standing. Because Neb. Rev. Stat. § 25-304 (Reissue 

2016) allows assignees of choses in action to “sue on any claim assigned 

in writing,” evidence of an oral assignment of a chose in action is insufficient as a matter of law to confer standing to sue on the assignee.

12. Jurisdiction: Appeal and Error. When a lower court does not gain 

jurisdiction over the case before it, an appellate court also lacks the 

jurisdiction to review the merits of the claim.

Appeal from the District Court for Douglas County: James 

T. Gleason, Judge. Vacated and dismissed.

Scott A. Lautenbaugh, of Law Offices of Scott Lautenbaugh, 

for appellant.

Michael J. O’Bradovich, P.C., for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Stacy, J.

Kim Hawley brought this civil action against John Skradski 

for breach of contract, conversion, and tortious interference 

with a business relationship or expectation. A jury trial was 

held, and at the close of Hawley’s case in chief, the district 

court granted Skradski’s motion for a directed verdict. Hawley 

appeals. Because we find Hawley lacked standing to bring the 

action in his own name, we vacate the district court’s judgment 

and dismiss the appeal.
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

BACKGROUND

Hawley’s Complaint

Hawley filed this lawsuit against Skradski in the district 

court for Douglas County on October 28, 2015. Hawley is the 

only named plaintiff. Hawley’s complaint alleged he purchased 

a heating and air conditioning (HVAC) business from an entity 

affiliated with Skradski in 2008 and operated that HVAC business on premises leased from Skradski. The complaint alleged 

that in July 2011, Hawley ceased operating the HVAC business 

and vacated the leased premises. It further alleged that thereafter, Skradski “took possession of the premises” and “[u]nbeknownst to [Hawley] and without his authorization, [Skradski] 

began operating the business he had sold to [Hawley]” using 

the same premises. Hawley alleged that Skradski converted 

“payments, work orders, business lists, contacts, contracts and 

the like, and converted various other assets of the business 

to his use” and that this “caused the value of the business to 

decrease.” Hawley sought to recover damages in an unspecified amount, relying on theories of breach of contract, conversion, and tortious interference with a business relationship 

or expectation.

Skradski’s Answer

Skradski’s answer generally denied the allegations of the 

complaint and specifically denied having sold the HVAC 

business to Hawley individually. Instead, Skradski’s answer 

alleged that in 2008, he sold the HVAC business to KNR 

Capital Corp. (KNR) and leased the business premises to the 

same corporate entity. In addition, Skradski’s answer alleged 

that Hawley’s complaint failed to state a claim upon which 

relief could be granted and that Hawley lacked standing to 

assert the claims.

Trial Evidence

A jury trial was held over a 2-day period in August 2018. 

Among the evidence offered and received was a copy of the 

2008 asset purchase agreement pertaining to the sale of the 
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HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

HVAC business. The asset purchase agreement showed the 

HVAC business was purchased by KNR, and not by Hawley 

individually.

During trial, Hawley testified that when the asset purchase 

agreement was signed, he and his wife each owned between 

1 and 2 percent of KNR and the remainder was held by what 

Hawley described as a “401K rollover” holding company that 

was “part of [a] trust” that Hawley was “in charge of.” Hawley 

later testified that when he and his wife subsequently divorced, 

her ownership share in KNR was “essentially nullif[ied],” 

although he did not fully explain how that occurred.

KNR operated the HVAC business from 2008 through July 

2011. According to Hawley, he closed the HVAC business after 

learning the general manager had been “padding his numbers,” 

resulting in a shortfall of several hundred thousand dollars. 

After closing the HVAC business, Hawley, as KNR’s president, 

entered into a contract to sell the HVAC business to McCarthy 

Heating & Air Conditioning Service, Inc. (McCarthy).

Hawley testified that before closing on the contract to sell 

the HVAC business to McCarthy, he and the president of 

McCarthy visited the HVAC business premises to examine 

the inventory. During that October 2011 visit, Hawley saw 

people who had been employed by the HVAC business during 

the time he operated it, and it appeared to Hawley they were 

operating an HVAC business from the premises. Hawley also 

testified that while he was on the premises, he saw a work 

chart, evidence of billings, an employee gathering materials 

to return to a vendor for credit, and a compact disc copy of 

the HVAC business’ customer database. Skradski and other 

witnesses generally refuted Hawley’s account of what he saw 

during the October visit to the business premises. And Skradski 

denied operating an HVAC business from the premises during 

October 2011.

Hawley testified that as a result of the October visit, 

McCarthy learned KNR had suffered a “substantial loss of the 

inventory” and the sale price for the HVAC business dropped 

from $100,000 to $50,000.
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HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

During his direct examination, Hawley was asked, “What 

eventually happened to [KNR]?” and he replied, “We eventually closed it down . . . and transferred the remaining assets to 

myself.” He testified that the remaining assets were “the rights 

to pursue this case” against Skradski, and then reiterated that 

he “assigned that to myself.” He offered no further details on 

how the alleged assignment from KNR to Hawley occurred.

Oral Motion to Amend Pleadings

On the morning of the second day of trial, after offering 

testimony about an assignment from KNR, Hawley made an 

oral motion to “amend the pleadings to comport with the evidence.” Hawley sought to amend his complaint to add an allegation that KNR assigned its claim against Skradski to Hawley. 

Alternatively, Hawley sought to add KNR as a party plaintiff. 

Skradski opposed the requested amendments on grounds they 

were untimely.

The court refused Hawley’s request to add KNR as a party 

plaintiff. It reasoned there was evidence that KNR made an 

“oral assignment” to Hawley of any claim it had against 

Skradski, and it found this evidence tended to show that 

Hawley, and not KNR, was the proper plaintiff. But the court 

granted Hawley’s motion to conform the pleadings to the evidence for purposes of alleging an assignment from KNR to 

Hawley of any claim KNR had against Skradski. After indicating on the record that such an amendment would be allowed, 

the court instructed Hawley’s counsel, “You may file an appropriate pleading,” to which counsel replied, “Thank you, [y]our 

honor.” No amended pleading appears in our record, but the 

parties thereafter treated the assignment from KNR to Hawley 

as having been raised in the operative pleading.1

Motion for Directed Verdict

After the close of Hawley’s case in chief, Skradski moved 

for a directed verdict, arguing Hawley had failed to meet his 

1 See Neb. Ct. R. Pldg. § 6-1115.
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HAWLEY v. SKRADSKI

Cite as 304 Neb. 488

burden of proof on all three theories of recovery: breach of 

contract, conversion, and tortious interference with a business 

relationship or expectation. The district court agreed, and without expressly ruling on whether Hawley had proved standing to 

bring suit in his own name, the court granted the directed verdict and dismissed the action. Hawley filed this timely appeal, 

which we moved to our docket on our own motion.

ASSIGNMENTS OF ERROR

Hawley assigns, restated, that the district court erred in (1) 

granting Skradski’s motion for directed verdict, (2) finding 

there was insufficient evidence of conversion, and (3) finding 

there was insufficient evidence of tortious interference with a 

business relationship or expectation.

STANDARD OF REVIEW

[1] When a jurisdictional issue does not involve a factual 

dispute, determination of a jurisdictional issue is a matter of 

law which requires an appellate court to reach a conclusion 

independent from the trial court’s; however, when a determination rests on factual findings, a trial court’s decision on the 

issue will be upheld unless the factual findings concerning 

jurisdiction are clearly incorrect.2

ANALYSIS

Standing and Real Party in Interest

[2,3] Although neither party raises the issue on appeal, 

we must first determine whether Hawley has standing and is 

the real party in interest for purposes of bringing this action 

against Skradski. Whether a party who commences an action 

has standing and is therefore the real party in interest presents 

a jurisdictional issue.3 Because the requirement of standing is 

fundamental to a court’s exercise of subject matter jurisdiction, 

2 Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435 

(2018).

3 Id.
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either a litigant or a court can raise the question of standing at 

any time.4

[4-6] The stage of the litigation in which a party claims that 

its opponent lacks standing affects how a court should dispose 

of the claim.5 If a motion challenging standing is made at the 

pleadings stage, it is considered a “facial challenge” and a 

court will review the pleadings to determine whether there are 

sufficient allegations to establish the plaintiff’s standing.6 But 

if the challenge to standing, and thus the court’s subject matter 

jurisdiction, is raised after the pleadings stage and the court 

holds an evidentiary hearing and reviews evidence outside the 

pleadings, it is considered a “factual challenge” and the party 

opposing the challenge must offer evidence to support its burden of establishing subject matter jurisdiction.7

[7] Where the trial court’s decision on a question of subject 

matter jurisdiction is based on a factual challenge, the court’s 

factual findings are reviewed under the clearly erroneous standard.8

 But aside from any factual findings, the trial court’s ruling on subject matter jurisdiction is reviewed de novo, because 

it presents a question of law.9

Here, the district court heard evidence on the issue of 

Hawley’s standing to bring suit in his own name. We therefore review its factual findings on this jurisdictional issue for 

clear error, and we review de novo the ultimate question of 

Hawley’s standing.

Real Party in Interest Statutes

At trial, Hawley admitted it was KNR that purchased the 

HVAC business from Skradski and sold the HVAC business 

4 Id.

5 Id.

6 See id.

7 See id.

8 See id.

9 See Bohaboj v. Rausch, 272 Neb. 394, 721 N.W.2d 655 (2006).
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Cite as 304 Neb. 488

to McCarthy. Hawley testified that he was one of several 

shareholders of KNR when it purchased the HVAC business 

in 2008 and that he was the sole shareholder of KNR when 

it sold the HVAC business in 2011. But Hawley did not bring 

this action in his capacity as an officer of KNR—he brought 

it individually. And even where one person owns all the stock 

of a corporation, property belonging to the corporation does 

not become the property of such person.10 On this record, any 

chose in action against Skradski belonged to KNR, not to 

Hawley individually. Hawley apparently recognized this and 

claimed to be prosecuting this action as the assignee of KNR’s 

chose in action against Skradski.

[8] Nebraska’s real party in interest statute provides that 

“[e]very action shall be prosecuted in the name of the real 

party in interest except as otherwise provided in section 

25-304.”11 We have recognized that § 25-301 establishes an 

absolute requirement that all actions be brought in the name 

of the real party in interest and that the only allowable exceptions to this rule are set forth in Neb. Rev. Stat. § 25-304 

(Reissue 2016).12

[9] Section 25-304 states in relevant part: “Assignees of 

choses in action assigned for the purpose of collection may 

sue on any claim assigned in writing.” A related statute, Neb. 

Rev. Stat. § 25-302 (Reissue 2016), states: “The assignee of a 

thing in action may maintain an action thereon in the assignee’s own name and behalf, without the name of the assignor.” 

Construing these statutes together, Nebraska law permits an 

assignee of a chose in action to maintain an action thereon 

in the assignee’s own name when the assignment being sued 

upon is in writing. As such, Hawley could establish standing 

to bring this action in his own name, and thus show the court 

10 See State ex rel. Sorensen v. Weston Bank, 125 Neb. 612, 251 N.W. 164 

(1933).

11 Neb. Rev. Stat. § 25-301 (Reissue 2016).

12 Orr v. Knowles, 215 Neb. 49, 337 N.W.2d 699 (1983).
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had subject matter jurisdiction, if he proved by a preponderance of the evidence13 the existence of a written assignment 

under § 25-304.14

Hawley Failed to Prove Written 

Assignment Under § 25-304

The only evidence of an assignment from KNR was 

Hawley’s testimony, and it was sparse. During Hawley’s direct 

examination, he was asked, “What eventually happened to 

[KNR]?” and he responded, “We eventually closed it down . . . 

and transferred the remaining assets to myself.” Hawley then 

explained that the only assets that were transferred were “the 

rights to pursue this case,” and again said he “assigned that” 

to himself. Hawley did not produce a written assignment from 

KNR, and his testimony did not expressly reference a written assignment.

[10] After hearing Hawley’s testimony about the assignment, 

the district court found KNR had made an “oral assignment” 

to Hawley of any claim it had against Skradski. Although the 

court did not expressly rule on whether the oral assignment 

gave Hawley the requisite standing to support the exercise of 

subject matter jurisdiction, it found Hawley was the proper 

plaintiff, and it reached the merits of Hawley’s claims and 

granted Skradski’s motion for a directed verdict on those 

claims. Whether a court has subject matter jurisdiction is a 

threshold issue that should be resolved prior to an examination 

of the merits,15 and we therefore conclude the court implicitly 

found it had subject matter jurisdiction.

13 See, Wetovick v. County of Nance, 279 Neb. 773, 782 N.W.2d 298 (2010); 

Pallas v. Dailey, 169 Neb. 533, 100 N.W.2d 197 (1960).

14 See Archer v. Musick, 147 Neb. 1018, 1027, 25 N.W.2d 908, 913 (1947) 

(“‘assignees of choses in action assigned for the purpose of collection’” 

are considered real parties in interest and authorized to maintain actions 

thereon as such).

15 See, generally, Holmstedt v. York Cty. Jail Supervisor, 275 Neb. 161, 745 

N.W.2d 317 (2008).
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As noted, we review factual findings related to the court’s 

subject matter jurisdiction for clear error16 and the court’s 

ultimate determination as to subject matter jurisdiction de 

novo.17 On this record, it was not clearly erroneous to find 

that KNR made an oral assignment to Hawley of its claim 

against Skradski.

[11] But because § 25-304 allows assignees of choses in 

action to “sue on any claim assigned in writing,” we find on 

de novo review that evidence of an oral assignment of a chose 

in action is insufficient as a matter of law to confer standing 

to sue on the assignee. Because Hawley failed to prove he 

was the assignee under a written assignment from KNR of a 

chose in action against Skradski, Hawley failed to prove his 

standing to bring this suit in his own name under § 25-304. As 

such, the district court lacked subject matter jurisdiction over 

the cause.

CONCLUSION

[12] When a lower court does not gain jurisdiction over the 

case before it, an appellate court also lacks the jurisdiction to 

review the merits of the claim.18 We thus vacate the district 

court’s judgment and dismiss the appeal for lack of subject 

matter jurisdiction.

Vacated and dismissed.

16 See Jacobs Engr. Group, supra note 2.

17 See Bohaboj, supra note 9.

18 State ex rel. Rhiley v. Nebraska State Patrol, 301 Neb. 241, 917 N.W.2d 

903 (2018).