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299 Nebraska Report

BURKLUND v. FUEHRER

Cite as 299 Neb. 949

Todd A. Burklund and Shelly M. B

appellants, v. Brad Fuehrer and Stru

Technologies, LLC, appel

___ N.W.2d ___

Filed May 11, 2018. No. S-17-885.

1. Motions to Dismiss: Pleadings: Appeal and Error. An appellate court 

reviews a district court’s order granting a motion to dismiss de novo, 

accepting all allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.

2. Motions to Dismiss: Pleadings. To prevail against a motion to dismiss 

for failure to state a claim, a plaintiff must allege sufficient facts to state 

a claim to relief that is plausible on its face. In cases in which a plaintiff 

does not or cannot allege specific facts showing a necessary element, the 

factual allegations, taken as true, are nonetheless plausible if they suggest the existence of the element and raise a reasonable expectation that 

discovery will reveal evidence of the element or claim.

3. Actions: Pleadings: Notice. Civil actions are controlled by a liberal 

pleading regime; a party is only required to set forth a short and plain 

statement of the claim showing that the pleader is entitled to relief and 

is not required to plead legal theories or cite appropriate statutes so long 

as the pleading gives fair notice of the claims asserted.

4. Actions: Pleadings. The rationale for a liberal notice pleading standard 

in civil actions is that when a party has a valid claim, he or she should 

recover on it regardless of a failure to perceive the true basis of the 

claim at the pleading stage.

Appeal from the District Court for Lancaster County: 

Darla S. Ideus, Judge. Reversed and remanded for furth

proceedings.

Elizabeth Ryan Cano and John P. Weis, of Wolfe, Snowden, 

Hurd, Luers & Ahl, L.L.P., for appellants.

Nebraska Supreme Court Online Library

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

06/01/2018 09:07 AM CDT
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299 Nebraska Report

BURKLUND v. FUEHRER

Cite as 299 Neb. 949

Brian S. Kruse, of Rembolt Ludtke, L.L.P., for appellees.

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

JJ., and Riedmann, Judge, and Martinez, District J

Miller-Lerman,

NATURE OF CASE

This appeal arises from a disputed real estate transaction. Appellants, Todd A. Burklund and Shelly M. Burklund, 

sought damages for breach of contract, breach of warranty, 

and fraudulent misrepresentation after discovering extensive hail damage to the roof of a real property they were 

under contract to purchase from appellees, Brad Fuehrer and 

Structure Technologies, LLC (the sellers). The district court 

for Lancaster County granted the sellers’ joint motion to 

dismiss for failure to state a claim and dismissed the second amended complaint with prejudice and without leave to 

amend based on the “fact” that the damage was reasonably 

ascertainable by the Burklunds. The Burklunds appeal. We 

reverse the district court’s dismissal and remand the cause for 

further proceedings.

FACTS

On August 11, 2016, the Burklunds entered into a real 

estate purchase agreement (the Purchase Agreement) with the 

sellers for the purchase of real property in Lincoln, Nebraska 

(the Property). The Purchase Agreement included a lease-back 

provision whereby the Burklunds agreed to lease the Property, 

including a building located on the premises, to the sellers for 

a period of 1 year, with a 1-year renewal option, in consideration for monthly rent in the amount of $4,000. The Purchase 

Agreement included several addendums which were executed 

on the same day.

The Burklunds planned to purchase the Property, in 

part, to use it as part of a tax-deferred exchange under the 

Internal Revenue Code, I.R.C. § 1031 (2006) (i.e., a like-kind 
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exchange). In May 2016, the Burklunds had sold a different 

property, the proceeds of which sale they placed into escrow to 

accomplish the like-kind exchange. To complete the like-kind 

exchange, the Burklunds needed to close on a new property no 

later than November 1. The Burklunds selected the Property 

for that purpose, and arranged for an initial closing date of 

October 6. To this end, addendum No. 4 to the Purchase 

Agreement provides, in relevant part:

A material part of the consideration for [the Burklunds’] 

purchasing the Property is that [the Burklunds] intend[] 

to qualify this transaction as part of a tax-deferred 

exchange under Section 1031 of the Internal Revenue 

Code. . . . No additional expense or liability will be 

incurred by the [sellers] as a result of this like-kind 

exchange.

On September 29, 2016, the sellers informed the Burklunds, 

for the first time, that the roof of the building on the Property 

sustained hail damage earlier in the year; that Structure 

Technologies, LLC, received $39,000 from an insurance claim 

for that hail damage; and that the roof was not repaired. The 

hail damage occurred and the insurance claim was resolved 

before the parties executed the Purchase Agreement. The 

Burklunds requested to delay closing to inspect the roof.

The Burklunds’ subsequent inspections revealed that the 

roof had received substantial hail damage. The Burklunds 

learned that while they could obtain insurance for the building, future damage to the roof would not be covered. The 

Burklunds alleged that the inability to fully insure the building 

would prevent them from renting the Property at an agreedupon amount of $4,000 per month.

The Burklunds alleged that in the Purchase Agreement, 

the sellers warranted that they had already disclosed to the 

Burklunds “all defects that would ‘significantly alter’ the 

‘desirability’” of the building. Brief for appellants at 7. The 

relevant contract provisions are as follows:
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7. Condition of Property. This Agreement is based 

upon the [Burklunds’] inspection or investigation of 

[the] Property. [They] agree[] to accept [the] Property 

in its present condition, except as provided in this 

Agreement. [The sellers] represent[] that to the best of 

[their] knowledge, there are no defects in the Property 

that (1) are not reasonably ascertainable and which significantly affect the desirability or value of the Property, 

or (2) which the [sellers have] not disclosed to [their] 

Agent in writing.

Addendum No. 1 provides, in relevant part:

1. Due Diligence. Prior to closing [the Burklunds] shall 

have the right to conduct any inspections, and/or tests 

[they] deem[] necessary . . . . In the event that [they] discover[] any condition or circumstance with respect to the 

[P]roperty which is unacceptable to [them] in [their] sole 

discretion, [they] may terminate the Purchase Agreement 

at any time.

Following the discovery of the extensive roof damage and 

its impact on insurability, the Burklunds asked to proceed with 

closing due to the requirements of the like-kind exchange, 

but demanded that the sellers either replace the roof with the 

insurance funds or escrow the funds for repairs. According to 

the second amended complaint, on October 6, 2016, Fuehrer 

represented to the Burklunds’ real estate agent that he would 

replace the roof. No such action was taken by November 1, 

and the closing did not occur. The Burklunds did not benefit from their planned tax-deferred exchange and thereafter 

filed suit.

The Burklunds’ initial complaint filed in 2016 against 

Fuehrer; Structure Technologies, LLC; and Pamela A. Manske 

was dismissed after a hearing on February 14, 2017. The district court granted leave to the Burklunds to file an amended 

complaint within 20 days. The Burklunds filed a first amended 

complaint on March 3. On March 8, the sellers filed a motion to 
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Cite as 299 Neb. 949

dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(6). The Burklunds 

then sought leave to file a second amended complaint under 

Neb. Ct. R. Pldg. § 6-1115 by stipulation of the parties. The 

district court granted leave, and the Burklunds filed a second amended complaint on April 20. The second amended 

complaint named only Fuehrer and Structure Technologies as 

defendants, and the district court dismissed Manske without 

prejudice. The second amended complaint alleged breach of 

contract, breach of warranty, and fraudulent misrepresentation. 

The Purchase Agreement and addendum No. 4 were attached to 

the second amended complaint.

The sellers reinitiated their joint motion to dismiss in which 

they contended that the second amended complaint should 

be dismissed with prejudice for failure to state a claim upon 

which relief can be granted. At the hearing on the motion 

to dismiss, the district court received additional addendums 

executed simultaneously with the Purchase Agreement.

In a July 21, 2017, order, the district court first determined 

that the receipt of addendums to the contract that was the subject of the suit did not convert the motion to a motion for summary judgment. The district court then sustained the motion 

to dismiss with prejudice for failure to state a claim. The 

district court reasoned that the Purchase Agreement “clearly 

states it is based upon the [Burklunds’] inspection or investigation of the [P]roperty and [the Burklunds] agreed to accept 

the [P]roperty in its present condition unless otherwise provided in the Agreement” and that “the damage was obviously 

reasonably ascertainable as a subsequent roof inspection by 

[the Burklunds] disclosed the hail damage.” Finally, the district court determined that the remedy of damages sought by 

the Burklunds was unavailable under the contract because, 

according to the district court, the “[Purchase] Agreement 

specifically gives [the Burklunds] the option to terminate the 

[Purchase] Agreement.”

The Burklunds appeal.
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Cite as 299 Neb. 949

ASSIGNMENTS OF ERROR

On appeal, the Burklunds claim that the district court erred 

when it (1) dismissed the second amended complaint based on 

its determination that the complaint failed to state a claim for 

fraudulent misrepresentation, breach of contract, and breach of 

warranty and (2) determined that rescission is the only remedy available.

STANDARDS OF REVIEW

[1,2] An appellate court reviews a district court’s order 

granting a motion to dismiss de novo, accepting all allegations in the complaint as true and drawing all reasonable 

inferences in favor of the nonmoving party. Davis v. State, 

297 Neb. 955, 902 N.W.2d 165 (2017). To prevail against a 

motion to dismiss for failure to state a claim, a plaintiff must 

allege sufficient facts to state a claim to relief that is plausible 

on its face. Id. In cases in which a plaintiff does not or cannot 

allege specific facts showing a necessary element, the factual 

allegations, taken as true, are nonetheless plausible if they 

suggest the existence of the element and raise a reasonable 

expectation that discovery will reveal evidence of the element 

or claim. Id.

ANALYSIS

Review of Orders of Dism

The Burklunds claim that the district court erred when it 

granted the motion to dismiss with prejudice for failure to state 

a claim. When reviewing an order dismissing a complaint, an 

appellate court accepts as true all facts which are well pled and 

the proper and reasonable inferences of law and fact which 

may be drawn therefrom, but not the plaintiff’s conclusions. 

Rodriguez v. Catholic Health Initiatives, 297 Neb. 1, 899 

N.W.2d 227 (2017). Accordingly, for the purpose of reviewing the court’s dismissal of the second amended complaint, 

the facts that we have set out in this opinion are the facts as 

alleged by the Burklunds, which we accept as true.
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[3,4] Nebraska is a notice pleading jurisdiction. Civil actions 

are controlled by a liberal pleading regime; a party is only 

required to set forth a short and plain statement of the claim 

showing that the pleader is entitled to relief and is not required 

to plead legal theories or cite appropriate statutes so long 

as the pleading gives fair notice of the claims asserted. Id. 

The rationale for this liberal notice pleading standard in civil 

actions is that when a party has a valid claim, he or she should 

recover on it regardless of a failure to perceive the true basis 

of the claim at the pleading stage. Id.

As we explain below, we determine that the Burklunds’ 

second amended complaint contains allegations of facts which 

are sufficient to state a claim for relief which is plausible 

on its face. Accordingly, we reverse the district court’s order 

of dismissal.

Breach of Contract, Breach of 

and Fraudulent Misrepresent

In their second amended complaint, the Burklunds alleged 

breach of contract, fraudulent misrepresentation, and breach of 

warranty. The Burklunds’ claims are based on their interpretation of paragraph 7 of the Purchase Agreement. As set forth 

above, paragraph 7 provides, “[The sellers] represent[] that 

to the best of [their] knowledge, there are no defects in the 

Property that (1) are not reasonably ascertainable and which 

significantly affect the desirability or value of the Property, or 

(2) which the [sellers have] not disclosed to [their] Agent in 

writing.” The Burklunds contend that they are entitled to relief 

both because (1) there are defects in the Property which were 

not reasonably ascertainable and which significantly affect 

the desirability of the Property and (2) the sellers had not 

disclosed defects in the Property. Without commenting on 

the Burklunds’ reading of paragraph 7, we conclude that the 

Burklunds’ claims are plausible.

In its July 21, 2017, order, the district court characterized the second amended complaint as admitting the “fact” 
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that the roof damage was “reasonably ascertainable” by the 

Burklunds because it was ascertained upon subsequent inspections. Contrary to the district court’s reading of the second 

amended complaint, the Burklunds’ allegation that they ultimately ascertained the extent of the roof damage before closing 

does not necessarily mean they admitted the defect was “reasonably” ascertainable.

In their second amended complaint, the Burklunds alleged 

only that “[t]hrough the course of the [Burklunds’] inspection, 

it was determined that the roof had received substantial hail 

damage.” The Burklunds further described an “investigation” 

into the Property’s insurability following the sellers’ disclosure of unrepaired hail damage and collection on an insurance 

claim. The reasonable inferences of the second amended complaint lack any indication of whether these inspections were 

the same or beyond what would ordinarily be conducted by a 

buyer of commercial property.

The sellers urge us to follow Lucky 7 v. THT Realty, 278 

Neb. 997, 775 N.W.2d 671 (2009), a commercial real estate 

case with similar facts in which a buyer claimed damages for 

fraudulent and negligent misrepresentation after discovering 

that an office building’s roof was partially deteriorated in two 

sections although areas visible from the ground were recently 

replaced. After a bench trial, the evidence showed that a visual 

inspection of the weathered and aging roof sections would 

have made the buyer aware of the deteriorating condition of 

the building. Id. We noted that the record showed that the 

buyer routinely examined heating and air-conditioning units 

on roofs, so an inspection of this roof did not pose a hardship 

and was reasonable under the circumstances for an experienced 

purchaser of commercial buildings. Id. In that case, we concluded that a commercial buyer was not justified in forgoing 

routine visual real estate inspections and relying on a seller’s 

representations about a property.

Although the allegations here resemble many facts developed after trial in Lucky 7, we lack the facts at this stage 
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from which we may draw conclusions about whether the 

contract was breached by the sellers. And contrary to the 

district court’s apparent “finding,” the second amended complaint does not contain factual allegations from which a court 

can determine that the damage to the roof was “reasonably 

ascertainable” under paragraph 7 of the Purchase Agreement, 

because, as we have noted above, the nature and extent of 

the inspections conducted by the Burklunds and the background on ordinary business practice are not contained within 

that pleading.

The centerpiece of the Burklunds’ case is the allegation that 

contrary to the truth, the sellers promised that the Property was 

free from defects because either the defects were reasonably 

ascertainable or the sellers had disclosed the defects, and in 

addition, the sellers represented they would repair the roof, but 

failed to do so.

As we read the second amended complaint, it contains 

allegations of facts which are sufficient to state a claim for 

relief under breach of contract or breach of warranty primarily 

related to paragraph 7 of the Purchase Agreement. Likewise, 

the Burklunds’ claim for fraudulent representation as alleged 

is plausible on its face. See InterCall, Inc. v. Egenera, Inc., 

284 Neb. 801, 815, 824 N.W.2d 12, 23 (2012) (“[w]hether a 

party’s reliance upon a misrepresentation was reasonable is a 

question of fact”). Accordingly, we reverse the district court’s 

order of dismissal.

Availability of Remed

For their second assignment of error, the Burklunds claim 

that the district court erred when it determined that even if the 

Burklunds were successful on one of their claims, their only 

remedy was to terminate the Purchase Agreement. We make 

no comment on the correctness of the district court’s conclusions concerning the availability of remedies. Because the 

district court incorrectly concluded that the second amended 

complaint failed to state a cause of action and its decision is 
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reversed, the district court’s reasoning about damages falls 

with the order and the consideration of availability of damages 

is premature.

CONCLUSION

Accepting the facts in the second amended complaint as 

true, we determine that the Burklunds alleged sufficient facts 

to state claims which are plausible on their face. Thus, we 

determine that the district court erred when it granted the sellers’ motion to dismiss and dismissed the Burklunds’ case. We 

reverse the decision of the district court and remand the cause 

for further proceedings.

 Reversed and remande

further proceedin