# U ni te d S ta te s Co ur t of A pp ea ls For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _
No. 1 4- 17 41

__ __ __ __ __ __ __ __ __ __ __ __ __ _

Men ard , Inc . a W is co ns in Co rp or at io n

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.

Dial -Co lu m

bu s, LLC, a Neb ras ka li m it ed li ab il it y co m pa ny als o k no wn as Dial Co lu m bu s, LLC; DKC-Co lu m

bu s, LLC, a Neb ras ka li m it ed li ab il it y co m pa ny

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t s

Terry L. Clau ff, a Neb ras ka res id en t

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an t

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of Ne br as ka - Lin co ln

__ __ __ __ __ __
Su bm it te d: Octo be r 7, 2 01 4 Fil ed : M arch 26 , 20 15

__ __ __ __ __ __
Befo re LOKEN, BEAM, and COLLOTON, Cir cu it Ju dg es

.

__ __ __ __ __ __
BEAM, Ci rcu it Ju dg e.The di st ric t co ur t gr an te d su m m ary jud gm en t i n fa vo r of Men ard , Inc ., on it s cl ai m th at Terry Cl au ff is joi nt ly an d se ve ral ly li ab le fo r a co nt ract he si gn ed on b e h al f of DKC-Co lu m

bu s, LLC, be fo re th e co m pa ny cam e in to ex is te nc e. We

rev ers e.

I. BACKGRO UND

Men ard is a W is co ns in co rp or at io n th at own s an d op erat es ho m e im pr ov em en t

st or es

. Dial -Co lu m

bu s , LLC

, an d DKC-Co lu m bu s are Neb ras ka li m it ed li ab il it y

co m pa ni es (LLCs) . Clau ff i s a m em be r of bo th co m

pa ni es

.

Men ard op erat ed a ret ai l st or e in th e W es tg at e Cen te r in Co lu m bu s, Neb ras ka

, in a bu il di ng th at it su bl eas ed (th e Su bl eas e) fro m W al -Ma rt St or es , In c. On Aug us t
28

, 20 06

, Men ard en te red in to a Pu rch as e an d Sal e Agr eem en t ( th e PA) wit h Dial

Co lu m bu s to pu rch as e a pa rcel of pr op ert y (th e Pro pe rty) th at Dial -Co lu m bu s own ed

. Cl au ff si gn ed th e PA in hi s cap aci ty as a m an ag in g m e mb e r o f Dial -Co lu m bu s. Men ard pl an ne d t o bu il d a ne w st or e on th e ne wly acq ui red Pro pe rty an d want ed to
be rel ie ve d of it s ob li ga ti on s un de r t h e S u b l e a s e on ce th e ne w lo cat io n op en ed fo r bu si ne ss

. Men ard an d Dial -Co lu m bu s th eref or e in co rp or at ed a pr ov is io n in to th e PA

pr ov id in g th at Dial -Co lu m bu s wou ld as su m e fu ll res po ns ib il it y fo r al l te rm s of th e Su bl eas e th irt y da y s afte r Men ard op en ed it s new sto re, the "Effe ct iv e Dat e." Di al

Co lu m bu s's le as e as su m

pt io n res po ns ib il i t i e s in th e PA sp eci fic al ly in cl ud ed "p ay [in g] an y an d al l ren ts an d sa ti sf y [in g] al l ot he r ob li ga ti on s un de r" th e Su bl eas e. The PA fu rth er st at ed th at Dial -Co lu m bu s's res po ns ib il it ie s " were s et for th in m or e de ta il in th e Leas e Ass ig nm en t, Co ns en t & Rel eas e" (th e Leas e Ass ig nm en t) th at was

at ta ch ed as an ex hi bi t to th e PA. Dial -Co lu m bu s's na m e, ho wev er, ap pe ars no whe re in th e Leas e Ass ig nm en t. The Leas e Ass ig nm en t in st ead st at es th at DKC-Co lu m bu s

so ld th e Pro pe rty to Men ard an d on th e st at ed "Effe ct iv e Date " ag reed to rece iv e by

as si gn m en t al l of Men ard 's rig ht , t it le an d in te res t in an d to as s u me al l of Men ard 's
li ab il it ie s, du ti es an d ob li ga ti on s un de r th e Su bl eas e. The pa rti es (an d ap pa ren tl y th e

-2

-di st ric t co ur t) se em in gl y ne ve r no ti ced th is di sc rep an cy be twee n th e do cu m en ts un ti l

it was po in te d ou t to th em at or al arg um en t be fo re th is co ur t, an d th ey ha ve pr ov id ed

us no ex pl an at io n fo r why or h ow t hi s d is crep an cy oc cu rred

.

Non et he le ss , wit h th e writ te n co ns en t of W al -Ma rt, DKC-Co lu m bu s an d

Men ard fo rm al ly ex ecu te d th e Leas e Ass ig nm en t at ta ch ed to th e PA on Feb ru ary 12

, 20 07

. Cl au ff pu rp or te d to si gn th e Leas e Ass ig nm en t in hi s cap aci ty as a m em be r of
DKC-Co lu m

bu s. Howev er, DKC-Co lu m bu s di d no t fil e it s Arti cl es of Org an iz at io n wit h th e Neb ras ka Secr et ary of St at e un ti l Octo be r 30

, 20 07

, an d it is un di sp ut ed th at
th e co m pa ny was no t a la wfu ll y or ga ni zed LLC on th e da te Cl au ff sig ne d th e Leas e Ass ig nm en t. See Neb. Re v. St at

. §§ 21 -2 60 5, 21 -2 60 8 (rep eal ed 20 13 ) (p ro vi di ng 1

th at a li m it ed li ab il it y co m pa ny is co ns id ered or ga ni zed aft er the co m pa ny ha s fil ed
it s a r t i c l e s of or ga ni zat io n wit h th e Neb ras ka Secr et ary of St at e an d ha s rece iv ed a

cert ifi cat e of or ga ni zat io n)

. Cl au ff an d Men ard bo th cl ai m th at DKC

- C o l u mbu s ad op te d th e Leas e Ass ig nm en t aft er th e co m pa ny fo rm ed

, b u t n e it he r pa rty ha s
pr ov id ed do cu m en ta ry or ot he r ev id en ce th at id en ti fie s whe n or ho w DKC-Co lu m bu s di d so

. W al -Ma rt , as su bl es so r of th e W es tg at e pr op ert y an d be ne fic ia ry of th e Su bl eas e ob li ga ti on s fu ll y a s s ig ne d by Men ard to Dial -Co lu m bu s an d DKCCo lu m bu s, de m an de d th at Men ard al so co nt in ue to be se co nd ari ly li ab le fo r th es e

co m m it m en ts . Men ard ag reed to su ch req ui rem en t.

Men ard op en ed it s ne w st or e in Apr il 20 08

. The pa rti es ag ree th at th irt y da y s la te r Dial -Co lu m

bu s be cam e res po ns ib le fo r th e Su bl eas e un de r th e te rm s of th e PA,

an d th at DKC-Co lu m

bu s al so be cam e si m il arl y acco un ta bl e vi a it s ob li ga ti on s un de r th e Leas e Ass ig nm en t. Eit he r Dial -Co lu m bu s or DK C-Co lu m

bu s pai d ren t to W al

Mar t fo r May an d Ju ne of 20 08 ; ho wev er, ne it he r co m pa ny m ad e an y ren ta l pa y m en ts

In 2013

, the N eb ra ska L im ite d L ia bil it y Co m

pa ny Act (Neb ras ka LLCA), Neb

. 1
Rev

. St at

. §§ 21 -2 60 1 et se q., was rep eal ed an d rep la ced by th e Neb ras ka Uni fo rm Lim it ed Liab il it y Co m

pa ny Act (Neb ras ka ULLCA)

, Neb

. Rev

. St at

. §§ 21 -1 01 et

se q. Th e p art ie s ag ree t ha t t he Nebr as ka LLCA is co nt ro ll in g i n t hi s ca se

.
-3

-aft er Ju ne 20 08

. Bo th co m pa ni es al so fai le d to pa y th e in su ran ce co st s an d ta xe s du e

un de r th e Su bl eas e. The Su bl eas e ex pi red in Ja nu ary 20 11

, at whi ch ti m e Dial

Co lu m bu s an d DKC- Co lu m

bu s jo in tl y

owed W al -Ma rt m or e th an $7 00 ,00 0.

As co nt em

pl at ed by th e as si gn m en ts , W al -Ma rt in it ia ll y so ug ht to recover fr om Dial -Co lu m

bu s an d DKC-Co lu m

bu s. Fai li ng th is , it th en tu rn ed to co ll ect in g fro m Men ard un de r it s in de m

ni ty co m m it m en t. Men ard ev en tu al ly se tt le d wit h W al -Ma rt
f o r $ 3 50 ,00 0. Men ard th en br ou gh t su it ag ai ns t Dial -Co lu m bu s, DKC-Co lu m

bu s ,

an d Cl au ff to reco ve r th at m on ey

. In it s pl ead in gs , Men ard as se rte d se ve ral th eo rie s of reco ve ry ag ai ns t each de fen da nt , in cl ud in g br e a ch of co nt ract an d co nt ract ua l
in de m ni fic at io n. All th ree de fen da nt s in it ia ll y de fau lt ed

. Howev er, aft er th e cl erk 's

en try of de fau lt

, Cl au ff an d Dial -Co lu m bu s en te red an ap pe aran ce, an d th e d i s t r ic t

co ur t s et as id e th e en try of de fau lt as t o t he m . DKC-Co lu m bu s n ev er ap pe ared an d

was th us su bjec te d t o d efau lt jud gm en t. Fed . R. Civ . P. 55 (b ).

Cl au ff an d Dial -Co lu m

bu s joi nt ly fil ed a ple ad ing in w hic h the y de ni ed li ab il it y

an d as se rte d se ve ral affi rm at iv e de fen se s, in cl ud in g es to pp el

. The y th en m ov ed to
di sm is s th e cas e, bu t th e di st ric t co u r t d e ni ed th ei r m ot io n. Men ard su bs eq ue nt ly
fil ed a m ot io n fo r pa rti al su m m ary jud gm en t, a sk in g th e co ur t to en te r jud gm en t in
it s fav or ag ai ns t each de fen da nt on Men ard 's br each of co nt rac t a n d c o n tra ct ua l
in de m ni fic at io n th eo rie s. Dial -Co lu m bu s di d no t co nt es t th e m ot io n, an d th e di st ric t

co ur t en te red jud gm en t ag ai ns t it

. Cl au ff op po se d th e m ot io n, arg ui ng th at he was no t
li ab le fo r th e Leas e Ass ig nm en t be cau se (1 ) th e fu tu re m em be rs of DKC-Co lu m

bu s

au th or iz ed hi m to ob li ga te th e co m pa ny to th e co nt ract ; (2 ) no ne of th e pa rti es to th e Leas e Ass ig nm en t in te nd ed fo r hi m to be pe rs on al ly li ab le ; an d (3 ) an y li ab il it y th at

m ay ha ve in cu rred was rel ie ve d or di sc ha rg ed aft er DKC-Co lu m bu s fo rm ed an d
ad op te d t he Leas e Ass ig nm en t.

-4

-The di st ric t co ur t ul ti m at el y gr an te d su m m ary jud gm en t in fav or of Men ard on th e gr ou nd s th at Cl au ff was li ab le fo r th e Leas e Ass ig nm en t un de r Neb ras ka Rev is ed
St at ut e § 21 -2 63 5 (rep eal ed 20 13 ), whi ch pr ov id ed th at "[a ]ll pe rs on s who as su m e to

act as a li m it ed li a b i l it y co m pa ny wit ho ut au th or it y to do so sh al l be joi nt ly an d

se ve ral ly li ab le f

o r al l de bt s an d li ab il it ie s of th e co m pa ny." Neb

. Rev

. St at

. § 21

- 26 35

. The di st ric t co ur t co nc lu d e d t h a t Cl au ff di d no t ha ve au th or it y to ob li ga te
DKC-Co lu m

bu s to th e Leas e Ass ig nm en t be cau se th e co nt ract was no t in ci de nt al to
th e co m pa ny's or ga ni zat io n an d DKC-Co lu m bu s th eref

or e la ck ed th e cap aci ty t o

au th or iz e it

. See Neb

. Rev

. St at

. § 21 -2 60 8( 2) (s ta ti ng th at an un or ga ni zed LLC m ay

on ly tra ns act bu si ne ss or in cu r de bt if su ch bu si ne ss or de bt i s i n c i d e n ta l to th e

co m pa ny's or ga ni zat io n)

. The di st ric t co ur t fu rth er de te rm in ed § 21 -2 63 5 im po se d 2

wha t am ou nt ed to st ric t li ab il it y on Cl au ff fo r th is un au th or iz ed co nt ract be cau se he
fai le d t o s ho w th at Men ard ag reed to a di sc ha rg e o f hi s l ia bi li ty. Cla uf f ap pe al s.

II

. DISCUSS IO N

"We r ev ie w t he di st ric t co ur t's gra nt of s um m ary jud gm en t d e n ov o, v ie win g th e ev id e n c e a nd dr awin g al l reas on ab le in fere nc es in th e li gh t m os t fav or ab le to [Cl au ff]." Mal lo y v. U.S. Po st al Serv

., 75 6 F.3 d 10 88

, 10 90 (8 th Ci r. 20 14 ). W e wil l
affi rm on ly if "t he re is no ge nu in e di sp ut e as to an y m at eri al fact an d [Me na rd ] is

en ti tl ed to jud gm en t as a m at te r of la w." Fed

. R. Ci v. P. 56 (a). The pa rti es ag ree th at

Afte r th e di st ric t co ur t en te red su m m ary jud gm en t in fav or of Men ard

, Cl au ff 2 fil ed a m ot io n req ue st in g th at th e co ur t al te r or am en d it s jud gm en t un de r Ru le 59 (e) of th e Fed eral Ru le s of Ci vi l Pro ced ur e on th e gr ou nd s th at th e op en in g of Men ard 's

ne w st or e was a co nd it io n pr ec e d e n t t o th e fo rm at io n of th e Leas e Ass ig nm en t. Cl au ff, ho wev er, co ul d ha ve rai se d th is arg um en t pr io r to en try of jud gm en t in fav or of Men ard

, an d th e di st ric t cou rt th eref or e d id no t cl earl y ab us e it s bro ad di sc ret io n in de nyin g th e m ot io n. In no va ti ve Hom e Heal th Care , I nc . v . P .T.-O.T

. A s s o c s

. of th e Bl ack Hil ls

, 14 1 F.3 d 12 84

, 12 86 (8 th Ci r. 19 98 ). Howev er, th e di st ric t co ur t wil l be free to rev is it th is di sc ret io na ry rul in g u po n re m an d s ho ul d i t ch oo se to do so

.
-5

-Neb ras ka la w go ve rn s th is di sp ut e. B e cau se no Neb ras ka ap pe ll at e co ur t ha s

in te rp ret ed th e no w rep eal ed § 21 -2 63 5, ou r ta sk is to pr ed ic t th e m an ne r in whi ch th e Neb ras ka Su pr em e Co ur t wo ul d i nt erp ret th e st at ut e. Marv in Lum be r & Ce da r Co

. v. PP G Ind us ., Inc ., 22 3 F .3d 87 3, 8 76 (8t h C ir. 2 00 0)

.

Cl au ff rai se s wha t we co ns tru e to be th ree se pa rat e arg um en ts in op po si ti on to
th e di st ric t c o u rt' s ho ld in g th at he is pe rs on al ly li ab le fo r th e Leas e Ass ig nm en t.
Cl au ff fir st co nt en ds th at , be cau se th e fu tu re m em be rs of DKC-Co lu m

bu s au th or iz ed
hi m to si gn th e Leas e Ass ig nm en t on be ha lf of th e co m pa ny, hi s co nd uc t was

au th or iz ed fo r pu rp os es of § 21 -2 63 5. Cl au ff ne xt su gg es ts th at th e st at ut e do es no t

ap pl y to hi s co nd uc t be cau se th e pa rti es ne ve r in te nd ed fo r hi m to be pe rs on al ly li ab le
fo r th e Leas e Ass ig nm en t. Fi na ll y , Cl au ff co nt en ds th at , ev en if he was li ab le un de r § 21 -2 63 5, DKC-Co lu m

bu s rel ie ve d hi m fro m su ch li ab il it y by ad op ti ng th e co nt ract

an d c om m en ci ng pe rfo rm an ce o n i t af te r th e co m

pa ny lawfu ll y

for m ed

.

A. Cla uff' s Aut ho ri ty

W e be gi n ou r an al y si s by no ti ng th at th e fact ua l di sc rep an ci es be twee n th e PA

an d th e Leas e Ass ig nm en t crea te so m e un cert ai nt y reg ard in g whe th er th e pa rti es in te nd ed to bi nd Dial -Co lu m bu s o r DKC-Co lu m

bu s t o t he Leas e Ass ig nm en t. The

pa rti es , ho wev er, rep res en te d to th e di st ric t co ur t an d to th is co ur t th a t DKCCo lu m bu s was th e in te nd ed pa rty to th e Leas e Ass ig nm en t. The refo re, fo r pu rp os es of su m m ary jud gm en t re vi ew, we wil l re ly on t he pa rti es ' rep res en ta ti on s re ga rd in g th ei r in te nt , bea rin g i n m in d t ha t fu tu re di sc ov ery m ay rev eal th at res ol ut io n of th is
is su e is far l es s cl ear t ha n t he pa rti es led th e d is tri ct co ur t t o b el ie ve

.

W e fin d no fau lt in th e di st ric t cou rt' s con cl us io n th at , ba se d on th e su m m ary jud gm en t reco rd

, Cl au ff was no t au th or iz ed to ob li ga te DKC-Co lu m bu s to th e Leas e Ass ig nm en t. The Neb ras ka LLCA pr es cri be d th e m et ho d by whi ch LLCs co ul d fo rm

an d pr oh ib it ed an un or ga ni zed LLC fro m tra ns act in g bu si ne ss or in cu rri ng de bt th at

-6

-was no t in ci de nt al to it s or ga ni zat io n. See Neb

. Rev

. St at

. §§ 21 -2 60 5, 21 -2 60 8.

Viewe d in co nju nc ti on wit h th es e pr ov is io ns , it is cl ear th at § 21 -2 63 5 crea te d th e
pr os pe ct of li ab il it y fo r pe rs on s who act ed as an LLC wit ho ut th e st at e ha vi ng gr an te d
th em au th or it y to do so

. Thi s in te rp ret at io n of th e te rm "au th or it y " is su pp or te d by
th e le gi sl at iv e hi st or y of § 21 -2 63 5 an d is co ns is te nt wit h ho w co ur ts ha ve in te rp ret ed
si m il arl y -wo rd ed st at e st at ut es in Neb ras ka an d ot he r juri sd ic ti on s. See, e.g ., Par 3,

In c. v. Liv in gs to n, 68 6 N.W .2d 36 9, 37 2- 73 (Neb

. 20 04 ) (in te rp ret in g Neb

. Rev

. St at

. § 2 1

- 2 0 2 0 ); Tim

be rli ne Equ ip

. Co

. v. Dav en po rt, 51 4 P.2 d 11 09

, 11 10 -1 1 (Or

. 3

19 73 ); Mo de l Bu s. Co rp

. Act § 14 6 cm t. (1 96 9) (s ta ti ng th e au th or it y to act as a

c o r p o r a ti on m

us t co m e fro m th e st at e); The Neb ras ka Lim it ed Liab il it y Co m pa ny Act: Heari ng on LB 1 2 1 Befo re th e Co m m

. on Ban ki ng , Co m

m erce an d In s., 19 93

Le g., 93 rd Ses s. Ja n. 26

, 19 93

, at 11 (s ta te m en t of Sen

. Dav id Lan di s, M e mb e r , Co mm

. o n B an ki ng , Co m m erce an d In s.). Acco rd in gl y , as su m in g th at DKCCo lu m bu s was act ua ll y th e in te nd ed reci pi en t o f th e Leas e Ass ig nm en t, Cl au ff was

no t au th or iz ed to ob li ga te th e co m pa ny to th is co nt ract

. Bu t se e Par 3, 68 6 N.W .2d 4

at 37 2- 73 (d efen da nt no t li ab le un de r Neb

. Rev

. St at

. § 21 -2 02 0 fo r co nt ract he si gn ed
in na m e o f un in co rp or at ed bu si ne ss be cau se reco rd es ta bl is he d th at pa rti es act ua ll y in te nd ed to bi nd a di ffer en t, l awfu ll y for m ed co rp or at io n)

.

Sect io n 21 -2 02 0, whi ch is Neb ras k a ' s co rp or at e an al og ue to § 21 -2 63 5, 3

pr ov id es th at "[a ]ll p e r s o ns pu rp or ti ng to act as or on be ha lf of a co rp or at io n, kn owi ng th ere was no in co rp or at io n un de r th e Bu si ne ss Co rp or at i on Act, sh al l be joi nt ly and sev eral ly liab le for all li ab il it ie s cr eat ed whi le so act in g."

Howev er, th e su m

m ary jud gm en t reco rd in di cat es th at DKC-Co lu m bu s cam e 4 in to ex is te nc e an d ad op te d th e Leas e Ass ig nm en t lo ng be fo re an y de bt s or li ab il it ie s act ua ll y aro se un de r th e Leas e Agr eem en t. It is th eref or e un cl ear whe th er Men ard

was act ua ll y ha rm ed in an y way by Cl au ff's un au th or iz ed c o n d u c t

. The Neb ras ka Su pr em e Co ur t te nd s to di sa pp ro ve of so m ewh at si m il ar un ba rg ai ne d fo r ev en ts

. See Po rte r v. Smith , 48 6 N.W.2d 8 46 , 85 3 (Ne b. 1 99 2)

.
-7

-B. The Pa rti es ' I nten t

Cl au ff's arg um en ts wit h res pe ct to th e r e l e v a n ce of th e pa rti es ' in te nt rai se

m ur ki er q u e s t i on s of la w. Co ur ts th at ha ve in te rp ret ed st at ut es li ke § 21 -2 63 5
vi rtu al ly al l ag ree th at th e st at ut or y la ng ua ge em bo di es a co m

m on la w co nc ep t kn own

as "p ro m ot er li ab il it y ." E.g., Ru gg io v. Vin in g, 75 5 So .2d 79 2, 79 4- 95 (Fl a. Dis t. Ct

. App

. 20 00 ); Bo ok er Cu st om Pack in g Co

. v. Sal lo m i, 71 6 P.2 d 10 61

, 10 63 (Ari z. Ct

. App

. 19 86 ); H.F

. P h il ip sb or n & Co

. v. Su so n, 32 2 N.E.2d 45

, 48 (Il l. 19 74 ). "A 'pr om ot er' is a pe rs on who as su m es to act on be ha lf of a pr op os ed co rp or at io n th at is

no t y et in co rp or at ed ." W il li am Mea de Fle tc he r, Fle tc he r Cy cl op ed ia of th e Law of
Co rp or at io ns § 18 9. Bec au se no ne xi st en t co rp or at io ns la ck cap aci ty to co nt ract , pr om ot ers ge ne ral ly are li ab le fo r th ei r pr ei nc or po rat io n ag reem en ts th ou gh m ad e on be ha lf o f a co rp or at io n t o b e fo rm ed . Id. at § 2 15

.

As an in it ia l m at te r, th e di st ric t co ur t co rrec tl y reject ed Cl au ff's arg um en t th at
hi s co nd uc t fel l ou ts id e th e pu rv ie w of § 21 -2 63 5 m erel y be cau se th e pa rti es di d no t

a f f irmativ el y in te nd th at he be pe rs on al ly li ab le fo r th e Leas e Ass ig nm en t. "Th e
pu rp os e of st at ut es li ke [2 1- 26 35 ] is to pr ot ect in no cen t th i r d p a r t i e s who ha ve de al in gs wit h an en ti ty th at do es no t ex is t an d ne ve r be co m es ad eq ua te ly cap it al iz ed ."

Ru gg io

, 75 5 So .2d at 79 5; s e e W. Sec. Co rp

. v. Eter na l Tech s. Gro up , In c., 30 3 F. App 'x 17 3, 17 4 (5 th Ci r. 20 08 ) (ci t i n g w i t h a p p ro va l to Ru gg io ). W e wou ld li ke ly

st rik e a fat al bl ow to t h e p rimary ai m of § 21 -2 63 5 were we to co nc lu de th at th e

st at ut e ap pl ie d on ly in ci rcu m st an c e s w h ere th e th ird pa rty to th e co nt ract act ua ll y kn ew it was de al in g wit h a pr om ot er. Rat he r, cas e la w st ro ng ly su pp or ts th e di st ric t

co ur t's co nc lu si on th at st at ut es li ke § 21 -2 63 5 im po se li ab il it y on pr om ot ers fo r th ei r
pr ei nc or po rat io n co nt ract s un le ss th e th ird pa rty kn ows it is de al in g wit h a pr om ot er

an d ag re e s t o lo ok so le ly to th e pr op os ed co m pa ny fo r pe rfo rm an ce. E.g., Tala ria

W a s te Mg m

t., In c. v. Laid la w W as te Sy s., In c., 82 7 F. Su pp

. 84 3, 84 6 (D. Mas s. 19 93 ); Sh erwo od & R o be rts -Oreg on , I nc . v . Al ex an de r, 52 5 P.2 d 13 5, 13 7- 39 (Or.
19 74 ). Acco rd in gl y , as su m in g th e p a r t i e s in te nd ed fo r DKC-Co lu m bu s to rece iv e

-8

-as si gn m en t of th e Su bl eas e, Cl au ff can no t es cap e th e reac h of § 2 1

- 26 35 m erel y

be cau se th e p art ie s d id no t i nt en d fo r hi m to be pe rs on al ly liab le

.

The di st ric t co ur t gav e sh or t sh rif t, ho wev er, to Clau ff's al te rn at iv e arg um en t
th at hi s li ab il it y fo r th e Leas e Ass ig nm en t was rel ie ve d aft er DKC-Co lu m bu s fo rm ed

, ad op te d th e co nt ract , an d co m m en ced pe rfo rm an ce on it

. The di st ric t co ur t co rrec tl y

no te d th at , whe n faced wit h fact pa tt ern s l ik e th e o ne be fo re u s, sev eral co ur ts ha ve de fau lt ed to pr in ci pl es of no va ti on an d con cl ud ed th at a co rp or at io n's ad op ti on of a
pr om ot er's co nt ract do e s no t rel ie ve th e pr om ot er fro m li ab il it y un le ss th e pa rti es fo rm al ly ag ree t o a r el eas e. E.g., Tala ria W as te Mg m t., 82 7 F. Su pp

. at 84 6 n.7 ; Ja co bs on v. St ern , 60 5 P.2 d 19 8, 20 1 (Nev

. 19 80 ). Howev er, nu m ero us co ur ts ha ve refu se d to st ric tl y ap pl y no va ti on pr in ci pl es to pro m ot er co nt ract s i n c irc um st an ces whe re do in g so wou ld ov erri de th e pa rti es ' in te nt an d se em in gl y gr an t to th e th ird

pa rty an un ex pe ct ed an d un ne ces sa ry win df al l. Nor fo lk S. Ry

. Co

. v. Ja co bs

, 54 9 F.
Su pp

. 2d 99 0, 99 9- 10 00 (N.D. Ohi o 20 08 ) (p ro m ot er' s liab il it y rel ie ve d if co rp or at io n fo rm s, ad op ts th e pr ei nc or po rat io n co nt ract , an d co m m en ces pe rfo rm an ce on it ); GS

Pet ro le um , I nc . v . R an d S Fu el , I nc ., No . 0 7C -0 9- 02 3 RRC , 20 09 W L 15 54 68 0, at
*3 -4 (Del . Sup er. Ct . J un e 4, 20 09 ); Su so n, 32 2 N.E.2d at 48 -5 0 (n o l ia bi li ty bas ed

on st at e la w pri nc ip le s o f co nt ract an d e qu it y ).

It is a bi t u n c le ar why th e di st ric t co ur t di d no t ta ke a m or e in cl us iv e lo ok at
Neb ras ka 's co m

m on la w of pr om ot er li ab il it y in in te rp ret in g § 21 -2 63 5. "It is a

reco gn iz ed ru le of co ns tru ct io n th at st at ut es whi ch effe ct a ch an ge in th e co m m on la w

or ta ke away a co m

m on -la w rig ht sh ou ld be st ric tl y co ns tru e d

. . . a co ns tru ct io n whi ch res tri ct s or rem ov es a co m m on -la w rig ht sh ou ld no t be ad op te d un le ss th e pl ai n

wor ds of th e act co m

pe l it ." Kno sp v. Sh afer Pro ps ., LLC, 82 0 N.W .2d 68

, 74 (Neb

. App

. 20 12 ). Fu rth erm or e, "[i ]n co ns tru in g [th e pl ai n wor ds of ] a st at ut e, a co ur t m

us t
lo ok at th e st at ut or y ob

jecti ve to be acco m

pl is he d, th e pr ob le m to be rem ed ie d, or th e
pu rp os e to be se rv ed

, an d th en pl ace o n t he st at ut e a rea so na bl e co ns tru ct io n wh ic h
be st ach ie ve s th e pu rp os e of t h e s t a t u t e." Guz m an v. Bart h, 55 2 N.W .2d 29 9, 30 1

-9

-(Neb

. 19 96 ). The se pr in ci pl es of st at ut or y co ns tru ct io n su gg es t th at , if Cl au ff ' s de fen se was av ai la bl e un de r th e co m m on la w, th en § 21 -2 63 5 sh ou ld be co ns tru ed as el im in at in g th is de fen se on ly if th e pl ai n wor ds an d th e pu rp os e of th e st at ut e co m pe l
th is res ul t. Id .; Kn os p, 8 20 N.W .2d at 7 4.

Alt ho ug h no t di sp os it iv e, se ve ral cas es su gg es t t h a t t he Neb ras ka Su pr em e Co ur t has be en he si ta nt to ho ld pr om ot ers li ab le on th ei r pr ei nc or po rat io n con tra ct s whe n it is cl ear th e pa rti es in te nd ed to bi nd th e co rp or at i o n to th e ag reem en t,

pa rti cu la rly in ci rcu m st an ces whe re th e co rp or at io n it se lf is ul ti m at el y he ld li ab le on th e co nt ract

. E.g., Hen de rs on v. Jo pl in

, 21 7 N.W .2d 92 0, 92 4 (Neb

. 19 74 ); Am

. Gas
Co ns t. Co

. v. Lis co , 24 1 N.W

. 89

, 90 (Neb

. 19 32 ); Neb

. N a t ' l Ban k of Yor k v.
F e r g u s o n , 68 N.W . 3 70 , 3 71 -7 2 (Neb . 1 89 6) ; acco rd W hi tn ey v. W y m an , 1 01 U.S

. 39 2, 39 7 ( 1 8 7 9 ) (p la in ti ff es to pp ed to de ny co rp or at io n's no ne xi st en ce be cau se

co rp or at io n la te r cam e in to ex is te nc e an d tre at ed co nt ract as va li d an d bi nd in g up on it ); Fo rk er So la r, In c. v

. K no bl au ch

, 39 6 N.W .2d 27 3, 27 9 (Neb

. 19 86 ) ("A pe rs on who co nt ract s wit h a co rp o r a t i o n is es to pp ed fro m la te r de nyin g it s co rp or at e

ex is te nc e."). Cl au ff's de fen se th at he was rel ie ve d of li ab il it y on ce DKC-Co lu m bu s

cam e in to ex is te nc e, ad op te d th e co nt ract , an d co m m en ced pe rfo rm an ce on i t
th eref or e m ay be vi a b l e un de r th e Neb ras ka co m m on la w. Lis co , 24 1 N.W

. at 90 ; Ferg us on , 68 N.W

. at 37 1- 72 ; acco rd Ja co bs

, 54 9 F. Su pp

. 2d at 10 00 ; Su so n, 32 2
N.E.2d at 4 8- 50

.

Ass um in g th e po ss ib il it y th at th e pa rti es an d th e di st ric t co ur t m a y n ot ha ve gi ve n su ffi ci en t co ns id erat io n to whe th er th e la ng ua ge an d th e pu rp os e of § 21 -2 63 5

co m pe l a fin di ng th at th e st at ut e ab roga te d Cl au ff's co m m on la w de fen se s, we su gg es t

a cl os er lo ok

. Guz m an , 55 2 N.W .2d at 30 2; Kno sp , 82 0 N.W .2d at 74

. In de ed

, al th ou gh § 21 -2 63 5 cl earl y de fin ed ho w a pr o mote r be cam e li ab le on a
pr ei nc o r p o r a t i o n co nt ract , it was si le nt wit h res pe ct to ho w a pr om ot er co ul d be
rel ie ve d of or av oi d li ab il it y fo r th e ag reem en t. Co m pa re Tala ria W as te Mg m

t., 82 7
F. Su pp

. at 84 6 n.7 (p ro m ot er m us t ob ta in ex pr es s rel eas e); wit h Su so n, 32 2 N.E.2d

-1 0-a t 4 8

- 5 0 (li ab il it y rel ie ve d by ex pr es s rel eas e or by ad op ti on of co nt ract by

co rp or at io n) ; an d Ru gg io

, 75 5 So .2d at 79 5 (p erm it ti ng de fen da nt to rai se tra di ti on al

eq ui ta bl e de fen se s to pr om ot er li ab il it y ). In ad di ti on , as th e di s t r i c t c o u r t no te d, §
21 -2 63 5 is in te nd ed to pr ot ect pa rti es th at are vi ct im iz ed by un au th or iz ed co rp or at e

act iv it y

. W e th eref

or e fin d so m e m eri t in th e cas es ho ld in g t h a t t h e no rm al ly rig id

no va ti on ru le s s ho ul d b e rel ax ed in cir cu m st an ces wher e th e co rp or at io n form s and
ad op ts th e co nt ract be cau se th e th ird pa rty pr es um ab ly rece iv es "ev erythi ng fo r whi ch
it ha d bar ga in ed " and can ha rd ly be la be le d a vi ct im

. Su so n, 32 2 N.E.2d at 49 ; see 5

al so Jac ob s, 5 49 F. Sup p. 2 d a t 1 00 0.

Giv en th e co m

pl ex it y of th es e le ga l is su es an d th e po te nt ia l fo r fac t u al
de fic ie nc ie s in th e su m

m ary jud gm en t reco rd no te d ab ov e, we co nc lu de th at ou r be st

co ur se of act io n is to le av e to th e di st ric t co ur t th e qu es ti on of whe th er th e Neb ras ka

co m m on la w an d/ or § 21 -2 63 5 pr ecl ud e Cl au ff's arg um en t th at hi s li ab il it y un de r th e

6

Leas e Ass ig nm en t m ay be rel ie ve d or av oi de d be cau se DKC-Co lu m bu s cam e in to

ex is te nc e, ad op te d t he co nt ract , and co m m en ced pe rfo rm an ce o n i t.

Cl au ff pl ed an es to pp el de fen se , an d th e pa rti es ' rep res en ta ti on s to th is co ur t 5

su gg es t th at th ey ha ve vi ewed th e po te nt ia l av ai la bi li ty of a co rp or at io n by es to pp el de fen se as a li ve is su e th ro ug ho ut th e co ur se of th es e pr oc eed in gs

. Howev er, be cau se th e su m m ary jud gm en t re cord is un cl ear reg ard in g th e ex te nt Cl au ff br ou gh t th is is su e to th e di st ric t co ur t's at te nt io n, we le av e t o C la uf f th e bu rd en of art ic ul at in g to th e di st ric t co ur t t he ba si s o f hi s es to pp el de fen se

.
W e no te th at su bs eq ue nt to th e di st ric t co ur t's gr an t of su m m ary jud gm en t, th e 6 Neb ras ka Su pr em e Co ur t reco gn iz ed th at Neb

. Rev

. St at

. § 21 -2 02 0, whi ch is th e

co rp or at e an al og ue to § 21 -2 63 5, di d no t ab ol is h th e co m m on la w de fen se of de fact o

co rp or at io n. In re Estat e o f Greb

, 84 8 N.W .2d 61 1, 62 0- 21 (Neb

. 20 14 ). Alt ho ug h

no t di rect ly on po in t, Greb cert ai nl y su gg es ts th at th e Neb ras ka Su pr em e Co ur t wou ld reject th e arg um en t th at Neb ras ka 's pr om ot er li ab il it y st at ut es ab ol is he d th e co m m on la w le ga l an d eq ui ta bl e de fen se s to pr om ot er li ab il it y

. Acco rd Su so n, 32 2 N.E.2d at 48

.
-1 1-II I. CONCLUSI ON

The di st ric t co ur t's gr an t of su m m ary jud gm en t in fav or of Men ard is rev ers ed

an d re m an de d fo r fu rth er p ro ceed in gs co ns is te nt wit h t hi s o pi ni on

.

COLLOTON, Ci rcu it Ju dg e, di ss en ti ng

.

In m y vi ew, th e d i s t r i ct co ur t co rrec tl y ap pl ie d th e te rm s of Rev is ed St at ut es of Neb ras ka § 21 -2 63 5 (2 01 2)

, an d pr op erl y reject ed th e arg um en ts th at Terry Cl au ff

pr es en te d in th e di st ric t co ur t. The la ng ua ge of th e st at ut e is cl ear: “ All pe rs on s who

as su m e to act as a li m it ed li ab il it y co m pa ny wit ho ut au th or it y to do so sh al l be joi nt ly

an d se ve ral ly li ab le fo r al l de bt s an d li ab il it ie s of th e co m pa ny.” Id

. Cl au ff pu rp or te d

to si gn a le as e as si gn m en t on be ha lf of a li m it ed li ab il it y co m pa ny, DKC-Co lu m

bu s, th at was no t y et or ga ni zed

. Cl au ff ha d no au th or it y to do so , se e Neb

. Rev

. St at

. § 21

- 26 08 (2 ) (2 01 2)

, a n d h e is th eref or e joi nt ly an d se ve ral ly li ab le fo r th e res ul ti ng li ab il it ie s o f DKC-Co lu m bu s.

The co ur t’s cu rio us op in io n rev erses th e jud gm en t in fav or of Men ard

, In c., an d

rem an ds th e cas e to th e di st ric t co ur t fo r fu rth er co ns id erat io n wit ho ut id en ti fy in g an y

erro r in th e an al y si s of th e di st ric t co ur t. In st ead

, th e co ur t rem an ds fo r co ns id erat io n of two m at te rs th at were ne ve r pr es en te d to or ad dr es se d by th e di st ric t co ur t. It ha s be en well se tt le d he ret of or e th at we wil l no t r e ve rs e a gr an t of su m m ary jud gm en t
ba se d on arg um en ts th at were no t ra i s e d i n r e s p o ns e to th e m ot io n. B.M. ex re l.
Mil le r v. S . Cal la wa

y R-II S ch . Dis t. , 73 2 F .3d 88 2, 8 87 (8t h C ir. 2 01 3)

.

The co ur t t hi nk s i t is a “ bi t u nc le ar wh y th e d is tri ct co ur t d id no t t ak e a m or e in cl us iv e lo ok at Neb ras ka ’s co m m on la w of pr om ot er li ab il it y in in te rp ret in g § 21

- 26 35 .” Ant e , at 9. The reas on is pe rfec tl y cl ear: Cl au ff ne ve r arg ue d in res po ns e to
Men ard ’s m o t i o n fo r su m m ary jud gm en t th at a co m m on la w de fen se su ch as

“ co rp or at io n by es to pp el ” pr ecl ud ed ap pl i c a t i on of th e st at ut e. The su m m ary

-1 2-jud gm en t reco rd is no t “ un cl ear reg ard in g th e ex te nt Cl au ff br ou gh t th is is su e to th e

di st ric t co ur t’s at te nt io n,” an te , a t 1 1 n

. 5 ; Cl au ff ne ve r m en ti on ed it

. Eve n if th e bo il erp la te refe ren ce to “ waiv er, la ch es an d/ or es to pp el ” in Cl au ff’s an swe r, R. Doc

. 21

, at 7, is en ou gh to pl ead ad eq ua te ly a de fen se of “ co rp or at io n by es to pp el ” un de r Neb ras ka la w, a de fen da nt do es no t pr es erv e a de fen se by pl ead in g it bu t th en de cl in in g to ad va nc e it in res po ns e to th e op po ne nt ’s di sp os it iv e m ot io n. The di st ric t

co ur t un de rs ta nd ab ly di d no t ad dr es s th e po in t, an d it is to o la te fo r Cl au ff to rai se a

ne w def en se to th e m ot io n fo r su m m ary jud gm en t fo r th e fi rs t t im e o n a pp eal

.

The co ur t, m or eo ve r, ov ers ta te s t he si gn ifi can ce o f Fir st Neb ra sk a Tr us t Co

.

v. Gre b (In re Est at e of Gre b)

, 84 8 N.W .2d 61 1 (Neb

. 20 14 ), whe n it op in es by way of a fo ot no te —wi th ou t br ie fin g or arg um en t— th at Gre b “ cert ai nl y su gg es ts th at th e Neb r a s k a Su pr em e Co ur t wou ld reject th e arg um en t th at Neb ras ka ’s pr om ot er li ab il it y st at ut es ab ol is he d th e co m m on la w le ga l an d eq ui ta bl e de fen se s to pr om ot er li ab il it y .” Ant e , at 11 n.6

. Gre b ho ld s th at th e B u s i n e s s C o r p or at io n Act di d no t
ab ol is h th e de fact o co rp or at io n do ct rin e in Neb ras ka in a cas e “ whe re, un be kn own st

to it s di rect or s and of

fic ers , a la wfu l corp or at io n was inv ol un ta ril y di ss ol ve d.” 84 8

N.W .2d at 62 1. Gre b do es no t ad dr es s pr om ot er li ab il it y ; if an y th in g, it im pl ie s th at
th e de fact o co rp or at io n de fen se is un av ai la bl e in th at co nt ex t be cau se th e Bu si ne ss Co rp or at io n Act go ve rn s: “ Alt ho ug h th e act co nt ai ns se ct io n s g o v e rn in g th e

co m m en cem en t of co rp or at e ex is te nc e an d imp o s in g li ab il it y up on pe rs on s

pu rp or ti ng to ac t as or on be ha lf of a co rp or at io n wi th kn ow le dg e th at no
in co rp or at io n ha s ta ken pl ac e , t h e s e p r ov is io ns do no t ad dr es s al l of th e is su es

res po ns i b le fo r th e de ve lo pm en t of th e [d e fact o co rp or at io n] do ct rin e.” Id

. (em ph as es ad de d) (fo ot no te s om it te d)

. One is su e un ad dr es se d by th e Bu si ne ss Co rp or at io n Act was th e eff ect of a n i nv ol un ta ry co rp or at e di ss ol ut io n un kn own to
th e co rp or at e di rect or s an d of fic ers , so th e de fact o co rp or at io n do ct rin e was av ai la bl e in th at s c e n a r i o

. Bec au se § 21 -2 63 5 do es co nt ai n se ct io ns im po si ng li ab il it y on
pe rs on s pu rp or ti ng t o a c t a s or on be ha lf of a li m it ed li ab il it y co m pa ny wit ho ut

au th or it y to do so , th ere is go o d r e a s o n t o be li ev e th at th e Neb ras ka co ur t wou ld

-1 3-fo ll ow th e te rm s of th e st at ut e. Se e Th omp so n & Gre en Mac h. C o

. v

. M u s i c Ci ty
Lu mbe r Co

. , 68 3 S.W .2 d 3 4 0

, 34 5 (Ten n. Ct

. App

. 19 84 ) (ap pl y in g Ten ne ss ee
eq ui va le nt of § 21 -2 63 5 fo r co rp or at io ns ); W he at Belt Pub

. Pow er Dis t. v. Bat te rma n , 45 2 N.W .2d 49 , 5 1 ( N e b

. 1 99 0) (“ [T]he li ab il it y of on e pa rty t o a co nt ract m ay no t
be su bs ti tu te d fo r th e li ab il it y of an ot he r un le ss th e pa rti es to th e or ig in al c o nt ract

ag ree t o t he di sc ha rg e o f th e o rig in al de bt or an d s ub st it ut io n o f a n ew on e.”).

The co ur t’s ot he r st at ed reas on fo r rem an di ng is a refe ren c e t o “factu al
di sc re pa nc ie s” tha t “ cr eate so m e un cert ai nt y ” ab ou t whe th er DKC-Co lu m bu s or Dial

Co lu m bu s was the pu rp or te d par ty to th e Leas e Ass ig nm en t th at Cl au ff sig ne d with

Men ard

. Ant e , at 6, 11

. Thi s th eo ry , to o, was ne ve r rai se d in th e di st ric t co ur t or ev en

o n a pp eal

. Cl au ff ack no wled ge d rep eat ed ly th at he pu rp or te d to si gn th e Le a s e Ass ig nm en t on be ha lf of DKC-Co lu m bu s. R. Doc

. 56

, at 3 (“ Cl au ff

. . . ex ecu te d th e Leas e Ass ig nm en t on be ha lf of D K C a s a m em be r.”); id

. at 11 (“ [T]he Leas e Ass ig nm en t ex pr es sl y sh owe d Cl au ff as si gn in g as a m em be r of DKC.”); R. Doc

. 57

- 1, at 1 (“ I

. . . ex ecu te d th e Leas e Ass ig nm en t on be ha lf o f D K C

. ” ) (d ecl arat io n of Terry L. Cl au ff); A p p e l la nt ’s Br. at 5 (“ Cl au ff pe rs on al ly ne go ti at ed th e Leas e Ass ig nm en t wit h Men ard on be ha lf of DKC-C o l u mbu s, an d ex ecu te d th e Leas e Ass ig nm en t on be ha lf of DKC-Co lu m bu s as a m em

be r.”). If th e writ te n pa pe rs were

no t en ou gh , Cla uf

f’s co un se l re affi rm ed th e p oi nt at o ral arg um en t:

Que st i on : Hav e y ou ev er arg ue d, in th e di st ric t co ur t or in th is co ur t, th at th e Leas e Ass ig nm en t was ex ecu te d by Cl a u f f on be ha lf of Dial

Co lu m bu s?

Co un se l fo r Cl au ff: It ha s ne ve r be en arg ue d th at th e Leas e Ass ig nm en t
sp eci fic al ly w as si gn ed on be ha lf o f Dia l-C ol um bu s.

-1 4-The di st ric t co ur t co rrec tl y ap pl ie d § 2 1

- 2 63 5 an d reject ed th e po in ts th at

Cl au ff rai se d in res po ns e to Men ard ’s m ot io n fo r su m m ary ju d g ment

. The re is no

so un d re as on for a do -o ve r. I wou ld affi rm th e jud gm en t.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-1 5-