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LeRETTE v. HOWARD

Cite as 300 Neb. 128

David LeRette, Jr., individually and a

of Master Blaster, Inc., appe

cross-appellees, v. Steven H. Ho

Dowd, Howard & Corrigan, L.L.C

appellees and cross-appe

___ N.W.2d ___

Filed June 1, 2018. No. S-17-580.

1. Jurisdiction: Appeal and Error. Subject matter jurisdiction is a question of law for the court, which requires an appellate court to reach a 

conclusion independent of the lower court’s decision.

2. Judgments: Verdicts: Appeal and Error. Review of a ruling on 

a motion for judgment notwithstanding the verdict is de novo on 

the record.

3. Trial: Appeal and Error. The standard of review of a trial court’s 

determination of a request for sanctions is whether the trial court abused 

its discretion.

4. Actions: Parties. The purpose of Neb. Rev. Stat. § 25-301 (Reissue 

2016) is to prevent the prosecution of actions by persons who have no 

right, title, or interest in the cause.

5. Actions: Parties: Public Policy. Neb. Rev. Stat. § 25-301 (Reissue 

2016) discourages harassing litigation and keeps litigation within certain 

bounds in the interest of sound public policy.

6. Actions: Parties: Standing. The focus of the real party in interest 

inquiry is whether the party has standing to sue due to some real interest in the cause of action, or a legal or equitable right, title, or interest 

in the subject matter of controversy. The purpose of the inquiry is to 

determine whether the party has a legally protectable interest or right in 

the controversy that would benefit by the relief to be granted.

7. Actions: Pleadings: Parties. The character in which one is a party to 

a suit, and the capacity in which a party sues, is determined from the 

allegations of the pleadings and not from the caption alone.

Nebraska Supreme Court Online Library

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

08/24/2018 09:09 AM CDT
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8. Judgments: Verdicts. On a motion for judgment notwithstanding the 

verdict, the moving party is deemed to have admitted as true all relevant evidence admitted that is favorable to the party against whom the 

motion is directed, and, further, the party against whom the motion is 

directed is entitled to the benefit of all proper inferences deducible from 

the relevant evidence.

9. ____: ____. To sustain a motion for judgment notwithstanding the 

verdict, the court resolves the controversy as a matter of law and may 

do so only when the facts are such that reasonable minds can draw but 

one conclusion.

10. Attorneys at Law: Attorney Fees: Conflict of Interest. An attorney 

who violates established rules of professional conduct and performs 

services despite a conflict of interest may not receive compensation for 

such services.

11. Judgments: Words and Phrases. An abuse of discretion occurs when 

a trial court’s decision is clearly against justice or conscience, reason, 

and evidence, or when the decision unfairly deprives the litigant of a 

substantial right or a just result.

Appeal from the District Court for Douglas County: Timoth

P. Burns, Judge. Affirmed as modifi

Ronald J. Palagi and Donna S. Colley, of Law Offices of 

Ronald J. Palagi, P.C., L.L.O., and Kathy Pate Knickrehm 

for appellants.

David A. Domina, of Domina Law Group, P.C., L.L.O., for 

appellees.

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

JJ., and Steinke, District Judg

Steinke, District Judg

NATURE OF CASE

The jury found in favor of the plaintiffs on a claim for legal 

malpractice and fraudulent misrepresentation and awarded 

$775,000. After trial, the district court overruled the plaintiffs’ 

motion for sanctions and partially granted the defendants’ 

motion for judgment notwithstanding the verdict (JNOV), 
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reducing the damages to $235,968.78. The plaintiffs appeal, 

and the defendants cross-appeal, challenging the district 

court’s subject matter jurisdiction.

BACKGROUND

In November 2013, David LeRette, Jr., individually and as 

the owner of Master Blaster, Inc., filed a complaint against 

Steven H. Howard and his law firm, alleging, among other 

things, that Howard committed legal malpractice and breached 

his duty as LeRette’s attorney when he failed to advise LeRette 

of his conflicts of interest and when he acted adversely to 

LeRette’s interests. A jury trial was held on the matter in early 

2017. From the evidence presented, we adduce the following 

set of facts.

Master Blaster’s Judg

Against And

In 2006, LeRette sold certain assets of his business, Master 

Blaster, to Johnnie Anderson. Pursuant to the purchase agreement, Anderson executed a promissory note to Master Blaster 

for $350,000 with 12 percent annual interest. After three payments, Anderson defaulted on the note.

Master Blaster filed suit for the balance owed. During those 

proceedings, Master Blaster was represented by Sandra L. 

Maass.

Anderson then filed for bankruptcy. Master Blaster’s suit 

against Anderson was stayed. In the bankruptcy proceeding, 

Master Blaster challenged the discharge of Anderson’s debt 

to Master Blaster. The bankruptcy court ultimately granted 

Master Blaster’s request after finding that omissions and misstatements in Anderson’s schedules and statements of financial affairs were inaccurate, unreliable, and constituted intentional or reckless indifference to the truth. Thereafter, the stay 

was lifted from Master Blaster’s suit against Anderson. In 

2009, Master Blaster secured a judgment against Anderson for 

$470,020.39 plus interest.
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Legal Malpractice Acti

Anderson’s Bankruptcy A

LeRette’s bankruptcy attorney thought Anderson’s bankruptcy attorneys may have been negligent in their representation of Anderson and suggested to LeRette that Anderson 

could pursue a legal malpractice claim against them in order 

to generate funds that could be used to satisfy his debt to 

Master Blaster. Based on this information, LeRette contacted 

Maass, who told LeRette that she thought her former classmate, Howard, might be able to help.

With LeRette’s approval, Maass called Howard to discuss 

the matter. Howard indicated that he was interested in the 

case. Thereafter, Maass gave Howard’s contact information to 

LeRette, who then called Howard.

After talking to Howard, LeRette contacted Anderson and 

asked him if he was interested in pursuing a legal malpractice 

claim against his bankruptcy attorneys. Anderson indicated 

that he was, and LeRette and Anderson met at a fast food restaurant to discuss it. According to LeRette, he told Anderson 

that he would hire the attorney.

LeRette then called Howard and scheduled a meeting in 

Howard’s law office for May 1, 2009. Howard told LeRette 

to bring Anderson, which he did. At the meeting, Howard 

advised LeRette and Anderson that any proceeds from the 

suit would be used to satisfy the judgment against Anderson. 

Howard advised LeRette not to execute on the judgment 

against Anderson, because it would make the case more difficult for Howard. LeRette did not execute on the judgment. 

According to LeRette, Howard told him that he could not be 

named in the malpractice action, because malpractice suits cannot be assigned. But Howard represented that the suit would 

be successful and that LeRette would “get [his] money and 

get paid.”

Howard filed the legal malpractice claim against the bankruptcy attorneys in October 2009.
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Mediation and Sett

Agreeme

In March 2012, a mediation of the legal malpractice suit 

against Anderson’s bankruptcy attorneys occurred. Howard, 

LeRette, and Anderson were all present. According to LeRette, 

he met with Howard before the mediation to discuss what 

settlement amounts might be acceptable. The mediation ultimately reached an impasse.

Thereafter, the mediator issued a proposal in which he recommended that the parties settle for $350,000, with Anderson 

to receive $0, LeRette to receive $300,000, and Howard to 

receive $50,000 for his fees. The proposal was not accepted.

On July 23, 2012, without discussing the matter with 

LeRette, Howard settled the legal malpractice action for 

$350,000. Howard deposited the settlement proceeds into his 

firm’s trust account and dispersed $235,964.78 to Anderson, 

retaining the remaining $114,035.22 in payment of his fees 

and expenses. Anderson did not pay LeRette, and LeRette 

never received any of the settlement proceeds.

According to LeRette, he stopped receiving information from Anderson and Howard after the mediation. When 

LeRette followed up with the malpractice case, he was told 

that the trial was to occur on October 29, 2012. Sometime 

later, LeRette learned about the settlement and the payment 

and filed the suit against Howard and his law firm.

Evidence of Dam

At the trial, LeRette sought to prove that Howard’s legal 

malpractice and fraudulent misrepresentations caused him 

damages.

As evidence of those damages, LeRette called a university finance professor to testify. The witness calculated what 

Master Blaster’s judgment against Anderson would have been 

worth beginning in April 2009 through February 2017. A document of his calculations was entered into evidence. According 

to the document, the value of Master Blaster’s judgment at the 
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time of the trial was either $1,209,614 or $1,276,038, depending on whether a penalty was included.

Relevant to the value of Anderson’s claim against his bankruptcy attorneys, an offer of judgment filed by Howard was 

admitted into evidence. In the offer, Anderson offered to accept 

an entry of judgment against the bankruptcy attorneys in the 

amount of $1 million.

Jury Verdi

At the conclusion of the evidence, the jury was instructed 

on two theories: legal malpractice and fraudulent misrepresentation. After the case was submitted, the jury returned a 

general verdict for LeRette and Master Blaster with damages 

of $775,000.

Damages Redu

After trial, Howard and his law firm filed a motion for 

JNOV, to alter or amend judgment, and for a new trial. In the 

motion, Howard and his firm alleged, among other things, that 

the judgment was not supported by sufficient evidence and that 

the jury awarded excessive damages. A hearing on the motion 

was held, and on May 5, 2017, the district court issued an order 

reducing the damages from $775,000 to $235,968.78, which 

was the amount Anderson received in the settlement.

In reducing the damages to the amount that Anderson 

received in the settlement, the district court reasoned:

There was no evidence adduced at trial that . . . Howard 

could have obtained a more favorable settlement for 

Anderson or that he performed deficiently in reaching 

the settlement. It is clear from the evidence at trial that 

Anderson was the only one with a legal claim against the 

bankruptcy attorneys, and he agreed to settle the case for 

$350,000 in which he received $235,968.78.

The only damages [LeRette and Master Blaster] could 

have sustained, as a proximate cause of . . . Howard[’]s 

negligence or misrepresentations, was not seeing that 

LeRette [and Master Blaster] received all or part of the 
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settlement proceeds received by Anderson. Under the 

facts presented to the jury, the amount Anderson received 

would equal the most [LeRette and Master Blaster] could 

have received as damages. The Court finds, as a matter of 

law, that this amount was the only damages that [LeRette 

and Master Blaster] are entitled [to].

Motion for San

After the trial, LeRette filed a motion for sanctions, requesting that the trial court strike Howard and his law firm’s 

answer, award attorney fees and costs to LeRette and Master 

Blaster, and disgorge the attorney fees received by Howard 

and his law firm in the underlying legal malpractice suit. The 

district court overruled the motion.

On appeal, LeRette and Master Blaster argue that the district 

court erred in overruling the motion, because the evidence 

shows that Howard failed to comply with discovery requests 

and committed fraud upon the court. LeRette and Master 

Blaster argue that a pattern of misconduct by Howard and his 

law firm warranted sanctions and that the trial court’s failure to 

impose sanctions constituted an abuse of discretion.

ASSIGNMENTS OF ERROR

LeRette and Master Blaster assign that the trial court erred 

in reducing the jury’s award of damages and in overruling the 

motion for sanctions.

Howard and his law firm cross-appeal, assigning that the 

trial court erred in failing to dismiss LeRette and Master 

Blaster’s complaint for want of subject matter jurisdiction.

STANDARD OF REVIEW

[1] Subject matter jurisdiction is a question of law for the 

court, which requires an appellate court to reach a conclusion 

independent of the lower court’s decision.1

1 Deutsche Bank Nat. Trust Co. v. Siegel, 279 Neb. 174, 777 N.W.2d 259 

(2010).
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[2] Review of a ruling on a motion for JNOV is de novo on 

the record.2

[3] The standard of review of a trial court’s determination 

of a request for sanctions is whether the trial court abused 

its discretion.3

ANALYSIS

Subject Matter Jurisd

Before addressing LeRette and Master Blaster’s assignments, we first consider Howard and his law firm’s assignment regarding subject matter jurisdiction. They argue that 

because the judgment debt was owned by the corporation 

Master Blaster and not by LeRette, LeRette was not the real 

party in interest. Howard and his firm contend that because 

LeRette was not the real party in interest, he lacked standing 

to sue, and that therefore, the trial court lacked subject matter jurisdiction.

[4-6] Indeed, Neb. Rev. Stat. § 25-301 (Reissue 2016) 

requires that except as otherwise provided by statute, all cases 

are to be brought “in the name of the real party in interest.” 

The purpose of § 25-301 is to prevent the prosecution of 

actions by persons who have no right, title, or interest in the 

cause.4 Section 25-301 also discourages harassing litigation and 

keeps litigation within certain bounds in the interest of sound 

public policy.5 The focus of the real party in interest inquiry is 

whether the party has standing to sue due to some real interest 

2 See Bellino v. McGrath North, 274 Neb. 130, 133, 738 N.W.2d 434, 

439 (2007) (“[t]o sustain a motion for [JNOV], the court resolves the 

controversy as a matter of law and may do so only when the facts are 

such that reasonable minds can draw but one conclusion”), and Hauser 

v. Nebraska Police Stds. Adv. Council, 264 Neb. 605, 650 N.W.2d 760 

(2002) (questions of law are reviewed de novo on record).

3 Malchow v. Doyle, 275 Neb. 530, 748 N.W.2d 28 (2008).

4 Manon v. Orr, 289 Neb. 484, 856 N.W.2d 106 (2014).

5 Id.
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in the cause of action, or a legal or equitable right, title, or 

interest in the subject matter of controversy.6 The purpose of 

the inquiry is to determine whether the party has a legally protectable interest or right in the controversy that would benefit 

by the relief to be granted.7

The crux of Howard and his law firm’s jurisdictional argument rests on the premise that Master Blaster was not named a 

party to this action. A review of the operative pleadings, however, reveals otherwise.

[7] We have held that the character in which one is a party 

to a suit, and the capacity in which a party sues, is determined 

from the allegations of the pleadings and not from the caption alone.8

Here, the caption of the operative complaint, as well as its 

body, support that both LeRette and Master Blaster were parties to the action. The caption of the operative complaint identifies the “[p]laintiffs” as “DAVID LERETTE, JR., Individually, 

and as owner of MASTER BLASTER, INC.” We notice that 

the caption uses the plural form of the term “plaintiff” and 

that it also lists both LeRette and Master Blaster in capital 

letters, which is traditionally done with parties. In the body 

of the operative complaint, under the “STATEMENT OF THE 

FACTS” heading, Master Blaster was again specifically identified as a plaintiff.

We also conclude that the jury instructions, the verdict form, 

the amended judgment, and the postjudgment motion for sanctions all support that both LeRette and Master Blaster were 

parties to the action. Each of these filed documents uses the 

plural form of the term “plaintiff” and refers to both LeRette 

and Master Blaster.

6 Id.

7 Id.

8 Zapata v. McHugh, 296 Neb. 216, 893 N.W.2d 720 (2017); Steinhausen v. 

HomeServices of Neb., 289 Neb. 927, 857 N.W.2d 816 (2015).
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Because the allegations of the pleadings sufficiently identify Master Blaster as a party plaintiff, Howard and his law 

firm’s argument that this court lacks jurisdiction because this 

action was not brought by the real party in interest is without merit.

Reduction of Jury A

We next consider LeRette and Master Blaster’s assignment 

that the district court erred in partially granting Howard and 

his law firm’s motion for JNOV and reducing the jury’s award 

of damages.

[8,9] On a motion for JNOV, the moving party is deemed 

to have admitted as true all relevant evidence admitted that 

is favorable to the party against whom the motion is directed, 

and, further, the party against whom the motion is directed is 

entitled to the benefit of all proper inferences deducible from 

the relevant evidence.9 To sustain a motion for JNOV, the court 

resolves the controversy as a matter of law and may do so only 

when the facts are such that reasonable minds can draw but 

one conclusion.10

LeRette and Master Blaster assert that the trial court erred 

in reducing the damages to $235,968.78, the amount Anderson 

received in the settlement. He argues that reasonable minds 

could have concluded that LeRette and Master Blaster were 

entitled to $775,000. We disagree.

LeRette and Master Blaster’s argument is based on the 

premise that the damages resulting from Howard’s legal malpractice are equal to the value of Master Blaster’s judgment 

against Anderson. Such premise would be true if Anderson’s 

legal malpractice claim had gone to trial and been successful. Then, Anderson’s damages would include the damages 

resulting from the bankruptcy attorney’s failure to have Master 

Blaster’s judgment discharged.

9 Bellino, supra note 2.

10 Id.
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However, LeRette and Master Blaster did not present evidence to support a finding that Anderson’s malpractice action 

would have been successful had it proceeded to trial. Nor did 

they present evidence that Howard was negligent or acted deficiently in securing the $350,000 settlement or that he could or 

should have secured a greater settlement.

LeRette and Master Blaster did, however, present evidence 

to support a finding that Howard was negligent in advising 

LeRette not to execute on the judgment, in representing that 

LeRette would receive the proceeds, and in cutting LeRette 

out of the settlement proceeds. With regard to executing on 

the judgment, the evidence showed that at all relevant times, 

Anderson had no assets except for various tools and “a partly 

put together vehicle.” Because any damages resulting from the 

executing advice was minimal, the only damages proximately 

caused by Howard’s negligence or misrepresentations was in 

not seeing that LeRette and Master Blaster received the settlement proceeds.

[10] Although the district court reduced the award to the 

amount that Anderson received in the settlement, we modify 

that amount to include the amount Howard received in the 

settlement. We so modify the award, because an attorney who 

violates established rules of professional conduct and performs 

services despite a conflict of interest may not receive compensation for such services. In State ex rel. FirsTier Bank v. 

Mullen,

11 we explained:

We do not accept the contention that an attorney can 

receive fees for representation which from the outset 

gives the appearance of impropriety and is violative of 

established rules of professional conduct. An attorney 

may not recover for services rendered if those services 

are rendered in contradiction to the requirements of 

11 State ex rel. FirsTier Bank v. Mullen, 248 Neb. 384, 390, 534 N.W.2d 575, 

580 (1995).
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professional responsibility and inconsistent with the character of the profession.

It is an established rule of professional conduct that a lawyer may not represent a client if the representation involves a 

concurrent conflict of interest, unless, among other things, the 

client is advised of the conflict and consents to it.12

Here, we must assume that Howard failed to advise LeRette 

and Anderson of his conflict of interest. Because a general verdict does not specify the basis for an award, Nebraska law presumes that the winning party prevailed on all issues presented 

to the jury.13 One of the issues presented to the jury was that 

Howard failed to advise LeRette and Anderson of his conflict 

of interest.

Because Howard violated the rule regarding representations 

involving conflicts of interest, we conclude that, as a matter of 

law, Howard is not entitled to compensation for his services in 

the settlement. Thus, we modify the jury award to include the 

$114,035.22 that he received for those services.

Motion for San

[11] Finally, LeRette and Master Blaster claim that the 

trial court abused its discretion in overruling their postverdict motion for sanctions against Howard and his law firm. 

An abuse of discretion occurs when a trial court’s decision is 

clearly against justice or conscience, reason, and evidence, or 

when the decision unfairly deprives the litigant of a substantial right or a just result.14

Although the trial court did not explain its reasoning for 

denying LeRette and Master Blaster’s motion for sanctions, 

we think it likely did so because it found that Howard was 

12 See Neb. Ct. R. of Prof. Cond. § 3-501.7.

13 Heckman v. Burlington Northern Santa Fe Ry. Co., 286 Neb. 453, 837 

N.W.2d 552 (2013).

14 See Coral Prod. Corp. v. Central Resources, 273 Neb. 379, 730 N.W.2d 

357 (2007).
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not acting in bad faith when he sought to protect, based on 

attorney-client privilege, his files and the confidential information of his client, Anderson. Because we see no abuse of discretion, we find that this assignment is without merit.

CONCLUSION

For the reasons set forth above, we affirm the district court’s 

partial granting of Howard and his law firm’s JNOV, but modify the jury award from $235,964.78 to $350,000.

Affirmed as modified