Opinion ID: 1813711
Heading Depth: 1
Heading Rank: 7

Heading: equitable rescission

Text: In an equitable rescission action based on fraud, undue influence, misrepresentation, or business coercion, the proponent bears the burden of proving each element by clear and convincing evidence. See, Schuelke v. Wilson, 250 Neb. 334, 549 N.W.2d 176 (1996); Goff v. Weeks, 246 Neb. 163, 517 N.W.2d 387 (1994); McCubbin v. Buss, 180 Neb. 624, 144 N.W.2d 175 (1966). In its order, the trial court did not expressly state that it utilized this heightened evidentiary standard. However, it is presumed in a bench trial that the judge was familiar with and applied the proper rules of law unless it clearly appears otherwise. State v. Orduna, 250 Neb. 602, 550 N.W.2d 356 (1996). In regard to the Bauermeisters' claims against appellees Roots and Resource Recycling, the trial court concluded that the Bauermeisters had failed to prove fraud, either actual or constructive, on Roots' part, and that Roots was not guilty of business coercion, nor did he exert undue influence on the Bauermeisters. We agree. The evidence establishes that the Bauermeisters, in executing the assignment and allocation agreement, did not rely on Roots, but, instead, relied on Katz. Roots and the Bauermeisters were unable and unwilling to pay attorney fees on an hourly fee basis in August 1988. Moreover, in the joint venture agreement, executed at a time when each was individually represented by counsel, Roots and the Bauermeisters agreed to split equally all profits from the operation of a landfill on the Bauermeister property. Thus, the trial court correctly concluded that the assignment and allocation agreement should be enforced as written in regard to Roots and Resource Recycling. We note that the Bauermeisters did not assign as error in their cross-appeal the district court's failure to rescind the assignment and allocation agreement on the grounds of misconduct with respect to McReynolds or Katz. Thus, this issue is not before us. Notwithstanding, the Bauermeisters argue that the assignment and allocation agreement was a modification of the prior fee agreement and that McReynolds therefore had an affirmative duty to make a full and fair disclosure of all material facts affecting the transaction at issue, and ensure that the transaction in question was fair. Whatever merit there may be to the Bauermeisters' argument, it nonetheless does not address the determinative issue, that being the remedy requested by the Bauermeisters. The purpose of rescission is to place the parties in a status quo, that is, return the parties to their position which existed before the rescinded contract. Kracl v. Loseke, 236 Neb. 290, 461 N.W.2d 67 (1990). The trial court concluded that it was impossible for equity to substantially restore the parties to the positions they held prior to the execution of the assignment and allocation agreement. We agree. The land at issue has been conveyed to Waste Management for use as a landfill. No one wants this conveyance rescinded or this use terminated. Further, the joint venture business opportunity to bid for the Douglas County landfill is forever lost. McReynolds relied on his share of the royalties to compensate Katz and Huck for their services. The Bauermeisters have entered into an agreement for the division of their income pursuant to the agreement. Roots has sold his share of Resource Recycling in reliance on the agreement. Clearly, it would be impossible to return these parties to a status quo. Moreover, a party seeking rescission of a contract on the grounds of fraud, misrepresentation, or business coercion must do so promptly upon the discovery of the facts giving rise to the right to rescind. See, McCubbin v. Buss, 180 Neb. 624, 144 N.W.2d 175 (1966); Mazanec v. Lincoln Bonding & Ins. Co., 169 Neb. 629, 100 N.W.2d 881 (1960); Wegner v. West, 169 Neb. 546, 100 N.W.2d 542 (1960). The parties executed the assignment and allocation agreement on November 30, 1988. Robert Bauermeister testified that the Bauermeisters executed the agreements because they felt as though they had a financial gun to their head. Nonetheless, the Bauermeisters ratified their actions on March 22, 1989, when they executed the purchase agreement which expressly incorporated the assignment and allocation agreement. It was not until nearly 3 years later, on January 23, 1992, that the Bauermeisters filed their petition. At that time, the Bauermeisters had received over $425,000 of income from the operation of the landfill. We conclude that the Bauermeisters' 3-year delay, all the time claiming a financial gun had been placed at their head, and the acceptance of over $425,000 in benefits pursuant to the contract, forecloses the Bauermeisters' opportunity to claim that their assent to the contract was invalid. `[One] who seeks equity must do equity.' Kracl v. Loseke, 236 Neb. at 304, 461 N.W.2d at 76. Plainly, the Bauermeisters have failed to do equity.