Opinion ID: 4518078
Heading Depth: 1
Heading Rank: 3

Heading: facts

Text: Underlying Litigation. This is the third appearance before this court by Falls City in relation to the underlying litigation. We set forth the facts of the underlying organizations—the Nebraska Municipal Power Pool (NMPP), the Municipal Energy Agency of Nebraska (MEAN), the National Public Gas Agency (NPGA), the American Public Energy Agency (APEA), and the Central Plains Energy Project (CPEP)—and the underlying litigation in our first opinion, decided in 2010: NMPP was created in 1975 as a nonprofit corporation with the purpose of idea generation, research, analysis, administration, and the creation of other entities to carry out these activities. NMPP has a 16-member board of directors made up of representatives from the participating municipalities. Falls City is a member of NMPP. The first entity created by NMPP in 1981 was [MEAN] . . . . NMPP created MEAN in order to obtain effi- cient sources of electricity for participating communities. [NPGA] was created in 1991 by NMPP in order to secure natural gas for the participating municipalities. . . . NPGA is governed by a board of directors made up of a representative from each of the NPGA-member municipalities, including Falls City. Both MEAN and NPGA require their members to also be members of NMPP. NMPP provides all the strategic planning and staffing services for NPGA and MEAN. Other than an executive director, who is employed jointly by NPGA and MEAN, neither organization has employees. NMPP’s budgeting process is administered through a joint operating committee, which consists of representatives from NMPP, NPGA, and MEAN. At the beginning of each year, the amount of time each NMPP employee will devote to a particular organization is estimated and expenses are then allocated among the organizations. - 26 - Nebraska Supreme Court Advance Sheets 305 Nebraska Reports DH-1, LLC v. CITY OF FALLS CITY Cite as 305 Neb. 23 In 1995, NMPP, NPGA, and MEAN created APEA, another interlocal agency. APEA was intended to finance bonds through which natural gas was purchased. APEA remained separate from the joint operating committee and had its own staff, but sometimes utilized NMPP staff for various projects. APEA issued bonds and purchased gas through a series of “prepays.” A prepay involves the purchase of a large supply of natural gas to be delivered in the future. The goal is to purchase a large amount of natural gas at a lower price than index, or market, price. The bonds used to pay for the gas are tax exempt as long as municipal entities purchase the gas later. As the gas is delivered and paid for by the end user, the proceeds are used to repay the principal and interest on the bonds.1 The complaint filed by Falls City against NMPP, CPEP, and several individual defendants alleged breach of contract, breach of fiduciary duty, and conspiracy to cause injury to Falls City and others. As relevant, the district court found in favor of Falls City in the amount of $628,267.90. In our 2010 opinion, we reversed the district court’s award of damages to Falls City on the ground that Falls City lacked standing.2 The parties again appeared in 2011, this time with respect to the order on costs assessed against Falls City.3 Upon remand, the district court entered an order assessing 22 percent of the costs to Falls City, which this court affirmed. The appeal now before us deals with a fee dispute between Falls City and the attorneys representing Falls City in the prior litigation. 1 City of Falls City v. Nebraska Mun. Power Pool, 279 Neb. 238, 240-41, 777 N.W.2d 327, 330-31 (2010). 2 City of Falls City v. Nebraska Mun. Power Pool, supra note 1. 3 City of Falls City v. Nebraska Mun. Power Pool, 281 Neb. 230, 795 N.W.2d 256 (2011). - 27 - Nebraska Supreme Court Advance Sheets 305 Nebraska Reports DH-1, LLC v. CITY OF FALLS CITY Cite as 305 Neb. 23 Fee Agreement. On November 20, 2006, Falls City and the firms entered into the contingency fee agreement now at issue in this appeal. As relevant, that agreement provided that Falls City retained the firms for the prosecution of any claims that Falls City may have and any claims Falls City may pursue on behalf of MEAN, NPGA, NMPP or any of their members includ- ing those who might join in the prosecution of these claims individually or by virtue of a class action or who might benefit from any common fund created, discovered, increased, preserved or protected or property to which they may have a claim, against any person or entity thought to be responsible for damages sustained as a result of actions by NMPP, its employees or CPEP. For this work, the firms were entitled to “$15,000.00 as an Initial Fee” and a “contingent fee based upon the following schedule: (a) 40% of all amounts recovered by settlement or verdict which is not appealed; or, (b) 50% of all amounts recovered in the event of an appeal of a verdict by any party involved in the lawsuit.” The agreement indicates that it applied to “relief in addition to, or in lieu of, an immediate monetary benefit, but which relief has a calculable present value”; “securities, or other non-cash assets”; “or[,] if the settlement of this case is made by a structured settlement[,] . . . the present value of the settlement.” While the action filed against NMPP and others proceeded in district court, APEA, NPGA, and MEAN entered into an agreement on February 26, 2007, which dissolved and restructured APEA and equitably distributed its assets. NPGA and MEAN withdrew from APEA, with the withdrawal agreement dividing the $23.1 million held by APEA between NPGA and MEAN. NPGA received $9.8 million. Though Falls City was not a party to the withdrawal agreement, as a member of NPGA it received $1,567,570.02. Thereafter, Falls City elected to become a direct member of APEA. - 28 - Nebraska Supreme Court Advance Sheets 305 Nebraska Reports DH-1, LLC v. CITY OF FALLS CITY Cite as 305 Neb. 23 The firms sought payment under the contingency fee agreement, based upon the funds Falls City received pursuant to the withdrawal agreement and improved equity positions in the various organizations, but Falls City declined to pay. The firms then assigned their claims to DH-1, which filed suit on January 14, 2015, for the fee under the contingency agreement. Eventually, a second amended complaint was filed which joined the firms for purposes of their equitable claims. In total, the firms sought $1,487,785.60 consisting of (1) a $627,028 fee from the APEA distribution, (2) $564,197.60 as a fee for Falls City’s interest in the APEA, (3) $40,000 for the increase in Falls City’s equity interest in NPGA, and (4) $256,560 for the value of the “Agreement for Termination of Participation of Members, Distribution of Funds to Members, and for Complete Settlement, Mutual Releases and Covenants” entered into between MEAN, NPGA, and APEA. On October 10, 2017, the district court granted Falls City’s motion for summary judgment as to the claims under the fee agreement, concluding that the contingency under the fee agreement was not met and that thus, the firms were not entitled to a fee under the agreement. The district court also held that DH-1’s standing was limited to legal rights under the fee agreement and that it had “no equitable rights to assert against Falls City.” However, the district court granted DH-1’s motion to file a second amended complaint. DH-1 did so, adding the firms as parties to the litigation. At a hearing on December 21, 2018, ostensibly held with regard to Falls City’s motion to compel, Falls City orally moved for summary judgment. The firms waived notice, and a hearing was held at which evidence was offered. The district court granted the motion for summary judgment and dismissed the complaint. ASSIGNMENTS OF ERROR The firms assign that the district court erred in dismissing both their contract and equitable claims. - 29 - Nebraska Supreme Court Advance Sheets 305 Nebraska Reports DH-1, LLC v. CITY OF FALLS CITY Cite as 305 Neb. 23