Court Opinion

ID: 2807826
Source: CourtListenerOpinion
Date Created: 2015-06-12 14:07:41.734552+00
Date Added: 2024-06-11T12:26:22.072933
License: Public Domain

- 70 -
                       Nebraska A dvance Sheets
                        291 Nebraska R eports
                   McGILL v. LION PLACE CONDO. ASSN.
                             Cite as 291 Neb. 70

         Paul F. McGill, appellee and cross-appellee, v.
            Lion Place Condominium Association, an
              unincorporated association, appellee
               and cross-appellant, and M ichael
                     L. Henery, appellant.
                               ___ N.W.2d ___

                     Filed June 12, 2015.    No. S-14-582.

 1.	 Res Judicata: Collateral Estoppel. The applicability of claim and issue
     preclusion is a question of law.
 2.	 Statutes. Statutory interpretation is a question of law.
 3.	 Judgments: Appeal and Error. When reviewing questions of law, an
     appellate court has an obligation to resolve the questions independently
     of the conclusion reached by the trial court.
 4.	 Equity: Appeal and Error. In an appeal of an equitable action, an
     appellate court tries factual questions de novo on the record and reaches
     a conclusion independent of the findings of the trial court, provided,
     where credible evidence is in conflict on a material issue of fact, the
     appellate court considers and may give weight to the fact that the trial
     judge heard and observed the witnesses and accepted one version of the
     facts rather than another.
 5.	 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.
 6.	 Courts: Actions: Parties: Complaints: Pleadings: Records. If the
     capacity in which a party sues is doubtful, a court may examine the
     complaint, the pleadings as a whole, and even the entire record.
 7.	 Derivative Actions: Words and Phrases. A derivative action is a suit
     brought by a shareholder to enforce a cause of action belonging to
     the corporation.
 8.	 Derivative Actions: Pleadings. In appropriate circumstances, a unit
     owner may bring a derivative suit on behalf of an unincorporated con-
     dominium association to enforce a cause of action belonging to the
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                       Nebraska A dvance Sheets
                        291 Nebraska R eports
                   McGILL v. LION PLACE CONDO. ASSN.
                             Cite as 291 Neb. 70

     association. But the unit owner must allege that demand has been made
     upon the association or governing body to enforce the claim or that
     demand would have been futile.
 9.	 Actions: Corporations. According to the business judgment rule, courts
     are precluded from conducting an inquiry into actions of corporate
     directors taken in good faith and in the exercise of honest judgment in
     the lawful and legitimate furtherance of corporate purposes.
10.	 ____: ____. The business judgment rule applies to all discretionary
     decisions by a board of directors, including the decision not to pursue a
     cause of action.
11.	 Res Judicata. Claim preclusion bars the relitigation of a claim that
     has been directly addressed or necessarily included in a former
     adjudication.
12.	 Collateral Estoppel. Issue preclusion bars the relitigation of a finally
     determined issue that a party had a prior opportunity to fully and
     fairly litigate.
13.	 Res Judicata: Collateral Estoppel. While claim preclusion and issue
     preclusion are similar and serve similar purposes, they are distinct.
     Among other differences, claim preclusion looks to the entire cause of
     action, but issue preclusion looks to a single issue.
14.	 Res Judicata: Actions. The basis of the doctrine of res judicata is that
     the party to be affected, or someone with whom he or she is in privity,
     has litigated or has had an opportunity to litigate the same matter in a
     former action.
15.	 Collateral Estoppel. Issue preclusion protects litigants from relitigating
     an identical issue with a party or his or her privy and promotes judicial
     economy by preventing needless litigation.
16.	 ____. The doctrine of issue preclusion recognizes that limits on liti-
     gation are desirable, but a person should not be denied a day in
     court unfairly.
17.	 Limitations of Actions: Waiver. The benefit of a statute of limitations
     is personal and, like any other personal privilege, may be waived and
     will be unless pleaded.
18.	 Estoppel: Words and Phrases. Equitable estoppel is a bar which
     precludes a party from denying or asserting anything to the contrary
     of those matters established as the truth by his or her own deeds, acts,
     or representations.
19.	 Attorney Fees. Attorney fees and expenses may be recovered only
     where provided for by statute or when a recognized and accepted uni-
     form course of procedure has been to allow recovery of attorney fees.
20.	 Attorney Fees: Appeal and Error. When an attorney fee is autho-
     rized, the amount of the fee is addressed to the trial court’s discre-
     tion, and its ruling will not be disturbed on appeal absent an abuse
     of discretion.
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                        Nebraska A dvance Sheets
                         291 Nebraska R eports
                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

21.	 Attorney Fees: Costs. Without indication to the contrary, where a
     statute speaks only to attorney fees and costs, a party may recover his
     or her attorney fees, the costs of the filing of the action, and any other
     expenses that are specifically delineated as taxable costs by statute.

   Appeal from the District Court for Douglas County: Peter
C. Bataillon, Judge. Affirmed in part, and in part vacated and
remanded for further proceedings.
  Dean F. Suing and David A. Castello, of Katskee, Henatsch
& Suing, for appellant.
  Justin D. Eichmann, of Bradford & Coenen, L.L.C., for
appellee Paul F. McGill.
   Michael S. Kennedy, of Kennedy Law Firm, P.C., L.L.O.,
for appellee Lion Place Condominium Association.
  Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
      Cassel, J.
                      I. INTRODUCTION
   This appeal was taken from a judgment invalidating the
sale of limited common elements of a condominium governed
by the Nebraska Condominium Act1 and awarding attorney
fees, expenses, and court costs. We address two primary
issues. First, we conclude that despite the absence of statu-
tory authority, equity allows a derivative suit on behalf of an
unincorporated unit owners association. Second, we interpret
the governing statute2 to require both approval by 80 percent
of the votes in the association and unanimous agreement by
the owners of units to which the limited common elements
are allocated. But only an award of attorney fees and costs
is authorized by the relevant statute.3 It does not permit the

 1	
      Neb. Rev. Stat. §§ 76-825 to 76-894 (Reissue 2009 & Cum. Supp. 2014).
 2	
      § 76-870.
 3	
      § 76-891.01.
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                         Nebraska A dvance Sheets
                          291 Nebraska R eports
                      McGILL v. LION PLACE CONDO. ASSN.
                                Cite as 291 Neb. 70

recovery of expenses. We vacate the award of costs and
expenses and remand the cause for determination of the tax-
able costs. Because we find no merit to the other issues raised
in the appeal, we otherwise affirm the judgment of the dis-
trict court.

                       II. BACKGROUND
                 1. Development of Condominium
   Paul F. McGill developed Lion Place Condominium
with Michael L. Henery. The recorded “Declaration of
Condominium Property Regime” established 16 units, con-
sisting of 12 residential and 4 commercial units. Henery pur-
chased the commercial units, and McGill purchased four of
the residential units.
   The declaration allocated certain common elements as lim-
ited common elements for the exclusive use of the commer-
cial units. These limited common elements consisted of “[a]ll
[c]ommon [e]lements in the basement level and first floor.”
Under Nebraska law, “[c]ommon elements” include “all por-
tions of a condominium other than the units.”4 A “[l]imited
common element” is any “portion of the common elements
allocated . . . for the exclusive use of one or more but fewer
than all of the units.”5
   To govern the condominium, the declaration established
an unincorporated association, composed of all of the unit
owners. Each unit owner was granted one vote for each unit
owned, except that the owner of the basement commercial
unit was granted three votes. Although the association was
granted “all of the powers necessary to govern” the condo-
minium, an “[e]xecutive [b]oard” of five unit owners was
created to act on the association’s behalf and to administer
its affairs.

 4	
      § 76-827(4).
 5	
      § 76-827(16).
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                   Nebraska A dvance Sheets
                    291 Nebraska R eports
                McGILL v. LION PLACE CONDO. ASSN.
                          Cite as 291 Neb. 70

               2. Henery’s Purchase of Limited
                       Common Elements
   In 2008, Henery offered to pay $35,000 to purchase the lim-
ited common elements adjacent to his commercial units. The
minutes of a July 2008 meeting of the association reveal that
Henery’s offer may have been the “key” to financing repairs
to the exterior of the condominium building. At a meeting
in September, the association agreed to withhold approval of
Henery’s offer until its next meeting in order to facilitate other
offers. However, “[e]very [one]” agreed to sell the limited
common elements and to accept the highest offer.
   McGill also sought to purchase the limited common ele-
ments and offered $36,000. Upon learning of McGill’s offer,
Henery immediately countered with an offer of $36,000, plus
the payment of all closing costs and related expenses. At a
meeting in December 2008, the association ultimately voted to
accept Henery’s second offer. As we explain below, the heart of
the controversy is the sufficiency of the vote at the December
2008 meeting.
   In May 2009, Henery and the president of the association
signed a purchase agreement for a portion of the limited com-
mon elements adjacent to Henery’s commercial units. And in
order to transfer the limited common elements to Henery, the
president signed an amendment to the condominium declara-
tion, modifying the boundaries of three of Henery’s commer-
cial units to incorporate the limited common elements. The
president then reconveyed the modified commercial units to
Henery via a warranty deed.
                  3. McGill’s First Action
   In January 2010, McGill filed an action in the district court
for Douglas County against Henery and the association, chal-
lenging the sale of the limited common elements. The 2010
action was dismissed upon the association’s motion for judg-
ment on the pleadings. The district court determined that
McGill lacked standing as an individual to bring the action.
It observed that McGill had failed to demonstrate how he was
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                   Nebraska A dvance Sheets
                    291 Nebraska R eports
               McGILL v. LION PLACE CONDO. ASSN.
                         Cite as 291 Neb. 70

injured by the sale to Henery, because the limited common
elements had always been allocated to Henery’s commercial
units. And the court further denied McGill leave to amend his
complaint, observing that a lack of standing could not be rem-
edied by amendment.
                       4. Present Action
             (a) Pleadings and Pretrial Proceedings
   After the dismissal of the 2010 action, McGill filed a sec-
ond action against Henery and the association in the district
court for Douglas County. And McGill again challenged the
sale of the limited common elements. However, in contrast
to the 2010 action, McGill brought the second action “on
his own behalf, as well as on behalf of all other members of
the [a]ssociation similarly situated, derivatively in the right
of and for the benefit of the [a]ssociation.” And he asserted
that he had made demand upon the association to initiate
proceedings regarding the sale, but that the executive board
had refused.
   Both Henery and the association moved to dismiss on the
basis that the second action was barred by the dismissal of the
2010 action. The district court overruled the motions, observ-
ing that the 2010 action was dismissed due to McGill’s lack of
standing as an individual. But the second action was brought
derivatively on behalf of the association. Thus, the court deter-
mined that while any suit in McGill’s individual capacity was
barred, a derivative action was appropriate.
   Each party subsequently moved for summary judgment.
At the summary judgment hearing, the district court received
McGill’s deposition testimony. In his deposition, McGill indi-
cated that prior to the sale, Henery had been using the lim-
ited common elements adjacent to Henery’s commercial units.
McGill believed that Henery should be paying rent, and McGill
complained of Henery’s use of the limited common elements
to the president of the association. In an affidavit, Henery
explained that he sought to incorporate the limited common
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                   Nebraska A dvance Sheets
                    291 Nebraska R eports
               McGILL v. LION PLACE CONDO. ASSN.
                         Cite as 291 Neb. 70

elements into his commercial units in order to “avoid any con-
fusion or conflict.”
   McGill further explained that he had been interested in
purchasing the limited common elements and that the sale to
Henery “was not done right.” McGill had made an offer and
included everything that Henery had proposed. But McGill
believed that the limited common elements were going to be
auctioned, and his offer was only his “beginning bid.” McGill
also believed that Henery should have paid market value,
because the limited common elements had been appraised
for $88,000.
   The district court overruled each of the motions for sum-
mary judgment. Henery subsequently filed a second motion for
summary judgment, claiming that McGill could not maintain
a derivative action on behalf of the association, because it
was unincorporated. The district court rejected Henery’s argu-
ment and overruled the motion. The court observed that while
a derivative action is generally associated with a corporation,
“there is nothing that prevents it from being brought on behalf
of a partnership, a limited liability company, or some type of
other unincorporated association.”

                              (b) Trial
   The matter proceeded to trial, and the district court received
evidence regarding the December 2008 approval of the sale to
Henery. According to the treasurer of the association, all of the
unit owners voted in favor of Henery’s offer except McGill and
another unit owner. However, the treasurer could not remember
if an absent unit owner had been represented by a proxy. Thus,
the treasurer testified that out of a possible 18 votes, 13 or 14
votes were cast in favor of the sale.
   Henery also testified and clarified the circumstances of the
vote. According to Henery, the absent unit owner had been rep-
resented by a proxy. Henery testified that there were “14 votes
voted for the sale and four votes against.”
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                         Nebraska A dvance Sheets
                          291 Nebraska R eports
                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

                  5. District Court’s Judgment
   After trial, the district court entered an order finding that
the sale and conveyance were void. The court determined that
under the Nebraska Condominium Act, the sale required the
approval of 80 percent of the association. But at most, only
77.7 percent of the association approved the sale. Further, the
act required an agreement signed by the requisite number of
unit owners. But no evidence of such an agreement had been
offered by Henery or the association. Consequently, the court
concluded that the sale was void and that title to the limited
common elements remained with the association. And in a later
order, the court awarded McGill his attorney fees in the amount
of $28,016 and expenses of $1,209.14, plus costs.
   Henery and the association filed several motions to alter or
amend or for a new trial, which were all overruled. Henery
filed a timely notice of appeal, and the case was initially
assigned to the Nebraska Court of Appeals’ docket. We moved
the case to our docket.6 After obtaining permission to file a
brief out of time, the association filed a brief on cross-appeal.
                III. ASSIGNMENTS OF ERROR
   Henery assigns, consolidated and restated, that the district
court erred in (1) finding that the derivative action was not
barred by the dismissal of the 2010 action, (2) permitting
McGill to bring a “shareholder derivative suit” on behalf of
the association, (3) determining that McGill was not equitably
estopped from bringing the derivative action, and (4) finding
that the sale and conveyance of the limited common elements
were void.
   In its cross-appeal, the association makes the same assign-
ments of error as Henery. But in addition, it contends that
the district court erred in (1) finding that McGill had stated
a claim, (2) determining that title to the limited common ele-
ments remained with the association, and (3) awarding McGill
his attorney fees and costs.

 6	
      See Neb. Rev. Stat. § 24-1106(3) (Reissue 2008).
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                        Nebraska A dvance Sheets
                         291 Nebraska R eports
                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

                  IV. STANDARD OF REVIEW
   [1-3] The applicability of claim and issue preclusion is a
question of law.7 Statutory interpretation is a question of law.8
When reviewing questions of law, an appellate court has an
obligation to resolve the questions independently of the conclu-
sion reached by the trial court.9
   [4] In an appeal of an equitable action, an appellate court
tries factual questions de novo on the record and reaches a con-
clusion independent of the findings of the trial court, provided,
where credible evidence is in conflict on a material issue of
fact, the appellate court considers and may give weight to the
fact that the trial judge heard and observed the witnesses and
accepted one version of the facts rather than another.10
                        V. ANALYSIS
   Before addressing Henery’s and the association’s assign-
ments of error, we recall general principles of the condo-
minium form of property ownership. Although Nebraska
retains another group of statutes governing condominiums,11
the Nebraska Condominium Act applies to condominiums cre-
ated on or after January 1, 1984.12 Because the declaration in
this case was recorded in 1998, the Nebraska Condominium
Act controls.
   The condominium form is distinguished by its dual levels
of property ownership. Individual units are separately owned,
while the remainder is designated for common ownership by
the unit owners.13 This remainder comprises the “[c]ommon

 7	
      Hara v. Reichert, 287 Neb. 577, 843 N.W.2d 812 (2014).
 8	
      First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013).
 9	
      Id.
10	
      Sadler v. Jorad, Inc., 268 Neb. 60, 680 N.W.2d 165 (2004).
11	
      See Condominium Property Act, Neb. Rev. Stat. §§ 76-801 to 76-823
      (Reissue 2009).
12	
      See, § 76-826(a); Twin Towers Condo. Assn. v. Bel Fury Invest. Group,
      290 Neb. 329, 860 N.W.2d 147 (2015).
13	
      See § 76-827(7).
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                       Nebraska A dvance Sheets
                        291 Nebraska R eports
                   McGILL v. LION PLACE CONDO. ASSN.
                             Cite as 291 Neb. 70

e­lements” of the condominium.14 And each unit owner pos-
 sesses an undivided ownership interest in the common ele-
 ments. “Real estate is not a condominium unless the undi-
 vided interests in the common elements are vested in the
 unit owners.”15
    However, the use of some common elements may be
 reserved to fewer than all of the unit owners. These restricted
 common elements are known as limited common elements.16
 But limited common elements remain common elements of the
 condominium. The comments to the Uniform Condominium
 Act, on which the Nebraska Condominium Act is based,17
 are instructive on this point. “Like all other common ele-
 ments, limited common elements are owned in common by all
 unit owners.”18
    Although each unit owner possesses an undivided ownership
 interest in the common elements, the individual unit owners
 have no right of control over the common elements. The power
 to “[r]egulate the use, maintenance, repair, replacement, and
 modification of common elements” is vested in the associa-
 tion19 and may be delegated to the executive board.20
    Having reviewed some basic characteristics of condo-
 minium property ownership, we now turn to Henery’s and
 the association’s assignments of error. We first address their
 claims regarding McGill’s ability to bring the present action
 challenging the sale to Henery. We then turn to the validity
 of the sale and McGill’s award of attorney fees, expenses,
 and costs.

14	
      See § 76-827(4).
15	
      § 76-827(7).
16	
      See § 76-827(16).
17	
      See 1983 Neb. Laws, L.B. 433.
18	
      Unif. Condominium Act § 2-108, comment 1, 7 (part II) U.L.A. 548
      (2009).
19	
      § 76-860(6).
20	
      See § 76-861.
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                        Nebraska A dvance Sheets
                         291 Nebraska R eports
                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

                       1. Present Action
                      (a) Derivative Suit
   Henery and the association contend that McGill did not
properly sue in a derivative capacity and that Nebraska law
did not permit McGill to bring a derivative suit on behalf of
the association. They argue that McGill failed to appropriately
caption his complaint as being brought in a representative
capacity. And they assert that he had no statutory authority to
bring the action, because the association was unincorporated.
They further invoke the business judgment rule, claiming that
the executive board’s refusal to instigate proceedings regarding
the sale was a reasonable decision. We address each argument
in turn.
   [5,6] Although McGill’s complaint was not captioned as
being brought in a representative capacity, we have stated
that the character in which one is a party to a suit, and the
capacity in which a party sues, is determined from the alle-
gations of the pleadings and not from the caption alone.21 If
the capacity in which a party sues is doubtful, a court may
examine the complaint, the pleadings as a whole, and even the
entire record.22
   We read McGill’s complaint as asserting a claim on behalf
of the association. The complaint specifically stated that the
action was brought “derivatively in the right of and for the
benefit of the [a]ssociation.” And McGill alleged a common
injury to the unit owners of the condominium. Each unit
owner possessed an undivided ownership interest in the com-
mon elements, and McGill claimed that Henery had unlaw-
fully obtained title to certain common elements. Because
the association was granted the power to institute litigation
on matters affecting the condominium,23 McGill’s allegations

21	
      See Steinhausen v. HomeServices of Neb., 289 Neb. 927, 857 N.W.2d 816
      (2015).
22	
      Id.
23	
      See § 76-860(4).
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                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

were sufficient to establish that he was asserting a claim on the
association’s behalf.
   [7] We agree that the action did not fall within an express
grant of statutory authority. Derivative proceedings are typi-
cally initiated pursuant to Nebraska’s Business Corporation
Act.24 That act authorizes derivative proceedings brought on
behalf of a corporation in certain circumstances,25 and it applies
to a “corporation for profit . . . incorporated under or subject to
the provisions of the act.”26 Our case law reflects this paradigm
by speaking in terms of “shareholder” and “corporation.” We
have held that a derivative action is a suit brought by a share-
holder to enforce a cause of action belonging to the corpora-
tion.27 However, because the association was unincorporated,
the Business Corporation Act did not apply. And the Nebraska
Condominium Act is silent as to the right of a unit owner to
sue derivatively on behalf of an association.
   But derivative proceedings are not dependent upon legisla-
tive authorization. Many courts have recognized that deriv-
ative actions originated in equity, existing independent of
specific legislation.28 As expressed by the Supreme Court
of Delaware,
         [t]o prevent a “failure of justice,” courts of equity
      granted equitable standing to stockholders to sue on behalf
      of the corporation “for managerial abuse in economic
      units which by their nature deprived some participants
      of an effective voice in their administration.” The courts

24	
      Neb. Rev. Stat. §§ 21-2001 to 21-20,197 (Reissue 2012).
25	
      See §§ 21-2070 to 21-2077.
26	
      § 21-2014(4).
27	
      See, e.g., Kubik v. Kubik, 268 Neb. 337, 683 N.W.2d 330 (2004); Sadler,
      supra note 10.
28	
      See, Schoon v. Smith, 953 A.2d 196 (Del. 2008); Larsen v. Island
      Developers, Ltd., 769 So. 2d 1071 (Fla. App. 2000); Kilburn v. Young, 244
Ga. App. 743, 536 S.E.2d 769 (2000); Caprer v. Nussbaum, 36 A.D.3d
176, 825 N.Y.S.2d 55 (2006); Polikoff v. Adam, 67 Ohio St. 3d 100, 616
N.E.2d 213 (1993).
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                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

      reasoned that without equitable standing, “stockholders
      would be without an immediate and certain remedy,”
      there would have been a complete failure of justice, and
      the general principles of equity and fairness would have
      been defeated.29
   Recognizing the equitable origins of derivative actions,
in Caprer v. Nussbaum,30 the New York Supreme Court,
Appellate Division, extended the ability to sue derivatively
to the unit owners of a condominium. The New York court
acknowledged that the unit owners had no statutory authority
to bring a derivative claim on behalf of the condominium. But
the court observed that the basis for the corporate derivative
action was the fiduciary relationship between shareholders
and directors. And it reasoned that the condominium was
analogous to other situations in which derivative suits had
been permitted.
      Like the management of a corporation or the general
      partner in a limited partnership, the members of the board
      of managers of a condominium owe a fiduciary duty to
      the individual unit owners in their management of the
      common property . . . . The same factors that caused
      the courts to fashion the derivative action procedure for
      shareholders and limited partners thus apply to condo-
      minium unit owners. All are owners of fractional interests
      in a common entity run by managers who owe them a
      fiduciary duty that requires protection.31
(Citations omitted.)
   We agree with the New York court that the same factors
prompting the development of derivative actions in other con-
texts apply equally to condominiums. All of the unit owners
possess an interest in the condominium. But the power to
initiate proceedings on matters affecting the condominium is
granted to the association and may be delegated to a separate

29	
      Schoon, supra note 28, 953 A.2d at 201.
30	
      Caprer, supra note 28.
31	
      Id. at 189, 825 N.Y.S.2d at 67.
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                      McGILL v. LION PLACE CONDO. ASSN.
                                Cite as 291 Neb. 70

body.32 Thus, if derivative proceedings were not allowed, a
harm or injury to the condominium might go unaddressed
through managerial abuse of power.
   Further, we have previously recognized that in certain cir-
cumstances, a member of an unincorporated association may
properly bring a derivative suit on the association’s behalf.33
Although our previous case arose under considerably differ-
ent circumstances, it does not suggest any reason why the
same rule should not apply to an unincorporated condomin-
ium association.
   [8] We therefore hold that in appropriate circumstances, a
unit owner may bring a derivative suit on behalf of an unincor-
porated condominium association to enforce a cause of action
belonging to the association. But the unit owner must allege
that demand has been made upon the association or govern-
ing body to enforce the claim or that demand would have
been futile.34
   In the present action, McGill sought to invalidate the
alleged unlawful sale of the limited common elements to
Henery. And because the sale affected the entire condo-
minium, the cause of action would have been properly initi-
ated by the association or the executive board.35 But McGill
alleged that he had made demand upon the association to
initiate proceedings and that the executive board had refused.
Additionally, evidence of the demand and refusal was
received by the district court. Consequently, we find no error
in the district court’s conclusion that a derivative proceeding
was appropriate.
   But Henery and the association also rely upon the execu-
tive board’s refusal of McGill’s demand and contend that the
business judgment rule precluded McGill from maintaining a

32	
      See   §§ 76-860(4) and 76-861.
33	
      See   Weimer v. Amen, 235 Neb. 287, 455 N.W.2d 145 (1990).
34	
      See   id. See, also, Sadler, supra note 10.
35	
      See   §§ 76-860(4) and 76-861.
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                         Nebraska A dvance Sheets
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                     McGILL v. LION PLACE CONDO. ASSN.
                               Cite as 291 Neb. 70

derivative suit. They claim that because the executive board’s
refusal was reasonable and made in good faith, the district
court was barred from questioning the sale’s validity.
   [9,10] This argument is not well taken. According to the
business judgment rule, courts are precluded from conducting
an inquiry into actions of corporate directors taken in good
faith and in the exercise of honest judgment in the lawful
and legitimate furtherance of corporate purposes.36 The busi-
ness judgment rule applies to all discretionary decisions by
a board of directors, including the decision not to pursue a
cause of action.37 However, such a decision is entitled to the
protection of the business judgment rule only if made by a
majority of disinterested directors.38 In this case, the district
court received evidence of two votes of the executive board
refusing McGill’s demand. But in each vote, Henery and his
son formed a part of the majority. And they clearly were not
disinterested members of the executive board.39 We cannot
indulge in speculation as to how the other members of the
executive board would have voted in the absence of Henery
and his son’s participation. Consequently, we see no basis for
the business judgment rule. This assignment of error is with-
out merit.
                    (b) Claim Preclusion and
                        Issue Preclusion
   Both Henery and the association contend that the present
action was barred by the dismissal of the 2010 action. They
assert that the present action was an impermissible attempt to
relitigate issues either that were conclusively determined or
that could have been raised in the 2010 action.

36	
      Sadler, supra note 10.
37	
      See Lewis v. Anderson, 615 F.2d 778 (9th Cir. 1979).
38	
      See Harhen v. Brown, 431 Mass. 838, 730 N.E.2d 859 (2000).
39	
      See 1 American Law Institute, Principles of Corporate Governance:
      Analysis and Recommendations § 1.23 at 25 (1994) (defining “[i]nterested”
      director or officer).
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   As previously discussed, the district court determined that
any action brought by McGill in his individual capacity was
barred by the dismissal of the 2010 action. No party con-
tests this determination. The court further concluded that
the derivative suit brought on the association’s behalf was
appropriate. We therefore restrict our analysis to the deriva-
tive suit.
   [11-13] Henery’s and the association’s arguments invoke
the concepts of claim preclusion and issue preclusion. In the
past, we have referred to these concepts as res judicata and
collateral estoppel.40 Claim preclusion bars the relitigation
of a claim that has been directly addressed or necessarily
included in a former adjudication.41 Issue preclusion bars
the relitigation of a finally determined issue that a party had
a prior opportunity to fully and fairly litigate.42 While the
doctrines are similar and serve similar purposes, they are
distinct.43 Among other differences, claim preclusion looks
to the entire cause of action, but issue preclusion looks to a
single issue.44
   The present action and the 2010 action clearly invoked the
same cause of action or claim. In both suits, McGill sought to
invalidate the sale of the limited common elements to Henery.
But in order for claim or issue preclusion to apply, some nexus
must exist between the parties to the successive actions.45 As
previously discussed, McGill brought the 2010 action in his
individual capacity and initiated the present proceedings on the
association’s behalf. This change from an individual to a repre-
sentative capacity permitted a successive lawsuit.

40	
      See Hara, supra note 7.
41	
      See id.
42	
      See id.
43	
      Id.
44	
      See id.
45	
      See, Kirkland v. Abramson, 248 Neb. 675, 538 N.W.2d 752 (1995); In re
      Estate of Wagner, 246 Neb. 625, 522 N.W.2d 159 (1994).
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   We addressed a similar scenario in Hickman v. Southwest
Dairy Suppliers, Inc.46 In that case, a husband and wife were
injured in a motor vehicle accident and the wife passed away
from her injuries. The administrator of the wife’s estate brought
a wrongful death action, and a verdict was returned in favor of
the defendants. The husband then filed suit against the same
defendants for his own personal injuries, and the defendants
claimed that the suit was barred by the prior verdict.
   We rejected the defendants’ argument and observed that
even if the husband had been appointed the administrator of
his wife’s estate, res judicata or collateral estoppel would
likely not have applied. “‘In order that parties for or against
whom the doctrine of res judicata is sought to be applied may
be regarded the same in both actions, the general rule is that
they must be parties to both actions in the same capacity or
quality.’”47 In the case at bar, by bringing a suit on behalf of
the association, it is clear that McGill appeared in a different
capacity than in the 2010 action.
   [14,15] But Henery and the association argue that McGill’s
different capacity was irrelevant, because he was in privity
with the association in the 2010 action. Both claim preclusion
and issue preclusion require an identity or privity of parties.48
However, an analysis of the principles behind privity and the
doctrines of claim preclusion and issue preclusion demonstrate
the flaws in this argument.
   In analyzing federal law, we have previously observed:
         “There is no definition of ‘privity’ which can be auto-
      matically applied to all cases involving the doctrines of
      res judicata and collateral estoppel. Privity requires, at
      a minimum, a substantial identity between the issues in

46	
      Hickman v. Southwest Dairy Suppliers, Inc., 194 Neb. 17, 230 N.W.2d 99
      (1975).
47	
      Id. at 22, 230 N.W.2d at 103, quoting American Province Real Estate
      Corp. v. Metropolitan Utilities Dist., 178 Neb. 348, 133 N.W.2d 466
      (1965). See, also, Restatement (Second) of Judgments § 36 (1982).
48	
      See R.W. v. Schrein, 263 Neb. 708, 642 N.W.2d 505 (2002).
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       controversy and showing the parties in the two actions are
       really and substantially in interest the same.”49
And we have stated that the basis of the doctrine of res judi-
cata is that the party to be affected, or someone with whom he
or she is in privity, has litigated or has had an opportunity to
litigate the same matter in a former action.50 Similarly, issue
preclusion protects litigants from relitigating an identical issue
with a party or his or her privy and promotes judicial economy
by preventing needless litigation.51
    In this case, McGill and the association cannot be said to
be in privity, because they are not really and substantially the
same in interest. In the 2010 action, the district court deter-
mined that McGill did not have an interest in contesting the
sale to Henery and that, thus, he did not have standing. McGill
did not appeal this ruling. In contrast, in representing the inter-
ests of the unit owners and the condominium as a whole, the
association was necessarily interested in the validity of the
sale. We therefore reject the assertion that McGill was in priv-
ity with the association.
    [16] And it cannot be said that prior to the derivative suit,
any party had yet litigated the validity of the sale, either inde-
pendently or on the association’s behalf. The doctrine of issue
preclusion recognizes that limits on litigation are desirable, but
a person should not be denied a day in court unfairly.52 We find
no error in the district court’s conclusion that the derivative
proceeding was not barred by claim preclusion or issue preclu-
sion. This assignment of error is without merit.

49	
      VanDeWalle v. Albion Nat. Bank, 243 Neb. 496, 505, 500 N.W.2d 566, 573
      (1993), quoting Lowell Staats Min. Co. v. Philadelphia Elec. Co., 878 F.2d
1271 (10th Cir. 1989).
50	
      See Hickman, supra note 46.
51	
      Hara, supra note 7.
52	
      Hickman, supra note 46.
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                   (c) Failure to State Claim
   The association claims that McGill’s complaint failed to
state a claim, because the action was filed more than 1 year
from the date that the amendment to the declaration was
recorded. As discussed above, in order to effect the sale to
Henery, the president of the association executed an amend-
ment to the declaration modifying the boundaries of Henery’s
commercial units and then reconveyed the units to Henery.
Section 76-854(b) provides that “[n]o action to challenge the
validity of an amendment adopted by the association pursuant
to this section may be brought more than one year after the
amendment is recorded.”
   We reject the premise of this argument—that McGill chal-
lenged the amendment to the declaration and not the sale of the
limited common elements. The president executed the amend-
ment only to transfer the limited common elements to Henery.
The sale of these limited common elements was at the heart
of McGill’s derivative action, and the evidence established
that the limited common elements were sold. Section 76-870
specifies the requirements to convey a portion of the common
elements. Therefore, that statute controls.53
   [17] Even if § 76-854 were controlling, Henery and the
association waived any defense based upon the 1-year limita-
tions period. Neither Henery nor the association raised a statute
of limitations defense in their answers or motions to dismiss.
The association did not raise § 76-854(b) until after judgment
had been entered against it. The benefit of the statute of limita-
tions is personal and, like any other personal privilege, may be
waived and will be unless pleaded.54

53	
      See Bergan Mercy Health Sys. v. Haven, 260 Neb. 846, 620 N.W.2d 339
      (2000).
54	
      In re Margaret Mastny Revocable Trust, 281 Neb. 188, 794 N.W.2d 700
      (2011).
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                     (d) Equitable Estoppel
   Henery and the association assert that equitable estoppel
should defeat McGill’s claim, because the association accepted
the benefits of the sale by using the funds received from
Henery. They further argue that McGill also benefited from the
sale and that he voted in favor of using the funds.
   [18] Equitable estoppel is a bar which precludes a party
from denying or asserting anything to the contrary of those
matters established as the truth by his or her own deeds, acts,
or representations.55 Before discussing the elements of equita-
ble estoppel, we first reject any argument relating to McGill in
his individual capacity. As already discussed, McGill brought
the present action derivatively on behalf of the association.
Any conduct or benefit relating to McGill as an individual
is irrelevant.
   Because this is a derivative action, the association is the
party to be estopped. And as to the association, the defense
clearly fails. To be estopped, the association is required to
have possessed “knowledge, actual or constructive, of the
real facts.”56 Although the district court ultimately deter-
mined that the sale was void, the association had no aware-
ness of its invalidity. As the court observed, “There was
merely a misunderstanding as to what the requirements were
of such a sale.”
   Further, it cannot be said that the parties were unable
to ascertain the truth or falsity of the pertinent facts.57 The
requirements for the sale were set forth in the Nebraska
Condominium Act, and Henery was present when his offer
was approved by the association. Thus, the pertinent facts
were equally available to all of the parties. This argument is
without merit.

55	
      Berrington Corp. v. State, 277 Neb. 765, 765 N.W.2d 448 (2009).
56	
      See id. at 774, 765 N.W.2d at 455.
57	
      See id.
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                   2. Sale and Attorney Fees
                        (a) Validity of Sale
   Henery and the association assert that the sale of the limited
common elements was not invalid. And the association further
claims that the district court erred in determining that title to
the limited common elements remained with the association,
rather than Henery.
   In arguing that the sale was not invalid, the association again
relies upon § 76-854, concerning amendments to the declara-
tion. But as already discussed, the amendment in this case was
executed only to carry out the sale to Henery. Regardless of the
form of the transfer, the sale was required to comply with the
provisions of § 76-870.
   Section 76-870 provides, in relevant part:
         (a) Portions of the common elements may be conveyed
      or subjected to a security interest by the association if
      persons entitled to cast at least eighty percent of the votes
      in the association, . . . or any larger percentage the decla-
      ration specifies, agree to that action; but all the owners of
      units to which any limited common element is allocated
      must agree in order to convey that limited common ele-
      ment or subject it to a security interest. . . . Proceeds of
      the sale are an asset of the association.
         (b) An agreement to convey common elements or
      subject them to a security interest must be evidenced by
      the execution of an agreement, or ratifications thereof,
      in the same manner as a deed, by the requisite number
      of unit owners. The agreement must specify a date after
      which the agreement will be void unless recorded before
      that date. The agreement and all ratifications thereof
      must be recorded in every county in which a portion
      of the condominium is situated and is effective only
      upon recordation.
         ....
         (d) Any purported conveyance, encumbrance, judicial
      sale, or other voluntary transfer of common elements,
      unless made pursuant to this section, is void.
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   Henery and the association also misunderstand the require-
ments of § 76-870(a). They assert that only Henery’s con-
sent was necessary to approve the conveyance, because he
owned all of the commercial units to which the limited com-
mon elements were allocated. Thus, they do not read the
80-­percent requirement as applying to limited common ele-
ments. We disagree.
   This argument neglects the common ownership of limited
common elements. As previously discussed, although allocated
to the exclusive use of certain units, limited common ele-
ments are nonetheless common elements of the condominium.
Because they are common elements, each unit owner possesses
an undivided ownership interest in the limited common ele-
ments, even if the owner has no right to their use. Section
76-870(a) protects this ownership interest by requiring the
approval of 80 percent of the total authorized votes in the asso-
ciation to convey common elements, whether or not the com-
mon elements are also limited common elements.
   Rather than providing an alternative method of approval,
§ 76-870(a) provides an additional safeguard as to the sale of
limited common elements. Not only must 80 percent of the
total votes approve the sale of limited common elements, but
the sale must be approved by all of the unit owners entitled
to the use of the limited common elements. Without the una-
nimity requirement, the association could vote to sell limited
common elements despite an objection from those unit owners
entitled to their use.
   Because § 76-870(a) required approval by both 80 per-
cent of the total votes and 100 percent of the unit owners
to whom the limited common elements were allocated, the
vote was clearly insufficient. While the second requirement
was satisfied, the first was not. As the district court deter-
mined, at most, the sale to Henery was approved by a vote
of only 77.7 percent. Thus, the conveyance fell short of the
80-­percent requirement.
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    Further, there is no evidence of any agreement executed by
the unit owners approving the sale, or ratifications thereof, as
required by § 76-870(b). Only Henery and the president of the
association signed the purchase agreement for the limited com-
mon elements. And only the president signed the amendment
to the declaration and the warranty deed. We therefore agree
with the district court that the conveyance of the limited com-
mon elements was void.58
    Henery and the association raise additional arguments rely-
ing upon provisions of the declaration and of the act which
are similarly unpersuasive. Section 76-845(b) addresses the
“reallocation” of limited common elements between units, not
the conveyance of title. Similarly, paragraph 14(B)(ii) of the
declaration merely provides that only limited common ele-
ments may be incorporated into an adjacent unit or units “then
owned by Declarant.” Assuming a declarant still exists in this
case, the incorporation of limited common elements into an
adjacent unit or units necessarily requires the conveyance of
title. Such a conveyance is not permitted without compliance
with the requirements of § 76-870.
    As to the association’s assertion regarding the state of title
to the limited common elements, we agree that the district
court could have been more specific. Rather than indicating
that title to the limited common elements remained with the
association, it would have been more clear to state that each
unit owner retained his or her undivided ownership interest.
But because the association was composed of all the unit own-
ers, the district court was not necessarily incorrect. However,
we reject the association’s premise that title to the limited com-
mon elements remained with Henery. The limited common ele-
ments are still allocated to the exclusive use of the commercial
units. But Henery’s ownership of the limited common elements

58	
      See § 76-870(d).
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is shared with all of the unit owners. This assignment of error
is without merit.
                         (b) Attorney Fees
   The association assigns that the district court erred in
awarding McGill his attorney fees and costs. It claims that
there was no statutory basis to permit the award, that the
award included attorney fees incurred in the 2010 action,
and that McGill was improperly granted payment of cer-
tain “expenses.”
   [19] The association is correct that some basis must exist to
permit an award of attorney fees. We have stated that attorney
fees and expenses may be recovered only where provided for
by statute or when a recognized and accepted uniform course
of procedure has been to allow recovery of attorney fees.59 The
district court did not mention a statutory basis for the award of
attorney fees. Rather, it relied upon the “laws of Derivati[ve]
Action lawsuits.”
   However, a specific statutory basis exists in § 76-891.01,
which provides:
         If a declarant or any other person subject to the
      Nebraska Condominium Act fails to comply with any
      provision of the act or any provision of the declaration or
      bylaws, any person or class of persons adversely affected
      by the failure to comply has a claim for appropriate relief.
      The court, in an appropriate case, may award costs and
      reasonable attorney’s fees.
We determine that an award of attorney fees and costs was
proper under § 76-891.01.
   [20] As to the amount of the award, we find no abuse of
discretion regarding the services provided by McGill’s attor-
neys. When an attorney fee is authorized, the amount of the
fee is addressed to the trial court’s discretion, and its ruling
will not be disturbed on appeal absent an abuse of discretion.60

59	
      See Garza v. Garza, 288 Neb. 213, 846 N.W.2d 626 (2014).
60	
      Lamar Co. v. City of Fremont, 278 Neb. 485, 771 N.W.2d 894 (2009).
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The district court based the amount of the award on an affi-
davit from one of McGill’s attorneys. In the affidavit, the
attorney averred that $28,016 in services were provided either
in support of the present action or in support of both the 2010
action and the present action. And two attached listings show
that numerous services related solely to the 2010 action were
excised from McGill’s ultimate award.
   The association also argues that the district court improperly
awarded McGill payment for several miscellaneous expenses
charged by his attorneys, including postage, photocopies, and
court reporters. Our prior case law has not been consistent
in its treatment of such litigation expenses. For example, in
National Am. Ins. Co. v. Continental Western Ins. Co.,61 we
rejected the argument that litigation expenses were not recover-
able under Neb. Rev. Stat. § 44-359 (Reissue 2010), reasoning
that there was no rational basis for distinguishing expenses
for photocopying or expert consultation from other expenses
necessary to a client’s representation. However, in Young v.
Midwest Fam. Mut. Ins. Co.,62 we construed the same section
and concluded that expert witness fees and other litigation
expenses were not recoverable.
   Since as early as 1922, we have recognized that litigation
expenses are not recoverable unless provided for by statute
or a uniform course of procedure.63 But as the above two
cases illustrate, we have not been uniform in applying this
principle,64 and our cases have diverged even when construing
the same statutory section.

61	
      National Am. Ins. Co. v. Continental Western Ins. Co., 243 Neb. 766, 502
N.W.2d 817 (1993).
62	
      Young v. Midwest Fam. Mut. Ins. Co., 276 Neb. 206, 753 N.W.2d 778
      (2008).
63	
      See Toop v. Palmer, 108 Neb. 850, 189 N.W. 394 (1922).
64	
      See City of Falls City v. Nebraska Mun. Power Pool, 281 Neb. 230, 795
N.W.2d 256 (2011). See, also, Bartunek v. Gentrup, 246 Neb. 18, 516
N.W.2d 253 (1994) (recognizing prior affirmance of award of expert
      witness fee without statutory basis or uniform course of procedure).
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    This disparity arises, in part, from the numerous distinct
statutory provisions addressing the recovery of attorney fees
and costs in certain types of litigation. For example, specific
statutes expressly permit the recovery of certain litigation
expenses.65 One such statute authorizes the recovery “for fees
necessarily incurred for not more than two expert witnesses”
under certain conditions in a condemnation action.66 In con-
trast, other statutes, such as § 76-891.01 in the present case,
authorize only the recovery of attorney fees and costs.
    In City of Falls City v. Nebraska Mun. Power Pool,67 we
recognized the inconsistencies in our case law. Although that
case specifically dealt with the taxation of costs under Neb.
Rev. Stat. § 25-1711 (Reissue 2008), we find it instructive
in construing any statute providing only for the recovery of
attorney fees and costs. We recognized that it is the province
of the Legislature to designate specific items of litigation
expense which may be taxed as costs and that the Legislature
has done so with respect to certain court costs.68 Further,
shifting of litigation expenses from one party to another
could have a chilling effect on a plaintiff’s right to seek relief
for injury or wrong or subject an unsuccessful defendant
to costs greatly in excess of the monetary relief sought by
the plaintiff.69
    [21] We therefore hold that without indication to the con-
trary, where a statute speaks only to attorney fees and costs,
a party may recover his or her attorney fees, the costs of the
filing of the action, and any other expenses that are specifi-
cally delineated as taxable costs by statute.70 And we expressly

65	
      See, e.g., Neb. Rev. Stat. § 76-720 (Reissue 2009).
66	
      Id.
67	
      City of Falls City, supra note 64.
68	
      See id.
69	
      Id.
70	
      See Kliment v. National Farms, Inc., 245 Neb. 596, 514 N.W.2d 315
      (1994).
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disapprove of our prior cases, such as National Am. Ins. Co.,
which permitted the recovery of litigation expenses without an
explicit basis for doing so.
   As previously discussed, § 76-891.01 speaks only to the
recovery of attorney fees and costs. But the district court
allowed McGill to recover $1,209.14 in expenses, including
expenses for postage, photocopies, and court reporters. Our
attention has not been directed to any statute which defines
taxable costs to include these items. But we are also aware
that the parties have not had the opportunity to brief the statu-
tory basis for the items to be claimed as costs, and we think it
is appropriate that the district court consider the matter in the
first instance.
                      VI. CONCLUSION
   Based upon the requirements of the Nebraska Condominium
Act, the sale and conveyance of the limited common elements
were void. The conveyance was neither approved by the
requisite vote of the association nor evidenced by an agree-
ment signed by the unit owners. And we further conclude that
McGill was not barred from bringing the present derivative
action and that a statute authorized the district court to award
McGill his taxable costs and reasonable attorney fees. We
therefore affirm the award of attorney fees of $28,016, but
we vacate the award of costs and expenses and remand the
cause to the district court to determine the amount of tax-
able costs to be awarded to McGill in conformity with this
opinion. In all other respects, we affirm the judgment of the
district court.
	Affirmed in part, and in part vacated                     and
	 remanded for further proceedings.