Court Opinion

ID: 9385546
Source: CourtListenerOpinion
Date Created: 2023-04-07 13:05:38.756825+00
Date Added: 2024-06-11T17:18:02.647528
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/07/2023 08:05 AM CDT

                                                       - 957 -
                               Nebraska Supreme Court Advance Sheets
                                        313 Nebraska Reports
                                            BRAUER V. HARTMANN
                                              Cite as 313 Neb. 957

                          Sieg H. Brauer, doing business as Brauer Law
                            Office, appellant, v. Kent Hartmann and
                               Hartmann Hay Co., LLC, appellees.
                                                  ___ N.W.2d ___

                                        Filed April 7, 2023.     No. S-22-248.

                 1. Contracts. The interpretation of a contract and whether the contract is
                    ambiguous are questions of law subject to independent review.
                 2. Judgments: Appeal and Error. In a bench trial of a law action, a trial
                    court’s factual findings have the effect of a jury verdict and will not be
                    set aside on appeal unless clearly wrong.
                 3. Attorney Fees: Courts. Courts have traditional authority to supervise
                    the charging of fees for professional services under their inherent power
                    to regulate the practice of law.
                 4. Attorney Fees. An attorney may not recover for services rendered
                    if those services are rendered in contradiction to the requirements
                    of professional responsibility and are inconsistent with the character of
                    the profession.
                 5. ____. Contingency fees are recoverable only if reasonable.
                 6. Attorney Fees: Contracts: Proof. In a suit to recover an unpaid fee, the
                    lawyer has the burden of persuading the trier of the fact, when relevant,
                    of the existence and terms of any fee contract, the making of any dis-
                    closures to the client required to render a contract enforceable, and the
                    extent and value of the lawyer’s services.
                 7. Attorney and Client. The value of a lawyer’s services is ordinarily a
                    question of fact.
                 8. Appeal and Error. An appellate court is not obligated to engage in an
                    analysis that is not necessary to adjudicate the case and controversy
                    before it.
                 9. Fraud: Proof. A fraudulent misrepresentation claim requires a plaintiff
                    to establish the following elements: (1) A representation was made; (2)
                    the representation was false; (3) when made, the representation was
                    known to be false or made recklessly without knowledge of its truth
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          Nebraska Supreme Court Advance Sheets
                   313 Nebraska Reports
                         BRAUER V. HARTMANN
                           Cite as 313 Neb. 957

   and as a positive assertion; (4) the representation was made with the
   intention that the plaintiff should rely on it; (5) the plaintiff did so rely
   on it; and (6) the plaintiff suffered damage as a result.

   Appeal from the District Court for Hall County, Rachel A.
Daugherty, Judge, on appeal thereto from the County Court
for Hall County, Alfred E. Corey III, Judge. Judgment of
District Court affirmed.
  Sieg H. Brauer, of Brauer Law Office, for appellant.
   John C. Hahn, of Baylor, Evnen, Wolfe & Tannehill, L.L.P.,
for appellees.
  Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ., and Cox, District Judge.
  Funke, J.
                       INTRODUCTION
   An attorney sued his former clients, alleging three separate
causes of action: breach of contract per an hourly fee agree-
ment, breach of contract per a contingency fee agreement,
and fraudulent misrepresentation. The county court found for
the attorney on his first cause of action but against him on
his second and third causes of action. The attorney appealed
to the district court, which affirmed with some minor modi-
fications. The attorney appeals. For the reasons stated below,
we affirm.
                     BACKGROUND
                 Underlying Litigation
   Sieg H. Brauer is a licensed attorney doing business as
Brauer Law Office. Kent Hartmann and Kirk Hartmann are
brothers and were, at all relevant times, joint owners of
Hartmann Hay Co., LLC (HHC), a farming and livestock
company. In December 2015, Kent met with Brauer about a
claim that HHC wanted to bring against Wilbur-Ellis Company
(WECO). WECO had provided agricultural services to HHC;
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         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     BRAUER V. HARTMANN
                       Cite as 313 Neb. 957

according to Kent, WECO had negligently misapplied chemi-
cals and caused some of HHC’s crops to fail during the 2014
crop year. Kent explained to Brauer that a setoff might be
possible insofar as WECO had a potential claim against him
for nonpayment of charges for chemicals and services. Brauer
prepared an engagement letter, as well as a contingency fee
agreement. In his engagement letter, dated January 7, 2016,
Brauer explained:
         This will serve to confirm our discussions on December
      21, 2015 regarding the crop damages you suffered in
      2014 and your request for representation under a contin-
      gent fee agreement.
         I have prepared a fee agreement pursuant to those
      discussions. It provides that I will pursue your claim for
      damages to your crop in 2014 caused by untimely chemi-
      cal application by [WECO]. It is further understood, that
      you have an outstanding balance due to [WECO] that may
      provide incentive for settlement of your damage claim as
      an offset to the damage claim, and that my fee will be
      based on the amount determined to constitute the value of
      your crop damages.
   Kent signed the contingency fee agreement and returned
it to Brauer. The contingency fee agreement provided, in rel-
evant part:
         This writing confirms and memorializes the terms
      agreed to by Kent Hartman [sic] (CLIENT) and BRAUER
      LAW OFFICE (ATTORNEY) for providing legal rep-
      resentation regarding CLIENT’S claim in the following
      matter(s) (OCCURRENCE):
         Farm crop damages due to negligent chemical applica-
      tion in 2014 crop year.
         1. Client desires to employ Attorney under a
      CONTINGENCY FEE agreement.
         A. The Client shall pay as ATTORNEY COMPEN­
      SATION for services rendered 33 1/3% of the total
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         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     BRAUER V. HARTMANN
                       Cite as 313 Neb. 957

      recovery of moneys, value received, or value of proper-
      ties recovered in prosecution of CLIENT’S claim.*
          ....
          * CLIENT acknowledges and agrees that ATTORNEY
      is entitled to the value of any debt cancelled in calcu-
      lating the value of any recovery obtained as a result
      of prosecution of CLIENT’S claim relating to the
      OCCURRENCE.
Brauer later sent Kent an “Hourly Fee Agreement” for
“General Matters Including Defending Claim by [WECO]
for Chemicals.” The document was never signed and returned;
however, the parties agree that with respect to WECO’s claim
against Kent, Brauer agreed to defend Kent for a fee of $100
per hour.
   On February 29, 2016, Brauer, on behalf of HHC, filed
a claim against WECO for crop damages of approximately
$163,000. On March 23, WECO filed a claim against Kent
for nonpayment of charges for chemicals and services in
the amount of approximately $126,000. The matters were
removed to federal court per diversity jurisdiction and even-
tually consolidated. Litigation continued for over a year, and
HHC eventually filed for bankruptcy protection. Thereafter,
on August 21, 2017, Kent and, purportedly, Kirk executed a
guaranty with respect to Brauer’s fees for services “previously
and hereinafter rendered.” HHC and WECO ultimately settled
and dismissed their claims against one another with prejudice.
As part of the settlement, neither HHC nor WECO admitted
liability. On March 9, 2018, HHC and WECO obtained judicial
approval of their settlement. Brauer billed Kent and HHC for
unpaid fees and costs. For the most part, Kent and HHC failed
or refused to provide the requested payments.
                  Procedural History
   On July 22, 2019, Brauer brought a claim against Kent,
Kirk, and HHC for unpaid fees and expenses, initially alleg-
ing two causes of action. Brauer’s first cause of action
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         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     BRAUER V. HARTMANN
                       Cite as 313 Neb. 957

concerned unpaid fees for his defense of Kent. On that cause
of action, Brauer admitted that he had been paid $3,500 but
claimed a remaining balance of $3,906.70. Brauer’s prayer for
relief requested a judgment in the amount of $3,876.70, plus
interest. Brauer’s second cause of action concerned his repre-
sentation of HHC in its claim against WECO. On that cause of
action, Brauer requested a remaining balance of $42,474.50,
plus interest, which included $474.50 in expenses. Brauer’s
position was that the value of the settlement was “not less than
$126,000.00” and that he was entitled to one-third of “such
value” under the terms of the contingency fee agreement.
Brauer attached to his complaint copies of the engagement let-
ter he had sent to Kent, the contingency fee agreement he had
executed with Kent, and the personal guaranty that Kent and,
purportedly, Kirk had signed in August 2017.
   In his answer, Kirk broadly denied engaging Brauer to
provide legal services. “All of these discussions,” he wrote,
“were between [sic] Kent . . . , who held himself out . . . as
being the managing member of [HHC].” Kirk also denied sign-
ing the guaranty attached to Brauer’s complaint. In a separate
answer, Kent and HHC argued that Brauer was not entitled
to any damages with respect to his second cause of action,
because the settlement agreement that Brauer negotiated did
not result in any recovery, res, or fund out of which to pay a
contingency fee. Kent and HHC also argued that the contin-
gency fee agreement is not fair and reasonable as required by
law and that because “the value recovered by [Brauer] to [Kent
and HHC], if any, is not reasonably determinable,” the contin-
gency fee agreement is unenforceable.
   In April 2020, Brauer amended his complaint, adding a
third cause of action against Kent for fraudulent misrepre-
sentation. In his amended complaint, Brauer alleged Kirk had
averred that he had not executed the guaranty attached to
Brauer’s complaint and that Kent had affixed Kirk’s signature
to the document. If this were determined to be true, Brauer
argued, then Kent’s delivery of the signed guaranty to Brauer
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         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     BRAUER V. HARTMANN
                       Cite as 313 Neb. 957

constituted fraud. Brauer argued that he had relied on the
guaranty, supposedly signed by Kent and Kirk, in continuing
representation of them in the federal cases after HHC filed for
bankruptcy protection.
                      Relevant Admissions
   Prior to trial, the county court deemed certain matters con-
clusively established for the remainder of litigation under Neb.
Ct. R. Disc. § 6-336. Section 6-336 concerns the discovery
device of requests for admission and provides that untimely
responses thereto will be deemed admissions and will be con-
clusively established for all trial purposes unless the court, on
motion, permits withdrawal or amendment.
   Both Kent and HHC failed to respond to Brauer’s first set of
requests for admissions in a timely manner. Eventually, Kent
and HHC moved to withdraw and amend their responses to
Brauer’s first set of requests for admissions. The county court
denied their motion. As a result, certain matters were deemed
conclusively established for the remainder of litigation. As to
Kent, these matters included, as relevant:
         ADMISSION NO. 23: Admit that as a result of
      the settlement between you, HHC and WECO, HHC
      received a benefit in the WECO Claim of not less than
      $126,631.75.
         ....
         ADMISSION NO. 24: Admit that as a result of
      the settlement between you, HHC and WECO you
      received a benefit in the WECO claim of not less than
      $126,631.75.
As to HHC, these matters included, as relevant: ADMISSION
NO. 22: Admit that as a result of the settlement between you,
Kent Hartmann and WECO, HHC received a benefit in the
WECO Claim of not less than $126,631.75.
                    Trial and Judgment
   Days before trial, Brauer moved to dismiss Kirk from the
action without prejudice. The county court dismissed Kirk,
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            Nebraska Supreme Court Advance Sheets
                     313 Nebraska Reports
                          BRAUER V. HARTMANN
                            Cite as 313 Neb. 957

and the matter proceeded to trial only against Kent and HHC.
Kent’s and HHC’s deemed admissions were received into evi-
dence by the county court. In development of the fraud claim,
a certified forensic document examiner and handwriting iden-
tification expert testified on behalf of Brauer. She opined that
Kirk did not sign the guaranty and that it was highly probable
that the same person signed it twice, i.e., that Kent signed the
document on his own and also forged Kirk’s signature.
    On August 25, 2021, the county court entered a judgment.
The court found for Brauer on his first cause of action. But
the court found for Kent and HHC on Brauer’s other causes of
action. Specifically, the court concluded that Brauer was not
entitled to recover under the contingency fee agreement. The
county court also found that Brauer did not prove damages as
necessary to recover for fraudulent misrepresentation. Brauer
appealed to the district court.
                   Appeal to District Court
   On appeal from the county court’s judgment, as to Brauer’s
first cause of action, both parties agreed that the postjudgment
interest rate entered was incorrect. The district court affirmed
the county court’s decision as modified, remanding the matter
with directions to modify the judgment interest. Brauer agrees
with the district court’s determination as to his first cause of
action and raises no further issue on appeal. Kent and HHC do
not cross-appeal.
   Regarding Brauer’s second cause of action, the district
court noted as a preliminary matter that Nebraska law was
unclear as to whether the parties’ contingency fee agreement,
as written, was enforceable. 1 Nonetheless, it assumed, argu-
endo, that it was. The district court observed that the deemed
1
    See, e.g., Wunschel Law Firm, P.C. v. Clabaugh, 291 N.W.2d 331 (Iowa
    1980) (holding that contingency fee agreement for defense of unliquidated
    tort damage claim, based upon percentage of difference between prayer of
    petition and amount awarded, is void as unreasonable and against public
    policy).
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            Nebraska Supreme Court Advance Sheets
                     313 Nebraska Reports
                         BRAUER V. HARTMANN
                           Cite as 313 Neb. 957

admissions, as written, stated that Kent and HHC “‘received
a benefit in the WECO claim of not less than $126,631.75.’”
The court found, however, that although Kent and HHC did
receive a benefit as a result of Brauer’s services in the claim
against them by WECO, they had entered into a separate con-
tract to pay Brauer for defending them from that claim on an
hourly basis. As to HHC’s claim against WECO, the district
court found that there was no evidence a certain debt was ever
owed to WECO and then canceled. Thus, the admissions were
not fatal to Kent’s and HHC’s defense. The court found error,
however, in the county court’s failure to award $474.50 in
costs and affirmed as modified.
   As to Brauer’s third cause of action for fraudulent misrepre-
sentation, the district court affirmed, agreeing with the county
court that Brauer had failed to prove damages.
                 ASSIGNMENTS OF ERROR
   Brauer assigns, consolidated and restated, that the district
court erred in (1) affirming the district court’s order deny-
ing him fees under the contingency fee agreement by (a)
failing to apply the terms of the contingency fee agreement,
(b) failing to properly apply discovery rules regarding con-
clusively established admissions, (c) finding that Brauer pre-
sented insufficient evidence of a benefit received by Kent and
HHC per HHC’s claim against WECO, and (d) finding that
there was no evidence of a certain debt owed WECO by Kent
and/or HHC that was canceled, as well as in (2) affirming the
county court’s decision that there was no fraudulent misrep-
resentation after concluding that Brauer had failed to prove
fraud damages.
                  STANDARD OF REVIEW
   [1] The interpretation of a contract and whether the con-
tract is ambiguous are questions of law subject to indepen-
dent review. 2
2
    Dion v. City of Omaha, 311 Neb. 522, 973 N.W.2d 666 (2022).
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            Nebraska Supreme Court Advance Sheets
                     313 Nebraska Reports
                          BRAUER V. HARTMANN
                            Cite as 313 Neb. 957

   [2] In a bench trial of a law action, a trial court’s factual
findings have the effect of a jury verdict and will not be set
aside on appeal unless clearly wrong. 3
                            ANALYSIS
                 Contingency Fee Agreement
   [3,4] Courts have traditional authority to supervise the
charging of fees for professional services under their inherent
power to regulate the practice of law. 4 Attorney fee agree-
ments are different from conventional commercial contracts:
The difference arises from the fact that an attorney may not
recover for services rendered if those services are rendered in
contradiction to the requirements of professional responsibility
and are inconsistent with the character of the profession. 5 The
Nebraska Rules of Professional Conduct, which are currently
in effect, provide that a lawyer may not enter into an agreement
for, charge, or collect an unreasonable fee. 6 Therefore, when
determining a satisfactory fee for services, the primary inquiry
is reasonableness. 7
   [5-7] Contingency fees are recoverable only if reasonable. 8
In order for the reasonableness of a particular fee to be deter-
mined, the extent and value of the lawyer’s services must
first be established. 9 In a suit to recover an unpaid fee, the
3
    132 Ventures v. Active Spine Physical Therapy, ante p. 45, 982 N.W.2d 778
    (2022).
4
    Sherrets, Smith v. MJ Optical, Inc., 259 Neb. 424, 610 N.W.2d 413 (2000).
5
    St. John v. Gering Public Schools, 302 Neb. 269, 923 N.W.2d 68 (2019).
    See, also, Hauptman, O’Brien v. Turco, 273 Neb. 924, 735 N.W.2d 368
    (2007), and Restatement (Third) of the Law Governing Lawyers, § 34,
    comment b. (2000) (lawyers owe their clients greater duties than are owed
    under general law of contracts).
6
    Neb. Ct. R. of Prof. Cond. § 3-501.5.
7
    Stueve v. Valmont Indus., 277 Neb. 292, 761 N.W.2d 544 (2009).
8
    Hauptman, O’Brien v. Turco, supra note 5.
9
    St. John v. Gering Public Schools, supra note 5.
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              Nebraska Supreme Court Advance Sheets
                       313 Nebraska Reports
                             BRAUER V. HARTMANN
                               Cite as 313 Neb. 957

lawyer has the burden of persuading the trier of fact, when
relevant, of the existence and terms of any fee contract, the
making of any disclosures to the client required to render a
contract enforceable, and the extent and value of the lawyer’s
services. 10 The value of a lawyer’s services is ordinarily a
question of fact. 11
   A lawyer can establish the extent and value of his or her
services in a contingency fee case by producing evidence
showing, for example, the results obtained, the quality of the
work, and whether the lawyer’s efforts substantially contrib-
uted to the result. 12 Other factors relevant to the reasonable-
ness of a contingency fee include the time and labor required;
the novelty and difficulty of the legal issues involved; the
skill required to do the work properly; the experience, reputa-
tion, and ability of the lawyer performing the services; and
the fee customarily charged in the locality for similar legal
services. 13 While the pertinent factors will differ from case
to case, the general inquiry should focus on the circum-
stances of the agreement and the work performed. 14 Where
a contingency fee is incommensurate with the value of the
services rendered by the attorney in exchange, the fee may
be unreasonable. 15 In other words, an attorney must produce
evidence that establishes a prima facie case that his or her
fee is reasonable. 16 Once the attorney has done so, the evi-
dentiary burden going forward shifts to the client, and the
client must object to the evidence established by the attorney
10
     Hauptman, O’Brien v. Turco, supra note 5.
11
     Id.
12
     Hauptman, O’Brien v. Turco, 277 Neb. 604, 764 N.W.2d 393 (2009).
13
     Id. See, also, Neb. Ct. R. of Prof. Cond. § 3-501.5 (listing eight factors to
     be considered in determining reasonableness of attorney fee).
14
     Hauptman, O’Brien v. Turco, supra note 12.
15
     See 7A C.J.S. Attorney & Client § 469 (2015) (citing King v. Fox, 7
     N.Y.3d 181, 851 N.E.2d 1184, 818 N.Y.S.2d 833 (2006)).
16
     Hauptman, O’Brien v. Turco, supra note 12.
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           Nebraska Supreme Court Advance Sheets
                    313 Nebraska Reports
                     BRAUER V. HARTMANN
                       Cite as 313 Neb. 957

with specificity to demonstrate why the documented fees are
not reasonable. 17
   Here, the evidence at trial established that Brauer and Kent
entered into two fee agreements, one being an hourly fee
agreement and one being a contingency fee agreement. Brauer
was previously paid $3,500 toward the hourly fee agreement
and has received a judgment in the amount of an additional
$3,876.70 under the hourly fee agreement. No party chal-
lenges these amounts. Brauer seeks to recover an additional
$42,474.50 under the contingency fee agreement; thus, Brauer
must produce evidence that the additional sum he demands is
reasonable based on the work he has performed and the value
he has provided through his services.
   The record includes two sets of billing statements created
and maintained by Brauer Law Office. The billing state-
ments appear to use matter numbers to differentiate between
individual matters for the same client: While both ledgers
display the client number for “Hartmann, Kent,” one displays
a matter number for “Crop/Chemical Damage” and the other
displays a matter number for “Wilbur Ellis Collection.” The
billing statements contain corresponding notations of the time
spent and the hourly rate charged. All of the billing entries
in the matter regarding “Crop/Chemical Damage” designate
no charge, while the billing entries in the matter regarding
“Wilbur Ellis Collection” designate a rate of $100 per hour.
The billing statements indicate 76.4 hours of service for the
“Crop/Chemical Damage” matter and 64.8 hours of service for
the “Wilber Ellis Collection” matter. Of the hours billed, 31.8
hours showed the exact same description of work for both mat-
ters and 30.6 and 25.3 hours, respectively, showed nearly the
same description of work for both matters. While maintained
separately, these records are functionally inextricable: The
majority of the billings under each matter appear under the
other, either identically or similarly. This presumably reflects
17
     Id.
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             Nebraska Supreme Court Advance Sheets
                      313 Nebraska Reports
                           BRAUER V. HARTMANN
                             Cite as 313 Neb. 957

the reality that the cases were consolidated. We are unable to
conclusively determine from the record whether the mirrored
billings are bifurcated or duplicative.
   Brauer was cognizant of the potential for “overlap” between
the parties’ operative fee agreements. Brauer testified at trial
that as to Kent, he had reduced his hourly rate of $200 per hour
by 50 percent to account for the fact that “work done on both
sides of the case or the two cases would often overlap” and
that “it wasn’t going to require inventing a new wheel for each
aspect of each case.” Brauer testified that Kent was “agree-
able” to the reduced hourly rate on account of the potential
for overlap. Thus, the situation before us is that of a reduction
in an attorney’s hourly rate entangled with a simultaneously
operative contingency fee agreement. Notably, however, we
are not called upon to review one “hybrid” fee agreement—
Brauer pled the existence of, and has sought to enforce, two
distinct contracts.
   [8] Accordingly, it suffices to say that Brauer has produced
insufficient evidence of the work performed and value pro-
vided pursuant, specifically, to the contingency fee agreement.
We can only speculate as to whether or not the claimed fee
computed pursuant to the contingency fee agreement is reason-
able. 18 Resultingly, Brauer has not met his burden in attempting
to enforce the contingency fee agreement; because this conclu-
sion is dispositive as to Brauer’s request for a contingency fee,
we do not reach his assigned errors thereunder. Moreover, we
express no opinion as to the general enforceability of what
the appellees have labeled a “reverse” contingency fee agree-
ment under Nebraska law. An appellate court is not obligated
to engage in an analysis that is not necessary to adjudicate the
case and controversy before it. 19
18
     Cf. Hauptman, O’Brien v. Turco, supra note 5. See, also, Bedore v. Ranch
     Oil Co., 282 Neb. 553, 805 N.W.2d 68 (2011) (appellate court cannot
     consider as evidence statements made by parties in briefs, because these
     are matters outside record).
19
     Schaeffer v. Frakes, ante p. 337, 984 N.W.2d 290 (2023).
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             Nebraska Supreme Court Advance Sheets
                      313 Nebraska Reports
                          BRAUER V. HARTMANN
                            Cite as 313 Neb. 957

                Fraudulent Misrepresentation
   Brauer argues that the district court erred in affirm-
ing the county court’s decision that there was no fraudulent
misrepresentation.
   [9] A fraudulent misrepresentation claim requires a plaintiff
to establish the following elements: (1) A representation was
made; (2) the representation was false; (3) when made, the rep-
resentation was known to be false or made recklessly without
knowledge of its truth and as a positive assertion; (4) the repre-
sentation was made with the intention that the plaintiff should
rely on it; (5) the plaintiff did so rely on it; and (6) the plaintiff
suffered damage as a result. 20
   The district court concluded that Brauer failed to prove dam-
ages as a necessary element of fraudulent misrepresentation.
We agree. Brauer argues that Kent induced him to rely upon
a fraudulent guaranty of a contingency fee agreement under
which Brauer cannot recover. Because Brauer cannot recover
under the contingency agreement, Brauer cannot recover for
his reliance upon a fraudulent guaranty of that agreement. The
district court did not err in holding the same.
                       CONCLUSION
   For the reasons discussed, the district court’s judgment is
affirmed.
                                                   Affirmed.
   Miller-Lerman, J., not participating.
20
     Nathan v. McDermott, 306 Neb. 216, 945 N.W.2d 92 (2020).