Court Opinion

ID: 5141031
Source: CourtListenerOpinion
Date Created: 2021-12-28 15:08:37.792942+00
Date Added: 2024-06-11T08:24:27.033911
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
12/28/2021 09:08 AM CST

                                                        - 439 -
                             Nebraska Court of Appeals Advance Sheets
                                  30 Nebraska Appellate Reports
                                         ALLIANCE GROUP v. NGC GROUP
                                              Cite as 30 Neb. App. 439

                      The Alliance Group, Inc., appellee, v. NGC Group,
                           Inc., appellant, and Justin Hernandez,
                                   an individual, appellee.
                                                    ___ N.W.2d ___

                                        Filed December 28, 2021.   No. A-21-139.

                 1. Breach of Contract: Damages. A suit for damages arising from breach
                    of a contract presents an action at law.
                 2. Judgments: Appeal and Error. In a bench trial of a law action, the trial
                    court’s factual findings have the effect of a jury verdict and will not be
                    disturbed on appeal unless clearly wrong.
                 3. ____: ____. In reviewing a judgment awarded in a bench trial of a law
                    action, an appellate court does not reweigh evidence, but considers the
                    evidence in the light most favorable to the successful party and resolves
                    evidentiary conflicts in favor of the successful party, who is entitled to
                    every reasonable inference deducible from the evidence.
                 4. Judgments: Claim Preclusion: Issue Preclusion: Appeal and Error.
                    The applicability of claim and issue preclusion is a question of law. On
                    a question of law, an appellate court reaches a conclusion independent
                    of the court below.
                 5. Damages: Appeal and Error. The amount of damages to be awarded is
                    a determination solely for the fact finder, and its action in this respect
                    will not be disturbed on appeal if it is supported by the evidence and
                    bears a reasonable relationship to the elements of the damages proved.
                 6. Damages: Judgments: Appeal and Error. With respect to damages, an
                    appellate court reviews the trial court’s factual findings under a clearly
                    erroneous standard of review.
                 7. Statute of Frauds. A memorandum, in order to make enforceable a
                    contract under the statute of frauds, may be any document or writing,
                    formal or informal, signed by the party to be charged or by the party’s
                    agent actually or apparently authorized thereunto, which states with rea-
                    sonable certainty (1) each party to the contract either by his or her own
                    name or by such a description as will serve to identify him or her, or
                                      - 440 -
            Nebraska Court of Appeals Advance Sheets
                 30 Nebraska Appellate Reports
                       ALLIANCE GROUP v. NGC GROUP
                            Cite as 30 Neb. App. 439

       by the name or description of the party’s agent; (2) the land, goods, or
       other subject matter to which the contract relates; and (3) the terms and
       conditions of all the promises constituting the contract and by whom and
       to whom the promises are made.
 8.    ____. Under the leading object rule, a promise to answer for the debt of
       another will be valid, although not in writing, when the principal object
       of the party promising to pay the debt is to promote his or her own inter-
       ests—and not to become a guarantor or surety—and when the promise is
       made on sufficient consideration.
 9.    ____. The consideration to support an oral promise to pay the debt of
       another must operate to the advantage of the promisor. It must also place
       him or her under a pecuniary obligation to the promisee independent of
       the original debt, which obligation is to be discharged by the payment of
       that debt.
10.    ____. For the leading object of the promise to be in the promisor’s own
       interests, the promisor need not receive cash in hand from the promise.
       However, the path of benefits flowing to the promisor must not be
       so circuitous or uncertain that obtaining those benefits cannot be said
       to have been his or her main purpose in making the promise, and the
       promisor’s advantage must be served in a straightforward way in order
       for the leading object rule to apply.
11.    Pleadings: Appeal and Error. Generally, an affirmative defense not
       raised or litigated in the trial court cannot be urged for the first time
       on appeal.
12.    Claim Preclusion: Appeal and Error. An appellate court may raise the
       issue of claim preclusion sua sponte, although it is infrequently done.

  Appeal from the District Court for Douglas County: Thomas
A. Otepka, Judge. Affirmed.
  Gregory S. Frayser, of Cline, Williams, Wright, Johnson &
Oldfather, L.L.P., for appellant.
   Thomas M. White and Amy S. Jorgensen, of White &
Jorgensen, for appellee The Alliance Group, Inc.
      Riedmann, Bishop, and Arterburn, Judges.
      Bishop, Judge.
                   I. INTRODUCTION
  The Alliance Group, Inc. (Alliance), filed a complaint
against NGC Group, Inc., and its owner, Justin Hernandez. The
                             - 441 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

complaint alleged claims for breach of contract and promissory
estoppel regarding NGC Group’s failure to reimburse Alliance
in accordance with an oral promise made by Hernandez. The
Douglas County District Court found that Hernandez’ oral
promise to reimburse Alliance was not barred by Nebraska’s
statute of frauds and that NGC Group breached that promise.
The court awarded Alliance $180,381.82 in damages, plus
postjudgment interest. NGC Group appeals the district court’s
determination that under the leading object rule, the oral prom-
ise was not barred by the statute of frauds. Additionally, NGC
Group contends that Alliance’s damages should have been lim-
ited to $104,721 based on a proof of claim Alliance filed in a
separate bankruptcy action. We affirm.
                       II. BACKGROUND
               1. Relationships Among Parties
                       and Other Entities
   This case involves the intersecting relationships between
several business entities and their owners and officers. Before
setting forth the operative facts at issue, we will describe the
entities and the relationships between them that form the back-
drop for this dispute.
                (a) Alliance and Acass Systems
   The dispute in this case involved an obligation owed to
Alliance pursuant to a contract between Alliance and Acass
Systems, LLC. Alliance is a Nebraska corporation that pro-
vides payroll and other employer support services to its clients.
Acass Systems was a Nebraska-based limited liability company
involved in stage fabrication and set construction for concerts
and other performance events. According to testimony given
at trial, Acass Systems filed for bankruptcy at some point in
August 2018. Alliance did not name Acass Systems as a party
to this action.
   Prior to its bankruptcy, Acass Systems was a client of
Alliance. On December 21, 2016, Alliance and Acass Systems
entered into a “Client Services Agreement” in which Acass
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

Systems agreed to pay a fee to Alliance for certain services,
including the distribution and deposit of payroll checks to
Acass Systems’ employees. Alliance would distribute payroll
to Acass Systems’ employees from its own account, and the
agreement required Acass Systems to reimburse Alliance “for
all wages, payroll taxes[,] and benefit costs incurred by or pay-
able to all” Acass Systems employees.

             (b) NGC Group; DIV Investments, LLC;
                       and Acass Systems
   NGC Group is a Nebraska corporation, owned wholly by
Hernandez, engaged primarily in commercial construction.
Hernandez also owns DIV Investments, LLC, a Nebraska lim-
ited liability company in the business of lending to and invest-
ing in other businesses. While the two companies are separate
entities, NGC Group’s chief financial officer, who also per-
formed work for DIV Investments, testified that NGC Group
would issue loans to DIV Investments, and these loans financed
DIV Investments’ loans to other entities.
   Over the course of 2017 and 2018, Acass Systems expe-
rienced financial difficulties impacting its ability to meet
its biweekly payroll obligations owed under the agreement
with Alliance. To combat these financial shortfalls, Acass
Systems sought out financing options and came to rely on DIV
Investments as its “main lender.” Acass Systems’ former chief
operating officer testified that “payroll was probably the main
course for” the money lent by DIV Investments.
   The record includes several promissory notes evidencing
multiple loans issued by DIV Investments to Acass Systems
in 2017 and 2018. Although these promissory notes included
a provision allowing for the conversion of the loan prin-
cipal into an equity interest in Acass Systems, the record
does not indicate that this right was ever exercised by DIV
Investments. According to NGC Group’s chief financial officer,
DIV Investments “utilize[d] loans from NGC [Group] in order
to fund its loans to [Acass Systems],” and these loans from
                              - 443 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

DIV Investments “were used for [Acass Systems’] payroll.”
NGC Group’s chief financial officer also had an office at Acass
Systems during the “due diligence period” of this arrangement,
and NGC Group provided its corporate credit card to Acass
Systems to assist in covering expenses.

                (c) NGC Group’s Role in Funding
                      Acass Systems’ Payroll
   According to Alliance’s owner, Michael Mapes, “[a]lmost all
of [Alliance’s] clients [would] pay their payroll invoice through
an . . . automatic clearing house” which Mapes described
as “an electronic check.” After that payment was received,
Alliance would then “pull the money out of [the client’s]
account” and “send the direct deposits . . . for [the client’s]
employees from [Alliance’s] account.” Mapes testified that
funds delivered through an “automatic clearing house” were
often not “good for . . . up to two days.” Alliance maintained a
policy that if a client’s payment in this manner ever “bounced,”
Alliance would thereafter require that client to “go on good
funds.” Mapes described that to “go on good funds” meant that
the client must provide for “either a wire transfer or a cashier’s
check in [Alliance’s] account before [Alliance would] release
the direct deposits for . . . their payroll.” Mapes testified that
Alliance generally did not advance payroll funding before
receiving a payment from its clients, but the record indicates
that Alliance made such an advance to Acass Systems on at
least one occasion.
   At some point in the course of Acass Systems’ contract with
Alliance, one of Acass Systems’ “automatic clearing house”
payments bounced. Although our record does not show the spe-
cific date of this event, there is no dispute that, starting some
time before March 30, 2018, Alliance required Acass Systems
to prepay its payroll obligations with “good funds” before
Alliance would distribute payroll checks to Acass Systems’
employees. Acass Systems’ process of making this prepay-
ment to Alliance began with an evaluation of whether or not
                             - 444 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

Acass Systems “had the money in [its] account” or if it “had a
deficit.” If there was a deficit, then Acass Systems “would go
to DIV [Investments] for the financing . . . to make that pay-
roll.” Testimony by Hernandez and NGC Group’s chief finan-
cial officer indicated that Acass Systems’ payroll funding was
typically accomplished by NGC Group providing financing for
DIV Investments, which would then use that financing to make
funds available for Acass Systems. Subsequently, “[t]he money
[from DIV Investments] would come into the [Acass Systems]
account” and then “go to the Alliance account.” Upon receiv-
ing the funding, Alliance would then make the required payroll
deposits. Mapes testified that Alliance was “constantly talking”
with “representatives of . . . Hernandez” to coordinate the time
and manner in which Acass Systems’ payroll obligation would
be paid, and Mapes communicated directly with Hernandez
regarding these matters as well.
   In contrast to this typical arrangement, NGC Group made
four direct payments to Alliance by wire transfer between
March 30 and June 8, 2018. There is no dispute that these pay-
ments were for Acass Systems’ payroll obligation to Alliance,
and Hernandez testified these direct payments from NGC Group
were “sent on behalf of the loan[s] that DIV [Investments]
made to [Acass Systems].” Several witnesses testified that these
direct payments were made to reduce potential delays in getting
paychecks to Acass Systems’ employees. Mapes testified that
Alliance’s primary concern was having “good funds” come in,
and “it didn’t matter to [him]” where those funds originated.

                 2. Payroll for June 22, 2018
   The core dispute of this case concerns Acass Systems’ pay-
roll for June 22, 2018. Earlier that same week on Tuesday, June
19, Alliance’s payroll manager sent an email to Hernandez and
NGC Group’s chief financial officer at their respective NGC
Group email addresses. In relevant part, the email stated that
Acass Systems had “let [Alliance] know that payroll fund-
ing will be coming from you again.” The email included wire
                             - 445 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

instructions and an invoice billing $180,381.82 for the June 22
payroll. Hernandez emailed a response on Wednesday, June 20,
which stated in part, “This will not be funded until Friday, we
will provide update on timing tomorrow.”
   On June 21, 2018, Mapes called Hernandez to discuss the
matter of the June 22 payroll. By June 21, Alliance had yet
to receive the required funding for payroll and would not
“release the [payroll] checks” until it had received “good
funds.” Mapes testified that he understood that “NGC [Group]
and [Hernandez] [were] going to make the payment” as they
had for previous payrolls. According to Mapes, Hernandez
said that Acass Systems’ payroll “couldn’t get funded till [June
22],” and Mapes responded that Alliance would “hold the
checks” until that day. Hernandez then replied that there would
be “even more trouble” with Acass Systems’ employees if the
checks were delayed, and according to Mapes, Hernandez then
asked, “Is there any way you can send the [paychecks] and
I’ll make sure you get paid by [June 22]?” Mapes understood
Hernandez to have made “an express, clear promise . . . that
he would cause Alliance to be paid back” if Alliance made the
payroll deposits on June 21, and Alliance proceeded to advance
the payroll funding that same day.
   Conversely, Hernandez denied making “a personal prom-
ise that [he] was going to cover payroll” or a promise that
either NGC Group or DIV Investments would cover the pay-
roll. Rather, he testified that there was a loan agreement “in
proc­ess” with Acass Systems, and if Acass Systems accepted
the loan and executed a new promissory note, the required
funds would be transferred to Alliance as they had previously.
Hernandez testified that he had been unable to come to terms
for a new loan agreement with Acass Systems and therefore no
transfer of funds to Alliance was ever made.
   Following this phone call, Mapes sent an email on June 24,
2018, communicating that he believed Hernandez had prom-
ised to transfer the funds for the June 22 payroll if Alliance
would “front $185,000 for payroll,” and he requested that
                             - 446 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

Hernandez “have this invoice paid first thing” on June 25.
Hernandez did not reply to this email, and no further commu-
nications regarding the payroll occurred prior to the filing of
this action.
                   3. Subsequent History and
                       July 2019 Complaint
   At some point in August 2018, Acass Systems filed for
bankruptcy, although the record does not indicate the court in
which Acass Systems filed the petition. Mapes confirmed in
his testimony that Alliance filed a proof of claim in this bank-
ruptcy and claimed approximately $104,721 as the amount due
from Acass Systems. Hernandez and NGC Group’s chief finan-
cial officer testified that DIV Investments also filed a claim in
Acass Systems’ bankruptcy for $5,325,078.70. No documents
relating to Acass Systems’ bankruptcy were offered or received
as evidence at trial.
   On July 10, 2019, Alliance filed a complaint in the Douglas
County District Court against NGC Group and Hernandez
seeking to recover $180,381.82 and interest thereon, costs, and
attorney fees. Alliance’s complaint alleged breach of contract
and, in the alternative, promissory estoppel. Alliance claimed
that Hernandez made a promise to reimburse Alliance for the
June 22, 2018, payroll and argued that this promise should be
enforced. NGC Group and Hernandez subsequently filed an
answer denying Alliance’s claims and arguing in part that these
claims were barred by the statute of frauds. NGC Group and
Hernandez also reserved “the right to amend or supplement its
affirmative defenses with affirmative defenses not listed” in the
answer “should they become available or apparent during the
course of this litigation,” but no such amended pleading was
ever filed.
   Trial began on November 4, 2020, and ended on November
5. The district court entered a written judgment on January
20, 2021, and found in favor of Alliance. The court found
that “Hernandez made a promise on behalf of NGC [Group]
                              - 447 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

to repay Alliance for the June 2018 Payroll, not to offer Acass
[Systems] another loan.” The court further concluded that the
promise given by Hernandez did not comply with the require-
ments of Neb. Rev. Stat. § 36-202 (Reissue 2016) that a prom-
ise to answer for the debt of another be in writing or suffi-
ciently evidenced by some note or memorandum, as the invoice
and emails offered by Alliance did not sufficiently detail the
essential terms of Hernandez’ promise. However, the court
found that Hernandez’ promise “was made to advantage NGC
[Group]” through its lending relationship with DIV Investments
and DIV Investments’ corresponding lending relationship with
Acass Systems. The court reasoned that Acass Systems’ default
on its loans from DIV Investments could then result in DIV
Investments’ default on its loans from NGC Group, and NGC
Group thus “stood to either benefit or suffer depending on the
success or failure of” Acass Systems. The court also noted
that Acass Systems utilized the services of NGC Group’s
chief financial officer and NGC Group’s corporate credit card.
Based on this evidence, the court concluded that “the leading
object rule applies as an exception to the statute of frauds”
in this case and that Hernandez’ promise, given on behalf of
NGC Group, was an enforceable contract. The court awarded
Alliance $180,381.82 in damages and postjudgment interest;
the court determined that Alliance was not entitled to prejudg-
ment interest.
   NGC Group now appeals.

                III. ASSIGNMENTS OF ERROR
   NGC Group claims that the district court erred in (1) deter-
mining that Alliance’s claim was not barred by the statute of
frauds, (2) applying the leading object rule to except the oral
promise from the requirements of the statute of frauds, (3) not
limiting Alliance’s damages to $104,721 pursuant to Alliance’s
proof of claim filed in Acass Systems’ August 2018 bankruptcy
action, and (4) failing to apply the doctrines of claim preclusion
and issue preclusion to limit Alliance’s damages to $104,721.
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                  ALLIANCE GROUP v. NGC GROUP
                       Cite as 30 Neb. App. 439

                 IV. STANDARD OF REVIEW
   [1-3] A suit for damages arising from breach of a contract
presents an action at law. Bloedorn Lumber Co. v. Nielson,
300 Neb. 722, 915 N.W.2d 786 (2018). In a bench trial of a
law action, the trial court’s factual findings have the effect of a
jury verdict and will not be disturbed on appeal unless clearly
wrong. Id. In reviewing a judgment awarded in a bench trial of
a law action, an appellate court does not reweigh evidence, but
considers the evidence in the light most favorable to the suc-
cessful party and resolves evidentiary conflicts in favor of the
successful party, who is entitled to every reasonable inference
deducible from the evidence. Id.
   [4] The applicability of claim and issue preclusion is a ques-
tion of law. Hill v. AMMC, Inc., 300 Neb. 412, 915 N.W.2d
29 (2018). On a question of law, an appellate court reaches a
conclusion independent of the court below. Id.
   [5,6] The amount of damages to be awarded is a determina-
tion solely for the fact finder, and its action in this respect will
not be disturbed on appeal if it is supported by evidence and
bears a reasonable relationship to the elements of the dam-
ages proved. Pan v. IOC Realty Specialist, 301 Neb. 256, 918
N.W.2d 273 (2018). With respect to damages, an appellate
court reviews the trial court’s factual findings under a clearly
erroneous standard of review. Id.

                         V. ANALYSIS
              1. Enforceability of Promise by
               Hernandez to Repay Alliance
                    (a) Hernandez’ Promise
  Although NGC Group states that it “disputes but does not
appeal” the district court’s finding that Hernandez made a
promise on its behalf to repay Alliance, brief for appellant at
10, we examine the district court’s findings on this matter as
part of our analysis.
  The district court found that “Hernandez made a promise
on behalf of NGC [Group] to repay Alliance for the June
                             - 449 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

2018 Payroll, not to offer Acass [Systems] another loan.” As
previously described, the testimony given at trial shows that
representatives of Alliance and NGC Group were in frequent
communication regarding the manner in which Acass Systems’
payroll obligations would be funded. In the months leading up
to the disputed payroll, NGC Group wired funding directly to
Alliance on four occasions for Acass Systems’ payroll obliga-
tion. Alliance’s payroll manager directed his June 19, 2018,
email to Hernandez and NGC Group’s chief financial officer at
their NGC Group email addresses, and Mapes likewise directed
his June 24 email to Hernandez’ NGC Group email address.
We also note that Mapes testified that he believed Hernandez
promised to have the payroll invoice paid in full without
regard to whether Acass Systems accepted another loan agree-
ment. Mapes’ testimony also indicated that if he had believed
Hernandez had instead promised to “make funds available or
. . . offer a loan to [Acass Systems],” such a promise would not
have caused him to release payroll funding to Acass Systems’
employees without having received “good funds.”
    While the parties dispute the characterization of the phone
call on June 21, 2018, our standard of review requires that we
consider the evidence and inferences drawn therefrom in the
light most favorable to the successful party and resolve all evi-
dentiary conflicts in the successful party’s favor. See Bloedorn
Lumber Co. v. Nielson, 300 Neb. 722, 915 N.W.2d 786 (2018).
In light of the evidence offered at trial, we cannot say the
district court was clearly wrong in concluding that Hernandez
orally promised, on behalf of NGC Group, to repay Alliance
for the June 22 payroll.

                   (b) Statute of Frauds and
                      Leading Object Rule
   The heart of this dispute centers on the issue of whether
Nebraska’s statute of frauds bars the enforcement of Hernandez’
oral promise to repay Alliance. NGC Group claims that
the statute of frauds should bar enforcement of Hernandez’
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

promise and that the district court erred in finding that the
leading object rule applied in this case.
   [7] Section 36-202 provides in pertinent part that “every
special promise to answer for the debt, default, or misdoings of
another person” “shall be void, unless such agreement, or some
note or memorandum thereof, be in writing.” The Nebraska
Supreme Court has explained:
      “‘A memorandum, in order to make enforceable a con-
      tract within the Statute, may be any document or writing,
      formal or informal, signed by the party to be charged or
      by his agent actually or apparently authorized thereunto,
      which states with reasonable certainty, (a) each party
      to the contract either by his own name, or by such a
      description as will serve to identify him, or by the name
      or description of his agent, and (b) the land, goods or
      other subject-matter to which the contract relates, and (c)
      the terms and conditions of all the promises constituting
      the contract and by whom and to whom the promises
      are made.’”
Hansen v. Hill, 215 Neb. 573, 578, 340 N.W.2d 8, 12 (1983)
(quoting Ord v. Benson, 163 Neb. 367, 79 N.W.2d 713 (1956)).
   The district court found that Hernandez’ oral promise was
not supported by sufficient writings to satisfy the statute of
frauds, and we agree with this conclusion. Hernandez’ prom-
ise on behalf of NGC Group was a “promise to answer for
the debt, default, or misdoings of” Acass Systems, and thus,
it needed to be supported by writings stating the terms of the
contract with reasonable certainty. See § 36-202. The only
writings corresponding to the payroll for June 22, 2018, were
the previously described emails exchanged between the parties’
representatives and the invoice attached to the June 19 email
from Alliance’s payroll manager. As the district court observed,
these writings did not specifically identify the entity that would
repay Alliance, nor did they indicate the specific time or man-
ner of repayment. The district court did not err in concluding
the statute of frauds was not satisfied.
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

   [8] However, the district court further found that the “lead-
ing object rule” applied as an exception to the statute of frauds
in this case and rendered Hernandez’ oral promise enforceable.
Under the leading object rule, a promise to answer for the debt
of another will be valid, although not in writing, when the
principal object of the party promising to pay the debt is to
promote his or her own interests—and not to become a guar-
antor or surety—and when the promise is made on sufficient
consideration. Christian v. Smith, 276 Neb. 867, 759 N.W.2d
447 (2008).
   [9] Under this leading object exception to the statute of
frauds, the consideration to support an oral promise to pay the
debt of another must operate to the advantage of the promisor.
Id. It also must place him or her under a pecuniary obliga-
tion to the promisee independent of the original debt, which
obligation is to be discharged by the payment of that debt. Id.
“The Restatement (Second) of Contracts explains that when the
leading object of the promise is to promote the promisor’s own
interests, then the promisor does not need the protection against
his own generous impulses afforded by the statute of frauds.”
Christian v. Smith, 276 Neb. at 879, 759 N.W.2d at 459 (citing
Restatement (Second) of Contracts § 116 (1981)).
   [10] For the leading object of the promise to be in the prom-
isor’s own interests, the promisor need not receive cash in hand
from the promise. Christian v. Smith, supra. However, the path
of benefits flowing to the promisor must not be so circuitous or
uncertain that obtaining those benefits cannot be said to have
been his or her main purpose in making the promise. Id. As a
matter of practicality, the promisor’s advantage must be served
in a straightforward way in order for the main purpose rule to
apply. Id. “We treat the terms ‘leading object’ and ‘main pur-
pose’ synonymously.” Id. at 879, 759 N.W.2d at 460.
   In Christian v. Smith, supra, the plaintiff obtained lines
of credit at a Nebraska bank, which allowed the defendant,
who could not secure his own credit, to purchase cattle and
have them fed for sale. The defendant promised to pay the
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

plaintiff a fee for each lot of cattle purchased, as well as pay
the plaintiff’s bank debt as the cattle were sold. However, once
all the cattle were sold, there were insufficient funds to pay the
plaintiff’s lines of credit and a judgment was obtained against
him; the plaintiff then sought to recover damages from the
defendant. The Nebraska Supreme Court determined that the
defendant’s main purpose in his oral promise to pay plaintiff’s
debt was to serve defendant’s own interests, which was to
garner profits from the sale of fattened cattle, not to become
plaintiff’s guarantor. The court concluded the oral agreement
between the parties fell “within the ambit of the leading object
rule” and therefore did not need to be in writing to be enforce-
able. Id. at 880, 759 N.W.2d at 460.
   Similarly, in the present case, the district court concluded
that the leading object rule applied based primarily on NGC
Group’s role in financing DIV Investments’ loans to Acass
Systems. Even though NGC Group “did not have loan agree-
ments” or other direct interests in Acass Systems, the court
concluded that NGC Group nevertheless “stood to either ben-
efit or suffer depending on the success or failure” of Acass
Systems, as Acass Systems’ default on the loans from DIV
Investments could then impact DIV Investments’ ability to
repay its own loans from NGC Group. The court also noted that
DIV Investments “filed a proof of claim in [Acass Systems’]
bankruptcy in the amount of approximately $5 million” and
consequently “suffered a loss” when it was unable to recover
the total amounts owed by Acass Systems.
   NGC Group argues that the leading object rule does not
apply in this case because it “did not receive a direct benefit
from” Hernandez’ promise. Brief for appellant at 14. NGC
Group describes that DIV Investments remained obligated to
repay its loans to NGC Group “without regard to [Acass
Systems’] repayment to” DIV Investments. Id. Thus, because
DIV Investments would continue to be responsible for its
debts to NGC Group, a promise that NGC Group would repay
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

Alliance on behalf of Acass Systems would not “afford [NGC
Group] any advantage” or otherwise “promote any purpose or
interest” beneficial to NGC Group. Id. at 15.
   We find that the district court was correct in applying
the leading object rule in this case. NGC Group and DIV
Investments are both owned by Hernandez, and NGC Group’s
lending relationship with DIV Investments establishes flows
of funds both originating from and returning to NGC Group
through DIV Investments’ corresponding lending relationships
with third-party entities such as Acass Systems. As the dis-
trict court observed, Hernandez’ testimony established that
DIV Investments suffered a substantial loss following Acass
Systems’ default and bankruptcy. While DIV Investments may
still remain obligated on its loans from NGC Group, it is rea-
sonable to infer that DIV Investments’ loss stemming from
Acass Systems’ default would in turn impact DIV Investments’
ability to repay its loans from NGC Group on time and in full
amount. NGC Group thus had its own business advantage in
promising to repay Alliance in this case; Acass Systems’ con-
tinued operation through the maintenance of its payroll would
sustain its ability to pay back the loans from DIV Investments,
and these moneys would flow back to NGC Group through
DIV Investments’ own loan repayments. The evidence in this
case sufficiently establishes that the leading object of the
promise by Hernandez on behalf of NGC Group was to serve
NGC Group’s own interests. Alliance’s claim was therefore not
barred by the statute of frauds, and the district court did not err
in applying the leading object rule.

                         2. Damages
  NGC Group also argues that the district court erred in
awarding Alliance $180,381.82 and claims that the district
court should have limited Alliance’s damages to $104,721
pursuant to Alliance’s proof of claim filed in Acass Systems’
bankruptcy proceeding.
                              - 454 -
        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

            (a) Claim Preclusion and Issue Preclusion
   [11,12] NGC Group’s argument regarding the amount of
damages awarded to Alliance primarily concerns the district
court’s failure to apply the doctrines of claim preclusion and
issue preclusion. Generally, an affirmative defense not raised
or litigated in the trial court cannot be urged for the first
time on appeal. See Linscott v. Shasteen, 288 Neb. 276, 847
N.W.2d 283 (2014). See, also, Ballard v. Union Pacific RR.
Co., 279 Neb. 638, 781 N.W.2d 47 (2010) (claim preclusion
is affirmative defense which must ordinarily be pleaded to be
available). However, an appellate court may raise the issue of
claim preclusion sua sponte, although it is infrequently done.
See id.
   NGC Group failed to plead either claim preclusion or
issue preclusion as affirmative defenses and likewise failed to
expressly argue at trial that either doctrine barred Alliance’s
claim or otherwise limited Alliance’s recovery to $104,721.
Although counsel for NGC Group referenced Alliance’s proof
of claim in its closing argument, this argument focused pri-
marily on Alliance’s claim for $104,721 in Acass Systems’
bankruptcy as the appropriate measure for Alliance’s damages
rather than for its preclusive effect. We conclude that NGC
Group did not sufficiently present either affirmative defense at
the district court level.
   Moreover, even if we elected to review whether Alliance’s
proof of claim should have preclusive effect under either doc-
trine, our record is not sufficient to determine the applicability
of either claim preclusion or issue preclusion. No documents
relating to Acass Systems’ bankruptcy were offered or received
as evidence at trial. Instead, Alliance’s proof of claim was
used to refresh Mapes’ recollection of Acass Systems’ debt to
Alliance. As pertinent to this issue, the record provides only
that Acass Systems filed for bankruptcy in some jurisdiction
at some point in August 2018 and that Alliance filed a proof
of claim in this bankruptcy claiming that $104,721 remained
due from Acass Systems. No further evidence or testimony
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        Nebraska Court of Appeals Advance Sheets
             30 Nebraska Appellate Reports
                 ALLIANCE GROUP v. NGC GROUP
                      Cite as 30 Neb. App. 439

was provided regarding Alliance’s claim in Acass Systems’
bankruptcy. NGC Group failed to adequately develop the
record on this matter, and we accordingly decline to address
NGC Group’s assertion that claim and issue preclusion limit
Alliance’s damages in this case.

                  (b) Measurement of Damages
   We proceed now to examine the district court’s award of
$180,381.82 in damages to Alliance. The amount of damages
to be awarded is a determination solely for the fact finder, and
its action in this respect will not be disturbed on appeal if it
is supported by evidence and bears a reasonable relationship
to the elements of the damages proved. Pan v. IOC Realty
Specialist, 301 Neb. 256, 918 N.W.2d 273 (2018). With respect
to damages, an appellate court reviews the trial court’s factual
findings under a clearly erroneous standard of review. Id.
   The record includes the invoice attached to the email sent
to Hernandez by Alliance’s payroll manager on June 19, 2018.
The total amount billed in this invoice was $180,381.82. While
we note that the amount of Alliance’s damages was disputed at
trial on the basis of the $104,721 claimed by Alliance in Acass
Systems’ bankruptcy, we find that the district court’s award of
$180,381.82 was sufficiently supported by the evidence offered
at trial and thus was not clearly erroneous.

                        VI. CONCLUSION
   For the reasons set forth above, we affirm the judgment of
the district court in all respects.
                                                  Affirmed.