Court Opinion

ID: 9371987
Source: CourtListenerOpinion
Date Created: 2023-02-17 15:05:44.187661+00
Date Added: 2024-06-11T17:16:31.603219
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
02/17/2023 09:05 AM CST

                                                        - 538 -
                               Nebraska Supreme Court Advance Sheets
                                        313 Nebraska Reports
                                             TRAUSCH V. HAGEMEIER
                                                Cite as 313 Neb. 538

                         Dennis R. Trausch, an individual, and Janelle
                          M. Trausch, an individual, appellants and
                          cross-appellees, v. Linda M. Hagemeier, an
                           individual, appellee and cross-appellant,
                                and RLI Insurance Company, an
                                 Illinois corporation, appellee.
                                                    ___ N.W.2d ___

                                        Filed February 17, 2023.   No. S-22-075.

                 1. Motions to Dismiss: Pleadings: Appeal and Error. A district court’s
                    grant of a motion to dismiss on the pleadings is reviewed de novo by
                    an appellate court, accepting the factual allegations in the complaint as
                    true and drawing all reasonable inferences of law and fact in favor of the
                    nonmoving party.
                 2. Limitations of Actions: Appeal and Error. The question of which
                    statute of limitations applies is a question of law that an appellate court
                    must decide independently of the conclusion reached by the trial court.
                 3. Attorney Fees: Appeal and Error. On appeal, an appellate court will
                    uphold a lower court’s decision allowing or disallowing attorney fees for
                    frivolous or bad faith litigation in the absence of an abuse of discretion.
                    Allocation of amounts due between offending parties and attorneys is
                    part and parcel of the determination of the amount of an award and is
                    reviewed for an abuse of discretion.
                 4. Judges: Words and Phrases. A judicial abuse of discretion exists when
                    the reasons or rulings of a trial judge are clearly untenable, unfairly
                    depriving a litigant of a substantial right and denying just results in mat-
                    ters submitted for disposition.
                 5. Motions to Dismiss: Pleadings. As a general rule, when a court grants a
                    motion to dismiss, a party should be given leave to amend absent undue
                    delay, bad faith, unfair prejudice, or futility.
                 6. Pleadings. Leave to amend should not be granted when it is clear that
                    the defect cannot be cured by amendment.
                                     - 539 -
            Nebraska Supreme Court Advance Sheets
                     313 Nebraska Reports
                          TRAUSCH V. HAGEMEIER
                             Cite as 313 Neb. 538

 7. Pleadings: Rules of the Supreme Court. Where leave to amend is
    sought before discovery is complete and before a motion for summary
    judgment has been filed, leave to amend should be denied as futile only
    if the proposed amendment cannot withstand a motion to dismiss under
    Neb. Ct. R. Pldg. § 6-1112(b)(6).
 8. Motions to Dismiss: Rules of the Supreme Court: Pleadings. Because
    a motion to dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(6) tests the
    legal sufficiency of the complaint, not the claim’s substantive merits,
    a court may typically look only at the face of the complaint to decide
    a motion to dismiss.
 9. Motions to Dismiss: Pleadings. A motion to dismiss should be granted
    only in the unusual case in which a plaintiff includes allegations that
    show on the face of the complaint that there is some insuperable bar
    to relief.
10. Motions to Dismiss: Summary Judgment: Pleadings. If, on a motion
    to dismiss for failure to state a claim, matters outside the pleading are
    presented to and not excluded by the court, the motion shall ordinarily
    be treated as one for summary judgment and the parties must be given
    reasonable opportunity to present all material made pertinent to such
    a motion.
11. Judicial Notice: Motions to Dismiss: Summary Judgment: Pleadings.
    When prior court filings are matters of public record, they can be judi-
    cially noticed without converting a motion to dismiss into a motion for
    summary judgment.
12. Judicial Notice: Records: Appeal and Error. Papers requested to be
    judicially noticed must be marked, identified, and made a part of the bill
    of exceptions.
13. Judicial Notice. When a court takes judicial notice of a fact, care should
    be taken by the court to identify the fact it is noticing, and its justifica-
    tion for doing so.
14. Judicial Notice: Records: Claim Preclusion: Issue Preclusion. A
    court may judicially notice existence of its records and the records of
    another court, but judicial notice of facts reflected in a court’s records
    is subject to the doctrines of claim preclusion, issue preclusion, and the
    law of the case.
15. Estoppel. The doctrine of judicial estoppel protects the integrity of the
    judicial process by preventing a party from taking a position inconsistent
    with one successfully and unequivocally asserted by the same party in a
    prior proceeding.
16. Estoppel: Intent. Fundamentally, the intent behind the doctrine of
    judicial estoppel is to prevent parties from gaining an advantage by
                                     - 540 -
             Nebraska Supreme Court Advance Sheets
                      313 Nebraska Reports
                           TRAUSCH V. HAGEMEIER
                              Cite as 313 Neb. 538

      taking one position in a proceeding and then switching to a different
      position when convenient in a later proceeding.
17.   Judgments: Claim Preclusion. Claim preclusion bars the relitigation
      of a claim that has been directly addressed or necessarily included in a
      former adjudication if (1) the former judgment was rendered by a court
      of competent jurisdiction, (2) the former judgment was a final judgment,
      (3) the former judgment was on the merits, and (4) the same parties or
      their privies were involved in both actions. The doctrine bars relitigation
      not only of those matters actually litigated, but also of those matters
      which might have been litigated in the prior action.
18.   Claim Preclusion. The doctrine of claim preclusion rests on the neces-
      sity to terminate litigation and on the belief that a person should not be
      vexed twice for the same cause.
19.   Judgments: Claim Preclusion. A dismissal with prejudice is a final
      judgment, because it operates as a rejection of the plaintiff’s claims on
      the merits and claim preclusion applies.
20.   Limitations of Actions: Dismissal and Nonsuit: Jurisdiction. After
      dismissal of an action as to a named party by operation of law under
      Neb. Rev. Stat. § 25-217(3) (Cum. Supp. 2022), there is no longer an
      action pending against that party and the district court has no jurisdic-
      tion to make any further orders except to formalize the dismissal.
21.   Actions: Attorney Fees: Words and Phrases. “Frivolous,” for the pur-
      poses of Neb. Rev. Stat. § 25-824 (Reissue 2016), is defined as being
      a legal position wholly without merit, that is, without rational argument
      based on law and evidence to support a litigant’s position in the lawsuit.
      It connotes an improper motive or legal position so wholly without merit
      as to be ridiculous.
22.   Judgments: Claims: Words and Phrases. The determination of
      whether a particular claim or defense is frivolous must depend upon the
      facts of the particular case.

  Appeal from the District Court for Clay County: Vicky L.
Johnson, Judge. Affirmed as modified.
  Terry K. Barber, of Barber & Barber, P.C., L.L.O., for
appellants.
  Richard P. Garden, Jr., of Cline, Williams, Wright, Johnson
& Oldfather, L.L.P., for appellee and cross-appellant.
   Miller-Lerman, Cassel, Stacy, Funke, and Freudenberg,
JJ., and Miller, District Judge.
                             - 541 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

   Miller-Lerman, J.
                      I. NATURE OF CASE
   Based on the allegation that public notary Linda M.
Hagemeier did not in fact witness their signatures on certain
documents, Dennis R. Trausch and Janelle M. Trausch sued
Hagemeier and her surety, RLI Insurance Company (RLI),
for damages in the district court for Clay County, Nebraska.
RLI was not served and did not appear. Because it determined
that the claims were barred by the 4-year statute of limita-
tions for negligence, Neb. Rev. Stat. § 25-207(3) (Reissue
2016), the district court dismissed the amended complaint
and did so with prejudice. The order also stated that because
the action against Hagemeier failed, “so must the cause of
action against [RLI].” In addition, the district court imposed
sanctions of $10,000 in attorney fees and costs against the
Trausches because the litigation was “frivolous, willful, in bad
faith, and vexatious.” The Trausches appeal. On cross-appeal,
Hagemeier claims that the district court abused its discretion
when it imposed sanctions solely on the Trausches rather
than allocating sanctions jointly and severally between the
Trausches and their counsel.
   We agree with the district court that the Trausches’ negli-
gence claim against Hagemeier was not timely filed and that
it was properly dismissed with prejudice. We find no abuse of
discretion with regard to the sanctions or the amount of attor-
ney fees imposed on the Trausches. Accordingly, we affirm
the district court’s order with respect to Hagemeier. However,
because RLI was not served and did not appear in district
court, we modify the order of the district court to the extent it
purported to make rulings affecting RLI.
              II. STATEMENT OF FACTS
                     1. Background
  This appeal stems from improper notarization of deeds
of trust and disclaimers of homestead (collectively the
Documents) executed between the Trausches and Cornerstone
                             - 542 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

Bank (Bank). The Documents listed the Bank as the lender and
gave it the right to foreclose by power of sale on the subject
real property in the event of default. The Documents were
later recorded with the Adams County, Nebraska, register of
deeds. The Trausches allege that Hagemeier, a notary public
and employee of the Bank, falsely declared she had witnessed
their signatures on the Documents, when she was not actually
present at signing.
   The Trausches defaulted on their obligations under the
loan. The Trausches claim that Hagemeier’s false notariza-
tion enabled the Documents to be recorded, without which
the Bank could not have foreclosed against the real property
pursuant to the foreclosure process described in Neb. Rev. Stat.
§ 76-1006 (Reissue 2018).
                        2. Prior Actions
   Prior to this case, the Trausches and their families initiated
several other proceedings against the Bank and its employ-
ees, and several cases involved the validity of the Documents
central to the Trausches’ present claims. Court filings and
orders in the parties’ prior litigation were judicially noticed
in the orders of the court determining that the matter had
been litigated in other courts and were admitted at the hearing
on sanctions.
              (a) Bankruptcy Court Proceedings
   The Trausches filed two cases in the U.S. Bankruptcy
Court for the District of Nebraska in 2018 concerning debts
in their family farming operations. While pursuing a line of
credit of $730,000 from the Bank, the Trausches made sev-
eral bankruptcy filings vouching for the enforceability of the
Documents at issue in the present action. In their motion to
incur secured debt and in a joint stipulation by the Bank, the
Trausches asserted, inter alia:
     (i) [T]he Loan Documents were duly executed and
     are valid and binding on the Debtors; (ii) the Loan
                             - 543 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

     Documents are fully enforceable according to the terms
     thereof; (iii) there is no defense, offset or counterclaim
     that any Debtor could assert with respect to the Loan
     Documents or the Indebtedness; (iv) the liens and secu-
     rity interests granted pursuant to the Loan Documents
     are valid and perfected liens and security interests upon
     the Collateral and are not subject to avoidance; (v) that
     Debtors have no claims or causes of action against the
     Bank; and (vi) that the Debtors will not bring any claim
     or cause of action against the Bank, including, but not
     limited to, tort claims, claims contesting the amount
     or enforceability of the indebtedness, claims contesting
     the enforceability of the Loan Documents or avoidance
     claims under the [Bankruptcy] Code.
The bankruptcy court approved the Trausches’ motion to
incur secured debt and entered the stipulated order. The Bank
extended credit to the Trausches to conduct their 2018 farm-
ing operations.
                   (b) Adams County Litigation
   In a prior action between the Trausches and the Bank in the
district court for Adams County, the Trausches asserted affirm­
ative defenses and counterclaims against the Bank based on
the allegation that Hagemeier was negligent in the manner she
notarized the Documents.
   As an affirmative defense to the Bank’s claims on promis-
sory notes, the Trausches alleged in an exhibit in that case that
      at the time [the Trausches] signed the deed of trust
      annexed to the [Bank’s] Complaint . . . , they did not do
      so in the presence of . . . Hagemeier; that . . . Hagemeier
      at some later time affixed her signature and notarial seal
      to said document; and that said purported notarial act
      was, as a result, ineffective and done in violation of Neb.
      Rev. Stat. § 64-105.
   The Trausches’ counterclaims in the Adams County case
further alleged that the purported trustee’s sale of the real
                             - 544 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                    TRAUSCH V. HAGEMEIER
                       Cite as 313 Neb. 538

property was void because it was based on the Documents,
which were not signed in the presence of a notary public,
and that thus, the Documents are void and their recording in
the Adams County register of deeds was impermissible and
void at its inception. The Trausches alleged that the failure
of Hagemeier to properly notarize the Documents voided any
subsequent notice of default and notice of trustee’s sale, made
the sale of the real property void for lack of notice, and meant
that the real property was not effectively conveyed to the pur-
ported buyer.
   The Adams County District Court found that the Trausches
did not approach the process of discovery seriously, that their
conduct “was in bad faith and frustrated the rules of discov-
ery,” and that it was willful. As a result, the Adams County
District Court imposed a sanction of dismissing the affirmative
defenses, counterclaims, and third-party complaint filed by the
Trausches and their family farming corporation.
                     3. Procedural History
   In the present action, the Trausches allege in their amended
complaint that Hagemeier “breached her duty as a Nebraska
notary public” and was negligent when she purported to nota-
rize the signatures on the Documents when, in fact, she was
not present. The amended complaint named Hagemeier and
her surety, RLI. With respect to Hagemeier’s negligence, the
amended complaint sought general and special damages related
to the proceedings concerning the real property that is the sub-
ject of the Documents, including the Bank’s sale of the real
estate through the nonjudicial foreclosure process described in
§ 76-1006. The Trausches also asserted that RLI was liable up
to the limits of its surety bond, $15,000, for damages incurred
as a result of the fact that Hagemeier had not notarized the
Documents in the manner provided by law.
   RLI was not served with the amended complaint and did
not appear in these proceedings. Hagemeier moved to dis-
miss the amended complaint. The Trausches did not seek to
                             - 545 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                    TRAUSCH V. HAGEMEIER
                       Cite as 313 Neb. 538

amend the substance of their complaint. At the hearing on the
motion, the parties submitted exhibits. Although the district
court properly took judicial notice of public court records and
marked them as part of the bill of exceptions, it stated it did
not want to admit evidence on the motion to dismiss in an
effort to avoid the danger of converting Hagemeier’s motion
into a motion for summary judgment. Several exhibits were
received on Hagemeier’s motion for sanctions sought under
Neb. Rev. Stat. § 25-824 (Reissue 2016). The record includes
court filings and orders from prior related proceedings in
bankruptcy court and the district court for Adams County, and
an affidavit by Hagemeier’s attorney swearing that “[t]he total
sanction sought in this case is $10,737 which represents the
attorney’s fees incurred to date to defend this action.”
   In its order following the hearing, the district court
determined that the action was time barred and granted
Hagemeier’s motion to dismiss. In support of its order, the
court determined that the applicable statute of limitations was
§ 25-207(3), which sets forth a period of 4 years for negli-
gence actions. The Documents were signed on June 8, 2017,
but the Trausches did not initiate this case until November 10,
2021. Because the district court found there was no method
of correcting the defects in the amended complaint by addi-
tional pleading, it dismissed the action, and it did so with
prejudice and without leave to replead for various reasons
discussed below.
   With respect to the motion for sanctions, the district court
noted, inter alia, that the issues presented in this case had
been litigated in bankruptcy court and in the district court
for Adams County. Applying § 25-824(2) and Neb. Rev. Stat.
§ 25-824.01 (Reissue 2016), the district court found that the
Trausches’ action was frivolous, willful, in bad faith, and vex-
atious; that the Trausches and their counsel failed to respond
to requests to resolve the matter; and that there was no rea-
sonable basis on which the Trausches could have proceeded
on any legal action. The district court imposed $10,000 in
                              - 546 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

attorney fees and costs as sanctions against the Trausches and
in favor of Hagemeier.
   The Trausches appeal. Hagemeier cross-appeals.
               III. ASSIGNMENTS OF ERROR
   The Trausches assign, summarized and restated, that the
district court erred when it found the amended complaint
stated a claim for negligence and dismissed the case as
untimely under § 25-207. The Trausches also claim the dis-
trict court abused its discretion when it dismissed the case
with prejudice, found the litigation was frivolous or made in
bad faith, and assessed attorney fees of $10,000 as a sanction
against them.
   On cross-appeal, Hagemeier claims that the district court
abused its discretion when it failed to allocate sanctions jointly
and severally between the Trausches and their counsel.
                IV. STANDARDS OF REVIEW
   [1] A district court’s grant of a motion to dismiss on the
pleadings is reviewed de novo by an appellate court, accepting
the factual allegations in the complaint as true and drawing all
reasonable inferences of law and fact in favor of the nonmov-
ing party. Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins.
Co., 312 Neb. 629, 980 N.W.2d 437 (2022).
   [2] The question of which statute of limitations applies is
a question of law that an appellate court must decide inde-
pendently of the conclusion reached by the trial court. Mai v.
German, ante p. 187, 983 N.W.2d 114 (2023).
   [3,4] On appeal, an appellate court will uphold a lower
court’s decision allowing or disallowing attorney fees for
frivolous or bad faith litigation in the absence of an abuse of
discretion. George Clift Enters. v. Oshkosh Feedyard Corp.,
306 Neb. 775, 947 N.W.2d 510 (2020). Allocation of amounts
due between offending parties and attorneys is part and par-
cel of the determination of the amount of an award and is
reviewed for an abuse of discretion. Id. A judicial abuse of
                             - 547 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

discretion exists when the reasons or rulings of a trial judge
are clearly untenable, unfairly depriving a litigant of a sub-
stantial right and denying just results in matters submitted for
disposition. Id.

                          V. ANALYSIS
   The Trausches contend that we should reverse the dis-
trict court’s order that dismissed the amended complaint with
prejudice and imposed sanctions on them. On cross-appeal,
Hagemeier contends that the district court abused its discretion
when it sanctioned only the Trausches rather than allocating
the award of attorney fees jointly and severally between the
Trausches and their attorney.

                  1. Statutes of Limitations
                     and Party Affected
   Neb. Rev. Stat. § 64-109 (Reissue 2018) provides that a
damaged party can maintain a civil action on the official bond
of a notary, against the notary public and his or her sureties.
In the course of this appeal, the parties have suggested that
no statute explicitly provides the limitations period for a civil
action against a notary public brought under § 64-109. The
parties characterized the Trausches’ amended complaint in
competing ways to support their preferred statutes of limita-
tions, including § 25-207(3) (negligence), as well as Neb.
Rev. Stat. § 25-205(1) (Reissue 2016) (action upon promise in
writing), Neb. Rev. Stat. § 25-212 (Reissue 2016) (action not
provided for in chapter 25), Neb. Rev. Stat. § 25-209 (Reissue
2016) (action on official or judicial bond), Neb. Rev. Stat.
§ 25-206 (Reissue 2016) (action on statutory liability), and
§ 25-207(4) (fraud).
   The transcript in this case reflects that although summons
was issued on both defendants, RLI was not served. Thus,
RLI was dismissed by operation of law under Neb. Rev. Stat.
§ 25-217(3) (Cum. Supp. 2022), and without RLI, this case
is not an action against a notary and her surety and cannot
                              - 548 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

be an action on a bond under § 64-109. We therefore agree
with the district court that the operative allegations against
Hagemeier in the amended complaint sounded in negligence
and were subject to the 4-year limitation period for negli-
gence in § 25-207(3). Accordingly, the amended complaint was
properly dismissed as untimely as against Hagemeier.

                  (a) Claim Against Hagemeier
                         as an Individual
   The Trausches contend that the claim against Hagemeier for
negligence with respect to her duties as a notary is an action on
an official bond, and therefore benefits from the 10-year statute
of limitations period found in § 25-209. We disagree with this
characterization of the amended complaint, and furthermore,
the course of this litigation does not support the Trausches’
contention. The pleadings, inter alia, set forth a case for negli-
gence against Hagemeier alone, and the case proceeded against
Hagemeier alone. The district court correctly applied the stat-
ute of limitations for negligence to bar the claims against
Hagemeier. See § 25-207(3).
   The amended complaint alleged that Hagemeier was neg-
ligent and breached her duty to witness the signatures of par-
ties to notarized documents. The Trausches sought general
damages and specific damages arising from attorney fees and
costs, impacts on the real estate, replacement of foreclosed real
estate, and income tax consequences. The amended complaint,
as it related to alleged negligence by Hagemeier, framed this
case in the district court and on appeal. Under § 25-207(3), the
statute of limitations for negligence is 4 years.
   The district court applied the 4-year limitations period
of § 25-207(3) in its analysis and order and determined
the Trausches’ action was barred as against Hagemeier. We
agree. Hagemeier purported to notarize the Documents on
June 8, 2017, and thus the Trausches, having signed the
Documents outside the presence of a notary, had knowledge
of the claim on or before June 8. This case was initiated on
                               - 549 -
          Nebraska Supreme Court Advance Sheets
                   313 Nebraska Reports
                      TRAUSCH V. HAGEMEIER
                         Cite as 313 Neb. 538

November 10, 2021, which is beyond the 4-year filing period.
The amended complaint was not filed in a timely manner
as required by § 25-207(3), and the district court correctly
granted Hagemeier’s motion to dismiss.
                   (b) Case Properly Dismissed
                           With Prejudice
   [5-7] The order of the district court dismissed the Trausches’
amended complaint with prejudice and sua sponte did not
grant them leave to amend. As a general rule, when a court
grants a motion to dismiss, a party should be given leave to
amend absent undue delay, bad faith, unfair prejudice, or futil-
ity. Eadie v. Leise Properties, 300 Neb. 141, 912 N.W.2d 715
(2018). Leave to amend should not be granted when it is clear
that the defect cannot be cured by amendment. Williams v.
State, 310 Neb. 588, 967 N.W.2d 677 (2021). Considering the
question of whether an amendment is futile, we have said that
where leave to amend is sought before discovery is complete
and before a motion for summary judgment has been filed,
leave to amend should be denied as futile only if the proposed
amendment cannot withstand a motion to dismiss under Neb.
Ct. R. Pldg. § 6-1112(b)(6). Williams v. State, supra.
   In this case, the district court explained that the issues raised
in the amended complaint had been litigated in other venues,
including bankruptcy court and the district court for Adams
County. The district court stated that “the decisions of those
courts constitute[] judicial estoppel of these claims,” by which
we understand that the court believed both that inconsistent
claims were judicially estopped and that previously adjudi-
cated claims were precluded from relitigation in this case. The
district court stated that in this action, “there is no reasonable
basis on which the [Trausches] could have proceeded on any
legal action.” We agree.
   As an initial matter, the district court determined that in
prior cases, the Trausches made certain allegations accepted
by the courts, resulting in judicial estoppel, and that claims
                             - 550 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                    TRAUSCH V. HAGEMEIER
                       Cite as 313 Neb. 538

litigated in prior proceedings are precluded. The district court
referred to prior related litigation in bankruptcy court and in
the district court for Adams County.
    [8-10] Because a motion to dismiss under § 6-1112(b)(6)
tests the legal sufficiency of the complaint, not the claim’s
substantive merits, a court may typically look only at the face
of the complaint to decide a motion to dismiss. In re Interest
of Noah B. et al., 295 Neb. 764, 891 N.W.2d 109 (2017). A
motion to dismiss should be granted only in the unusual case
in which a plaintiff includes allegations that show on the face
of the complaint that there is some insuperable bar to relief.
Id. If, on a motion to dismiss for failure to state a claim,
matters outside the pleading are presented to and not excluded
by the court, the motion shall ordinarily be treated as one for
summary judgment and the parties must be given reasonable
opportunity to present all material made pertinent to such a
motion. Id.
    [11] However, when prior filings are matters of public
record, they can be judicially noticed without converting a
motion to dismiss into a motion for summary judgment. Id.;
Doe v. Omaha Pub. Sch. Dist., 273 Neb. 79, 727 N.W.2d
447 (2007), overruled on other grounds, Moser v. State, 307
Neb. 18, 948 N.W.2d 194 (2020); In re Adoption of Kenten
H., 272 Neb. 846, 725 N.W.2d 548 (2007); Ferer v. Erickson,
Sederstrom, 272 Neb. 113, 718 N.W.2d 501 (2006).
    [12,13] Judicial notice is governed by Neb. Rev. Stat.
§ 27-201(2)(b) (Reissue 2016), which provides that judicial
notice may be taken of any fact not subject to reasonable dis-
pute, when such fact is capable of accurate and ready determi-
nation by resort to sources whose accuracy cannot reasonably
be questioned. Judicial notice may be taken at any stage of
the proceeding. § 27-201(6). Papers requested to be judicially
noticed must be marked, identified, and made a part of the
bill of exceptions. Bohling v. Bohling, 304 Neb. 968, 937
N.W.2d 855 (2020). Further, we have stated that care should
be taken by the court to identify the fact it is noticing, and
                             - 551 -
         Nebraska Supreme Court Advance Sheets
                  313 Nebraska Reports
                    TRAUSCH V. HAGEMEIER
                       Cite as 313 Neb. 538

its justification for doing so. Strunk v. Chromy-Strunk, 270
Neb. 917, 708 N.W.2d 821 (2006).
   [14] A court may judicially notice existence of its records
and the records of another court, but judicial notice of facts
reflected in a court’s records is subject to the doctrines of
claim preclusion, issue preclusion, and the law of the case.
Gottsch v. Bank of Stapleton, 235 Neb. 816, 458 N.W.2d 443
(1990); R. Collin Mangrum, Mangrum on Nebraska Evidence
§ 27-201 (2022). See, Jensen v. Champion Window of Omaha,
24 Neb. App. 929, 900 N.W.2d 590 (2017); State v. McMillion,
23 Neb. App. 687, 875 N.W.2d 877 (2016). See, also, Stutzka
v. McCarville, 420 F.3d 757 (8th Cir. 2005).
   In connection with its determination that dismissal should
be with prejudice, the district court took judicial notice of
public records of the claims adjudicated in prior litigation in
bankruptcy court and in Adams County. We agree that judicial
notice of public court records was properly taken, because
their use was limited to the truth of facts asserted in the
orders, judgments, and findings of fact and conclusions of law.
See Gottsch v. Bank of Stapleton, supra (citing In re Snider
Farms, Inc., 83 B.R. 977 (N.D. Ind. 1988)). The Documents
were properly included in the bill of exceptions, and the dis-
trict court referenced facts therein for the limited purpose of
determining whether the Trausches’ claims could be refiled or
would be barred by the doctrines of judicial estoppel and claim
preclusion, thereby making amendment futile.
   The Trausches agree that the district court should notice
the “intertwined” and “pertinent” matter in other cases. Reply
brief for appellants at 10. Accordingly, given the record and
limited use of the public records of the other cases, we see no
error in the manner the district court employed judicial notice
in this case.
   [15,16] The doctrine of judicial estoppel protects the integ-
rity of the judicial process by preventing a party from taking
a position inconsistent with one successfully and unequivo-
cally asserted by the same party in a prior proceeding. Western
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                        Cite as 313 Neb. 538

Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1, 938
N.W.2d 329 (2020). Fundamentally, the intent behind the doc-
trine of judicial estoppel is to prevent parties from gaining an
advantage by taking one position in a proceeding and then
switching to a different position when convenient in a later
proceeding. Id.
   In their filings in the bankruptcy court, which were accepted
by the bankruptcy court through a stipulated order, the
Trausches admitted, inter alia, that the Documents were valid
and binding; that the Documents are fully enforceable accord-
ing to the terms thereof; and that there is no defense, offset,
or counterclaim that they could assert with respect to the
Documents. The Trausches will be estopped from asserting a
position that is inconsistent from the position that it previously
advocated in court. Representations in the bankruptcy court
are directly contrary to the current claims for damages based
on the invalidity of the Documents.
   [17,18] Claim preclusion bars the relitigation of a claim
that has been directly addressed or necessarily included in a
former adjudication if (1) the former judgment was rendered
by a court of competent jurisdiction, (2) the former judgment
was a final judgment, (3) the former judgment was on the mer-
its, and (4) the same parties or their privies were involved in
both actions. Hara v. Reichert, 287 Neb. 577, 843 N.W.2d 812
(2014). The doctrine bars relitigation not only of those matters
actually litigated, but also of those matters which might have
been litigated in the prior action. Id. The doctrine rests on the
necessity to terminate litigation and on the belief that a person
should not be vexed twice for the same cause. Marie v. State,
302 Neb. 217, 922 N.W.2d 733 (2019).
   [19] The order of the district court for Adams County dis-
missed the Trausches’ claims—which, inter alia, challenged
the validity of the Documents—with prejudice. A dismissal
with prejudice is a final judgment, because it operates as a
rejection of the plaintiff’s claims on the merits and claim pre-
clusion applies. See, Eadie v. Leise Properties, 300 Neb. 141,
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                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

912 N.W.2d 715 (2018); Kuskie v. Adams Bank & Trust of
Madrid, 248 Neb. 18, 531 N.W.2d 921 (1995). The Adams
County order disposed of the Trausches’ present claims in
which the Trausches claim that the Documents are void
and unenforceable based on their improper notarization by
Hagemeier. The doctrine of claim preclusion has been applied
to include claims which might have been brought against par-
ties to the proceeding involving the same subject matter. See,
Marie v. State, supra; Doerr v. Chaffe, 29 Neb. App. 766, 960
N.W.2d 604 (2021). Although Hagemeier was not a party to the
Adams County suit, her employer, the Bank, was a party; the
effectiveness of Hagemeier’s “purported notarial act” was the
basis for the Trausch’s Adams County case; and the dismissal
with prejudice resolved the claims on the merits.
    Amendment of the Trausches’ complaint would be futile,
because the Trausches would be estopped from lodging new
claims inconsistent with those resolved in prior litigation, and
because the issues underlying the complaint were previously
litigated and are barred by claim preclusion. The district court
did not err when it dismissed the amended complaint with
prejudice and without leave to replead.
                       (c) RLI Unaffected by
                         These Proceedings
   As indicated above, we are aware of § 64-109, which pro-
vides for a civil action on the official bond of a notary public
against the notary public and his or her sureties. But in this
case, as we have observed, RLI was not served and was dis-
missed by operation of law under § 25-217(3). Without the
surety for Hagemeier in this case, this matter was not an action
on an official bond and the proceedings did not affect the
rights, if any, of the Trausches against RLI.
   [20] In this regard, we observe that the order of the district
court stated that because the cause of action against Hagemeier
fails, “so must the cause of action against [RLI].” Because
RLI was not in the case, this comment was unwarranted. After
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                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

dismissal of an action as to a named party by operation of law
under § 25-217(3), there is no longer an action pending against
that party and the district court has no jurisdiction to make any
further orders except to formalize the dismissal. Carrizales v.
Creighton St. Joseph, 312 Neb. 296, 979 N.W.2d 81 (2022).
As a result, we modify the order of the district court to affect
only the Trausches and Hagemeier, because the court lacked
jurisdiction over RLI.
   Claims against RLI are not to be viewed as either having
been decided by the trial court or remarked upon by this court.
Compare Stock v. Meissner, 209 Neb. 636, 309 N.W.2d 86
(1981), and Stock v. Meissner, 217 Neb. 56, 348 N.W.2d 426
(1984) (noting that statute of limitations for action on oral
contract for grain dealer differed from that for action on offi-
cial surety bond for grain dealer license). Because RLI was
not served and stood dismissed, the district court’s ruling
regarding RLI is a nullity, and we modify the order on appeal
accordingly.
                         2. Sanctions
   The Trausches next contend that the district court abused
its discretion when it assessed sanctions of $10,000 based on
attorney fees incurred by Hagemeier. They contend that they
did not have an improper motive when they brought the cur-
rent action. We reject this argument and affirm the order that
granted Hagemeier’s motion for sanctions.
   [21,22] As stated above, we will uphold a lower court’s
decision to assess sanctions for frivolous or bad faith liti-
gation in the absence of an abuse of discretion. George
Clift Enters. v. Oshkosh Feedyard Corp., 306 Neb. 775, 947
N.W.2d 510 (2020). “Frivolous,” for the purposes of § 25-824,
is defined as being a legal position wholly without merit, that
is, without rational argument based on law and evidence
to support a litigant’s position in the lawsuit. George Clift
Enters. v. Oshkosh Feedyard Corp., supra. It connotes an
improper motive or legal position so wholly without merit as
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                     TRAUSCH V. HAGEMEIER
                        Cite as 313 Neb. 538

to be ridiculous. Id. The determination of whether a particular
claim or defense is frivolous must depend upon the facts of
the particular case. Id.
                      (a) Sanctions Against
                          the Trausches
   After deciding that the amended complaint should be dis-
missed, the district court considered Hagemeier’s motion for
sanctions supported by an affidavit itemizing her attorney fees
and costs of $10,737. The district court dismissed the amended
complaint “with prejudice [and] without leave to amend,”
and awarded $10,000 in sanctions. In support of its decision,
the district court found that “the conduct of the [Trausches]
herein was frivolous, willful, in bad faith, and vexatious.” As
discussed above, the district court observed that “this mat-
ter has been litigated in other venues.” It also found that the
Trausches and their counsel failed to respond to Hagemeier’s
requests to resolve the matter and found that there was no rea-
sonable basis on which the Trausches could have proceeded on
any legal action.
   Sections 25-824 and 25-824.01 provide that the court, at its
discretion, can assess sanctions against the culpable parties and
attorneys for claims or defenses which are frivolous or made in
bad faith. Section 25-824(2) provides, in relevant part:
      [T]he court shall award as part of its judgment and in
      addition to any other costs otherwise assessed reason-
      able attorney’s fees and court costs against any attorney
      or party who has brought or defended a civil action that
      alleges a claim or defense which a court determines is
      frivolous or made in bad faith.
A court determining the amount of attorney fees and costs to
levy against a party who has made a frivolous or bad faith
claim considers statutory factors, including, but not limited to,
the following:
         In determining the amount of a cost or an attorney’s
      fee award pursuant to subsection (2) of section 25-824,
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                        Cite as 313 Neb. 538

      the court shall exercise its sound discretion. When grant-
      ing an award of costs and attorney’s fees, the court shall
      specifically set forth the reasons for such award and
      shall, in determining whether to assess attorney’s fees
      and costs and the amount to be assessed against offend-
      ing attorneys and parties, consider the following factors,
      including, but not limited to: (1) The extent to which any
      effort was made to determine the validity of any action
      or claim before the action was asserted; (2) the extent of
      any effort made after the commencement of an action to
      reduce the number of claims or defenses being asserted
      or to dismiss claims or defenses that have been found
      not to be valid; (3) the availability of facts to assist the
      party to determine the validity of a claim or defense; (4)
      the relative financial position of the parties involved; (5)
      whether or not the action was prosecuted or defended in
      whole or in part in bad faith; (6) whether or not issues
      of fact, determinative of the validity of a party’s claim
      or defense, were reasonably in conflict; (7) the extent to
      which the party prevailed with respect to the amount of
      and number of claims in controversy; (8) the amount or
      conditions of any offer of judgment or settlement in rela-
      tion to the amount or conditions of the ultimate relief
      granted by the court; (9) the extent to which a reasonable
      effort was made to determine prior to the time of filing of
      a claim that all parties sued or joined were proper parties
      owing a legally defined duty to the plaintiff or defendant;
      and (10) the extent of any effort made after the com-
      mencement of an action to reduce the number of parties
      in the action.
§ 25-824.01.
   Based on the record on the motion for sanctions, includ-
ing records from prior relevant litigation, we cannot say that
the district court abused its discretion when it found that the
Trausches should be sanctioned because their pleadings were
frivolous and filed in bad faith.
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                     TRAUSCH V. HAGEMEIER
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                         (b) Cross-Appeal
   In the cross-appeal, Hagemeier argues that the district court
abused its discretion because it did not allocate sanctions
jointly and severally between the Trausches and their coun-
sel. In this regard, we note that Hagemeier filed a motion for
an order nunc pro tunc to clarify whether the sanctions were
awarded jointly and severally against the Trausches and their
counsel. The district court did not so clarify but did enter an
order nunc pro tunc and corrected what appear to be scriven-
er’s errors in the original order. The order nunc pro tunc states
that its judgment is as follows: “in favor of . . . Hagemeier
against the [Trausches], in the amount of $10,000.00 as sanc-
tions pursuant to Neb. Rev. Stat. Sec. 25-824(2).” In the cross-
appeal, Hagemeier asks us to modify the order nunc pro tunc
to clarify that the sanctions are applied jointly and severally
between the Trausches and their counsel.
   Having reviewed the record, we cannot say that the district
court abused its discretion in the manner it assessed sanctions,
in this case, solely against the Trausches, whose conduct the
order called “frivolous, willful, in bad faith, and vexatious.”
We decline to modify the district court’s order in this regard
and reject the cross-appeal.
                       VI. CONCLUSION
   RLI was the surety on Hagemeier’s notary public bond,
but not having been served and not having appeared, RLI
was dismissed by operation of law. See § 25-217(3). The case
was one in negligence against Hagemeier and not an action
on a bond. The district court lacked jurisdiction over RLI,
and we modify the order as indicated below to apply only to
Hagemeier and the Trausches.
   The allegations against Hagemeier in the Trausches’
amended complaint sounded in negligence and were subject
to the 4-year statute of limitations of § 25-207(3). Because
the complaint was filed outside the limitations period, the dis-
trict court correctly concluded that claims against Hagemeier
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                    TRAUSCH V. HAGEMEIER
                       Cite as 313 Neb. 538

must be dismissed as time barred and, for the reasons explained
above, with prejudice. The district court’s order regarding
timeliness does not apply to RLI, and we modify the decision
to delete any ruling regarding RLI. The district court did not
abuse its discretion when it imposed sanctions solely against
the Trausches for frivolous and bad faith conduct. All other
assignments not herein discussed are denied.
                                      Affirmed as modified.
   Heavican, C.J., and Papik, J., not participating.