Court Opinion

ID: 9892046
Source: CourtListenerOpinion
Date Created: 2023-10-20 13:07:43.567324+00
Date Added: 2024-06-11T14:22:01.525259
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/20/2023 08:07 AM CDT

                                                        - 351 -
                               Nebraska Supreme Court Advance Sheets
                                        315 Nebraska Reports
                                        HARCHELROAD V. HARCHELROAD
                                              Cite as 315 Neb. 351

                       Carol Harchelroad, Personal Representative of
                       the Estate of Sidney B. Harchelroad, deceased,
                        appellee, v. Michelle Harchelroad, Personal
                           Representative of the Estate of Brian
                             L. Harchelroad, deceased, appellee,
                                   and Carol Harchelroad,
                                   individually, appellant.
                                                   ___ N.W.2d ___

                                        Filed October 20, 2023.   No. S-22-743.

                 1. Interventions: Appeal and Error. Whether a party has the right to
                    intervene in a proceeding is a question of law. On a question of law,
                    an appellate court is obligated to reach a conclusion independent of the
                    determination reached by the court below.
                 2. Interventions: Statutes: Equity. In addition to statutory intervention,
                    sometimes referred to as “intervention as a matter of right,” this court
                    has also recognized equitable intervention, which provides generally that
                    a court with equitable jurisdiction may allow persons to intervene as a
                    matter of equity in a proper case.
                 3. Interventions: Statutes. The right to intervene pursuant to statute
                    is absolute.
                 4. ____: ____. The intervention statutes are to be liberally construed.
                 5. Interventions. To be entitled to intervention as a matter of right, the
                    intervenor must have a direct and legal interest of such character that
                    the intervenor will lose or gain by the direct operation and legal effect
                    of the judgment which may be rendered in the action.
                 6. ____. An indirect, remote, or conjectural interest in the result of a suit is
                    not enough to establish intervention as a matter of right.
                 7. Interventions: Pleadings. Simply having a claim that arises out of the
                    same facts as the claims at issue in the litigation does not constitute hav-
                    ing a sufficient interest to support intervention.
                                    - 352 -
           Nebraska Supreme Court Advance Sheets
                    315 Nebraska Reports
                    HARCHELROAD V. HARCHELROAD
                          Cite as 315 Neb. 351

 8. ____: ____. A person seeking to intervene must allege facts showing
    that he or she possesses the requisite legal interest in the subject matter
    of the action.
 9. ____: ____. For purposes of ruling on a motion for leave to intervene,
    a court must assume that the intervenor’s factual allegations set forth in
    the complaint are true.
10. Interventions. It is of no effect that a party seeking intervention might
    have an interest adequately represented by another party.

  Appeal from the District Court for Chase County: Patrick M.
Heng, Judge. Reversed and remanded for further proceeding.
  Robert B. Reynolds and Michael D. Samuelson, of Reynolds,
Korth & Samuelson, P.C., L.L.O., for appellant.
   Erin R. Robak, of McGill, Gotsdiner, Workman & Lepp,
P.C., L.L.O., for appellee Michelle Harchelroad.
  Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ.
   Heavican, C.J.
                       INTRODUCTION
   Carol Harchelroad appeals from the district court’s denial of
her motion to intervene in a suit involving her husband’s estate.
Following the death of her husband, Sidney B. Harchelroad,
Carol was appointed to serve as personal representative of
his estate. In that capacity, Carol filed suit against the estate
of Brian L. Harchelroad. Brian was Sidney’s brother, whom
Sidney predeceased. A special administrator was later appointed
to administer Sidney’s estate, and that administrator has since
advanced this litigation. In her individual capacity, Carol filed
a motion to intervene in this suit. The district court denied that
motion, and Carol has appealed. We reverse, and remand for
further proceedings.
                      BACKGROUND
   The following facts are set forth in Carol’s complaint in
intervention. Brothers Sidney and Brian owned a business
                              - 353 -
          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

together. Sidney died on January 30, 2018. Carol was subse-
quently named personal representative of Sidney’s estate. Brian
died on August 9, 2019, and his wife, Michelle Harchelroad,
was named personal representative of Brian’s estate.
   As personal representative, Carol sued Brian’s estate on
October 29, 2019, alleging breach of contract, breach of implied
covenant of good faith and fair dealing, unjust enrichment,
fraud, breach of fiduciary duty, promissory estoppel/detrimental
reliance, and requesting a constructive trust. This action was
based on an alleged agreement between Sidney and Brian that
each would take out a $2 million life insurance policy on the
other and name themself as beneficiary. The alleged agree-
ment further provided that the proceeds from the policy would
be used to buy out the deceased brother’s share of the joint
business. Carol alleged that Brian collected the proceeds on
Sidney’s death and failed to buy out Sidney’s shares. This suit
further alleged that Brian then changed the beneficiary on the
policy on his life from Sidney to his wife, Michelle, and that
those proceeds were paid out and retained by Michelle after
Brian’s death. No payment derived from those proceeds was
made to Sidney’s estate or to Carol.
   On July 31, 2020, a special administrator was appointed to
administer Sidney’s estate. Carol remained personal representa-
tive of Sidney’s estate. Since the filing of a motion to substitute
parties, the special administrator has advanced this litigation
for the estate.
   Carol, in her individual capacity, sought to intervene in
the litigation against Brian’s estate. She alleged that she was
the residual beneficiary of Sidney’s estate and has a “sig-
nificant direct legal interest in the insurance proceeds” and,
further, that these proceeds would “substantially impact the
amount received by [her] in the estate proceedings.” The spe-
cial administrator did not object to Carol’s intervention, noting
at the hearing on intervention:
         When I was first appointed as special administrator
      in this case, the case had already been filed by Carol. I
                               - 354 -
          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

     filed a substitution of counsel in that case with the idea
     being that on behalf of the creditors of the estate, the
     purpose — or my purpose was to claw back as much
     money as I could, including the roughly two million dol-
     lars of insurance proceeds that was at stake in this case.
        Again, that was done for the benefit of the creditors at
     the time, which primarily were Western State Bank and
     Waypoint Bank.
        Since that time, it appears, and Michelle . . . asserts that
     either she or she in her capacity as personal represent­
     ative of the estate of Brian . . . has bought both of those
     loans from each of those banks.
        So she is in effect the creditor, now, for those two
     claims. It seems that my interests at this point are far
     more peripheral than they once were because the idea
     that I’m trying to claw back money for the benefit of
     these two bank creditors is gone, in that Michelle, now,
     in some capacity, asserts that she’s the ownership of both
     of those loans.
        It doesn’t make much sense for me to be front and
     center to claw back money for creditors when, in fact,
     she’s holding those moneys and asserts that she is the
     creditor now.
        ....
        Now, Carol . . . has always taken the position that
     it was she and not me that was entitled to that — to
     those funds.
        Now, there was always that friction, that tension
     between us relative to those funds, but it was in each of
     our interests early on in this case to try to claw it back
     from Michelle.
        Again, that has essentially changed now. Carol still
     asserts her interest as that owner and beneficiary of those
     funds, and my interest has — has changed.
  The district court denied the motion to intervene, noting that
Carol did not individually “have a ‘direct and legal interest’
                               - 355 -
          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

in the damages or personal property that is the subject of this
litigation. This is the role of the special administrator in this
matter.” The district court also noted that Carol was not indis-
pensable so as to require her inclusion as a party.

                 ASSIGNMENTS OF ERROR
  Carol assigns that the district court erred in (1) denying her
motion to intervene, (2) finding that she did not have a direct
and legal interest in the litigation, and (3) analyzing whether
she was an indispensable party in determining whether she
would be permitted to intervene.

                  STANDARD OF REVIEW
   [1] Whether a party has the right to intervene in a proceed-
ing is a question of law. 1 On a question of law, an appellate
court is obligated to reach a conclusion independent of the
determination reached by the court below. 2

                              ANALYSIS
    This appeal presents one primary issue: whether the district
court erred in finding that Carol did not have a direct and
legal interest in the underlying litigation sufficient to support
intervention under Neb. Rev. Stat. § 25-328 (Reissue 2016).
Wrapped up in that issue is whether the district court also erred
in considering whether Carol was an indispensable party to the
litigation between Sidney’s and Brian’s estates.
    [2] Our statute on intervention provides:
          Any person who has or claims an interest in the mat-
       ter in litigation, in the success of either of the parties to
       an action, or against both, in any action pending or to
       be brought in any of the courts of the State of Nebraska,
       may become a party to an action between any other
1
  Wayne L. Ryan Revocable Trust v. Ryan, 297 Neb. 761, 901 N.W.2d 671
  (2017).
2
  Id.
                                - 356 -
          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

      persons or corporations, either by joining the plaintiff in
      claiming what is sought by the complaint, or by uniting
      with the defendants in resisting the claim of the plaintiff,
      or by demanding anything adversely to both the plaintiff
      and defendant, either before or after issue has been joined
      in the action, and before the trial commences. 3
In addition to statutory intervention, sometimes referred to
as “intervention as a matter of right,” 4 this court has also
recognized equitable intervention, which provides generally
that “a court with equitable jurisdiction may allow persons to
intervene as a matter of equity in a proper case.” 5 The parties
agree that the instant case involves statutory intervention under
§ 25-328 because Carol sought intervention prior to trial.
   In addition to its consideration of Carol’s intervention, the
district court engaged in an analysis of whether Carol was
an indispensable party. Whether a party is an indispensable
or necessary party is a different, though related, concept to
intervention. Neb. Rev. Stat. § 25-323 (Reissue 2016), entitled
“Necessary parties; brought into suit; procedure,” provides
in part:
         The court may determine any controversy between
      parties before it when it can be done without prejudice
      to the rights of others or by saving their rights; but when
      a determination of the controversy cannot be had without
      the presence of other parties, the court shall order them to
      be brought in.
   We have explained that a necessary or indispensable party
to a suit is one whose interest in the subject matter of the con-
troversy is such that the controversy cannot be finally adjudi-
cated without affecting the indispensable party’s interest, or
3
  § 25-328.
4
  See, e.g., Carroll v. Gould, 308 Neb. 12, 952 N.W.2d 1 (2020).
5
  Wayne L. Ryan Revocable Trust v. Ryan, supra note 1, 297 Neb. at 772,
  901 N.W.2d at 678 (citing Department of Banking v. Stenger, 132 Neb.
  576, 272 N.W. 403 (1937)).
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          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

which is such that not to address the interest of the indispen­
sable party would leave the controversy in such a condition
that its final determination may be wholly inconsistent with
equity and good conscience. 6 The standard applied by a dis-
trict court is higher than that which must be met to support
statutory intervention because litigation that does not involve
all necessary parties cannot proceed in the absence of those
parties; thus, they are indispensable in order for a court to
maintain jurisdiction of the action.
   [3-9] Intervention is different. The right to intervene pursu-
ant to statute is absolute. 7 The intervention statutes are to be
liberally construed. 8 To be entitled to intervention as a matter
of right, the intervenor must have a direct and legal interest
of such character that the intervenor will lose or gain by the
direct operation and legal effect of the judgment which may
be rendered in the action. 9 An indirect, remote, or conjec-
tural interest in the result of a suit is not enough to establish
intervention as a matter of right. 10 Simply having a claim that
arises out of the same facts as the claims at issue in the litiga-
tion does not constitute having a sufficient interest to support
intervention. 11 Therefore, a person seeking to intervene must
allege facts showing that he or she possesses the requisite legal
interest in the subject matter of the action. 12 For purposes of
ruling on a motion for leave to intervene, a court must assume
that the intervenor’s factual allegations set forth in the com-
plaint are true. 13
6
   Koch v. Cedar Cty. Freeholder Bd., 276 Neb. 1009, 759 N.W.2d 464
   (2009).
 7
   Carroll v. Gould, supra note 4.
 8
   Id.
 9
   See Wayne L. Ryan Revocable Trust v. Ryan, supra note 1.
10
   Id.
11
   Id.
12
   Id.
13
   Id.
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           Nebraska Supreme Court Advance Sheets
                    315 Nebraska Reports
                  HARCHELROAD V. HARCHELROAD
                        Cite as 315 Neb. 351

   [10] Contrary to some jurisdictions with different statutory
or rule-based requirements, this court has explicitly held that
it is of no effect that a party seeking intervention might have
an interest adequately represented by another party. 14 Indeed,
§ 25-328 contains no such requirement. So long as the party
seeking intervention as a matter of right has a direct and legal
interest in the ligation, that party is entitled to intervene. Thus,
the district court’s finding that the special administrator repre-
sented Carol’s interest, and its conclusion that Carol was not
an indispensable party, were unnecessary and irrelevant to the
disposition of Carol’s motion to intervene. Rather, the district
court needed only to conclude whether Carol had a direct and
legal interest in the litigation, and if she did, it was required to
allow Carol leave to intervene under § 25-328.
   In supporting its conclusion that Carol lacked the requisite
direct and legal interest in the litigation, the district court
relied upon Ruzicka v. Ruzicka. 15 In that case, there was a
dispute over certain parcels of real property titled in the
name of the decedent at the time of his death. The decedent’s
wife, brother, and farm corporation argued that the property,
through “‘mistake and inadvertence,’” was not transferred to
the corporation. 16 Thus, there was a dispute over whether the
property was owned by the farm or by the residual benefi-
ciaries of the decedent’s estate. Those residual beneficiaries
sought to intervene, arguing that they had a direct and legal
interest in the pending litigation relating to the ownership of
the property. The motion to intervene was denied by the dis-
trict court.
   We reversed the denial of the motion to intervene in
Ruzicka, reasoning that title to the real property had vested
with the residuary beneficiaries upon the decedent’s death,
their interests in the litigation between the estate was direct
14
   See Ruzicka v. Ruzicka, 262 Neb. 824, 635 N.W.2d 528 (2001).
15
   Id.
16
   Id. at 825, 635 N.W.2d at 531.
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             Nebraska Supreme Court Advance Sheets
                      315 Nebraska Reports
                     HARCHELROAD V. HARCHELROAD
                           Cite as 315 Neb. 351

and legal, and the residuary beneficiaries would gain or lose
by the direct operation and legal effect of the judgment. We
were unpersuaded, for the reasons noted above, that the per-
sonal representative’s presence in the litigation was sufficient
to protect the interests of the residuary beneficiaries.
    In this case, the district court noted that Ruzicka involved
real property in which title had vested in the residuary benefi-
ciaries at the death of the decedent. The district court relied
on authority suggesting that the case before it (and now on
appeal here) involved damages and the recovery of life insur-
ance proceeds. It further noted that Ruzicka was instructive on
the issue of personal property, holding that title to personal
property remains with the personal representative until the
estate is closed. The district court here did not address our
subsequent decision in Wilson v. Fieldgrove, 17 where we noted
that since 1974, title to both personal and real property vests
in the decedent’s devisees and heirs immediately upon the
death of the decedent.
    Ultimately, Ruzicka is perhaps helpful in its explanation of
intervention and indispensable parties, but it holds only that a
personal representative can maintain an action with respect to
real estate only to the extent that the personal representative
has possession of the real estate for purposes of the estate’s
administration, and where individual residual beneficiaries had
title as of the moment of the decedent’s death, those individu-
als have a direct and legal interest in litigation concerning their
ownership rights.
    In addition to the district court’s reliance on Ruzicka,
Michelle, acting as personal representative of Brian’s estate,
directs us to In re Estate of Hedke 18 for the proposition that
“under the Nebraska Probate Code, the right and duty to
sue and recover assets for an estate reside in the estate’s
appointed personal representative, not the devisees.” And in
17
     Wilson v. Fieldgrove, 280 Neb. 548, 787 N.W.2d 707 (2010).
18
     In re Estate of Hedke, 278 Neb. 727, 750, 775 N.W.2d 13, 32 (2009).
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          Nebraska Supreme Court Advance Sheets
                   315 Nebraska Reports
                 HARCHELROAD V. HARCHELROAD
                       Cite as 315 Neb. 351

the absence of a personal representative, as was the case in In
re Estate of Hedke, the Nebraska Probate Code provided that
a special administrator could bring such litigation.
   But a more critical look at In re Estate of Hedke shows
only that the probate code grants to the personal representa-
tive the right and duty to sue and recover assets and that in the
absence of a personal representative, a special administrator
could fulfill that duty. There is no concern when those prin-
ciples are applied to this case. This litigation was initiated by
Carol, as personal representative (a position that, as best as
we can tell from this record, Carol still maintains), and later
advanced by a special administrator. In relying on In re Estate
of Hedke, Michelle appears to overlook that having standing
to bring suit is different than having the direct and legal inter-
est required to intervene in a suit. And intervention is what is
at issue here.
   The record here demonstrates that Carol, in her individual
capacity, has a direct and legal interest in the litigation in that,
at a minimum, she is the residual beneficiary under Sidney’s
will. Carol is entitled to the remainder of property in the estate
at the time of its closing. At issue in this underlying litigation
against Brian’s estate is $2 million, which the underlying com-
plaint alleged Brian, and later his estate, continues to owe for
the purchase of Sidney’s interest in the brothers’ business. Just
as the banks were entitled to intervene due to debts owed to
them, so too is Carol, who has a right to whatever remains—
and that amount could vary considerably based on the outcome
of this litigation.
   We also observe that our review of the record suggests that
the special administrator seems to lately question his own
legal interest in this litigation, insofar as he was appointed,
at least in part, to ensure that the interests of those other than
Carol were met. It is also apparent from the record and from
oral arguments in this case that related litigation is ongoing
between Michelle and Carol in their individual capacities,
as well as their capacities as the personal representatives of
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         Nebraska Supreme Court Advance Sheets
                  315 Nebraska Reports
                HARCHELROAD V. HARCHELROAD
                      Cite as 315 Neb. 351

their husbands’ respective estates. While the details of the
related litigation are not included in our record, its existence
further supports the conclusion that Carol has a direct and
legal interest in the outcome of this case’s portion of the
legal morass.
                        CONCLUSION
   The decision of the district court is reversed, and the cause
is remanded for further proceedings.
                               Reversed and remanded for
                               further proceeding.
   Miller-Lerman, J., not participating.