Mogensen Bros. Land & Cattle Co. v. Mogensen , 29 Neb. Ct. App. 56 ( 2020 )

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Nebraska Court of Appeals Advance Sheets
29 Nebraska Appellate Reports
MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
Cite as 29 Neb. Ct. App. 56
Mogensen Bros. Land & Cattle Company,
a Nebraska partnership, appellee and
cross-appellant, v. Steven Mogensen,
appellant and cross-appellee.
Steven Mogensen, appellant and cross-appellee,
v. Keith Mogensen, appellee and
cross-appellant.
___ N.W.2d ___
Filed November 3, 2020. Nos. A-19-326, A-19-327.
1. Partnerships: Accounting: Appeal and Error. An action for a partner-
ship dissolution and accounting between partners is one in equity and is
reviewed de novo on the record.
2. Declaratory Judgments: Equity: Appeal and Error. In reviewing an
equity action for a declaratory judgment, an appellate court tries factual
issues de novo on the record and reaches a conclusion independent of
the findings of the trial court, subject to the rule that where credible
evidence is in conflict on material issues of fact, the reviewing court
may consider and give weight to the fact that the trial court observed the
witnesses and accepted one version of the facts over another.
3. Jurisdiction: Limitations of Actions: Waiver. Unless a statutory time
limitation is jurisdictional, the law typically treats a statute of limitations
defense as an affirmative defense that must be raised or is waived.
4. Waiver: Words and Phrases. A waiver is a voluntary and intentional
relinquishment or abandonment of a known existing legal right or such
conduct as warrants an inference of the relinquishment of such right.
5. Waiver: Estoppel. To establish a waiver of a legal right, there must be
a clear, unequivocal, and decisive act of a party showing such a purpose,
or acts amounting to an estoppel on his or her part.
6. Actions: Accounting. A cause of action for an accounting accrues when
a plaintiff has the right to maintain and institute a suit.
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7. Corporations: Accounting: Proof. Although the burden is ordinarily
upon the party seeking an accounting to produce evidence to sustain the
accounting, when another person is in control of the books and has man-
aged the business, that other person is in the position of a trustee and
must make a proper accounting.
8. Partnerships. The manner in which the parties dealt with each other
during the life of the partnership may be considered in determining
whether there was an agreement between the parties.
9. ____. In order to be a business opportunity, the business must generally
be one of practical advantage to the entity and must fit into and further
an established entity policy.
10. ____. If an opportunity is one in which the partnership has an actual or
expectant interest, a fiduciary is prohibited from permitting his or her
self-interest to be brought into conflict with the partnership’s interest,
and may not take the opportunity for himself or herself.
11. ____. If a partnership declines an opportunity, it no longer has an actual
or expectant interest in that opportunity.
12. Accounting: Evidence: Appeal and Error. Although an action for an
accounting is reviewed de novo, where credible evidence is in con-
flict on material issues of fact, an appellate court may consider and
give weight to the fact that the trial court observed the witnesses and
accepted one version of the facts over another.
13. Claims. A claim is liquidated when there is no reasonable controversy as
to both the amount due and the plaintiff’s right to recover.
Appeal from the District Court for Boone County: Rachel
A. Daugherty, Judge. Affirmed.
David S. Houghton and Keith A. Harvat, of Houghton,
Bradford & Whitted, P.C., L.L.O., and Jeffrey C. Jarecki, of
Jarecki Maul, P.C., L.L.O., for appellant.
George H. Moyer, of Moyer & Moyer, for appellees.
Pirtle, Riedmann, and Bishop, Judges.
Pirtle, Judge.
I. INTRODUCTION
Steven Mogensen appeals from an order of the district
court for Boone County ordering Steven to pay an amount
of $118,448.57 to Mogensen Bros. Land & Cattle Company
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MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
Cite as 29 Neb. Ct. App. 56
(hereinafter referred to as “Mogensen Bros.” or “the partner-
ship”), a Nebraska partnership. The order stems from two
consolidated cases involving Mogensen Bros., whereby the
partners agreed to dissolve the partnership and conduct an
accounting of its profits and expenses.
Mogensen Bros. and Keith Mogensen cross-appeal the dis-
trict court’s alleged failure to award interest on the amount
owed by Steven for his share of a settlement payment to Cedar
Rapids State Bank (CRSB) for a previous partnership debt.
Keith also cross-appeals the finding that he owed the partner-
ship $129,922 in loan repayments.
II. BACKGROUND
1. Procedural Background
On May 27, 2010, a direct suit was brought by Mogensen
Bros. against Steven, alleging that Steven abused his duty
of care to the partnership by refusing to sign the neces-
sary documents to allow the partnership to participate in the
U.S. Department of Agriculture (USDA) “Direct and Counter-
Cyclical Payment Program.” The complaint alleged that
Steven’s failure to sign the documents caused the partnership
to lose $111,101 in federal farm program payments between
the years of 2007 and 2010. The complaint was later amended
to add 2011 and 2012 to the period of claimed damages and
sought to remove Steven from the partnership.
On June 28, 2013, Steven brought a separate suit against
Brian Mogensen and Keith, alleging that Brian and Keith vio-
lated the agreement establishing the partnership of Mogensen
Bros. (Partnership Agreement), as well as various fiduciary
duties, and denied Steven certain rights as an equal partner.
The suit also sought a full accounting of the partnership’s prof-
its and assets and a dissolution of the partnership. On October
24, Brian was dismissed without prejudice.
On December 23, 2013, Keith filed an application for the
appointment of a receiver for the partnership. On January
30, 2014, the district court appointed a receiver to “preserve
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MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
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evidence, protect partnership assets, and alleviate acrimony
among the parties.”
On August 29, 2014, Keith moved the district court for an
order directing the receiver to pay or renew two promissory
notes due for payment at CRSB. The two notes had princi-
pal amounts due of $194,815.10 and $200,000. After Steven
objected, a civil suit was filed by CRSB against the partner-
ship, and each of the Mogensen brothers individually, to collect
on the notes. The matter was ultimately settled after Brian and
Keith paid CRSB the amounts due.
On May 3, 2016, the two lawsuits involving the Mogensen
brothers, and the partnership between them, were consoli-
dated for discovery and trial. After years of litigation, the
parties reached a settlement agreement whereby Mogensen
Bros. would be dissolved and the assets divided among Steven,
Brian, and Keith in equal shares. The agreement also provided
that Steven would “pay one-third of the principal and interest
charges on the note financed through [CRSB] to the date of
final Court approval of the Receiver’s distribution.” Finally,
the settlement agreement provided that an accounting of all
partnership profits and expenses should be conducted. The
final accounting was set for trial on November 8, 2017.
After division of the partnership assets, the receiver filed
an allocation and distribution report, seeking final approval of
the distribution by the district court. The receiver’s report was
approved on November 7, 2017.
A trial on the final accounting of Mogensen Bros. took
place on November 8 and 27 and December 11 through 14 and
20, 2017.
On January 4, 2019, the district court entered an order find-
ing that Keith, as de facto managing partner of the partner-
ship, had the burden to establish an adequate accounting. The
order provided that the accounting was subject to a 4-year
statute of limitations barring any claim for “alleged wrong-
doing since prior to 2009.” The order further provided that
despite a provision in the Partnership Agreement prohibiting
the payment of a salary to the partners for services rendered
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MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
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to the partnership, there was a course of conduct among the
partners that acquiesced to such “guaranteed payments” and
Steven had knowledge of such.
The order made various findings as to whether allegedly
self-dealing transactions by Keith were sufficiently supported
by the accounting. The order also found that Keith did not
usurp a partnership opportunity by purchasing land for him-
self and one of his sons. Finally, the order found that Keith
owed the partnership $288,673, including $129,922 in loan
repayments, and Steven owed the partnership $118,448.57 for
losses sustained from the partnership’s inability to participate
in a USDA payment program. The district court declined to
assess interest on the amounts owed by both Keith and Steven.
It is from this order on the partnership accounting that Steven
appeals and that the partnership and Keith cross-appeal.
2. Factual Background
Anthony J. Pruss III, a certified public accountant, was
called as Keith’s first witness. Pruss had acted as the account­
ant for Mogensen Bros. for approximately 20 years. Before
Pruss began, Opal Mogensen, the mother of Steven, Keith, and
Brian, was maintaining the bookkeeping for the partnership.
Pruss testified that he used the “‘Mogensen Brothers Land
and Cattle General Ledger’” to prepare tax returns for the part-
nership. The general ledger reflects a “transaction summary of
all transactions” for the relevant tax years. The only verifica-
tion of whether the entries in the general ledger were accurate
is when the transaction amounts were compared to the balance
of the partnership’s checking account.
Keith began working for his father’s company, Ranch &
Farm Agricultural Systems, Inc. (Ranch and Farm), in 1973
when he graduated high school, and eventually, he became an
equal shareholder along with his brothers, Steven and Brian.
The three brothers began Mogensen Bros. as an informal part-
nership in 1974, which was formally organized in 1982.
Mogensen Bros. acquired its first farmland in 1974.
Throughout the 1970’s, the brothers rented out most of the
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partnership’s farmland while they worked construction for
Ranch and Farm. The partnership acquired more land in the
1980’s. In the early 1990’s, Steven farmed the partnership land
while Brian and Keith were working construction in differ-
ent areas. At the time, Keith was working for Mogensen Steel
Erectors, Inc. (Mogensen Steel). Brian is the principal share-
holder of Mogensen Steel.
In 1985 and 1986, Keith went to Illinois to set up a grain
storage building on behalf of Mogensen Steel, which job gen-
erated $331,000. The profits were paid to Mogensen Bros. and
were used to place downpayments on land purchases. In 1991,
Keith erected 14 dairy barns in Oklahoma, generating profits of
$335,000 that were paid directly to Mogensen Bros. In 1994,
Keith met with their accountants at the time, who told him that
the money paid to Mogensen Bros. needed to be paid back to
the company that generated it. Mogensen Bros. began paying
back Mogensen Steel and Ranch and Farm a total of $665,000
in 1994, and the partnership still owed money as of 2000.
Steven filed suit to dissolve Ranch and Farm in January
2001. After the lawsuit was filed, Keith did most of the
farming for Mogensen Bros. Keith testified that Steven has
not participated in the Mogensen Bros. farming operation
since around 2000 and has not approached him seeking any
information related to the partnership prior to filing the
instant lawsuit.
Keith testified that the brothers discussed dissolving
Mogensen Bros. in 2000 and made proposals for the distri-
bution of its land assets. The proposals included a balance
sheet prepared by the partnership’s accountants, reflecting, in
part, $333,013 and $335,613 owed to Ranch and Farm and
Mogensen Steel respectively.
Exhibit 96 is a note dated March 26, 2010, that was sent
to Steven to inform him that his signature was needed for
Mogensen Bros. to participate in the “ASC farm program” and
that nonparticipation would cost the partnership $25,465. Keith
testified that the program could have helped offset operating
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and other costs for the partnership. Keith testified that Steven
refused to sign the necessary farm program documents between
2008 and 2014. Exhibits 100 through 102 are notes sent from
Opal to Steven regarding his refusal to sign off on the part-
nership’s participation in the USDA farm program. Steven
refused to sign the farm program documents without being paid
directly in advance, despite being told that the program pays
the partnership directly, not individual partners.
Several letters and ballots were sent to Steven between
2007 and 2012 regarding various partnership activities, and
its possible dissolution, but they went unanswered. Both Keith
and Brian agreed to the dissolution and distribution plan, but
Steven did not respond.
Exhibits 120, 121, and 123 are correspondence from Julie
A. Eklund, a director with the USDA, reflecting the amounts
Mogensen Bros. would have received from the USDA payment
program. Keith testified that he used the numbers reflected in
exhibit 123 to determine the amount Mogensen Bros. would
have received under the program. Exhibit 124 consists of hand-
written notes reflecting the potential farm program payments
for 2007 and 2008. Keith testified that the notes were written
by a USDA Farm Service Agency employee.
Keith testified that Mogensen Bros. purchased the “Mateya
place” in 2012 with financing through CRSB. Keith indi-
cated that an agreement had been made among the partners
in 1982 or 1983 to purchase the Mateya place. Keith noted
that the partnership was unable to obtain funding from Farm
Credit Services of America (FCSA), as it had with previous
land purchases, because Steven refused to sign the appropri-
ate documents.
Keith testified that he began receiving guaranteed payments
from the partnership in 1986 or 1987. After litigation between
the parties in 2005, Keith continued to receive such payments.
The payment amounts were occasionally increased through
ballot voting by the partners. Between 2005 and 2014, the
payments increased from $350 per week to $500 per week
to $900 per week. A ballot was sent to each partner in 2012,
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MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
Cite as 29 Neb. Ct. App. 56
but Steven did not return his. Keith testified that he did not
receive any objection from Steven regarding the receipt of
guaranteed payments. Keith testified that the partnership had a
custom of paying partners for work performed since its incep-
tion and that Steven received guaranteed payments between
1987 or 1988 until 1994.
Keith testified that the “Fitzsimmons land” was purchased
because it was near other land he owned and one of his sons,
Morgan Mogensen, wanted to purchase his own land. Keith
personally purchased the land and resold a portion to Morgan.
Keith testified that the property was advertised around the
Cedar Rapids, Nebraska, community and that Brian had agreed
to the purchase of the land for Morgan. Keith did not talk
to Steven about the purchase. Keith testified that he did not
purchase the Fitzsimmons land for the partnership because he
“wanted to save Mogensen [Bros.] money for something big-
ger and better.” Later on, the Mateya place was purchased for
the partnership.
Keith testified that the partnership “ran on cash” for a period
of time because Steven refused to sign the necessary documents
for the partnership to borrow money from FCSA. Eventually, a
line of credit was established with CRSB after Keith and Brian
were told by CRSB that it would lend money with just two of
the partners’ signatures. Keith further testified that he made a
number of personal loans to the partnership between the years
1978 to 1982. He testified that those loans had not been fully
paid off until 2007 or 2008. Keith discussed making the loans
beforehand with Brian, but not with Steven.
On cross-examination, Keith testified that Opal, the part-
ners’ mother, took care of the books and records for the part-
nership, but acknowledged that it was his role to handle the
financial responsibilities of the partnership. He testified that he
was responsible for the financial records of Mogensen Bros.
“[p]robably since 2002.”
Keith testified that his process for keeping the partnership
books was to “[g]o through the check blanks at the end of the
month, the statements. Then you — and you’d code them.”
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MOGENSEN BROS. LAND & CATTLE CO. v. MOGENSEN
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Keith admitted that the partnership’s entire bookkeeping was
based on its checkbook, with no other records.
As of 2011, Keith and Brian each owned one-half share of
Ranch and Farm. The general ledger showed various transac-
tions between Mogensen Bros. and Ranch and Farm, including
a payment to Ranch and Farm for “Equipment Rent.” In 2011,
Mogensen Bros. paid Ranch and Farm $11,340 in “Principal”
for “Machine Hire.”
Keith acknowledged that he received compensation for leas-
ing equipment to the partnership. Keith indicated that the
decision was based in part on a suggestion made by Pruss,
the accountant for both the partnership and Keith personally,
because Keith was doing most of the work for the partner-
ship without earning outside income. Keith determined the
rate charged for leasing the equipment, which he testified he
set below the rates of a nearby rental company. Keith tracked
the hours the machinery was used and what he was paid by
the partnership.
Keith testified that he leased land to the partnership and that
the lease agreements were signed and approved by Brian. Keith
indicated that a lease agreement was sent to Steven but that he
did not sign it. Keith determined what the lease terms would
be, including the rental rate.
Exhibit 145 is a note signed by Brian stating, “I give per-
mission to Keith . . . to loan money to Mogensen [Bros.] at
any time.” Keith testified that the note was signed shortly after
the Partnership Agreement, around June 1982. The loans Keith
made to the partnership total $36,416.25.
Exhibit 140 reflects the loans by Keith, as well as inter-
est and principal payments made on the loans through 2005.
Exhibit 140 shows a total of $258,966.42 paid to Keith on the
loans between 1982 and 2005.
Keith agreed that the partnership made payments to his son
Morgan, including approximately $40,000 for livestock. Keith
testified that Morgan’s cattle were sold alongside partnership-
owned cattle because the sale brought in more money if the
cattle were sold in larger lots. Keith testified that payment
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of $140,000 to Morgan between 2005 and 2013 for labor
“sounds kind of high.” During that same time, another one of
Keith’s children was paid $7,000 by the partnership. The part-
nership also paid wages to Keith’s other two children.
Exhibit 148 is a list of payments made by Mogensen Bros.
to Mogensen Steel between 1994 and 2004. The total value of
the notes is $325,000. Exhibit 148 shows an amount owed of
$335,613 beginning in 1994. Keith could not explain why the
balance reflected in exhibit 148 was higher than the sum of
the notes in exhibit 149. Between 2005 and 2007, Mogensen
Bros. paid Mogensen Steel $266,813 and no interest payments
were made.
In 2008 and 2009, Mogensen Bros. paid Mogensen Steel
$20,010 for leasing equipment and machine hire. Keith agreed
to the price on behalf of the partnership. He did not ask
Steven about leasing equipment from or loaning money to
Mogensen Steel.
Exhibit 152 is a list of questions regarding potential partner-
ship actions sent by Keith to Steven in 2007. Steven was asked
whether he would sign for an operating note with FCSA, but
he responded that he would like more information regarding
the partnership’s finances before answering. Keith testified that
all of the partnership’s financial information was available to
Steven at Opal’s house and that Steven never requested further
information regarding the partnership.
Exhibit 155 is a copy of the lease agreements made for
Mogensen Bros. to rent land from Keith and his wife and to
purchase the production from the land. The agreements are for
various years between 2005 and 2013.
Keith testified that he was not involved in documenting
wages and hours of partnership employees or other bookkeep-
ing but that employees would turn in a timesheet with hours
worked and what was done. Exhibit 167 consists of “employee
time sheets” that were handwritten and kept by various partner-
ship employees, including Keith’s children.
The vice president of CRSB testified that Mogensen Bros.
had been a customer of CRSB for 10 years at the time of
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trial. On August 7, 2015, Mogensen Bros. paid off two out-
standing operating loans from CRSB and one loan from CRSB
for the purchase of real estate. Note No. 4050 had a principal
balance of $200,000 with an additional $15,775.01 of interest.
Note No. 3855 had a principal balance of $194,280.82 with an
additional $14,835.50 of interest. The two notes were paid by
Keith and Brian as part of a settlement with CRSB’s lawsuit
against Mogensen Bros. to collect on the loans.
Pam Lovejoy, a financial officer for FCSA, testified that
Mogensen Bros. had three loans with FCSA at the time of
trial. Lovejoy acknowledged that the Partnership Agreement
of Mogensen Bros. requires the signature of all three partners
to obtain a loan. She testified that other than one of the out-
standing loans, which required only one signature, FCSA has
not been authorized to make a loan to Mogensen Bros. since
2003 because not all partners were willing to sign the neces-
sary documents.
Lovejoy calculated an estimate of the amount of inter-
est Mogensen Bros. would have paid on a loan from FCSA,
including “patronage,” compared to the partnership’s commer-
cial bank lender, CRSB. Patronage, in this case, is a certain
amount that FCSA pays back to its customers as dividends
from its profits. Exhibit 83 reflects Lovejoy’s estimate that
Mogensen Bros. would have saved approximately $13,231.37
from 2007 through 2011 and $26,431 from 2012 through 2016
by borrowing with FCSA.
Brian testified that he was involved in the agricultural
aspect of the partnership between 1972 and the mid-1980’s.
Eventually, around 1989, Brian became less involved in the
farming due to his construction business with Mogensen Steel.
Despite his noninvolvement with the farming, Brian kept in
touch with Keith regarding the farming operation weekly.
Brian also kept in touch with Keith regarding the part-
nership’s financial condition. Brian was aware that Keith
was leasing machinery and equipment to the partnership and
acknowledged his approval of the land development done by
Keith. Brian also approved the repayments made by Mogensen
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Bros. to Keith and acknowledged that he had a “standing deal”
with Keith to allow Keith to lend money to the partnership for
cashflow purposes when needed. Brian testified that exhibit
145, the note he signed granting Keith permission to lend
Mogensen Bros. money “at any time,” was signed because he
was often “on the road” and unable to sign a promissory note
each time Keith needed to lend money. Brian testified that
the concept of guaranteed payments was agreed to when the
partners “sat around the table and figured out what was fair
and reasonable.”
When the Fitzsimmons land went up for sale, Brian told
Keith that “it’s right next to us, let’s go for it,” but when Keith
raised the possibility that Morgan might buy a portion of the
land, Brian responded that they “should give [Morgan] every
chance and help him all we can to get started farming” and that
Brian was no longer interested in the land.
Brian testified that he was aware of, and did not oppose, the
partnership’s renting equipment from Ranch and Farm. Brian
testified that Keith charged “half” of the rental value of compa-
rable equipment in the area when renting his personal property
to the partnership. The rate Keith charged for equipment rental
was “half price or no more than three-fourths price of what it
would be off-the-street.”
Brian testified that his most recent conversation with Steven
regarding the partnership was in May 2017. He testified that he
had not had any other conversations of substance with Steven
regarding the partnership since 2002.
Opal, the mother of the three Mogensen brothers, testified
that after she married Harry Mogensen, she farmed in Cedar
Rapids while Harry traveled to Omaha, Nebraska, to do iron-
work. Later on, Harry acquired a franchise to erect grain bins
and other steel buildings. Ranch and Farm was initially incor-
porated by Harry, and Opal acted as the bookkeeper. Prior to
his death in 2000, Harry transferred ownership of Ranch and
Farm to his sons. Opal testified that she acted as bookkeeper
and secretary for all of the various entities operated by the
Mogensen family, including Mogensen Bros.
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Opal testified that after the dissolution and sale of Ranch
and Farm in 2003 or 2004, she took on the role of correspond-
ing with Steven regarding Mogensen Bros. Opal testified that
she “very seldom got a response” to letters she wrote to Steven
regarding the partnership. She testified that there were attempts
to amicably divide Mogensen Bros. among the partners.
Opal testified that she wrote back and forth with Steven
because he “was not really welcome in [her] house” because
she was “afraid of Steven for many years.” Opal testified that
on one occasion, Steven “stormed through the house” and
grabbed some partnership papers and walked out the door. In
response, Opal called the sheriff.
Kenneth Porter, a “heavy industry contractor,” testified that
he owns and is familiar with Caterpillar brand equipment.
Porter testified that the rental value of a “D9-H and bulldozer”
has remained around $170 per hour since 2005. He testified
that the value of a “627-B Caterpillar . . . scraper” was about
$160 per hour in 2005 and has increased around $20 since then
to $180 per hour. Porter testified that this price includes the
operator, the fuel, and the machine itself, as well as mainte-
nance and transportation.
Steven acknowledged that in 2004, the parties stipulated that
he could have access to all of the records of Mogensen Bros.,
but he claimed an attorney for “the bank” would not allow
him to see the partnership records. Steven agreed that he had
received some partnership bank statements, but he could not
say whether he received a bank statement every month since
the stipulation was entered.
Andrew Hoffman, the receiver appointed in this case, has
been an attorney licensed in Nebraska since December 2004.
Hoffman testified that a significant portion of his practice
involves farmers and ranchers within the state. Hoffman was
formally appointed to this case in January 2014.
Hoffman testified that he inspected each of the properties
owned by the partnership. He testified that there were “3,654
[sic]” total acres: “2,478 of which are irrigated, 377 dry-
land, and 728 acres of grassland.” He described the farming
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practices of Mogensen Bros. as “conventional for this part
of the country.” Hoffman testified that over the course of the
receivership, he did not have any issues with Keith’s attempting
to avoid the disclosure of partnership assets or money. Hoffman
testified that Keith occasionally did work on the partnership
land without approval of the receivership and “[s]ometimes”
requested compensation for that work.
Hoffman testified that when he was appointed, there was
$170,000 to $180,000 of prepaid credits at an agricultural
cooperative. Once Hoffman decided to rent out the farmland,
Hoffman worked with the cooperative to get the entire balance
refunded. Hoffman noted in his report that $106,000 of prepaid
fertilizer and $61,999 of prepaid diesel were refunded to the
receiver’s account and that the total refund was “either used to
pay expenses or distributed to the partners.”
A real estate broker and appraiser licensed in Nebraska tes-
tified that he was contacted to appraise the partnership’s real
estate in 2013 and valued it at approximately $22 million.
After the real estate broker’s testimony, Keith rested his case
in chief. Steven subsequently moved for a directed verdict in
both cases, alleging that Keith had the sole responsibility to
maintain the partnership’s financial records and had not pro-
duced a “satisfactory accounting” as a matter of law. Keith
disputed that he was solely responsible for maintaining the
financial records, alleging that he became responsible due to
Steven’s inaction with the partnership. The district court denied
the motion for a directed verdict.
Steven called Robert Kirchner as his first witness. Kirchner,
a forensic accountant and certified fraud examiner, testified
that his job as a forensic accountant is to “translate[] financial
accounting and business data into the legal context so that
judges and juries understand how . . . it applies in civil and
criminal cases.” As a certified fraud examiner, Kirchner spe-
cializes in the “examination of discovery of fraudulent finan-
cial transactions” and the “calculation of losses and damages
that businesses and individuals suffer.”
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Kirchner testified that Steven and his attorney asked him
to investigate (1) payments made by Mogensen Bros. to Keith
and his family members, and the adequacy of the support-
ing documents for those payments; (2) payments made by
Mogensen Bros. to Brian, Ranch and Farm, and Mogensen
Steel; (3) the amount paid to the receiver in this matter; (4) the
amounts identified as borrowed and spent in Keith’s January
2014 affidavit, and the adequacy of the supporting documents;
and (5) the amount of equipment bought and sold on behalf
of Mogensen Bros. and whether the partnership records were
adequate to support such.
Kirchner reviewed the pleadings and discovery of this case,
the partnership income tax returns for 2006 through 2015,
Keith’s personal tax returns, the general ledgers for the part-
nership from 2008 onward, the depreciation schedule for
­partnership land and assets, the “All Transactions Reports” for
2005 through 2013, the “Guaranteed Weekly Payment Report,”
a loan transactions report, and various equipment lists.
Exhibit 158 reflects Kirchner’s findings as to the payments
made to Keith and his family members. Kirchner’s findings
reflect $243,700 was paid to Keith for guaranteed payments
between January 2005 and January 2014. Keith was paid
$80,990 for “Leasing Equipment” and $35,795 for “Machine
Hire” between January 2005 and January 2014. Keith was paid
$13,110 for “Equipment Rent” and $1,133 for “Shop Rent.” He
was also paid $182,115 for land leases with Mogensen Bros. as
the tenant.
Kirchner testified that the loan history between Keith and
the partnership reflects $36,416 in principal and $222,550
in interest payments made to Keith between 1983 and 2005.
Between 2005 and 2011, $140,180 in principal and $60,028 in
interest were paid to Keith, and $6,215 was paid to Keith for
parts, supplies, repairs, et cetera. A $15,000 distribution was
made to Keith, as well as Brian and Steven, in 2012.
Kirchner’s testimony and conclusions based on his review
of the evidence found total payments of $1,037,232 paid
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to Keith; $190,685 paid to Morgan; and $23,385 paid to Keith’s
wife and his other children, between January 2005 and January
2014. Of the $80,990 paid for equipment leases, Kirchner was
able to tie $65,330 to supporting documents. Of the $182,115
for land leases, Kirchner was able to tie $107,557 to supporting
documents. None of the $23,385 in payments to Keith and his
children were verified by supporting documentation.
Kirchner testified that it was his professional opinion that
the supporting documents were inadequate for the various
payments made to Keith and his family between 2005 and
2014. Kirchner explained that the general ledger alone was
inadequate because it does not “fully explain the transaction.”
Kirchner noted that wages, for example, were not explained
with figures such as how many hours were worked, what
the hourly rate was, or what work was performed. For notes
payable, Kirchner testified that the transactions lacked a writ-
ten promissory note, a security agreement, an amortization
schedule, an explanation of the purpose of the loan, et cetera.
Kirchner further expressed his opinion that the general ledger’s
breakdown between principal and interest payments made to
Keith was an inadequate accounting because there was no
indication of how the amounts due were calculated, such as an
amortization schedule.
Exhibit 158 reflects Kirchner’s findings as to payments
made from Mogensen Bros. to Ranch and Farm for equip-
ment purchases and rental between 2007 and 2011. There was
also approximately $349,420 in payments on notes payable to
Ranch and Farm. These payments amount to $333,013.31 in
principal and $16,407 in interest. Exhibit 158 reflects $306,823
in total payments from Mogensen Bros. to Mogensen Steel
between 2005 and 2014. Kirchner opined that the documen-
tation was inadequate to support the payments to Ranch and
Farm and Mogensen Steel.
A table in exhibit 158 is a comparison between the gen-
eral ledger produced and Keith’s January 2014 affidavit
regarding a December 2013 loan taken out on behalf of the
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partnership. A total of $380,500 was borrowed and accounted
for in the general ledger. Keith’s affidavit claims $420,000 was
borrowed from CRSB in December 2013 but allocates only
$412,000 of such to specific expenses. Kirchner found that
Keith’s affidavit reflects an excess expenditure of $148,816
that was not accounted for in the general ledger, plus an addi-
tional $17,086 in attorney fees that was disputed by the parties,
for a total of $165,902. Despite being able to track payments
totaling $231,684 related to the 2013 loan within the general
ledger, Kirchner opined that such was inadequate to support the
payments due to the lack of documentation.
Kirchner opined that the records produced were inadequate
to support a determination of the partnership’s assets and liabil-
ities. He testified that his opinion was largely due to the lack of
supporting documentation for various claimed payments and a
stated purpose of the transactions. He also testified that the tax
returns and general ledger fail to account for the value of cer-
tain assets, such as equipment, due to the depreciation reflected
in those documents.
Steven was recalled as a witness in his own behalf. Steven
testified that he is familiar with the partnership real estate and
that he has around 40 years of farming experience. Steven
testified that he observed Keith’s farming practices between
the years of 2007 through 2013 and opined that Keith did
not exercise good farming practices during that time. Steven
disagreed with Keith’s practice of “plowing waterways shut
and discing deeply, and not having enough crop residue.” He
testified that such practices caused erosion, runoff, and the loss
of topsoil.
Steven testified that he checks the partnership property
about every 2 months but was not paid a wage or salary for
such work since 2007. Steven indicated that he personally
farmed the “Richards farm” every year and would “fix all the
ditches,” “rent [a] soil mover,” or “use [a] backhoe or skid
steer and . . . put drainage pipe in and terraces, and culvert and
any way [he] could to stop runoff.”
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Steven testified that he was made aware by letter of
Keith’s and Brian’s desire to enroll the partnership in a USDA
farm ­program but that no meeting was scheduled to discuss the
matter. Steven was notified about the program “at least four”
times. Steven testified that once he received the letter, he con-
tacted the USDA sometime around 2007 or 2008. Steven testi-
fied that he did not believe he would receive a proportionate
share of the proceeds from the program because of the way his
“brother was handling the business.”
Exhibit 171 is an appendix to the form used for application
to the USDA farm program. It indicates that intentional or
fraudulent misrepresentation by the partnership could result in
civil or criminal liability of the individual partners.
Steven indicated that at the time he was asked to sign the
USDA farm program contract, he had not been informed of
the partnership business for several years. He testified that
he made an effort to look at partnership records at Opal’s
home but that after she called the sheriff, he did not attempt
to return because he “didn’t want to involve the police depart-
ment.” Steven testified that he was concerned there may have
been intentional or fraudulent misrepresentation by the other
partners and that he did not want to subject himself, or the
partnership, to liability. Steven testified that he did not sign the
USDA farm program contract because he “knew that [Keith]
was never complying with the farm program, and [he] also felt
in the best interest of the government that [he] would be com-
mitting fraud.”
According to Steven, he drove to the “ASC office” approxi-
mately four times to discuss the requirements of the farm pro-
gram and his concerns with Keith’s current farming practices.
Steven testified that a USDA employee advised him not to
sign the contract because he believed Steven was “telling the
truth” and the partnership was not complying with the required
farming practices of the program. Steven testified that he
ultimately signed the documentation to enroll the partnership
in the farm program after the receiver was appointed because
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he felt the receiver “would get the issue taken care of where
[the receiver] would be a better steward to the land.”
Steven testified that he believed various notes to Mogensen
Steel, Ranch and Farm, and Keith individually were “[f]icti-
tious” and amounted to “fraud.”
Steven recalled Keith to the witness stand to testify. Keith
acknowledged that the Partnership Agreement requires that all
partners agree prior to borrowing money for the partnership.
He further acknowledged that the decision to begin renting
his equipment to the partnership was based, in part, on his
account­ant’s advice that he needed to consider his own per-
sonal interests. He also admitted that he wanted a depreciation
deduction to offset his personal income and was tired of farm-
ing with “junk” equipment that he had purchased and “wore
out” doing partnership work.
After Keith’s testimony, Steven rested his rebuttal case. The
parties submitted briefs in lieu of oral closing arguments.
III. ASSIGNMENTS OF ERROR
Steven assigns, consolidated and restated, that the district
court erred in finding that (1) the action for an accounting was
barred, in part, by the statute of limitations; (2) various evi-
dence and testimony was sufficient to support the accounting
and that Keith owed “‘only’” an amount of $288,673 to the
partnership; (3) there was a course of conduct among the part-
ners that the partner working for the partnership was entitled to
a “‘guaranteed payment’”; (4) Keith did not usurp a partner-
ship opportunity; (5) Steven owed the partnership $118,448.57
for losses sustained; and (6) no interest was owed by Keith to
the partnership.
Mogensen Bros. and Keith assign on cross-appeal that the
district court erred in failing to award interest on the amount
Steven owed to Keith and Brian for Steven’s share of the set-
tlement payment to CRSB. Keith also cross-appeals the find-
ing that he owed the partnership $129,922 in loan repayments
made to him by the partnership.
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IV. STANDARD OF REVIEW
[1,2] An action for a partnership dissolution and account-
ing between partners is one in equity and is reviewed de novo
on the record. Fredericks Peebles v. Assam, 300 Neb. 670,
915 N.W.2d 770 (2018). In reviewing an equity action for a
declaratory judgment, an appellate court tries factual issues
de novo on the record and reaches a conclusion independent
of the findings of the trial court, subject to the rule that where
credible evidence is in conflict on material issues of fact, the
reviewing court may consider and give weight to the fact that
the trial court observed the witnesses and accepted one version
of the facts over another. Id.
V. ANALYSIS
1. Steven’s Appeal
(a) Statute of Limitations
Steven argues that the district court erred in determining that
the accounting was subject to a 4-year statute of limitations
that barred a claim for any alleged wrongdoing prior to 2009.
Because this assignment of error determines the scope of the
accounting as a whole, we address it first. Steven first argues
that “Keith waived or failed to preserve any such affirmative
defense at the time of the Settlement Agreement.” We disagree.
We also agree with the district court that an action for account-
ing in Nebraska is subject to a 4-year statute of limitations,
which applies in this case.
[3] We first find that Keith did not waive or fail to preserve
the statute of limitations affirmative defense. Unless a statu-
tory time limitation is jurisdictional, the law typically treats
a statute of limitations defense as an affirmative defense that
must be raised or is waived. Karo v. NAU Country Ins. Co.,
297 Neb. 798, 901 N.W.2d 689 (2017). In these cases, the stat-
ute of limitations defense was specifically pled within Keith’s
responsive pleadings to Steven’s counterclaim and separate
lawsuit seeking an accounting. Steven claims that because
the parties’ settlement agreement resolving all issues between
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the parties, save for the accounting, did not limit the scope of
the accounting, Keith has failed to preserve the statute of limi-
tations defense. However, the partial settlement specifically left
unresolved issues related to the accounting.
[4,5] We decline to find that any affirmative defense that
was not realleged at the time of the settlement was waived.
A waiver is a voluntary and intentional relinquishment or
abandonment of a known existing legal right or such conduct
as warrants an inference of the relinquishment of such right.
Omaha Police Union Local 101 v. City Of Omaha, 292 Neb.
381, 872 N.W.2d 765 (2015). To establish a waiver of a legal
right, there must be a clear, unequivocal, and decisive act of a
party showing such a purpose, or acts amounting to an estoppel
on his or her part. Id. Nothing in the record indicates Keith’s
intention to abandon the affirmative defenses previously pled
in response to Steven’s action for an accounting. Keith did
not expressly waive the statute of limitations defense, and we
reject this argument.
Steven also argues that the statute of limitations for an
accounting does not begin to run until the partnership is dis-
solved and there is a winding up. We disagree. Partnerships
in Nebraska are governed by the Uniform Partnership Act of
1998, Neb. Rev. Stat. § 67-401 et seq. (Reissue 2018), which is
Nebraska’s counterpart to the model act known as the Revised
Uniform Partnership Act (RUPA). See Elting v. Elting, 288
Neb. 404, 849 N.W.2d 444 (2014). Section 67-425 provides in
relevant part:
(2) A partner may maintain an action against the part-
nership or another partner for legal or equitable relief,
with or without an accounting as to partnership busi-
ness, to:
(a) Enforce the partner’s rights under the partnership
agreement;
(b) Enforce the partner’s rights under the Uniform
Partnership Act of 1998[.]
....
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(3) The accrual of, and any time limitation on, a right
of action for a remedy under this section is governed by
other law. A right to an accounting upon a dissolution and
winding up does not revive a claim barred by law.
RUPA “compel[s] partners to litigate their claims during the
life of the partnership or risk losing them.” Unif. Partnership
Act (1997) § 405(c), comment 4, 6 (part I) U.L.A. 150, 152
(2001). While Steven is correct that the parties’ settlement,
and the subsequent order by the district court, provides for “an
accounting of all partnership profits and expenses of Mogensen
Bros.,” it does not permit Steven to litigate claims outside of
the applicable statute of limitations.
Steven cites to the Nebraska Supreme Court’s decision in
Weyh v. Gottsch, 303 Neb. 280, 929 N.W.2d 40 (2019), in
arguing that “the statute of limitations does not begin to run
until the partnership is dissolved and there is a winding up” of
the business. Brief for appellant at 19. However, Steven’s reli-
ance on Weyh is misplaced. In that case, the partners “did not
settle up at the end of each farming year” and agreed that, once
one partner decided to end the farming operation, the manag-
ing partner “would provide an accounting and the net profits
would then be determined and distributed equally.” Weyh v.
Gottsch, 303 Neb. at 283, 284, 929 N.W.2d at 45. In this case,
the Partnership Agreement specifically provides for annual
accounting books that are to be accessible by any partner at
“all times”: “Books of Account. The partnership shall maintain
adequate accounting records. All books, records and accounts
of the partnership shall be open at all times to inspection by
all partners.”
[6] The basis for Steven’s action for an accounting is that he
was wrongfully excluded from accessing the partnership books
since approximately 2002, when he first sought an accounting.
A cause of action for an accounting accrues when a plaintiff
has the right to maintain and institute a suit. American Driver
Serv. v. Truck Ins. Exch., 10 Neb. Ct. App. 318, 631 N.W.2d 140
(2001). Therefore, Steven’s cause of action first accrued when
he was allegedly excluded from the partnership books, not
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at the time the partnership was dissolved and there was a wind-
ing up. Weyh v. Gottsch, supra, is distinguishable because there
was no annual settling up or annual accounting record that each
partner had an equal right to access and inspect, as there is in
this case. Therefore, in Weyh, there could be no breach until
the final accounting was completed and the defendant failed
to make payments the plaintiff allegedly was entitled to under
their oral contract.
Thus, we find this case to be distinguishable from Weyh and
governed, instead, by our decision in American Driver Serv. v.
Truck Ins. Exch., supra. In American Driver Serv., we found
that “[a]n equity action for an accounting is subject to a 4-year
statute of limitations.” 10 Neb. Ct. App. at 323, 631 N.W.2d at
145. See Neb. Rev. Stat. § 25-207 (Reissue 2016). Section
25-207 provides:
The following actions can only be brought within
four years: (1) An action for trespass upon real property;
(2) an action for taking, detaining or injuring personal
property, including actions for the specific recovery of
personal property; (3) an action for an injury to the rights
of the plaintiff, not arising on contract, and not hereinaf-
ter enumerated; and (4) an action for relief on the ground
of fraud, but the cause of action in such case shall not
be deemed to have accrued until the discovery of the
fraud . . . .
Although not binding on this court, we find this case analo-
gous to Fike v. Ruger, 754 A.2d 254 (Del. Ch. 1999), affirmed
752 A.2d 112 (Del. 2000), and Baghdady v. Baghdady,
No. 3:05-cv-1494, 2008 WL 4630487 (D. Conn. 2008). In
Fike, the Delaware court applied RUPA in finding that “once
such actions were permitted, they should be regarded as
‘accruing’ for purposes of statutes of limitations at the time of
their occurrence, even in the context of partnerships subject
to dissolution . . . .” 754 A.2d at 263. In this case, Steven
alleges a number of breaches of fiduciary duties by Keith,
as they relate to the accounting. Specifically, Steven alleges
that Keith breached his duties by failing to account to Steven,
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engaging in self-dealing transactions, and usurping partner-
ship opportunities.
The facts of this case are similar to those in Baghdady v.
Baghdady, supra. In that case, the parties did not dispute that
the managing partner stopped providing financial information
to the other partner in 1996. Applying Connecticut’s 6-year
statute of limitations for an accounting, the court held:
[T]he statute of limitations on [the plaintiff’s] claim for
an accounting ran sometime in 2003, six years after [the
defendant] refused to provide the information [the plain-
tiff] requested. . . . [A] separate claim for an accounting
based on [the defendant’s] failure to provide financial
information—and indeed, any alleged wrongdoing prior
to 1996—is barred by the statute of limitations.
Baghdady v. Baghdady, 2008 WL 4630487 at *9.
A comparable situation is now before us. Steven argues that
he was wrongfully excluded from full access of “[a]ll books,
records and accounts of the partnership.” This is the same
claim that Steven made in his 2002 lawsuit seeking an account-
ing and again in a 2004 counterclaim. Both accountings were
denied. In the present case, we agree with the district court
that the 4-year statute of limitations applies to Steven’s claim
for an accounting and find that it was not in error to rule that
any alleged wrongdoing prior to 2009, 4 years before Steven’s
complaint in this case was filed, was time barred.
(b) Sufficiency of Accounting
At the center of Steven’s appeal is his argument that Keith
did not meet his burden in accounting for various transactions
on behalf of the partnership. Along those lines, Steven also
argues that the district court erred in determining that Keith
owed “‘only’” an amount of $288,673 to the partnership. We
will address each of the transactions in turn.
(i) General Ledger
Steven first assigns that the district court erred in “gener-
ally determining that the General Ledger offered by Keith, as
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the managing partner, was a sufficient accounting.” In order to
address this assignment of error, we review some of the basic
principles of partnership accounting.
[7] Under § 67-445, partners are entitled to an accounting
upon the winding up of the business of a partnership. Although
the burden is ordinarily upon the party seeking an accounting
to produce evidence to sustain the accounting, when another
person is in control of the books and has managed the business,
that other person is in the position of a trustee and must make
a proper accounting. Trieweiler v. Sears, 268 Neb. 952, 689
N.W.2d 807 (2004).
The evidence shows that Keith managed the business of the
partnership and its finances since approximately 2002, even if
by default. Therefore, we agree with the district court that the
burden to establish a sufficient accounting was with Keith.
Although Steven argues that he was denied access to the
financial records of the partnership, the evidence shows that he
was permitted full access but simply failed to involve himself
in the partnership’s affairs. 68 C.J.S. Partnership § 526 (2020)
discusses the presentation of partnership books as evidence in
an accounting action:
In a suit for an accounting of the affairs of a partner-
ship, the partnership books are admissible in evidence,
even where the entries were made by one partner alone,
provided that each partner had access to the books at or
soon after the time the entries were made. Such books
are admissible for the purpose of showing the state of
partnership affairs and are competent to show the terms
of the contract of partnership, particularly as against a
partner who kept or directed their keeping. The evidential
value of the partnership books depends on the extent of
the access to them of the various partners and the acqui-
escence of the partners in the manner in which the books
were kept.
Based on these principles, we cannot broadly state that
the general ledger was insufficient to support the partnership
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accounting. We therefore turn to the individual transactions
Steven alleges were not adequately supported by the evidence.
(ii) Leased Equipment
Steven argues that the district court erred in determining
that payments for equipment leased from Ranch and Farm and
Mogensen Steel were supported by the accounting or otherwise
outside of the statute of limitations. Specifically, Steven takes
issue with $88,240 in payments to Ranch and Farm between
2008 and 2011 and $20,010 in payments to Mogensen Steel
between 2008 and 2009.
a. Ranch and Farm
The general ledger reflects that Mogensen Bros. made pay-
ments to Ranch and Farm for leased equipment in the follow-
ing amounts: $4,545 in 2008; $17,140 and $22,765 in 2009;
$17,150 in 2010; and $11,340, $11,300, and $4,000 in 2011.
Of the payments made in 2009, the $17,140 was for equipment
leased in 2008.
First, we agree with the district court that the payments for
equipment leased in 2008 are outside of the statute of limita-
tions. Next, we find that the payments made between 2009
and 2011 are adequately supported by the evidence. Exhibit
154 provides a breakdown of the equipment rented, the rental
rate, and the hours the equipment was rented for. Furthermore,
although Keith set the rate at which Mogensen Bros. rented the
equipment from Ranch and Farm, testimony from Brian and
Porter, a “heavy industry contractor,” show that the rate was
far below the market rate. We find the evidence sufficient to
support the accounting of payments made to Ranch and Farm
for leased equipment.
b. Mogensen Steel
The general ledger reflects that Mogensen Bros. made pay-
ments to Mogensen Steel for leased equipment in the fol-
lowing amounts: $15,210 in 2008 and $3,500 and $1,300 in
2009. We find the 2008 payment for $15,210 falls outside the
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applicable statute of limitations. We further agree with the
district court that the 2009 payment for $3,500 was adequately
accounted for but that Keith failed to account for the $1,300
payment made on May 1, 2009, for “trenching.” Exhibit 154
again shows the same information regarding the leased equip-
ment as it does for Ranch and Farm and encompasses the
$3,500 paid on December 1, 2009, by Mogensen Bros. It does
not show supporting information for the $1,300 payment,
which the district court found Keith failed to account for.
We agree.
(iii) Leased Land and Shop
Steven disputes $173,115 in payments made to Keith by
the partnership for land leases between 2005 and 2013. The
district court found that $9,000 in land leases and $1,133 for
shop rent of the total $182,115 paid to Keith was not sup-
ported by the evidence. Exhibit 155 includes several of the
lease agreements for two tracts of land owned by Keith and
his wife, which tracts were 314 acres and 120 acres, respec-
tively. Each of these lease agreements was signed by both
Keith and Brian, but not by Steven. Keith testified that the
lease agreements were also sent to Steven but that he did not
return them. Although Keith acknowledged that he set the rate
at which the partnership would rent the land, the evidence
shows that the rate was well below the market value. Brian
testified that he was aware Keith was renting his land to
the partnership.
The general ledger shows that $11,557.50 was paid to Keith
for the lease of 120 acres at section “34-19N-Range 7W” in
both 2005 and 2006. In 2007 through 2009, leases for this tract
were paid at $18,000 annually. A second lease was for 314
acres located at section “35-19-7W.” The general ledger shows
$10,000 was paid for the years 2005 through 2010 and $12,000
was paid in 2011 through 2013. In total, the written leases
within exhibit 155 and the general ledger support the $173,115
in land leases.
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(iv) Loan Payments
Steven also asserts that Keith made self-dealing loan repay-
ments to himself, Mogensen Steel, and Ranch and Farm that
were not approved by all of the partners and were not sup-
ported by the accounting.
a. Mogensen Steel and Ranch and Farm
Steven disputes $266,813 in loan repayments that were paid
to Mogensen Steel between 2005 and 2007 and $333,013 in
loan repayments made to Ranch and Farm between 2007 and
2010. Keith testified that $335,000 was paid to Mogensen Bros.
for work he did for Mogensen Steel in the 1990’s. However, in
1994, the partnership’s accountants informed Keith that this
money needed to be paid back to the entity that generated it.
The money paid to Ranch and Farm was for repayment on a
promissory note.
In 2000, the Mogensen Bros. partners discussed various
options for dissolving the partnership. As part of those discus-
sions, Steven was provided exhibit 93, which shows liabilities
to Mogensen Steel for $335,613 and to Ranch and Farm for
$333,013. This information was also attached to Steven’s affi-
davit in his 2002 lawsuit. We agree with the district court that
any dispute Steven has with these loan repayments is outside of
the applicable statute of limitations.
b. Keith
Steven also disputes $258,966 in loan repayments made
to Keith between 1982 and 2005 and $200,208 paid between
2005 and 2011. The evidence shows Keith loaned the partner-
ship $36,416.25 between 1982 and 1985. Per the Partnership
Agreement, these loans were to accrue interest at a rate of
12 percent.
First, we agree with the district court that the $258,966 in
loan repayments made between 1982 and June 2005 are out-
side of the applicable statute of limitations. We also find that
the loan repayments made between June 2005 and 2008, in the
amount of $70,285, fall outside the statute of limitations.
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After finding that all loan repayments prior to 2009 were
outside of the statute of limitations, the district court found
that the remaining loan repayments, in an amount of $129,922,
were not adequately supported by the accounting. Keith was
ordered by the district court to pay back to the partnership this
amount. We discuss this further below in addressing Keith’s
cross-appeal.
(v) Payments to Keith’s Children
Steven next takes issue with $140,914 in wages paid to
Keith’s son Morgan for work done for the partnership between
2005 and 2013. Keith testified that Morgan has “done every-
thing from putting fence in to feeding cattle to working cattle,
processing cattle, planting crops, [and] spraying crops” for the
partnership. Exhibit 167 was introduced by Keith and includes
several papers with handwritten dates and hours worked by
Keith’s children and other employees. Although the timesheets
are not exhaustive and do not perfectly represent the hours
Morgan was paid for and his wages, we agree with the district
court that there is no indication that such payments were self-
dealing or otherwise a breach of Keith’s fiduciary duties. “The
requirements for strict proof in actions for accounting may be
relaxed, but there must be some substantial evidence on which
to base an accounting.” 59A Am. Jur. 2d Partnership § 672 at
667 (2015). We find no error by the district court in finding
that the wages paid to Morgan for a period of 9 years were suf-
ficiently accounted for.
(vi) Sale of Cattle
Steven also argues that $40,045 paid to Morgan by the
partnership for the sale of Morgan’s personal livestock was
not sufficiently accounted for. Keith testified that the pay-
ment to Morgan was made because Morgan’s cattle were sold
alongside partnership-owned cattle because the sale brought in
more money to sell the cattle in larger lots. We find that this
sale method was beneficial to both Morgan and the partnership
because it allowed each to obtain a better price than would
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have been obtained in separate sales. This payment was not
improper, and the evidence was sufficient for the accounting.
(vii) December 2013 CRSB Loan
Finally, Steven argues that Keith did not adequately account
for $380,500 borrowed from CRSB in December 2013.
However, both Steven and his expert acknowledged that the
funds were used for the following purchases: $106,000 for
prepaid fertilizer, $108,598 for real estate taxes, and $17,086
in attorney fees for the partnership. The $106,000 for fertil-
izer was later reimbursed to the receiver. Additionally, the
CRSB funds were used to purchase $61,999 in prepaid diesel.
This amount was also reimbursed to the receiver. Another
$70,938 was used to purchase a pivot on December 30, 2013.
Whether or not the expenses were paid for exclusively with the
December 2013 CRSB loan, additional payments of approxi-
mately $18,000 for irrigation well columns and $30,000 for
miscellaneous expenses were made according to Keith’s affida-
vit and his testimony at trial. Based on this evidence, we find
that the December 2013 loans were accounted for.
(viii) Summary
Based on the foregoing, the district court did not err in fail-
ing to find that Keith owed any amounts beyond the $288,673
to the partnership.
(c) Guaranteed Payments
Steven also argues that the district court erred in finding that
there was a course of conduct among the parties whereby the
partner working for the partnership was entitled to a guaran-
teed payment. We find no error.
Steven argues that Keith was paid $243,700 in guaranteed
payments since 2005, in direct conflict of the terms of the
Partnership Agreement and § 67-421, and that the district
court improperly allowed such payments. Paragraph 13 of
the Partnership Agreement provides: “Salaries. No partner
shall receive any salary for services rendered to the partner-
ship.” Section 67-421(8) provides: “A partner is not entitled
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to remuneration for services performed for the partnership,
except for reasonable compensation for services rendered in
winding up the business of the partnership.”
Despite the terms of the Partnership Agreement and
§ 67-421, the evidence shows that all partners received such
guaranteed payments throughout the course of the partnership.
As is acknowledged by Steven in his reply brief, “RUPA’s
default rules are gap-filling rules” that may be changed by
the parties. Reply brief for appellant at 1. See Shoemaker v.
Shoemaker, 275 Neb. 112, 745 N.W.2d 299 (2008). The evi-
dence also reflects that Steven was apprised of the payments
and was afforded the opportunity to voice his objections and
opinions on such, but refused to respond to communications
regarding partnership matters. Specifically, Steven was sent
letters requesting his input on the rate of guaranteed payments
in 2007 and 2012 and did not respond. Brian testified, and
the evidence supports, that he approved the payments made to
Keith between 2005 and 2014.
[8] Although Steven may not have explicitly agreed to the
guaranteed payments, it is clear he was aware the payments
were being made and his refusal to participate in the partner-
ship’s affairs precludes him from now disputing the payments.
In Smith v. Daub, 219 Neb. 698, 703, 365 N.W.2d 816, 820
(1985), the Supreme Court held that “the manner in which
the parties dealt with each other during the life of the partner-
ship may be considered in determining whether there was an
agreement between the parties.” Brian approved the guaranteed
payments. Steven’s conduct in essence acquiesced to them. We
therefore agree with the district court that there was a course of
conduct among the partners and that Keith, as the party work-
ing for the partnership, was entitled to receive the guaranteed
payments pursuant to the partners’ agreement.
(d) Usurpation of Partnership Opportunity
[9-11] Steven also contends that the district court erred in
determining that Keith did not usurp a partnership opportu-
nity by purchasing certain property for himself and his son
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Morgan. We disagree. The Supreme Court has stated that “‘in
order to be a [business] opportunity, the business must gener-
ally be one of practical advantage to the [entity] and must fit
into and further an established [entity] policy.’” Anderson v.
Bellino, 265 Neb. 577, 588, 658 N.W.2d 645, 656 (2003). If
such opportunity is one in which the partnership “has an actual
or expectant interest, a fiduciary is prohibited from permit-
ting his or her self-interest to be brought into conflict with the
[partnership’s] interest, and may not take the opportunity for
himself or herself.” Trieweiler v. Sears, 268 Neb. 952, 993,
689 N.W.2d 807, 844 (2004). Although it is true that the pur-
chase of the Fitzsimmons land may have advanced a partner-
ship objective, it is also true that there can be no usurpation of
a partnership opportunity where the partners declined to take
advantage of such opportunity. If the partnership declines the
opportunity, it no longer has an actual or expectant interest in
that opportunity.
In this case, Keith disclosed the availability of the
Fitzsimmons land to Brian, but Brian indicated that they should
provide Morgan the opportunity to start his own farming opera-
tion and said that Brian was no longer interested in the prop-
erty. While Keith testified that he did not discuss the availabil-
ity of the Fitzsimmons land with Steven, the evidence shows
that Steven was not cooperating with partnership activities
and had previously opposed Keith’s purchases of land for the
partnership. Furthermore, the property was publicly advertised
and Steven did not take action to express his interest in acquir-
ing the property for the partnership. We find that Keith did not
usurp a partnership opportunity by purchasing the Fitzsimmons
land for himself and his son Morgan.
(e) Amount Owed by Steven
Steven also argues that it was in error for the district court
to find that he owed the partnership $118,448.57. Specifically,
the district court found that due to Steven’s refusal to sign the
requisite paperwork for the USDA farm program, the partner-
ship lost $29,691 for 2007, $24,580 for 2008, $25,481 for
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2009, and $25,465 for 2010. The district court also found that
Steven’s actions resulted in a loss of $13,231.57 through lower
interest rates and patronage when he refused to sign for loans
through FCSA, causing the partnership to instead obtain loans
with CRSB. We find no error.
We first note that the damages claimed by the partnership
are not barred by the 4-year statute of limitations. This case is
the product of two separate cases that were consolidated for the
purposes of trial and were again consolidated on appeal. While
Steven’s lawsuit was filed in 2013, the partnership filed its
lawsuit against Steven on May 27, 2010, alleging damages sus-
tained from Steven’s refusal to sign the necessary paperwork
for the partnership to participate in the USDA farm program.
Therefore, the damages awarded for the years 2007 through
2010 are not barred by the statute of limitations.
[12] The evidence is clear, and Steven admitted in his tes-
timony, that he refused to sign paperwork with the USDA
that would have allowed the partnership to enroll in the
USDA farm program and receive payments for the years 2007
through 2010. While Steven testified that he refused to sign
the paperwork because he feared that the partnership finances
and Keith’s farming practices did not adhere to the USDA’s
requirements, the district court found that his testimony was
not credible. Although we review an action for an account-
ing de novo, “where credible evidence is in conflict on mate-
rial issues of fact, [we] may consider and give weight to the
fact that the trial court observed the witnesses and accepted
one version of the facts over another.” Fredericks Peebles v.
Assam, 300 Neb. 670, 682, 915 N.W.2d 770, 780 (2018). We
find that the losses calculated by the district court for the years
2007 through 2010 are supported by the evidence, specifically
exhibits 123 and 124, which are USDA Farm Service Agency
worksheets for 2009 and 2010 and the handwritten farm pro-
gram figures for 2007 and 2008, calculated by a Farm Service
Agency employee.
We further find that the $13,231.57 in losses sustained
due to Steven’s refusal to sign loan documents with FCSA
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is supported by the evidence. Steven was aware that his sig­
nature was necessary to obtain loans with FCSA and neverthe-
less refused to cooperate with the partnership affairs. Although
Steven indicated that he would like to obtain more informa-
tion regarding the partnership’s finances before signing the
loan documents, the evidence shows that Steven had access to
the partnership’s books despite his contention to the contrary.
Lovejoy, a financial officer for FCSA, calculated an estimate
of the amount Mogensen Bros. would have saved in lower
interest rates and patronage between the years 2007 and 2011.
We find that it was not in error to order Steven to pay back the
$118,448.57 in losses sustained to the partnership.
(f) Prejudgment Interest
Steven’s final assignment of error is that the district court
erred in failing to assess prejudgment interest against Keith
on the sums Keith owed to the partnership. Steven claims that
prejudgment interest began to accrue on payments owed by
Keith to the partnership as early as June 26, 2017, when the
parties entered into a settlement agreement resolving all issues
of the pending litigation, except a final accounting of the part-
nership’s profits and assets. Steven argues that “interest on the
amounts Keith owed back to [the] Partnership accrued and the
cause of action arose under Neb. Rev. Stat. § 45-103.02(2).”
Brief for appellant at 42. We disagree.
[13] Steven’s argument for the award of prejudgment
interest relies exclusively on recovery under Neb. Rev. Stat.
§ 45-103.02(2) (Reissue 2010), which provides: “Except as
provided in section 45-103.04, interest as provided in section
45-104 shall accrue on the unpaid balance of liquidated claims
from the date the cause of action arose until the entry of
judgment.” Steven’s reliance on § 45-103.02(2) is misplaced.
Recovery of prejudgment interest under this section is limited
to claims that are liquidated. A claim is liquidated when there
is no reasonable controversy as to both the amount due and the
plaintiff’s right to recover. Brook Valley Ltd. Part. v. Mutual
of Omaha Bank, 285 Neb. 157, 825 N.W.2d 779 (2013). The
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very fact that the final accounting had not yet been resolved
makes it clear to us that any claim for amounts Keith owed
back to the partnership were not liquidated. The accounting by
its very nature meant that both the amount due and the right
to recover were still in controversy at the time of the parties’
settlement of the other issues. Therefore, the district court was
not in error for failing to assess prejudgment interest on the
amount owed by Keith to the partnership.
2. Issues on Cross-Appeal
(a) Interest on Settlement Payments
On cross-appeal, Mogensen Bros. and Keith argue that the
district court erred by failing to award interest on the amount
owed to Keith and Brian by Steven for a one-third share of the
settlement paid to CRSB. They claim the June 30, 2017, agree-
ment between the parties provided that Steven would pay inter-
est on CRSB notes No. 3855 and No. 4050 for the period of
August 7, 2015, until the receiver’s final report was approved
on September 9, 2018. However, we find that the amount of
$70,815.22 ordered by the district court to be paid to both
Keith and Brian by Steven encompasses the interest on the
CRSB notes as contemplated by the parties and that the district
court did not err by declining to award further interest.
Within the district court’s June 30, 2017, settlement order,
the provision related to the CRSB loan amounts provides:
Steven’s Obligation on Matya [sic] Note and General
Operating Notes. Steven . . . , for the Matya [sic] property
purchased by Mogensen Bros. [and] the operating note
of Mogensen Bros.[,] will pay one-third of the principal
and interest charges on the note financed through [CRSB]
to the date of final Court approval of the Receiver’s
distribution.
Mogensen Bros. and Keith argue that the district court’s
order should be modified to award interest on the two CRSB
notes from August 7, 2015, until “the date of final Court
approval of the Receiver’s distribution,” on September 9,
2018. However, the evidence shows that the two CRSB notes
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were paid off in full on August 7, 2015. Therefore, because
the notes were paid off, there could no longer be any interest
accruing to be paid to CRSB. The evidence shows that the two
notes had principal balances of $200,000 and $194,280.82 with
interest amounts of $15,775 and $14,835.50, respectively, on
August 7, 2015. In total, the amount paid by Keith and Brian
on the notes was $424,891.32. According to the settlement,
Steven was to pay one-third of this amount, or $141,630.44.
When this amount is split evenly between Keith and Brian,
each brother was to receive $70,815.22 from Steven. This is
the exact amount ordered by the district court.
As for further interest, owed directly to Keith and Brian, that
could have accrued from the date the CRSB notes were paid
off until the date the receiver’s final distribution was approved
by the district court, we agree with the district court that “there
was no stipulation as to interest.” The interest owed by Steven
was that assessed by CRSB on the notes, nothing more. We
find no error by the district court.
(b) Keith’s Loan Repayments
Keith also cross-appeals the district court’s finding that he
owes $129,922 back to Mogensen Bros. for loan repayments
made to him by the partnership. The district court found that
Keith did not adequately account for any loan repayments he
received from the partnership since 2009, which Kirchner, the
forensic accountant, found to be $110,180 in principal and
$19,742 in interest. We agree.
At trial, Kirchner testified that Keith provided a general
ledger for Mogensen Bros., as well as various checks that
were written from partnership accounts to Keith. Kirchner
expressed his professional opinion that the general ledgers
and loan transaction reports were inadequate to support the
loan repayments made to Keith because they do not explain
the purpose of the loan or how the interest amounts were
calculated. Although Keith provided an amortization sched-
ule that explains the principal and interest payments made
between 1982 and 2005, no such supporting documentation
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was provided for any payments made after June 2005. Without
any documentation explaining how the interest amounts were
calculated, we agree with the district court that the loan repay-
ments made to Keith since 2009, in the amount of $129,922,
were not adequately supported by the accounting. We find no
error by the district court in ordering Keith to pay $129,922
back to the partnership.
VI. CONCLUSION
Based on the foregoing reasons, we find that the district
court did not err in ordering Steven to pay $118,448.57 back to
Mogensen Bros. We further find that the district court did not
err in ordering Keith to pay $129,922 to the partnership. We
affirm the judgment of the district court in all respects.
Affirmed.