Applied Underwriters v. S.E.B. Servs. of New York ( 2017 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    09/29/2017 08:11 AM CDT
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    Nebraska Supreme Court A dvance Sheets
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    A pplied Underwriters, Inc., a Nebraska corporation,
    and A pplied R isk Services, I nc., appellants, v.
    S.E.B. Services of New York, Inc., a New York
    corporation, and 20th Century Services
    of New York, I nc., a New York
    corporation, appellees.
    ___ N.W.2d ___
    Filed July 21, 2017.    No. S-16-496.
    1.	 Appeal and Error. An appellate court is not obligated to engage in an
    analysis that is not necessary to adjudicate the case and controversy
    before it.
    2.	 Moot Question: Jurisdiction: Appeal and Error. Mootness is a justi-
    ciability doctrine that operates to prevent courts from exercising juris-
    diction, and an appellate court reviews mootness determinations under
    the same standard of review as other jurisdictional questions.
    3.	 Standing: Jurisdiction: Parties. Standing is a jurisdictional component
    of a party’s case because only a party who has standing may invoke the
    jurisdiction of a court.
    4.	 Jurisdiction: Judgments. A jurisdictional issue that does not involve a
    factual dispute presents a question of law.
    5.	 Moot Question: Words and Phrases. A moot case is one which seeks
    to determine a question that no longer rests upon existing facts or
    rights—i.e., a case in which the issues presented are no longer alive.
    6.	 Moot Question. Mootness refers to events occurring after the filing of
    a suit which eradicate the requisite personal interest in the resolution of
    the dispute that existed at the beginning of the litigation.
    7.	 Moot Question: Jurisdiction: Appeal and Error. Although mootness
    does not prevent appellate jurisdiction, it is a justiciability doctrine that
    can prevent courts from exercising jurisdiction.
    8.	 Moot Question. As a general rule, a moot case is subject to sum-
    mary dismissal.
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    Nebraska Supreme Court A dvance Sheets
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    9.	 ____. The central question in a mootness analysis is whether changes
    in circumstances that prevailed at the beginning of litigation have fore-
    stalled any occasion for meaningful relief.
    10.	 Parties: Standing. The question of standing can be raised by any party,
    or the court, at any time during the proceeding.
    11.	 Standing: Jurisdiction: Parties. Standing refers to whether a party had,
    at the commencement of the litigation, a personal stake in the outcome
    of the litigation that would warrant a court’s or tribunal’s exercising its
    jurisdiction and remedial powers on the party’s behalf.
    12.	 Standing: Words and Phrases. Standing involves a real interest in the
    cause of action, meaning some legal or equitable right, title, or interest
    in the subject matter of the controversy.
    13.	 Standing: Claims: Parties. To have standing, a litigant must assert the
    litigant’s own rights and interests, and cannot rest a claim on the legal
    rights or interests of third parties.
    14.	 Standing: Jurisdiction: Proof. A party invoking a court’s or tribunals’
    jurisdiction bears the burden of establishing the elements of standing.
    15.	 Pleadings: Standing. At the pleading stage, the standard for determin-
    ing the sufficiency of a complaint to allege standing is fairly liberal.
    16.	 Actions: Breach of Contract. As a general rule, one who is neither a
    party to a contract nor an agent of a party to a contract has no rights
    under the contract, and cannot bring an action for breach thereof.
    17.	 Standing: Jurisdiction. The defect of standing is a defect of subject
    matter jurisdiction. And when questions relating to both subject matter
    jurisdiction and personal jurisdiction are present in a case, the court
    must first determine the question of subject matter jurisdiction.
    Appeal from the District Court for Douglas County:
    K imberly Miller Pankonin, Judge. Affirmed.
    Jeffrey A. Silver for appellants.
    Stephen M. Bruckner and Patrick S. Cooper, of Fraser
    Stryker, P.C., L.L.O., for appellees.
    Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
    K elch, and Funke, JJ.
    Stacy, J.
    Applied Underwriters, Inc. (Applied), and Applied Risk
    Services, Inc. (ARS), appeal from an order dismissing their
    breach of contract action against S.E.B. Services of New York,
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    Inc., and 20th Century Services of New York, Inc. (collectively
    S.E.B.). The district court dismissed the action for lack of
    personal jurisdiction over S.E.B. and alternatively found that
    Nebraska was an inconvenient forum. We affirm the dismissal,
    but on different grounds.
    FACTS
    Applied is a Nebraska corporation located in Omaha,
    Nebraska. It markets and administers workers’ compensation
    insurance programs nationwide. S.E.B. is a New York cor-
    poration with its principal place of business in New York.
    S.E.B. provides security services and security guards in at least
    22 states.
    In 2014, S.E.B.’s third-party insurance broker contacted
    Applied to discuss obtaining workers’ compensation coverage
    for S.E.B. Subsequently, S.E.B. entered into a “Reinsurance
    Participation Agreement” (RPA) with Applied Underwriters
    Captive Risk Assurance Company, Inc. (AUCRAC). AUCRAC
    is not a party to this litigation. A “true and accurate copy”
    of the RPA was attached to the complaint in this matter.
    Paragraph 8 of the RPA recites that ARS is the “billing
    agent” for AUCRAC and is authorized “to account for, offset
    and true up any and all amounts due . . . and owing” under
    the RPA.
    The RPA provides workers’ compensation coverage through
    what it describes as a “segregated protected cell reinsurance
    program” established by AUCRAC. The details of the pro-
    gram are complex but irrelevant for purposes of resolving
    this appeal. In general, according to the RPA, AUCRAC is
    part of a “Reinsurance Treaty” composed of several “Issuing
    Insurers” that participate in a pooling arrangement and col-
    lectively issue the workers’ compensation coverage afforded
    under the RPA.
    From November 2014 through August 2015, S.E.B. reported
    payroll information to Applied in Omaha, and Applied used
    the information to calculate S.E.B.’s premium payments under
    the RPA. Initially, Applied withdrew amounts for premium
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
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    payments directly from S.E.B.’s bank account in New York
    via electronic debits, but at some point, S.E.B. became dis-
    satisfied with that arrangement and terminated the auto-
    matic debits.
    S.E.B. fell behind on the required premium payments, and
    on May 5, 2015, the president of S.E.B. executed a promissory
    note in favor of “Applied . . . and its affiliates and subsidi­
    aries” in the amount of $42,362.59, payable in monthly install-
    ments. The record shows the promissory note was paid in full
    on December 22, 2015.
    On October 26, 2015, Applied and ARS filed suit against
    S.E.B. in the district court for Douglas County. In count I
    of the complaint, Applied alleged S.E.B. breached the prom-
    issory note and sought recovery of $8,144.27. In count II,
    ARS alleged S.E.B. breached the RPA between AUCRAC and
    S.E.B., and it sought recovery of $752,926.98.
    On November 30, 2015, S.E.B. filed a motion to dismiss
    the complaint pursuant to Neb. Ct. R. Pldg. § 6-1112(b)(2)
    (lack of personal jurisdiction), (b)(6) (failure to state claim
    upon which relief could be granted), and (b)(7) (failure to join
    necessary party). S.E.B.’s motion also alleged dismissal was
    appropriate under Neb. Rev. Stat. § 25-538 (Reissue 2016),
    which provides: “When the court finds that in the interest of
    substantial justice the action should be heard in another forum,
    the court may stay or dismiss the action in whole or in part on
    any conditions that may be just.”
    A hearing on the motion to dismiss was held January 8,
    2016. The district court received three affidavits for the lim-
    ited purpose of ruling on the motion to dismiss for lack of
    personal jurisdiction. In addition, the court took judicial notice
    of the case file.
    In an order entered May 9, 2016, the district court dismissed
    the action for lack of personal jurisdiction and, alternatively,
    on the ground that Nebraska was an inconvenient forum.
    Applied and ARS timely appealed, and we moved the case
    to our docket on our own motion pursuant to our statutory
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
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    297 Neb. 246
    authority to regulate the caseloads of the appellate courts of
    this state.1
    ASSIGNMENTS OF ERROR
    Applied and ARS assign, restated and summarized, that the
    district court erred in (1) finding it lacked personal jurisdiction
    over S.E.B. under Nebraska’s long-arm statute, (2) declaring
    the forum selection provisions of the RPA unenforceable, and
    (3) finding Nebraska was not a reasonably convenient place
    for trial.
    SUPPLEMENTAL BRIEFING
    After hearing oral arguments in this case, we directed the
    parties to submit supplemental briefing on two issues: (1)
    whether the promissory note had been paid in full, rendering
    the appeal on count I moot, and (2) whether Applied and/or
    ARS had standing to bring the claim alleged in count II when
    neither was a party to the RPA.
    [1] Having reviewed the parties’ supplemental briefing, we
    find the issues of mootness and standing are dispositive. As
    such, we do not address the original assignments of error. An
    appellate court is not obligated to engage in an analysis that is
    not necessary to adjudicate the case and controversy before it.2
    STANDARD OF REVIEW
    [2] Mootness is a justiciability doctrine that operates to pre-
    vent courts from exercising jurisdiction, and an appellate court
    reviews mootness determinations under the same standard of
    review as other jurisdictional questions.3
    [3] Standing is a jurisdictional component of a party’s case
    because only a party who has standing may invoke the jurisdic-
    tion of a court.4
    1
    See Neb. Rev. Stat. § 24-1106(3) (Reissue 2016).
    2
    State v. Senn, 
    295 Neb. 315
    , 
    888 N.W.2d 716
    (2016); State v. Planck, 
    289 Neb. 510
    , 
    856 N.W.2d 112
    (2014).
    3
    See Al-Ameen v. Frakes, 
    293 Neb. 248
    , 
    876 N.W.2d 635
    (2016).
    4
    In re Application A-18503, 
    286 Neb. 611
    , 
    838 N.W.2d 242
    (2013).
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    [4] A jurisdictional issue that does not involve a factual
    dispute presents a question of law.5
    ANALYSIS
    Claim on Promissory
    Note Is Moot
    In count I of its complaint, Applied alleges S.E.B. failed
    to pay amounts due under the promissory note and $8,144.27
    remains due and owing. The record from the hearing on
    S.E.B.’s motion to dismiss indicates the promissory note was
    paid in full in December 2015, after the lawsuit was filed. The
    parties acknowledged this fact at oral argument and confirmed
    it in supplemental briefing to this court.
    [5-8] A moot case is one which seeks to determine a ques-
    tion that no longer rests upon existing facts or rights—i.e.,
    a case in which the issues presented are no longer alive.6
    Mootness refers to events occurring after the filing of a suit
    which eradicate the requisite personal interest in the resolution
    of the dispute that existed at the beginning of the litigation.7
    Although mootness does not prevent appellate jurisdiction, it
    is a justiciability doctrine that can prevent courts from exercis-
    ing jurisdiction.8 As a general rule, a moot case is subject to
    summary dismissal.9
    [9] Applied argues that count I should not be considered
    moot because, when the complaint was filed, S.E.B. owed
    sums on the promissory note. But the central question in a
    mootness analysis is whether changes in circumstances that
    prevailed at the beginning of litigation have forestalled any
    5
    Id.
    6
    Blakely v. Lancaster County, 
    284 Neb. 659
    , 
    825 N.W.2d 149
    (2012).
    7
    Id.; Professional Firefighters Assn. v. City of Omaha, 
    282 Neb. 200
    , 
    803 N.W.2d 17
    (2011).
    8
    Blakely v. Lancaster County, supra note 6.
    9
    Greater Omaha Realty Co. v. City of Omaha, 
    258 Neb. 714
    , 
    605 N.W.2d 472
    (2000).
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    occasion for meaningful relief.10 Here, the record and the
    judicial admissions of the parties demonstrate such changes in
    circumstances have occurred since the action was filed. By the
    time of the hearing on the motion to dismiss, the promissory
    note had been paid and there was no money remaining due.
    These changes effectively forestalled any occasion for mean-
    ingful relief on count I, rendering the claim moot.
    Although the district court’s dismissal was premised on lack
    of personal jurisdiction, we conclude count I is moot and we
    affirm the dismissal on that basis.
    No Standing to Bring Claim
    for Breach of RPA
    [10] The named plaintiffs in this action are Applied and
    ARS; neither entity is a party to the RPA which S.E.B. is
    alleged to have breached. We ordered supplemental briefing on
    the issue of whether Applied and ARS have standing to assert
    a claim that S.E.B. breached the RPA. The question of stand-
    ing can be raised by any party, or the court, at any time during
    the proceeding.11
    [11-15] Standing refers to whether a party had, at the com-
    mencement of the litigation, a personal stake in the outcome
    of the litigation that would warrant a court’s or tribunal’s
    exercising its jurisdiction and remedial powers on the party’s
    behalf.12 Standing involves a real interest in the cause of
    action, meaning some legal or equitable right, title, or interest
    in the subject matter of the controversy.13 To have standing,
    a litigant must assert the litigant’s own rights and interests,
    10
    Blakely v. Lancaster County, supra note 6; In re 2007 Appropriations of
    Niobrara River Waters, 
    278 Neb. 137
    , 
    768 N.W.2d 420
    (2009).
    11
    See Brook Valley Ltd. Part. v. Mutual of Omaha Bank, 
    281 Neb. 455
    , 
    797 N.W.2d 748
    (2011).
    12
    Field Club v. Zoning Bd. of Appeals of Omaha, 
    283 Neb. 847
    , 
    814 N.W.2d 102
    (2012).
    13
    In re Interest of Enyce J. & Eternity M., 
    291 Neb. 965
    , 
    870 N.W.2d 413
          (2015).
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
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    297 Neb. 246
    and cannot rest a claim on the legal rights or interests of third
    parties.14 A party invoking a court’s or tribunal’s jurisdiction
    bears the burden of establishing the elements of standing.15
    At the pleading stage, the standard for determining the suf-
    ficiency of a complaint to allege standing is fairly liberal.16
    [16] As a general rule, one who is neither a party to a con-
    tract nor an agent of a party to a contract has no rights under
    the contract, and cannot bring an action for breach thereof.17
    Here, Applied admits that as a nonparty to the RPA, it lacks
    standing to bring the claim in count II based on breach of the
    RPA. ARS, however, argues it has standing to bring the claim
    for breach of the RPA even though it is not a party thereto,
    because it is acting as AUCRAC’s billing agent.
    The complaint alleged the RPA appointed ARS the billing
    agent for AUCRAC and authorized ARS “to account for, offset
    and true up any and all amounts due . . . and owing” under
    the RPA. ARS argues this language in the RPA identifying
    ARS as “the billing agent” for AUCRAC creates an agency
    relationship that allows ARS to sue S.E.B. for breach of the
    RPA. ARS analogizes this case to Deutsche Bank Nat. Trust
    Co. v. Siegel.18
    In Deutsche Bank Nat. Trust Co., a loan servicer filed a
    complaint on behalf of the holder of a deed of trust, seek-
    ing judicial foreclosure of real property. The property owners
    claimed the court lacked subject matter jurisdiction because
    the loan servicer was not the real party in interest. We held
    that the loan servicer had standing as the trust holder’s agent
    for two reasons. First, a contract between the trust holder and
    the loan servicer authorized the loan servicer “‘to institute
    14
    In re Interest of Meridian H., 
    281 Neb. 465
    , 
    798 N.W.2d 96
    (2011).
    15
    Field Club v. Zoning Bd. of Appeals of Omaha, supra note 12.
    16
    
    Id. 17 See
    Marten v. Staab, 
    249 Neb. 299
    , 
    543 N.W.2d 436
    (1996).
    18
    Deutsche Bank Nat. Trust Co. v. Siegel, 
    279 Neb. 174
    , 
    777 N.W.2d 259
          (2010).
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
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    foreclosure proceedings . . . on behalf of the Trustee.’”19
    Second, the contract expressly granted a power of attorney to
    the loan servicer. We found that the power of attorney autho-
    rized the loan servicer to act as the trust holder’s agent and
    that the loan servicer acted within the scope of its agency in
    bringing the foreclosure action. As such, the loan servicer had
    authority and, implicitly, standing to bring the action on behalf
    of the trust holder.
    The instant case is factually distinguishable from Deutsche
    Bank Nat. Trust Co. Here, ARS is not seeking to enforce the
    RPA on behalf of AUCRAC pursuant to a power of attorney
    or any express authorization to institute legal action. Rather,
    it purports to enforce the RPA as the appointed billing agent
    for AUCRAC.
    The signed RPA was attached to the complaint. We see
    nothing in the RPA, and ARS directs us to nothing other
    than its status as the billing agent, which indicates AUCRAC
    has authorized ARS to bring a legal action for breach of the
    RPA. To the contrary, the RPA expressly provides that in the
    event S.E.B. is in default of any obligations under the RPA,
    “[AUCRAC] may take all reasonable steps to protect its and
    its affiliates’ interests.” Referring expressly to bringing legal
    actions for breach, the RPA provides:
    [I]t is understood and agreed that in the event of any
    such breach or threatened breach of this Agreement,
    [AUCRAC] may apply to any federal or state court
    located in Omaha, Douglas County, Nebraska for, and
    shall be entitled to, injunctive relief from such court,
    without the requirement of posting a bond or proof of
    damages, designed to cure existing breaches and to pre-
    vent a future occurrence or threatened future occurrence
    of like breaches on the part of [S.E.B.]
    Furthermore, the RPA expressly disavows any suggestion that
    any entity other than AUCRAC or S.E.B. has the implied
    authority to bring an action to enforce the RPA:
    19
    
    Id. at 178,
    777 N.W.2d at 263.
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    APPLIED UNDERWRITERS v. S.E.B. SERVS. OF NEW YORK
    Cite as 
    297 Neb. 246
    This Agreement is for the sole benefit of the Parties
    [defined elsewhere in the agreement as AUCRAC and
    S.E.B.] and nothing in this Agreement, express or implied,
    is intended to confer upon any Party, other than the
    Parties hereto and their affiliates, successors and permit-
    ted assigns, any legal or equitable rights, remedies, obli-
    gations or liabilities under or by reason of this Agreement,
    except as expressly provided herein.
    Under the facts of this case, even interpreting the pleadings
    liberally, ARS has neither alleged nor shown an agency rela-
    tionship between AUCRAC and itself sufficient to give ARS
    standing to bring an action for breach of the RPA.
    [17] The defect of standing is a defect of subject matter
    jurisdiction.20 And when questions relating to both subject
    matter jurisdiction and personal jurisdiction are present in a
    case, the court must first determine the question of subject
    matter jurisdiction.21
    The district court dismissed the action for lack of personal
    jurisdiction, but we conclude that neither Applied nor ARS has
    standing to bring the claim alleged in count II, and we there-
    fore affirm the dismissal on that basis.
    CONCLUSION
    For the foregoing reasons, the dismissal of this action is
    affirmed, but on grounds different from those articulated by
    the district court.
    A ffirmed.
    20
    Citizens Opposing Indus. Livestock v. Jefferson Cty., 
    274 Neb. 386
    , 
    740 N.W.2d 362
    (2007).
    21
    See Sherman T. v. Karyn N., 
    286 Neb. 468
    , 
    837 N.W.2d 746
    (2013).