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Nebraska Supreme Court: Possible Loan Release Makes Summary Judgment Premature for Partition Action

on Tuesday, 7 June 2022 in Dirt Alert: David C. Levy, Editor

Humphrey v. Smith, 311 Neb. 632 (2022).

A partition action asks a court to split a property between multiple owners. Here, two people bought a house together. One loaned the other $25,000 of the $35,000 purchase price. The lender, in turn, promised to release his name from the deed once the borrower paid off the loan. After the borrower made payments on the loan for three years, the borrower claimed the lender had forgiven the loan, while the lender claimed more than $16,000 remained outstanding.

The lender’s widow filed a complaint for partition by sale. She also alleged the borrower had received unjust enrichment by living in the house despite no longer making payments.

The District Court for Douglas County granted partial summary judgment on the partition action, and the borrower appealed. The Nebraska Supreme Court reversed.

The Court held that the outstanding loan created a question of fact, which made summary judgment improper. Summary judgment is only proper when a party has failed to produce evidence that could create a dispute affecting the outcome of the case. Brown v. Morello, 308 Neb. 968 (2021).

Here, the court held there was sufficient evidence to create a material dispute because the borrower and lender had presented conflicting accounts of the purported loan forgiveness. One claimed there had been a promise to forgive, while the other disputed that fact. Such dispute affected the outcome of the case because it determined whether the lender still held an interest in the property.

The Nebraska Supreme Court additionally found conflicting evidence as to whether the borrower had received unjust enrichment. Thus, the Court held that summary judgment on that claim was likewise improper.

The Court also considered whether it had jurisdiction. Under Nebraska Revised Statutes section 25-1902, appellate courts cannot review a case absent a final, appealable order from the court below. 

While partial summary judgments are not typically final and appealable, the court found summary judgments on partition actions may be. Under Peterson v. Damoude, 95 Neb. 469 (1914), summary judgment in a partition action is appealable when ownership of the land is the only issue in dispute. If, however, the dispute centers on something else, like the method of dividing the land, partial summary judgment is not appealable until a final order of partition.

Here, the question turned on whether the lender held a partial interest in the house based on the loan agreement with the borrower or had released the loan. If the lender had released the loan, he would have no interest in the property and no right to partition it. The Nebraska Supreme Court thus held the partial summary judgment was a final and appealable order that conferred appellate jurisdiction.

Consequently, the Court remanded the case. On remand, the District Court must consider more evidence as to whether the lender released the loan and/or the borrower received unjust enrichment.

Hannes D. Zetzsche

Aden J. Davis

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