Justia Nebraska Supreme Court Opinion Summaries

Articles Posted in Securities Law
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The Supreme Court affirmed the judgment of the district court in favor of Defendants in two actions brought under Nebraska's Uniform Fraudulent Transfer Act (UFTA), Neb. Rev. Stat. 36-701 to 36-712, but reversed the court's grant of attorney fees as sanctions on the grounds that both actions were frivolous, holding that the fraudulent transfer actions lacked merit but that the district court abused its discretion in finding the actions as frivolous.The creditors here alleged that a blanket security agreement guaranteeing repayment of a loan by a wife to her husband was a fraudulent transfer under the UFTA. The district court concluded, after a trial, that there was no actual intent to hinder, delay, or defraud any creditor under the UFTA and that the wife had proved good faith. The court then granted the wife attorney fees. The Supreme Court (1) reversed the award of sanctions, holding that the actions were not frivolous under Neb. Rev. Stat. 25-824; and (2) affirmed the judgments of dismissal, holding that the creditors failed to identify and prove there was any "property" at issue in these cases and thus failed to prove that there was a "transfer" under the UFTA. View "Korth v. Luther" on Justia Law

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The Lindsays were minority shareholders of the 304 Corporation; its principal asset was Mid City Bank. In 2010, the Nebraska Department of Banking and Finance and the FDIC began an examination of the bank. In 2011, the Department appointed the FDIC as the bank's receiver, stating that “‘large commercial real estate loan and poor management practices . . . led to a deterioration of the bank’s capital’” so that there was “‘no option but to declare the insolvent institution receivership.’” The bank reopened and regained good standing. In 2014, the FDIC filed suit, alleging that Fitl “was grossly negligent and breached his fiduciary duties,” 12 U.S.C. 1821(d)(2)(A)(i). The Lindsays also filed suit, alleging breach of fiduciary duties. The court dismissed. The Nebraska Supreme Court affirmed. The Lindsays’ claims are similar to all other shareholders’ claims and did not arise from a special duty, since the injury was not “separate and distinct.” The district court correctly concluded that the Lindsays’ claims were derivative in nature and that as a result of the FDIC lawsuit, the Lindsays had no standing to bring a derivative action on behalf of the corporation. View "Lindsay v. Fitl" on Justia Law

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DMK Biodiesel, LLC and Lanoha RVBF, LLC (collectively, Plaintiffs) brought an action against Renewable Fuels Technology, LLC and several individual defendants (collectively, Defendants), alleging that Defendants violated violated Neb. Rev. Stat. 8-1118(1) by selling a security by means of an untrue statement of material fact. Specifically, Plaintiffs alleged that Defendants, acting in concert as members and the manager of Republican Valley Biofuels, LLC (RVBF), made false oral representations and omissions in connection with RVBF and a proposed biodiesel facility that induced their investment. The district court granted Defendants’ motion to dismiss. The Supreme Court reversed because, in granting the motion to dismiss, the district court considered matters outside the pleadings without conducting an evidentiary hearing. On remand, the district court granted summary judgment for Defendants. The Supreme Court reversed, holding that the district court erred in entering summary judgment with respect to Plaintiff’s section 8-1118(1) claim because there remained genuine issues of material fact precluding summary judgment. View "DMK Biodiesel, LLC v. McCoy" on Justia Law

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Republican Valley Biofuels (RVBF) issued a confidential private placement memorandum seeking investors in a biodiesel production facility. DMK Biodiesel (DMK) and Lanoha RVBF (Lanoha) invested $600,000 and $400,000 respectively in RVBF, which was being promoted by four individuals (Promoters). Renewable Fuels Technology (Renewable Fuels) was the manager of RVBF. DMK and Lanoha entered into and executed separate subscription agreements with RVBF. DMK and Lanoha later filed a complaint against Renewable Fuels and Promoters, alleging that Defendants fraudulently induced them to invest funds in RVBF. Defendants filed a motion to dismiss and a motion to take judicial notice, requesting the district court to take judicial notice of the confidential private placement memorandum for RVBF and the subscription agreements executed between RVBF and DMK and Lanoha. The district court granted the motions. The Supreme Court reversed, holding that because the private placement memorandum and the subscription agreements were properly considered matters outside the pleading, an evidentiary hearing was required. Remanded. View "DMK Biodiesel, LLC v. McCoy" on Justia Law