3'S LOUNGE INC. v. Tierney

741 N.W.2d 687, 16 Neb. Ct. App. 64
CourtNebraska Court of Appeals
DecidedOctober 30, 2007
DocketA-05-1164
StatusPublished
Cited by24 cases

This text of 741 N.W.2d 687 (3'S LOUNGE INC. v. Tierney) is published on Counsel Stack Legal Research, covering Nebraska Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
3'S LOUNGE INC. v. Tierney, 741 N.W.2d 687, 16 Neb. Ct. App. 64 (Neb. Ct. App. 2007).

Opinion

741 N.W.2d 687 (2007)
16 Neb. App. 64

3'S LOUNGE INC., a Nebraska Corporation, Appellant
v.
Frank E. TIERNEY and Ok K. Tierney, Husband and Wife, Appellees.

No. A-05-1164.

Court of Appeals of Nebraska.

October 30, 2007.

*692 Thomas R. Ostdiek, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O., Omaha, for appellant.

Martin A. Cannon, of Cannon Law Office, Omaha, for appellees.

IRWIN, SIEVERS, and CASSEL, Judges.

CASSEL, Judge.

I. INTRODUCTION

3's Lounge Inc. held an option to purchase realty that it leased from HEB-AR, Inc. (HEB-AR). HEB-AR conveyed a portion of the leased property to Frank E. Tierney and Ok K. Tierney. 3's Lounge sued HEB-AR and the Tierneys to obtain title to the property conveyed to the Tierneys. Prior to trial, 3's Lounge settled its claims against HEB-AR and the district court for Douglas County dismissed HEB-AR from the lawsuit. After trial, the district court dismissed the claims against the Tierneys, finding that the dismissal of HEB-AR extinguished 3's Lounge's claims against the Tierneys. We conclude that as to the property conveyed to the Tierneys, the Tierneys were primarily liable to 3's Lounge, and that therefore, the release of HEB-AR, which was only secondarily liable, did not release the Tierneys. We reverse, and remand with directions.

II. BACKGROUND

On August 9, 1994, Club 10 Inc. leased a tract of real property (the leased property) from HEB-AR. Richard Walker and his brother signed the lease as corporate officers of Club 10 and individually as guarantors of Club 10's performance. The leased property is commonly referred to as "8919 North 30th Street, Omaha, Nebraska." While the legal description is complex, we need only state that it includes "Lot 6, Block 13," in "Florence, an Addition to the City of Omaha."

Club 10 initially agreed to lease the leased property for a 2-year term at a rate of $500 per month. The lease agreement (the lease) granted Club 10 the right to exercise nine separate and successive 2-year renewals.

The lease also gave Club 10 an irrevocable option to purchase the leased property. The lease specified that Club 10 could exercise its option at any time during its term, including during any extension or renewal. The lease established that if Club 10 exercised its option to purchase within 10 years of the execution of the lease, the purchase price would be $60,000, with credit given for all rental payments made by Club 10. The lease provided that all rental payments which became due after Club 10 provided notice of its intention to exercise the option would be suspended.

HEB-AR covenanted in the lease that it owned the leased property and that it "[would] not sell, alienate, assign, pledge, *693 or otherwise transfer the [leased property] during any portion of the lease term, including but not limited to any renewals or extensions thereof." The lease also contained a provision stating that the lease and irrevocable option to purchase were personal to HEB-AR and Club 10 and "may not be assigned, transferred, sublet, or otherwise transferred without obtaining the prior written consent of each party [to the lease]."

The lease was recorded on September 9, 1994. In October 1995, Walker bought his brother's shares in Club 10 to become the sole owner of the corporation. On October 26, Club 10 changed its corporate name to 3's Lounge. The corporation effected the name change by adopting an amendment to its articles of incorporation. A file stamp shows that the Nebraska Secretary of State received, filed, and recorded the amendment on November 3.

On August 22, 1996, HEB-AR conveyed a portion of the leased property to the Tierneys, the record title owners of "Lot 7, Block 13." The north boundary of Lot 7 adjoins the south boundary of Lot 6. According to a survey plat, which recites dimensions shown on the original plat, Lots 6 and 7 are each 66 feet north and south and 132 feet east and west. Both lots border 30th Street on the west and an alley on the east. The south boundary of Lot 7 adjoins Fillmore Street. The property conveyed to the Tierneys consisted of the "Southerly one third (1/3) [22 feet] of Lot 6, Block 13" (the disputed property).

On the same day that HEB-AR conveyed the disputed property to the Tierneys, HEB-AR and the Tierneys granted one another reciprocal easements. HEB-AR granted the Tierneys an easement over a 10-foot strip of the portion of Lot 6 that had a common boundary with the disputed property, more particularly described as "[a] parcel [10] feet wide Starting [22 feet] North of the southerly property line of Lot 6." In return, the Tierneys granted HEB-AR a 10-foot wide easement along the northern boundary of the disputed property.

On October 20, 2000, Walker, acting on behalf of 3's Lounge, sent a letter to the Tierneys and to HEB-AR notifying them of 3's Lounge's intention to exercise its option to purchase the leased property, including the disputed property. The Tierneys refused to recognize 3's Lounge's right to purchase the disputed property, giving rise to the instant lawsuit.

On August 29, 2001, 3's Lounge filed a petition seeking a declaratory judgment against HEB-AR and the Tierneys. In 3's Lounge's operative petition, filed at a later date, it alleged that the Tierneys had refused to recognize its right to purchase the disputed property and had asserted that their easement interest in a strip of land on Lot 6 was superior to 3's Lounge's interest in the same property. 3's Lounge alleged that the Tierneys took title to the disputed property subject to its right to purchase and that the Tierneys' easement interest was not superior to 3's Lounge's interest in the property.

3's Lounge set forth multiple causes of action. We describe only those causes of action that were not resolved by the court prior to trial. First, 3's Lounge requested that the court enter a declaratory judgment, declaring 3's Lounge's right to purchase the disputed property and determining the portion of the purchase price under the terms of the lease that would be properly allocable to the Tierneys in compensation for the disputed property. Next, 3's Lounge alleged that the Tierneys' refusal to convey the disputed property to 3's Lounge breached the terms of the lease. 3's Lounge requested that the court order specific performance of the terms of the option to purchase. Finally, 3's Lounge *694 requested that the court quiet title to the disputed property in 3's Lounge if the court determined that declaratory judgment was not appropriate.

The Tierneys filed an answer denying the material allegations of the petition. The Tierneys asserted several affirmative defenses, including estoppel, accord and satisfaction, and consent. With regard to consent, the Tierneys alleged that 3's Lounge had consented to the conveyance of the disputed property and to the Tierneys' easement.

On April 27, 2004, in recited consideration of $10, HEB-AR conveyed to 3's Lounge all of the leased property except for the disputed property. 3's Lounge also accepted payment of an unspecified amount from HEB-AR as part of the arrangement. On May 5, 3's Lounge and HEB-AR filed a joint stipulation and moved the court for an order dismissing HEB-AR as a defendant in the action because the parties had reached a settlement agreement. The court dismissed HEB-AR from the action. Neither the motion nor the order specified whether the dismissal was "with prejudice."

On May 5 and July 7, 2004, the court conducted a bench trial to resolve 3's Lounge's remaining claims against the Tierneys.

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Bluebook (online)
741 N.W.2d 687, 16 Neb. Ct. App. 64, Counsel Stack Legal Research, https://law.counselstack.com/opinion/3s-lounge-inc-v-tierney-nebctapp-2007.