Cottonwood Flats v. Hohenstein

CourtNebraska Court of Appeals
DecidedJune 3, 2025
DocketA-24-526
StatusUnpublished

This text of Cottonwood Flats v. Hohenstein (Cottonwood Flats v. Hohenstein) 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
Cottonwood Flats v. Hohenstein, (Neb. Ct. App. 2025).

Opinion

IN THE NEBRASKA COURT OF APPEALS

MEMORANDUM OPINION AND JUDGMENT ON APPEAL (Memorandum Web Opinion)

COTTONWOOD FLATS V. HOHENSTEIN

NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).

COTTONWOOD FLATS, INC., A NEBRASKA CORPORATION, APPELLEE, V.

KURT A. HOHENSTEIN, APPELLANT, AND KASEY R. LASHUM AND J. DOE, APPELLEES.

Filed June 3, 2025. No. A-24-526.

Appeal from the District Court for Dakota County: BRYAN C. MEISMER, Judge. Appeal dismissed. Kurt A. Hohenstein, pro se. Andrew T. Schlosser and Susan J. Spahn, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O., attorneys for appellee Cottonwood Flats, Inc.

RIEDMANN, Chief Judge, and MOORE and ARTERBURN, Judges. ARTERBURN, Judge. I. INTRODUCTION Kurt A. Hohenstein, representing himself, appeals from a writ of restitution entered by the district court for Dakota County. Kurt challenges the district court’s subject matter jurisdiction in several respects and asserts that the doctrine of claim preclusion bars relitigation of the ownership of the property at issue in this case. Because we ultimately find that the case is moot, we dismiss the appeal. II. BACKGROUND Although the present action began in December 2023, this case is the most recent development in an ongoing dispute amongst family members concerning ownership interests in and operation of the family farm incorporated as Cottonwood Flats, Inc. We need not set forth all

-1- the facts and procedural history of the underlying litigation to consider the issues raised in this appeal. We summarize the background only to the extent necessary to provide context for this case. A more detailed case history can be found in Hohenstein v. Hohenstein, No. A-22-108, 2023 WL 5217713 (Neb. App. Aug. 15, 2023) (selected for posting to court website) (Hohenstein I). See, also, Hohenstein v. Hohenstein, No. A-22-278, 2023 WL 5919731 (Neb. App. Sept. 12, 2023) (Hohenstein II); Hohenstein v. Hohenstein, No. A-23-1057, 2024 WL 4601638 (Neb. App. Oct. 29, 2024) (Hohenstein III). 1. QUITCLAIM DEED On November 2, 2010, Lillian Hohenstein, Kurt’s mother, executed a quitclaim deed transferring her home (referred to hereafter as “the family home”) from the William and Lillian Hohenstein Trust (referred to hereafter as “Lillian’s Trust”) to Cottonwood Flats. Although the quitclaim deed states that the transfer was executed “[f]or valuable consideration,” it appears that Lillian’s Trust did not receive any compensation for the sale. After the transfer, Lillian continued to live in the family home until her death in December 2015. 2. UNDERLYING LITIGATION In 2013, three of Kurt’s siblings filed suit against Kurt and Lillian. Hohenstein I. The three siblings were shareholders in Cottonwood Flats, as was Kurt. Id. In 2014, the siblings filed an amended complaint both individually and derivatively on behalf of Cottonwood Flats. The siblings sued Kurt individually and as director and officer of Cottonwood Flats. The siblings sued Lillian individually, as trustee of her trust, as trustee of the Hohenstein Family Trust, and as director and officer of Cottonwood Flats. Lillian died before trial, and the case was revived against Kurt as special administrator of her estate. Id. Two of the plaintiff siblings died before entry of the final order entered after trial; the case was revived in the names of their surviving spouses as personal representatives. Id. In their amended complaint, the plaintiffs generally alleged that Kurt engaged in self-dealing transactions and unduly influenced Lillian in those transactions, resulting in Kurt’s improper enrichment and financial harm to Cottonwood Flats. A significant portion of the plaintiffs’ claims concerned stock purchase agreements wherein Kurt allegedly received stock for less than fair market value. Relevant to this appeal is one transaction referred to as the “2010 Transaction” or the “November 2, 2010 Transaction” wherein Lillian, on behalf of Cottonwood Flats, transferred stock to Kurt, resulting in him receiving a majority of the corporation’s stock. With regard to the transfer of the family home, the amended complaint alleged: On or about November 2, 2010, [Lillian] transferred real property, including the home in which she resides, from [Lillian’s Trust] to the Corporation for less than fair value (the “Home Transfer”). . . . [Lillian] breached her fiduciary duty as Trustee by executing and/or authorizing . . . the Home Transfer, for less than fair value. . . . The . . . Home Transfer [is] invalid and unenforceable because [it] constituted directors’ conflicting interest transaction and [was] not fair to the Corporation nor authorized and/or executed by the proper number of disinterested directors as required by Neb. Rev. Stat. § 21-20,113 and 21-20,1114.

-2- In their request for relief, the plaintiffs asked the court to deem the home transfer invalid and unenforceable. Trial was held in April 2017. The district court determined that Kurt was not a credible witness and generally found in favor of the plaintiffs. Hohenstein I. For reasons unknown to us, the court’s final order following trial was not entered until 2019. Nevertheless, in the 2019 final order, the court found that Kurt and Lillian had breached their fiduciary duties in multiple ways, engaged in a pattern of self-dealing with respect to Cottonwood Flats, and that Kurt exerted undue influence over Lillian. The court specifically found that “the November 2, 2010 Transaction (and all of the related documents) was the result of . . . undue influence.” The court ordered that Kurt’s self-dealing transactions involving stock shares of Cottonwood Flats be reversed and restored to the proper parties. All agreements and documents executed by Kurt or Lillian on behalf of Cottonwood Flats that were inconsistent with the court’s ordered relief were declared null and void. Kurt was ordered to hire a forensic accountant to examine the books and records of Cottonwood Flats and provide a full and complete accounting of the corporation’s assets, liabilities, receipts, and expenditures from January 1, 2002, to the present. The court stated that after the accounting was completed and submitted to the court, the court would conduct additional proceedings to award monetary judgment against the defendants. A few months after the 2019 final order was entered, the plaintiffs motioned to alter or amend the judgment, which the district court granted. The amendment adjusted certain stock transfers not at issue in this appeal. In 2022, after the forensic accounting was completed, the court entered another final order concerning monetary judgment against Kurt and in favor of Cottonwood Flats. Kurt filed subsequent appeals in 2019, 2020, 2022, and 2023. Hohenstein I; Hohenstein III. In the 2022 appeal, one of Kurt’s assigned errors alleged that the district court erred in deciding the action because Cottonwood Flats was an indispensable party to the proceedings. Hohenstein I. We rejected his argument and found that the plaintiffs exercised their rights as shareholders to sue on behalf of Cottonwood Flats and brought suit in their representative capacity for the corporation. See id. In the 2023 appeal, Kurt similarly argued that because Cottonwood Flats was never made a party to the case, the court did not have jurisdiction to grant the plaintiffs judgment for attorney fees. Hohenstein III. We noted that Kurt’s argument was an effort to relitigate the issue of whether Cottonwood Flats should have been included as a party in the litigation and that the question was resolved in the prior appeal. See id. 3.

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Cottonwood Flats v. Hohenstein, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cottonwood-flats-v-hohenstein-nebctapp-2025.