Smeal Fire Apparatus Co. v. Kreikemeier

782 N.W.2d 848, 279 Neb. 661
CourtNebraska Supreme Court
DecidedApril 16, 2010
DocketS-08-1230
StatusPublished
Cited by342 cases

This text of 782 N.W.2d 848 (Smeal Fire Apparatus Co. v. Kreikemeier) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smeal Fire Apparatus Co. v. Kreikemeier, 782 N.W.2d 848, 279 Neb. 661 (Neb. 2010).

Opinion

782 N.W.2d 848 (2010)
279 Neb. 661

SMEAL FIRE APPARATUS CO., a Nebraska corporation, appellee and cross-appellant,
v.
Robert KREIKEMEIER and R.K. Manufacturing, Inc., appellants and cross-appellees.

No. S-08-1230.

Supreme Court of Nebraska.

April 16, 2010.

*855 Thomas B. Thomsen, of Sidner, Svoboda, Schilke, Thomsen, Holtorf, Boggy, Nick & Placek, Fremont, for appellants.

Paul R. Elofson, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O., Omaha, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

CONNOLLY, J.

I. SUMMARY

This is a second appeal from a contempt order. The district court entered a preliminary injunction in 1989 and a permanent injunction in 1990, upon the parties' stipulated settlement. The injunction enjoined the appellants, Robert Kreikemeier and R.K. Manufacturing, Inc. (collectively R.K.), from using or disclosing a manufacturing process used by Smeal Fire Apparatus Co., Inc. (SFAC), in the hydraulic systems of its aerial firefighting ladders. The district court has twice found that R.K. willfully disobeyed its injunction order. In our 2006 opinion, Smeal Fire Apparatus Co. v. Kreikemeier (Smeal I),[1] we dismissed R.K.'s first appeal from the court's first contempt order for lack of a final order.

On remand, a different judge again found R.K. in contempt of the injunction and imposed a coercive sanction of $5,000 per day, costs, and fees. SFAC moved for summary dismissal of R.K.'s appeal, arguing that the second order was also not a final, appealable order.

Although there is no graceful way of retreating from this court's previous rulings, some of our troubling contempt cases have created needless difficulties at both the trial and the appellate levels. An untangling of the snarls was long overdue. *856 Our decision changes the legal landscape of our present contempt law. We overrule a long line of cases affecting a trial court's jurisdiction, an appellate court's jurisdiction, and the standard of proof in civil contempt cases.

We first address the jurisdictional issues. In determining that we have jurisdiction, we overrule cases that have unnecessarily limited a court's inherent and statutorily granted contempt powers and cases that have precluded appellate review of final civil contempt orders. These cases' roots run deep. Correcting our contempt jurisprudence will require extensive pruning.

The first jurisdictional issue presents the question whether a district court has power in a contempt proceeding to order compensatory or equitable relief. Next, we address whether a contemnor can appeal a civil contempt order from a separate postjudgment proceeding.

We will set out our holding with more specificity in the following pages; but, briefly, it is this: We hold that in a civil contempt proceeding, a district court has inherent power to order compensatory relief when a contemnor has violated its order or judgment. We further hold that whether a contempt sanction is civil or criminal is relevant only when a party appeals from an interlocutory order of contempt. An interlocutory contempt order is an order that a court issues during an ongoing proceeding before the final judgment in the main action. Because R.K. appeals a final contempt order from a supplemental postjudgment contempt proceeding, we have jurisdiction.

Regarding the substantive issues, we conclude that the court erred in finding that R.K. had willfully violated the injunction. The injunction contained ambiguous terms that could only be clarified by reviewing the preliminary injunction record. A review of that record shows that the injunction did not give R.K. clear warning that it could be held in contempt for its conduct.

Finally, we conclude that for future cases, the standard of proof in civil contempt proceedings is clear and convincing evidence, unless the Legislature has mandated another standard.

II. BACKGROUND

SFAC and R.K. both manufacture aerial firefighting ladders. SFAC formerly employed Kreikemeier. In 1990, to resolve its trade secrets claim against R.K., SFAC obtained an agreed-upon injunction order. The order enjoined R.K. from using or disclosing SFAC's manufacturing process for a hydraulic valve spool.

In 2001, SFAC claimed that R.K. had violated the injunction. And the district court found R.K. to be in willful contempt. The court ordered R.K., as a condition to purge itself of contempt, to take the following actions: (1) within 30 days, notify the court of all of R.K.'s units with parts manufactured that violated the injunction; (2) within 60 days, notify purchasers that their use of the units violated the injunction; and (3) within 2 years, make a good faith effort to obtain agreements with the unit purchasers to exchange the parts. It also ordered R.K. to pay court costs, attorney fees, and expert witness fees.

R.K. appealed. The Court of Appeals relied on this court's decisions that a contemnor can only attack a coercive sanction through a habeas corpus proceeding. It concluded that R.K. could not appeal the district court's order imposing a coercive sanction.[2] The Court of Appeals nonetheless *857 concluded that it could review that part of the order requiring R.K. to pay costs and fees because R.K. could not avoid those awards. It concluded that the district court had not abused its discretion in making these awards. We granted R.K.'s petition for further review.

In Smeal I,[3] like the Court of Appeals, we also dismissed R.K.'s appeal for lack of jurisdiction. But we vacated the Court of Appeals' decision exercising jurisdiction over the award of attorney fees and costs. We repeated our previous holding that "`the imposition of a coercive sanction is never final and may not be attacked by direct appeal.'"[4] Also, we repeated our other previous holding that a district court lacks jurisdiction to order equitable relief in a contempt proceeding. We further concluded that the court's award of attorney fees and costs could not be extracted from the impermissible grant of equitable relief. We dismissed the appeal and vacated the court's order, including the award of attorney fees and costs.

On remand, after a hearing, the district court reaffirmed its earlier finding by a different judge that R.K. was willfully in contempt. The court adopted and reiterated the earlier injunction requirements, prohibiting R.K. from using SFAC's manufacturing process. It interpreted our mandate as requiring it to impose a purge plan that did not grant equitable relief to SFAC and to include a coercive sanction to obtain R.K.'s compliance.

Accordingly, the court's order required R.K. to do two things within 10 days. First, R.K. had to inform its current and former employees, officers, managers, stockholders, partners, and manufacturing agents of the court's order prohibiting the grinding or milling of the disputed valve spool, in the manner exemplified by exhibit 210. Second, Kreikemeier had to file an affidavit attesting under penalty of perjury that R.K. had held a company meeting in which R.K. informed the above persons of the court's prohibition on the manufacturing process, as illustrated by a photograph from exhibit 210. As a coercive sanction, the court stated that if R.K. failed to comply with its order, it would assess a fine of $5,000 per day, jointly and severally, until R.K. complied. The fine would begin on the 11th day after the court entered its order.

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Bluebook (online)
782 N.W.2d 848, 279 Neb. 661, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smeal-fire-apparatus-co-v-kreikemeier-neb-2010.