Summary
The Nebraska Supreme Court affirmed the denial of Stacy Ryan’s motion to intervene in Streck, Inc.’s action against Ryan Family, L.L.C., concerning an alleged breach of a lease and purchase option. The court held that Ryan’s membership and potential financial interest in the L.L.C. did not constitute a direct and legal interest supporting intervention personally or derivatively on behalf of the L.L.C. The court also held that an order denying intervention was a final, appealable order and that the claims Ryan sought to raise were outside the scope of the underlying litigation.
Topics
Practice areas
Questions Presented
- Whether the district court's order denying intervention was a final, appealable order notwithstanding Neb. Rev. Stat. § 25-1315.
- Whether Stacy Ryan alleged a direct and legal interest sufficient to intervene in her own behalf under Neb. Rev. Stat. § 25-328.
- Whether Stacy Ryan alleged a sufficient interest to intervene on behalf of Ryan Family, L.L.C., based on alleged inadequate protection of the LLC's interests.
Holdings
- An order denying intervention is a final order for purposes of appeal, and Neb. Rev. Stat. § 25-1315 does not alter Nebraska's final-order jurisprudence concerning such orders.
- A person seeking intervention under Neb. Rev. Stat. § 25-328 must allege a direct and legal interest such that the person will gain or lose by the direct operation and legal effect of the judgment; an indirect, remote, conjectural, or merely factually related interest is insufficient.
- A nonmanaging LLC member's potential reduction in distributions, without a distinct individual injury or legal authority to conduct the LLC's affairs, does not create a direct and legal interest sufficient for intervention in the member's own behalf.
- Ryan did not establish a direct and legal interest sufficient to intervene on behalf of the LLC because she neither filed a derivative action nor alleged facts showing that the receiver could not or would not protect the LLC's interests.
Key quotations
“We conclude § 25-1315 does not modify our final order jurisprudence as it regards orders denying intervention.” (297 Neb. at 780)
“The fact that Ryan, as a member of the L.L.C., may experience reduced distributions, depending on the outcome of the lawsuit against the L.L.C., does not give her a direct and legal interest in the lawsuit sufficient to support intervention in her own behalf.” (297 Neb. at 784-785)
“On this record, we conclude Ryan has not alleged a direct and legal interest sufficient to support intervention in the litigation between the L.L.C. and Streck.” (297 Neb. at 787)
Factual background
Streck leased real property from Ryan Family, L.L.C., under an agreement containing an option for Streck to purchase the property. After Streck claimed to have exercised the option and the closing did not occur, it sued the LLC for breach and specific performance. The LLC's comanagers disagreed about how to defend the action, so the district court appointed a receiver to represent the LLC; Stacy Ryan, a nonmanaging member with an approximately 20-percent interest, then sought to intervene individually and derivatively.
Procedural history
Streck sued Ryan Family, L.L.C., alleging breach of a lease containing an option to purchase real property and seeking specific performance. After the LLC's comanagers disagreed about the defense, the district court appointed a receiver, who answered and counterclaimed on behalf of the LLC. While Streck's partial-summary-judgment motion was pending, Stacy Ryan filed a complaint in intervention individually and derivatively on behalf of the LLC. The district court denied intervention and a continuance; the Nebraska Supreme Court accepted the appeal and affirmed.