Stacy, J.
This appeal involves the interplay between Nebraska's lis pendens statute
Jacobsen Land and Cattle Company (Jacobsen) is the record owner of land in Banner County, Nebraska. Terry P. Brown, individually, and Terry P. Brown as trustee of the Terry Paul Brown Living Trust, owns property adjacent to the Jacobsen's property. For many years, approximately 80 acres of Jacobsen's land has been fenced in with Brown's property (the disputed property).
In October 2014, Jacobsen and the Nebraska Game and Parks Commission (State) entered into a purported purchase agreement for the sale of a parcel of Jacobsen's land that included the disputed property. Pursuant to a warranty deed executed February 10, 2015, Jacobsen conveyed title to the subject real estate to the State. The deed was recorded on February 13.
After Jacobsen and the State entered into the purchase agreement, but before closing occurred, Brown filed and recorded a lis pendens with the Banner County register of deeds. The lis pendens recited that a quiet title action had been filed in the district court for Banner County, identified Brown as the plaintiff and Jacobsen as the defendant, and identified the disputed property by full legal description.
Shortly before filing the lis pendens, Brown filed a quiet title action against Jacobsen in the district court for Banner County, alleging ownership by adverse possession of the disputed property. Jacobsen filed an answer denying Brown's claim of adverse possession and setting forth several affirmative defenses.
The State subsequently moved for leave to intervene in the quiet title action between Brown and Jacobsen. In its motion, the State alleged it was the current owner of record of the disputed property and had a "direct interest in the subject matter in this litigation and the outcome of this litigation, as required by ... § 25-328." The State also alleged that when the quiet title action was filed, it "held equitable title in the disputed property" by virtue of having entered into an agreement to purchase the property.
Jacobsen did not object to the State's request to intervene in the quiet title action, but Brown did. In an order entered July 15, 2015, the court allowed the State to intervene over Brown's objection. The court acknowledged Brown's argument that the lis pendens statute prevented the State from acquiring any legal interest in the disputed property while the action was pending, but concluded "the State should be permitted to intervene to protect whatever interest it may have in some or part of this real estate."
Thereafter, the State filed what it captioned "Defendant-Interven[o]r's Answer to Plaintiff's Amended Complaint," in which it aligned with Jacobsen in defending against Brown's claim of adverse possession. The State's answer denied the allegations of Brown's complaint and set forth several affirmative defenses to the claim of adverse possession. Most of the State's affirmative defenses were similar to those asserted by Jacobsen in its answer, but the State also alleged the affirmative defenses of laches, unclean hands, and defects in the lis pendens notice.
Brown moved for partial summary judgment against the State, arguing application of the lis pendens statute prevented the State from acquiring any direct and legal interest in the disputed property. After a hearing, the district court granted Brown's motion in part, finding as a matter of law that (1) Brown had complied with the lis pendens statute and the notice filed was legally sufficient and effective and (2) the State was a "subsequent purchaser" under the lis pendens statute and as such could take only "whatever title [Jacobsen] had to give at the time the warranty deed was executed and recorded." However, the court's order granting partial summary judgment did not dismiss the State from the quiet title action or make any findings regarding the merits of the adverse possession claim.
Before trial, Jacobsen's counsel advised the court that his client had asked him not to participate in the pretrial conference or the trial and had consented to his withdrawal from the case. Jacobsen's counsel indicated that his client's intent was "to not participate further in this case" and "not to hire another attorney." No party objected, and the court allowed Jacobsen's counsel to withdraw. Jacobsen did not thereafter participate in the litigation and did not appear for trial.
After Jacobsen ceased participating in the action, the State moved to modify the case progression plan and to continue the pretrial conference. The State claimed that it needed additional time to prepare for trial and argued that because Jacobsen was no longer participating in the case, the State needed to conduct formal discovery so that it could defend against Brown's claim of adverse possession.
Brown opposed modifying the progression order. He argued the State had only the rights of a subsequent purchaser under the lis pendens statute and could not "step into [Jacobsen's] shoes" and defend against Brown's claim of adverse possession. The court overruled the motion to modify the progression order, but took the opportunity to summarize its earlier rulings and explain how it viewed the State's interest in the action going forward.
The court acknowledged the State had an interest in the outcome of the quiet title action sufficient to support intervention, but agreed with Brown that the State's interest was limited to "that of a subsequent purchaser as defined in the lis pendens statutes." The court reasoned:
The court concluded that, given the State's status as a subsequent purchaser under the lis pendens statute, it "would not have a defense as to the issues pending between [Brown] and [Jacobsen]," because Brown's claims of adverse possession predated the purchase agreement. The court observed that after the quiet title action was resolved, the State could then "pursue whatever remedies it may have under the purchase agreement between it and [Jacobsen]." The matter proceeded to pretrial conference as scheduled.
Only the State and Brown appeared for the pretrial conference. When the State indicated it planned to call witnesses to contest Brown's claim of adverse possession, Brown objected. He argued that permitting the State to offer evidence would be contrary to the court's determination that the State took no interest in the property pursuant to the lis pendens statute and would impermissibly allow the State to stand in the shoes of Jacobsen for purposes of challenging the elements of adverse possession. The State countered that it would be defending its own interests in the property and would be challenging Brown's adverse possession claim to the extent that claim impacts the interest the State would receive from Jacobsen.
Ultimately, citing the State's status as a subsequent purchaser under lis pendens, the court concluded the State would not be allowed to present evidence or question witnesses at trial related to the claim of adverse possession.
The quiet title action was tried to the bench on May 11, 2016. Jacobsen did not appear for trial. Brown offered evidence in support of the adverse possession claim. No party offered evidence in opposition to the claim, but the State was permitted to make several offers of proof.
In an order entered May 18, 2016, the court found Brown had met his burden of proving adverse possession of the disputed property. The court quieted title to the disputed property in Brown as against Jacobsen and any other persons or entities claiming any interest therein.
The State assigns, renumbered and restated, that the district court erred in (1) determining that the lis pendens operated to make the State a subsequent purchaser or, in the alternative, refusing to cancel the lis pendens; (2) determining that the State had a sufficient interest to intervene in the action, but did not have a sufficient interest to resist Brown's claim of adverse possession; (3) determining that equitable title to the disputed property would not affect the State's interest in Brown's claims and its ability to defend against the claims; (4) determining that Brown had met his burden of proving adverse possession of the disputed real property; and (5) refusing to modify the case progression order.
A quiet title action sounds in equity.
The interpretation of a statute, including the interpretation of the lis pendens statute, is a question of law.
One of the central questions raised on appeal is whether the right of an intervenor to participate and offer evidence in a quiet title action is restricted by application of the lis pendens statute. To answer this question, we begin by reviewing the history and purpose of lis pendens under Nebraska law.
Under the common-law doctrine of lis pendens (literally "`[a] pending lawsuit'"
Prior to 1887, Nebraska's lis pendens statute "was a legislative adoption of the equity rule of lis pendens that had existed from time immemorial,"
We have recognized that "[t]he scope of the [lis pendens] rule is determined by its end and purpose."
With the purpose and effect of the lis pendens rule in mind, we turn to the State's assignments of error.
In its first assignment, the State asserts the district court erred in finding it is a subsequent purchaser under the lis pendens statute. Alternatively, the State asserts that even if it is a subsequent purchaser, the district court erred in not canceling the lis pendens. We find no merit to this assignment.
The plain language of the lis pendens statute provides that once a lis pendens notice is filed, "[e]very person whose conveyance or encumbrance is subsequently executed or subsequently recorded shall be deemed to be a subsequent purchaser or encumbrancer and shall be bound by all proceedings taken in the action...."
The record shows that the warranty deed from Jacobsen to the State was executed February 10, 2015, and recorded February 13. Because the execution and recording of the deed conveying the disputed property occurred after the lis pendens was filed, the district court was correct in finding the State was a subsequent purchaser under § 25-531.
Regarding the State's alternative assignment, we note that § 25-531 permits a court to cancel a lis pendens notice "on the application of any person aggrieved, on good cause shown." The record indicates the State mentioned the availability of such relief once during argument to the court, but nothing in the record shows the State ever moved for such relief. An appellate court will not consider an issue on appeal that was not presented to or passed upon by the trial court,
After finding the State had sufficient interest to intervene in the action, the district court concluded the State's status as a subsequent purchaser under the lis pendens statute prevented the State from presenting evidence related to the adverse possession claim. It reasoned the "State's interest in this lawsuit [is that of] the subsequent purchaser of whatever real estate [Jacobsen] had to sell to it at the time of the closing [and] its role is limited to that of a subsequent purchaser which does not put it in the `same shoes' as [Jacobsen]."
To determine whether an intervenor's right to participate in an action and offer evidence is restricted by virtue of its status as a subsequent purchaser under the lis pendens statute, we begin by reviewing the general rights of one intervening in an action under § 25-328. That statute provides in relevant part:
The plain language of § 25-328 provides that one who intervenes becomes "a party" to the action, and our case law recognizes as much. We have held that one who intervenes under § 25-328 becomes a party to the litigation and has all the rights of a party.
Here, the district court interpreted the lis pendens statute to limit the rights of a party who intervenes as a subsequent purchaser. Specifically, the court concluded that because the State was a subsequent purchaser under the lis pendens statute, it could not "stand in the shoes" of Jacobsen and therefore could not offer any evidence opposing Brown's adverse possession claim. We reject this broad proposition, because it is contrary to our case law and cannot be reconciled with our settled jurisprudence on the rights of intervenors.
In Hadley v. Corey, we recognized that when a subsequent purchaser under the lis pendens statute becomes a party in an action involving the disputed property, he or she is "entitled to question [the] plaintiff's right to recover in the same manner as the original defendant."
When the State intervened in this quiet title action, it became a party.
As an intervening party to the litigation, the State should have been permitted to engage in discovery, file motions, introduce evidence, and examine witnesses just like any other party.
Lis pendens is a procedural mechanism intended to alert prospective purchasers about property disputes and
Our holding in Munger v. Beard & Bro.
Munger suggests that a subsequent purchaser who is known to the plaintiff must not only be allowed to participate as a party in an action commenced regarding the property, but should be joined as a necessary party in the action. In the present case, it is not necessary to address whether the State was a necessary or indispensable party
To constitute reversible error in a civil case, the admission or exclusion of evidence must unfairly prejudice a substantial right of a litigant complaining about evidence admitted or excluded.
We therefore reverse the judgment of the district court and remand the matter for a new trial. Because of our disposition,
For the foregoing reasons, we reverse the judgment and remand this matter for a new trial.
REVERSED AND REMANDED FOR A NEW TRIAL.
