Thomas & Thomas Court Reporters v. Switzer

Thomas & Thomas C ourT reporTers , L.L.C.,
appeLLee and Cross -appeLLanT, v. dougLas
swiTzer , an individuaL, and haThaway
& swiTzer , L.L.C., appeLLanTs
and Cross -appeLLees.
810 N.W.2d 677
Filed January 13, 2012. 	No. S-11-029.
1. Breach of Contract: Damages. A suit for damages arising from breach of a
contract presents an action at law.
2. Judgments: Appeal and Error. In a bench trial of a law action, the trial court’s
factual findings have the effect of a jury verdict and will not be disturbed on
appeal unless clearly wrong. The appellate court does not reweigh the evidence,
but considers the judgment in a light most favorable to the successful party and
resolves evidentiary conflicts in favor of the successful party, who is entitled to
every reasonable inference deducible from the evidence.
3. ____: ____. When reviewing questions of law, an appellate court has an obliga-
tion to resolve the questions independently of the conclusion reached by the
trial court.
4. Attorney Fees: Appeal and Error. A trial court’s decision denying attorney fees
will be upheld absent an abuse of discretion.
5. Contracts: Principal and Agent: Liability. When a party contracts with a
known agent acting within the scope of his or her authority for a disclosed
principal, the contract is that of the principal only and the agent cannot be held
personally liable thereon, unless the agent purports to bind himself or herself, or
has otherwise bound himself or herself, to performance of the contract.
6. ____: ____: ____. An agent for a disclosed principal is not liable on a contract
in the absence of some other agreement to the contrary or other circumstances
showing that the agent has expressly or impliedly incurred or intended to incur
personal responsibility.
7. Attorney and Client: Agency. The relationship between attorney and client is
one of agency, and the general agency rules of law apply to the relation of attor-
ney and client.
8. Attorney and Client: Contracts: Liability. Unless a lawyer or third person
disclaims such liability at the time of contracting, a lawyer is subject to liability
to third persons on contracts entered into on behalf of a client if the contract is
between the lawyer and a third person who provides goods or services used by
lawyers and who, as the lawyer knows or reasonably should know, relies on the
lawyer’s credit.
9. Corporations: Liability. The individual members and managers of a limited
liability company are generally not liable for a debt, obligation, or liability of
the company.
10. Corporations: Fraud. A court will disregard a limited liability company’s iden-
tity only where the company has been used to commit fraud, violate a legal duty,
or perpetrate a dishonest or unjust act in contravention of the rights of another.
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	19
cite as 283 Neb. 19
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:42 AM CST

11. Corporations. A limited liability company’s identity as a separate legal entity
will be preserved, as a general rule, until sufficient reason to the contrary
appears.
12. Corporations: Liability: Proof: Fraud. A plaintiff seeking to impose liability
on an individual member or manager of a limited liability company has the bur-
den of proving that the company’s identity should be disregarded to prevent fraud
or injustice to the plaintiff.
13. Actions: Attorney Fees: Words and Phrases. A frivolous action is one in which
a litigant asserts a legal position wholly without merit; that is, the position is
without rational argument based on law and evidence to support the litigant’s
position.
14. ____: ____: ____. The term “frivolous” connotes an improper motive or legal
position so wholly without merit as to be ridiculous.
15. Actions: Attorney Fees. pro se litigants are not entitled to recover attorney fees,
even if the pro se litigant is a licensed attorney.
Appeal from the District court for Douglas county: gregory
m. sChaTz, Judge. Affirmed in part, and in part reversed and
remanded with directions.
Douglas Switzer and richard p. hathaway, of hathaway
Switzer, L.L.c., pro se.
ronald e. reagan, of reagan, melton & Delaney, L.L.p., for
appellee.
heaviCan, 	C.J., 	wrighT, 	C onnoLLy, 	gerrard, 	sTephan,
mCC ormaCk , and miLLer-L erman, JJ.
gerrard, J.
Thomas & Thomas court reporters, L.L.c. (Thomas &
Thomas), sued Douglas Switzer, an attorney, and his law firm,
hathaway & Switzer, L.L.c. (hathaway Switzer), for failure to
pay for court reporting services. The primary issue presented in
this appeal is whether hathaway Switzer is liable to Thomas &
Thomas for its fees or whether hathaway Switzer’s clients are.
We conclude that hathaway Switzer is liable.
FAcTS
Thomas & Thomas sued Switzer and hathaway Switzer for
failure to pay for court reporting services provided in five cases
between January 28 and october 14, 2009. (Switzer’s partner
was never named as an individual party to the action.) Thomas
& Thomas alleged that it was owed a total of $5,992. Thomas
20 	283 NebrASkA reporTS

& Thomas alleged that demand had been made for payment
more than 90 days prior to the filing of the complaint and that
therefore, it was also due attorney fees pursuant to Neb. rev.
Stat. § 25-1801 (cum. Supp. 2010). Thomas & Thomas sought
a total judgment of the $5,992 it was owed and attorney fees
totaling $624.21.
In an answer, Switzer individually and hathaway Switzer
denied that they requested services from Thomas & Thomas.
Switzer and hathaway Switzer also alleged that Thomas &
Thomas had failed to join as necessary parties those on whose
behalf the depositions were taken and who were properly liable
for the costs. hathaway Switzer alleged that it acted as an
agent for its clients in its interactions with Thomas & Thomas.
As an affirmative defense, Switzer asserted that Thomas &
Thomas had no claim against him as an individual because
he interacted with Thomas & Thomas only as a member of a
limited liability company. Switzer also counterclaimed that he
should be awarded at least $4,000 in attorney fees because the
action against him was frivolous.
A bench trial was held. At trial, one of the owners of
Thomas & Thomas, John Thomas, testified that he had been
a court reporter for 35 years and that his wife and co-owner
had been a court reporter for 33 years. Thomas explained the
procedure used to retain Thomas & Thomas’ services. In most
cases, a law firm telephones Thomas & Thomas to schedule a
deposition. Thomas & Thomas asks the law firm to send it a
notice. The deposition request is entered in Thomas & Thomas’
billing and scheduling software, which generates a confirma-
tion sheet. The confirmation is faxed or e-mailed to the law
firm that requested the services.
Thomas stated that if he had been advised that hathaway
Switzer would not be responsible for services provided for
its clients, he would have either demanded cash on deliv-
ery, obtained payment before the deposition, or declined the
assignment. Thomas’ wife also testified that if a law firm
said it was not going to be responsible for payment, Thomas
& Thomas would require a retainer or payment on delivery.
If payment was not promised by either of these methods,
Thomas & Thomas would not accept the assignment. Thomas’
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	21
cite as 283 Neb. 19

wife said these procedures are standard in the court report-
ing industry. however, Thomas admitted during his deposi-
tion that a majority of the payments Thomas & Thomas had
received from hathaway Switzer over the years were pay-
ments actually received from clients—e.g., a check written
by a client.
The district court entered judgment for Thomas & Thomas.
The court noted Thomas & Thomas’ evidence that the industry
standard in the local community is that the attorney is primar-
ily responsible for the cost of court reporting services, absent
an agreement to the contrary. The court found no evidence
that hathaway Switzer had informed Thomas & Thomas that
the clients would be responsible for payment until after all the
invoices were presented to hathaway Switzer.
The court found, based on the custom and usage or course
of dealing in the industry as proved by Thomas & Thomas,
that an implied or constructive contract is created between an
attorney and a court reporter that makes an attorney primarily
responsible for court reporting services ordered by the attorney
and rendered for the client, absent an express disclaimer of
responsibility by the attorney. The court found that Thomas
& Thomas proved performance of the reporting services on
the order of Switzer and hathaway Switzer, that Switzer and
hathaway Switzer were properly invoiced for the services,
that the invoices were fair and reasonable for the services per-
formed, and that Switzer and hathaway Switzer failed to pay
the invoices. The court entered judgment against Switzer and
hathaway Switzer in the amount of $5,992, along with costs.
The court declined to award attorney fees to either party.
ASSIGNmeNTS oF error
Switzer and hathaway Switzer assign, restated, that the
district court erred in finding (1) that hathaway Switzer was
a party to a contract with Thomas & Thomas and therefore
liable for payment, when Thomas & Thomas had notice that
hathaway Switzer was acting as an agent for a disclosed
principal and hathaway Switzer had disclaimed contractual
liability by its prior course of dealing with Thomas & Thomas,
and (2) that Switzer was liable to Thomas & Thomas although
22 	283 NebrASkA reporTS

it presented no evidence to pierce hathaway Switzer’s com-
pany veil.
on cross-appeal, Thomas & Thomas assign that the court
erred in not awarding it attorney fees.
STANDArD oF reVIeW
[1-4] A suit for damages arising from breach of a contract
presents an action at law.1 In a bench trial of a law action, the
trial court’s factual findings have the effect of a jury verdict and
will not be disturbed on appeal unless clearly wrong.2 We do
not reweigh the evidence, but consider the judgment in a light
most favorable to the successful party and resolve evidentiary
conflicts in favor of the successful party, who is entitled to
every reasonable inference deducible from the evidence.3 When
reviewing questions of law, however, we have an obligation to
resolve the questions independently of the conclusion reached
by the trial court.4 And a trial court’s decision denying attorney
fees will be upheld absent an abuse of discretion.5
ANALySIS
There is no dispute in this case that someone owes Thomas
& Thomas money. The question is, who? hathaway Switzer
contends that its clients are the real debtors. And Switzer con-
tends that even if hathaway Switzer is liable, he is not liable,
in an individual capacity, for the company’s debt. We address
each argument in turn.
haThaway swiTzer’s L iabiLiTy
[5,6] hathaway Switzer’s argument rests upon basic prin-
ciples of agency law. The general rule is that when a party con-
tracts with a known agent acting within the scope of his or her
authority for a disclosed principal, the contract is that of the
1 Dutton-Lainson Co. v. Continental Ins. Co., 279 Neb. 365, 778 N.W.2d
433 (2010).
2 Hastings State Bank v. Misle, 282 Neb. 1, 804 N.W.2d 805 (2011).
3 See id.
4 See Stonacek v. City of Lincoln, 279 Neb. 869, 782 N.W.2d 900 (2010).
5 See Armstrong v. County of Dixon, 282 Neb. 623, 808 N.W.2d 37
(2011).
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	23
cite as 283 Neb. 19

principal only and the agent cannot be held personally liable
thereon, unless the agent purports to bind himself or herself, or
has otherwise bound himself or herself, to performance of the
contract.6 Stated another way, an agent for a disclosed principal
is not liable on a contract in the absence of some other agree-
ment to the contrary or other circumstances showing that the
agent has expressly or impliedly incurred or intended to incur
personal responsibility.7 hathaway Switzer argues that it was
acting as an agent for known principals: the clients of hathaway
Switzer for whose cases Thomas & Thomas’ services were
being sought. Thomas & Thomas does not deny knowing the
identity of hathaway Switzer’s clients. So, hathaway Switzer
concludes, Thomas & Thomas’ contract—and remedy—is with
those known principals.
[7] There is little question that the relationship between
attorney and client is one of agency and that the general agency
rules of law apply to the relation of attorney and client.8 Thus,
a client may be liable for the acts of the client’s attorney when
such was within the attorney’s scope of authority.9 but, while
general agency rules apply to the attorney-client relationship,
there is much more involved than mere agency.10 The attor-
ney, not the client, is responsible for performing the details
of litigation.11
[8] Thus, the restatement (Third) of the Law Governing
Lawyers provides that unless a lawyer or third person disclaims
6 Broad v. Randy Bauer Ins. Agency, 275 Neb. 788, 749 N.W.2d 478
(2008).
7 RSUI Indemnity Co. v. Bacon, 282 Neb. 436, 810 N.W.2d 666 (2011).
8 VRT, Inc. v. Dutton-Lainson Co., 247 Neb. 845, 530 N.W.2d 619 (1995).
9 See id.
10 See, Burt v. Gahan, 351 mass. 340, 220 N.e.2d 817 (1966); Gaines
Reporting Service v. Mack, 4 ohio App. 3d 234, 447 N.e.2d 1317 (1982).
11 See id. See, also, McCullough v. Johnson, 307 Ark. 9, 816 S.W.2d 886
(1991); Anheluk v. Kubik, 374 N.W.2d 67 (N.D. 1985); Molezzo Reporters
v. Patt, 94 Nev. 540, 579 p.2d 1243 (1978); Boesch v. Marilyn M. Jones &
Associates, 712 N.e.2d 1061 (Ind. App. 1999); Copp v. Breskin, 56 Wash.
App. 229, 782 p.2d 1104 (1989); Ingram v. Lupo, 726 S.W.2d 791 (mo.
App. 1987).
24 	283 NebrASkA reporTS

such liability at the time of contracting, a lawyer is subject to
liability to third persons on contracts entered into on behalf of
a client if “the contract is between the lawyer and a third per-
son who provides goods or services used by lawyers and who,
as the lawyer knows or reasonably should know, relies on the
lawyer’s credit.”12 And the restatement specifically explains
that, even when a client is a disclosed principal, a lawyer is
liable for the compensation of a court reporter who reasonably
relies upon the lawyer’s credit.13 “merely disclosing the client’s
name does not convey that the client rather than the lawyer is
to pay. Such persons are likely to rely on the credit of the law-
yer because they regularly deal with lawyers, while investigat-
ing the reliability of the client might be costly.”14
As a practical matter, in today’s legal system, an attorney
dealing with those who provide legal support services acts less
as an agent who relies on the client for authority to manage
the case, and more as a “general contractor,” albeit a profes-
sional, who is responsible for supervising the various aspects
of litigation.15 In that context, it is appropriate that the attorney,
with superior legal knowledge and familiarity with the case and
client, should bear the burden of clarifying his or her intent
regarding payment.16 It is, in fact, a relatively simple matter
for an attorney to disclaim liability with a clear statement to
that effect.17 And an attorney’s liability for (and payment of)
expenses of litigation is consistent with our ethical rules.18
12 restatement (Third) of the Law Governing Lawyers § 30(2)(b) at 216
(2000). See, also, McCullough, supra note 11; Anheluk, supra note 11;
Patt, supra note 11; Burt, supra note 10; Boesch, supra note 11; Copp,
supra note 11; Ingram, supra note 11; Mack, supra note 10. but see, e.g.,
McCorkle v. Weinstein, 50 Ill. App. 3d 661, 365 N.e.2d 953, 8 Ill. Dec.
567 (1977).
13 See restatement, supra note 12, § 30, comment b.
14 Id. at 217.
15 See Ingram, supra note 11.
16 Boesch, supra note 11.
17 Patt, supra note 11; Burt, supra note 10.
18 See, Neb. ct. r. of prof. cond. § 3-501.8(e)(1) and (2); § 3-501.8, com-
ment 10.
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	25
cite as 283 Neb. 19

hathaway Switzer argues that even under that rule, it still
effectively “disclaimed” liability through its ordinary course
of business with Thomas & Thomas: specifically, that Thomas
& Thomas generally received payment for its services from
hathaway Switzer’s clients. We note that this supposed course
of business was not as well substantiated by the evidence as
hathaway Switzer suggests. Neither Switzer nor his partner
testified, so the only evidence on this point was Thomas’ depo-
sition testimony that a “majority” of payments were apparently
made by clients, and his trial testimony that he did not “dis-
pute” hathaway Switzer’s argument that most of Thomas &
Thomas’ payments had been from clients.
but assuming that the evidence would have been sufficient
to establish a course of business, that evidence would not
establish that hathaway Switzer disclaimed liability. Instead,
it would only indicate that the bills were oftentimes paid by
clients. And as the restatement makes clear, it does not matter
who pays the bill; absent an express disclaimer at the time of
contracting, the attorney is responsible for payment.
Thus, even assuming that such evidence was relevant in
determining whether hathaway Switzer had disclaimed liabil-
ity, it still presented the district court with what was, at best,
a question of fact. Thomas & Thomas countered with direct
testimony of Thomas and his wife regarding their understand-
ing of their agreement with hathaway Switzer and the general
practice in the court reporting business from which they had
formed their expectations. And, we note, Thomas & Thomas’
practice was to accept employment before meeting the client,
and to send its bills to hathaway Switzer—putting hathaway
Switzer on notice that Thomas & Thomas was relying on
the firm’s credit, not the client’s.19 In short, the court was
presented with a question of fact as to whether Thomas &
Thomas should have expected hathaway Switzer’s clients to
pay Thomas & Thomas’ bills or whether hathaway Switzer
had effectively disclaimed liability for those bills—a question
of fact which was resolved against hathaway Switzer by the
19 See Copp, supra note 11.
26 	283 NebrASkA reporTS

trier of fact and which we find sufficient evidence to support
on appeal.20
swiTzer’s L iabiLiTy
Switzer also argues that the court erred in holding him indi-
vidually liable, essentially piercing hathaway Switzer’s “cor-
porate veil,” or company veil in this case. We find more merit
to this point.
Thomas 	& 	Thomas 	specifically 	alleged 	that 	hathaway
Switzer is a limited liability company, and that fact is undis-
puted. Thomas & Thomas also alleged that Switzer was the
party “personally engaging the services” of Thomas & Thomas,
but this allegation was denied by Switzer. And Switzer repeat-
edly alleged that he had not, in his individual capacity, retained
Thomas & Thomas’ services. Switzer also raised an affirmative
defense based on his allegation that he interacted with Thomas
& Thomas only in his capacity as a member of hathaway
Switzer. And in his trial brief, Switzer asserted that there was
no evidence he had contracted with Thomas & Thomas to pro-
vide services for his personal use. Nonetheless, without specifi-
cally discussing the issue, the court entered judgment against
both hathaway Switzer and Switzer individually.
[9-12] but the individual members and managers of a lim-
ited liability company are generally not liable for a debt, obli-
gation, or liability of the company.21 And a court will disregard
such a company’s identity only where the company has been
used to commit fraud, violate a legal duty, or perpetrate a dis-
honest or unjust act in contravention of the rights of another.22
The company’s identity as a separate legal entity will be pre-
served, as a general rule, until sufficient reason to the contrary
appears.23 And a plaintiff seeking to impose liability on an indi-
vidual member or manager has the burden of proving that the
20 See, e.g., Ingram, supra note 11.
21 See Neb. rev. Stat. § 21-2612 (cum. Supp. 2010). See, also, Neb. rev.
Stat. § 21-129 (cum. Supp. 2010).
22 See Christian v. Smith, 276 Neb. 867, 759 N.W.2d 447 (2008).
23 See id.
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	27
cite as 283 Neb. 19

company’s identity should be disregarded to prevent fraud or
injustice to the plaintiff.24
No such proof was presented here. The evidence does not
show that Switzer ever contracted individually with Thomas &
Thomas, although he was occasionally responsible for order-
ing Thomas & Thomas’ services. There is no evidence that
Switzer ever did so in any capacity other than as a member of
hathaway Switzer. Nor is there evidence of fraud or injustice
supporting disregard for the company’s legal identity. In short,
the record does not contain sufficient evidence (or, indeed, any
evidence) to support the court’s judgment against Switzer in
an individual capacity. So, we find merit to this assignment
of error.
aTTorney F ees
[13,14] each side of this case argues for an award of
attorney fees. We find none of their arguments to have merit.
Switzer argues that he should have been awarded attorney fees
because Thomas & Thomas’ claim against him as an individual
was frivolous. A court may award attorney fees against any
attorney or party who has brought or defended a civil action
which alleges a claim or defense which a court determines is
frivolous or made in bad faith.25 A frivolous action is one in
which a litigant asserts a legal position wholly without merit;
that is, the position is without rational argument based on
law and evidence to support the litigant’s position.26 The term
“frivolous” connotes an improper motive or legal position so
wholly without merit as to be ridiculous.27
[15] We reject Switzer’s argument. First, Switzer did not
specifically assign error to the court’s failure to award fees.28
but more pertinent, Switzer represented himself pro se. And
24 See id.
25 Neb. rev. Stat. § 25-824(2) (reissue 2008).
26 TFF, Inc. v. SID No. 59, 280 Neb. 767, 790 N.W.2d 427 (2010).
27 Id.
28 See Shepherd v. Chambers, 281 Neb. 57, 794 N.W.2d 678 (2011).
28 	283 NebrASkA reporTS

pro se litigants are not entitled to recover attorney fees, even if
the pro se litigant is a licensed attorney.29
Thomas & Thomas also argues for attorney fees. First, it
argues that Switzer’s counterclaim was frivolous. but while
Switzer’s counterclaim lacked merit, it was directed at Thomas
& Thomas’ attempt to hold Switzer personally liable—a claim
which we found to be unsupported by the evidence. Thus, even
though Switzer was not entitled to recover an attorney fee as a
“pro se litigant,” we cannot say that Switzer’s individual coun-
terclaim was frivolous per se, i.e., ridiculous, or that the claim
was filed with an improper motive.
Finally, Thomas & Thomas argues that it was entitled to
attorney fees pursuant to § 25-1801. That section provides
that a claimant with a claim amounting to less than $4,000
for, among other things, services rendered, may present that
claim to the allegedly liable party and then, if the claim is
not paid within 90 days, sue for the amount of the original
claim and additional costs, interest, and attorney fees.30 but
hathaway Switzer argues that § 25-1801 does not apply,
because Thomas & Thomas’ claim was for more than $4,000.
We agree.
Thomas & Thomas attempted to bring its claim under
$4,000 by styling its complaint as five separate causes of
action, each based on its services with respect to five separate
cases litigated by hathaway Switzer. but organizing the com-
plaint by client was essentially arbitrary—in some cases, for
instance, Thomas & Thomas took depositions from several dif-
ferent witnesses and billed separately for each. And, we note,
Thomas & Thomas not only sent bills to hathaway Switzer for
each deposition—it also sent a statement to hathaway Switzer
for all its past-due amounts. The total past-due amount on
that statement was $5,992—the exact amount that the district
court awarded. based on the facts alleged and the evidence
presented, the best characterization of Thomas & Thomas’
29 See Young v. Midwest Fam. Mut. Ins. Co., 276 Neb. 206, 753 N.W.2d 778
(2008).
30 See § 25-1801.
ThomAS & ThomAS coUrT reporTerS v. SWITzer 	29
cite as 283 Neb. 19

claim is that it is an action on an account.31 As such, it is a
single claim for an amount exceeding $4,000, and § 25-1801
is inapplicable.32 We find no merit to Thomas & Thomas’
cross-appeal.
coNcLUSIoN
We find no merit to hathaway Switzer’s claim that it was not
liable for the services provided by Thomas & Thomas. Nor do
we find merit to any of the arguments for attorney fees. but we
find that the court erred in entering judgment against Switzer
individually. The court’s judgment, to the extent that it holds
hathaway Switzer liable in the sum of $5,992, is affirmed. The
judgment is reversed to the extent that it holds Switzer person-
ally liable, and the cause is remanded to the district court with
directions to dismiss Thomas & Thomas’ claim against Switzer
as an individual.
aFFirmed in parT, and in parT reversed
and remanded wiTh direCTions.
wrighT, J., not participating in the decision.
31 See, generally, Sodoro, Daly v. Kramer, 267 Neb. 970, 679 N.W.2d 213
(2004).
32 See Schaffer v. Strauss Brothers, 164 Neb. 773, 83 N.W.2d 543 (1957)
(refusing fees under former version of § 25-1801, based on rejection of
plaintiff’s argument that he filed 71 claims for $20 each instead of 1 claim
for $1,420). See, also, Hancock v. Parks, 172 Neb. 442, 110 N.W.2d 69
(1961).
sTaTe oF nebraska , appeLLee , v.
roberT J. dunkin, appeLLanT.
807 N.W.2d 744
Filed January 13, 2012. 	No. S-11-220.
1. Effectiveness of Counsel. A claim that defense counsel provided ineffective
assistance presents a mixed question of law and fact.
2. Postconviction: Appeal and Error. on appeal from a proceeding for postconvic-
tion relief, the trial court’s findings of fact will be upheld unless such findings are
clearly erroneous.
30 	283 NebrASkA reporTS