Lucky 7 v. THT Realty

the garnishment statutes give the judgment creditor rights not
available to the judgment creditor at common law, the statutes
must be construed strictly so as to limit those rights to only
those granted, and not to deprive third parties of their lawful
rights.25 But the trustee asks us to apply the strict construction
rule proactively to make a garnishee liable to a judgment credi-
tor for a debt which the garnishee does not owe the judgment
debtor. We decline to do so. Furthermore, because we conclude
on the facts of this case that the deposit account was not the
property of Gencon and therefore not subject to garnishment,
Charter West’s failure to strictly comply with the garnishment
statutes was not prejudicial to any party and did not frustrate
the objective of the garnishment statutes in any way.
CONCLUSION
For the reasons discussed, we conclude that the district court
erred in entering judgment in favor of the trustee. We reverse
the judgment of the district court and remand the cause with
directions to dismiss the garnishment proceeding.
R eveRsed and Remanded with diRections.
25 See 38 C.J.S., supra note 3, §§ 3 and 5.
LUCky 7 v. tht reaLty 	997
Cite as 278 Neb. 997
Lucky 7, L.L.c., appeLLant, v. tht R eaLty, L.L.c.,
and pameLa k. watanabe -G eRdes , appeLLees.
775 N.W.2d 671
Filed December 4, 2009. 	No. S-08-1290.
1. Judgments: Appeal and Error. In a bench trial, the trial court’s factual find-
ings have the effect of a jury verdict and will not be set aside on appeal unless
clearly erroneous.
2. ____: ____. the Nebraska Supreme Court determines questions of law indepen-
dently of the trial court’s conclusions.
3. Negligence: Fraud. Negligent misrepresentation has essentially the same ele-
ments as fraudulent misrepresentation, with the exception of the defendant’s
mental state.
4. ____: ____. In both negligent and fraudulent misrepresentation cases, whether the
plaintiff exercised ordinary prudence is relevant to whether the plaintiff justifiably
relied on the misrepresentation when the means of discovering the truth was in
the plaintiff’s hands.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:49 AM CST

5. Fraud. a plaintiff is justified in relying upon a positive statement of fact if an
investigation would be required to discover the truth.
6. ____. In determining whether an individual reasonably relied on a misrepresenta-
tion, courts consider the totality of the circumstances, including the nature of the
transaction; the form and materiality of the representation; the relationship of the
parties; the respective intelligence, experience, age, and mental and physical con-
dition of the parties; and their respective knowledge and means of knowledge.
appeal from the District Court for Douglas County: J. patRick
muLLen, Judge. affirmed.
Donald J. Buresh and John D. Stalnaker, of Stalnaker,
Becker & Buresh, P.C., for appellant.
heather Voegele-andersen, of koley Jessen, P.C., L.L.O.,
for appellees.
heavican, 	c.J., 	wRiGht, 	connoLLy, 	G eRRaRd, 	stephan,
mccoRmack, and miLLeR-L eRman, JJ.
connoLLy, J.
SUmmary
Lucky 7, L.L.C., purchased commercial property consisting
of a warehouse facility abutted by an office building from tht
realty, L.L.C. (tht). after water leaked through the roof of
the office building, Lucky 7 brought suit seeking damages for
fraudulent and negligent misrepresentation based upon state-
ments made by tht regarding the condition of the roof. after
a bench trial, the district court dismissed both claims. the court
found the evidence insufficient to show that tht or its agents
intentionally misled Lucky 7 to its detriment. Lucky 7 does
not appeal this finding. the court also found that Lucky 7 did
not exercise ordinary prudence when it inspected the property,
because the roof’s condition was discoverable upon reasonable
inspection. We agree and affirm.
BaCkGrOUND
this controversy centers on commercial property in Omaha,
Nebraska. the property has three separate roofing systems—
one covering the warehouse and two separate roof levels on the
office building. In September 2002, tht replaced the ware-
house roof and obtained a 10-year warranty on the roof. tht
did not replace the roof on the office building.
998 	278 NeBraSka rePOrtS

In December 2004, tht contracted with Coldwell Banker
Commercial World Group (Coldwell Banker) to sell the prop-
erty. Coldwell Banker’s listing agent was robert Pollard. to
prepare the listing, Pollard requested information on the prop-
erty. the information that tht provided stated that the building
had a “[n]ew 10-year roof.” Pollard testified that the statement
about the roof’s condition indicated to him that the entirety of
the roof was new and under a 10-year warranty.
Using this information, Pollard created a property infor-
mation sheet that Coldwell Banker circulated. regarding the
roof, the sheet states: “roof: New 10-year.” Pollard placed
the 	information 	into 	circulation 	via 	mailings, 	fliers, 	and
Internet listings.
William Beard, the managing partner of Lucky 7, discovered
Coldwell Banker’s listing. he contacted his real estate agent,
who scheduled a showing for the property. Based upon the
information sheet, Beard and his real estate agent believed that
the property had a new roof with a 10-year warranty.
Beard attended three showings of the property. Beard testi-
fied that he believed the building had a new roof because the
roof on the warehouse portion was visible from ground level
and he could see that it was made with new roofing mate-
rial. But standing on the ground, Beard could not see the two
separate roof sections on the building’s office portion. those
roof sections could be inspected by Beard only if he were on
the roof. Beard admitted that if he had examined those two
roof sections, he would have been able to see that they were
made of a different roofing material and were not new. But
based upon his visual inspections and the statements on the
information sheet that the roof was new, Beard did not believe
it was necessary to inspect the roof before entering into the
purchase agreement.
Later in January 2005, Beard agreed to purchase the prop-
erty. the purchase agreement, in relevant part, stated:
Buyer will have sixty (60) days from Seller’s acceptance
of this agreement (“Inspection Period”) to conduct such
inspections, reviews and investigations of the Property,
including all reports, topographical surveys, paid tax
receipts, roof or building inspections, leases and any
LUCky 7 v. tht reaLty 	999
Cite as 278 Neb. 997

other information pertinent to the ownership, operation
and management of the Property, as the Buyer determines
necessary (“Inspections”). During the Inspection Period,
Buyer and its agents and representatives shall have the
right to reasonable access to the Property. . . .
. . . .
thIS OFFer IS BaSeD UPON BUyer’S Per-
SONaL INSPeCtION Or INVeStIGatION OF the
PrOPerty aND NOt UPON aNy rePreSeNta-
tION Or WarraNtIeS OF CONDItION By the
SeLLer Or SeLLer’S aGeNt.
Before the parties closed on the purchase, Beard received
a copy of the roof warranty. the warranty did not indicate
whether it covered the entire roof; it stated only that it covered
roofing material and did not specify whether the entire roof or
just part of the roof was covered by the warranty. after pur-
chasing the property, Beard assigned his interest to Lucky 7,
which placed a tenant in the building.
Shortly afterward, the tenant informed Beard that the roof
was leaking over the office area. a roofing contractor who
examined the roof informed Beard that the two roof sections
over the office building were not new. Beard also inspected the
roof and saw that the warehouse roof was different from the
office roof and that the office roof was not new.
In may 2005, the roofing contractor repaired portions of
the roof. the repair costs totaled $1,503.36. the contractor
also gave Beard an estimate to replace the roof sections on the
office. Later, the contractor estimated that it would cost $4,500
for replacing the upper office roof and that the cost to replace
the lower office roof was $24,200. Beard has since obtained
updated estimates of $4,700 and $25,800.
Lucky 7 filed suit alleging that tht had intentionally and
negligently misrepresented the roof’s condition. the district
court dismissed Lucky 7’s complaint. regarding the intentional
misrepresentation claim, it found that although the advertise-
ment and statements about the 10-year roof warranty were
misleading, the evidence was insufficient to show that tht
intentionally misled Beard to his detriment. In dismissing the
negligent misrepresentation claim, the court found that because
1000 	278 NeBraSka rePOrtS

the roof’s condition would have been obvious upon a reason-
able inspection, Lucky 7 failed to show that it acted in an ordi-
narily prudent manner.
aSSIGNmeNtS OF errOr
Lucky 7 assigns two errors:
(1) the district court erred as a matter of law in applying the
“ordinary prudence” standard to the negligent misrepresenta-
tion claim.
(2) In the alternative, the district court erred in finding that
because Lucky 7 failed to inspect the roof, it did not exercise
ordinary prudence.
StaNDarD OF reVIeW
[1,2] In a bench trial, the trial court’s factual findings have
the effect of a jury verdict and will not be set aside on appeal
unless clearly erroneous.1 But we determine questions of law
independently of the trial court’s conclusions.2
aNaLySIS
the first issue is whether ordinary prudence is a factor in
determining whether Lucky 7 was justified in relying upon
tht’s representations. When the means of discovering the
truth was in the hands of the party defrauded, we have held
that no action will lie where ordinary prudence would have
prevented the deception.3 Lucky 7 concedes that ordinary pru-
dence is a factor in determining justifiable reliance in a fraudu-
lent misrepresentation claim.4 But it argues it is not a factor in
a negligent misrepresentation claim. We disagree.
1 See Evertson v. City of Kimball, 278 Neb. 1, 767 N.W.2d 751 (2009).
2 See In re Interest of Tyler F., 276 Neb. 527, 755 N.W.2d 360 (2008).
3 Gibb v. Citicorp Mortgage, Inc., 246 Neb. 355, 518 N.W.2d 910 (1994),
citing Omaha Nat. Bank v. Manufacturers Life Ins. Co., 213 Neb. 873, 332
N.W.2d 196 (1983). accord Schuelke v. Wilson, 250 Neb. 334, 549 N.W.2d
176 (1996).
4 See Precision Enters. v. Duffack Enters., 14 Neb. app. 512, 710 N.W.2d
348 (2006).
LUCky 7 v. tht reaLty 	1001
Cite as 278 Neb. 997

We have adopted the negligent misrepresentation definition
in the restatement (Second) of torts § 552.5 Under § 552,
“[o]ne of the elements of a cause of action for negligent mis-
representation is justifiable reliance on the part of the plain-
tiff.”6 the restatement reads, in relevant part:
(1) One who, in the course of his business, profession
or employment, or in any other transaction in which he
has a pecuniary interest, supplies false information for
the guidance of others in their business transactions, is
subject to liability for pecuniary loss caused to them by
their justifiable reliance upon the information, if he fails
to exercise reasonable care or competence in obtaining or
communicating the information.7
[3] Negligent misrepresentation has essentially the same ele-
ments as fraudulent misrepresentation, with the exception of
the defendant’s mental state8:
In fraudulent misrepresentation, one becomes liable for
breaching the general duty of good faith or honesty.
however, in a claim of negligent misrepresentation, one
may become liable even though acting honestly and in
good faith if one fails to exercise the level of care required
under the circumstances.9
In 	claims 	of 	fraudulent 	or 	negligent 	misrepresentation,
the supplier of false information must have intended that
the user of the information would be influenced by the
information and rely on it.10 But in a case of negligent
5 restatement (Second) of torts § 552 (1977). See Gibb, supra note 3.
6 See Karel v. Nebraska Health Sys., 274 Neb. 175, 182, 738 N.W.2d 831,
838 (2007), citing Washington Mut. Bank v. Advanced Clearing, Inc., 267
Neb. 951, 679 N.W.2d 207 (2004).
7 restatement, supra note 5, § 552 at 126-27. accord, Brummels v. Tomasek,
273 Neb. 573, 731 N.W.2d 585 (2007); Agri Affiliates, Inc. v. Bones, 265
Neb. 798, 660 N.W.2d 168 (2003); Gibb, supra note 3.
8 Compare restatement, supra note 5 with §§ 525 and 526. See Gibb, supra
note 3.
9 Gibb, supra note 3, 246 Neb. at 371, 518 N.W.2d at 921. See, also,
restatement, supra note 5, § 552, comment a.
10 See Gibb, supra note 3.
1002 	278 NeBraSka rePOrtS

misrepresentation, the defendant need not know the statement
is false. that is, the defendant’s carelessness or negligence
in ascertaining the statement’s truth will suffice for negli-
gent misrepresentation.11
[4] We understand Lucky 7’s argument to be that once the
defendant supplies information to the plaintiff, the plaintiff
is not required to make any inquiry as to the accuracy of the
information. We disagree. If a plaintiff is required to show he
exercised ordinary prudence in relying on an intentionally false
statement, we believe the ordinary prudence rule should apply
with equal force absent a showing that the defendant intended
the plaintiff to rely on a knowingly false statement. So whether
the plaintiff was justified in relying upon representations made
by the defendant requires the same inquiry whether it is a
fraudulent or negligent misrepresentation claim.12 as sum-
marized by the Illinois appellate Court: “[N]o recovery for
fraudulent misrepresentation, fraudulent concealment or neg-
ligent misrepresentation is possible unless plaintiffs can prove
justifiable reliance, i.e., that any reliance was reasonable.”13
We hold that in both negligent and fraudulent misrepresenta-
tion cases, whether the plaintiff exercised ordinary prudence is
relevant to whether the plaintiff justifiably relied on the mis-
representation when the means of discovering the truth was in
the plaintiff’s hands.
[5] Lucky 7, however, argues that it was justified in rely-
ing on tht’s representation that the roof was new. It argues
the general rule is that a plaintiff is justified in relying upon a
positive statement of fact if an investigation would be required
to discover the truth.14 But we have never held that an “investi-
gation” includes an inspection of the property. to the contrary,
we have rejected misrepresentation claims when the truth of
11 See Washington Mut. Bank, supra note 6. See, generally, Gibb, supra
note 3.
12 See Gibb, supra note 3.
13 Neptuno v. Arbor, 295 Ill. app. 3d 567, 575, 692 N.e.2d 812, 818, 229 Ill.
Dec. 823, 829 (1998).
14 See Omaha Nat. Bank, supra note 3.
LUCky 7 v. tht reaLty 	1003
Cite as 278 Neb. 997

the property’s condition was obviously apparent to a potential
buyer upon inspection.15 In other cases, we have concluded that
the buyer reasonably relied on a seller’s misrepresentation only
after concluding that an inspection could have been fruitless or
that the seller interfered with the buyer’s ability to inspect.16 as
other courts have noted, a plaintiff “‘may not close his eyes to
what is obviously discoverable by him.’”17
But when the plaintiff would not have discovered the needed
information by inspection of the property, we have found his
or her reliance on the defendant’s statements reasonable. For
example, in Cao v. Nguyen,18 the buyers sought rescission of
a purchase agreement based upon alleged misrepresentations
by the sellers that the property was a duplex which could be
rented to two families, when in fact the property was not wide
enough to meet the municipal code requirement for a two-
family dwelling. the sellers did not provide the buyers with
information which would have placed them on notice that the
home did not meet the municipal code requirement for a two-
family dwelling. the sellers informed the buyers that they had
rented the house to two families in the past, and the property
was divided into two units. and, the advertisement for the
property described it as a duplex. to prove the sellers’ repre-
sentations were false, the buyers would have had to contact
the city, research the public records, and compare the build-
ing code to the actual structure of the home. the means of
discovering the truth of the sellers’ representations were not
in the buyers’ hands. therefore, we concluded that the buyers’
reliance was reasonable.
15 Christopher v. Evans, 219 Neb. 51, 361 N.W.2d 193 (1985); Bibow v.
Gerrard, 209 Neb. 10, 306 N.W.2d 148 (1981); Dyck v. Snygg, 138 Neb.
121, 292 N.W. 119 (1940); Kucera v. Pellan, 132 Neb. 739, 273 N.W. 10
(1937).
16 Foxley Cattle Co. v. Bank of Mead, 196 Neb. 1, 241 N.W.2d 495 (1976);
Martin v. Harris, 121 Neb. 372, 236 N.W. 914 (1931); Donelson v.
Michelson, 104 Neb. 666, 178 N.W. 219 (1920).
17 Ritchie v. Clappier, 109 Wis. 2d 399, 404, 326 N.W.2d 131, 134 (Wis.
app. 1982).
18 Cao v. Nguyen, 258 Neb. 1027, 607 N.W.2d 528 (2000).
1004 	278 NeBraSka rePOrtS

[6] Obviously, justifiable reliance must be decided on a case-
by-case basis. In determining whether an individual reasonably
relied on a misrepresentation, courts consider the totality of
the circumstances, including “‘“the nature of the transaction,
the form and materiality of the representation, the relationship
of the parties, the respective intelligence, experience, age, and
mental and physical condition of the parties, and their respec-
tive knowledge and means of knowledge.”’”19
here, the district court’s findings suggest that despite tht’s
representations regarding the newness of the roof, Beard’s
reliance on the representations was unreasonable because of
the following:
(1) Beard was a businessman with experience in purchasing
commercial property.
(2) the limiting language in the purchase agreement: the
contract explicitly stated that the purchase was based on the
buyer’s personal inspection and not conditioned on any repre-
sentations made by the seller.
(3) the purchase agreement explicitly provided for an
inspection period.
(4) Beard could have observed the roof’s condition if he had
examined it.
(5) the value of the building: Beard was purchasing a large
commercial building for $1,750,000.
(6) the warranty indicated that the roof had been replaced in
2002, 3 years before Beard bought the building.
Under these circumstances, the district court found that ordi-
nary prudence would demand that Beard inspect the building,
including the roof, before finalizing the purchase.
We agree. the record shows that Beard had routinely exam-
ined heating and air-conditioning units on roofs, so an inspec-
tion of this roof did not pose any hardship. and as an experi-
enced purchaser of commercial buildings, he understood the
importance of inspecting the condition of the property. the dis-
trict court was not clearly wrong in finding that Beard should
19 Finomore v. Epstein, 18 Ohio app. 3d 88, 90, 481 N.e.2d 1193, 1196
(1984), citing 37 am. Jur. 2d Fraud and Deceit § 248 (1968).
LUCky 7 v. tht reaLty 	1005
Cite as 278 Neb. 997

have inspected the roof and that the condition of it would have
been obvious had he done so.
CONCLUSION
Ordinary prudence is a factor in determining whether a
plaintiff is justified in relying upon a defendant’s represen-
tations. the district court did not err as a matter of law in
applying an ordinary prudence standard to Lucky 7’s negligent
misrepresentation claim. We also conclude the court’s factual
findings were not clearly wrong. the district court looked at
the context and type of transaction, and Beard’s knowledge,
experience, and access to pertinent information. Based upon
those factors, the district court found that Beard was not justi-
fied in relying on tht’s representations. We agree.
affiRmed.
state of nebRaska , appeLLee , v.
daRyLe m. duncan, appeLLant.
775 N.W.2d 922
Filed December 4, 2009. 	No. S-08-1308.
1. Postconviction: Proof: Appeal and Error. a defendant requesting postconvic-
tion relief must establish the basis for such relief, and the findings of the district
court will not be disturbed unless they are clearly erroneous.
2. Judgments: Appeal and Error. When reviewing a question of law, an appellate
court resolves the question independently of the lower court’s conclusion.
3. Postconviction: Effectiveness of Counsel: Proof: Appeal and Error. to estab-
lish a right to postconviction relief because of counsel’s ineffective assistance,
the defendant has the burden, under Strickland v. Washington, 466 U.S. 668, 104
S. Ct. 2052, 80 L. ed. 2d 674 (1984), to show that counsel’s performance was
deficient; that is, counsel’s performance did not equal that of a lawyer with ordi-
nary training and skill in criminal law in the area. Next, the defendant must show
that counsel’s deficient performance prejudiced the defense in his or her case. to
show prejudice, the defendant must demonstrate a reasonable probability that but
for counsel’s deficient performance, the result of the proceeding would have been
different. a court may address the two prongs of this test, deficient performance
and prejudice, in either order.
4. Rules of Evidence: Hearsay. hearsay requires a statement made by an out-of-
court declarant, and the statement requires an oral or written assertion.
1006 	278 NeBraSka rePOrtS