Haskell v. Madison Cty. Sch. Dist. No. 0001

M ary Lynn H askeLL and eLizabetH M endoza , appeLLants , v.
M adison C ounty sCHooL distriCt no. 0001, aLso known
as M adison pubLiC sCHooLs , et aL., appeLLees.
771 N.W.2d 156
Filed June 9, 2009. 	No. A-08-1047.
1. Pleadings: Appeal and Error. An appellate court reviews de novo a lower
court’s dismissal of a complaint for failure to state a claim.
2. Rules of the Supreme Court: Pleadings. Dismissal under Neb. Ct. R. Pldg.
§ 6-1112(b)(6) should be granted only in the unusual case in which a plaintiff
includes allegations that show on the face of the complaint that there is some
insuperable bar to relief.
3. Attorney Fees: Appeal and Error. On appeal, a trial court’s decision allowing or
disallowing attorney fees under Neb. Rev. Stat. § 25-824 (Reissue 2008) for frivo-
lous or bad-faith litigation will be upheld in the absence of an abuse of discretion
by the trial court.
4. Judgments: Res Judicata. The doctrine of res judicata, or claim preclusion,
bars the relitigation of a matter that has been directly addressed or necessarily
included in a former adjudication if (1) the former judgment was rendered by a
court of competent jurisdiction, (2) the former judgment was a final judgment, (3)
the former judgment was on the merits, and (4) the same parties or their privies
were involved in both actions.
5. Actions: Parties. Privity requires, at a minimum, a substantial identity between
the issues in controversy and a showing that the parties in the two actions are
really and substantially in interest the same.
6. Judgments: Appeal and Error. Where the record adequately demonstrates that
the decision of the trial court is correct, although such correctness is based on a
ground or reason different from that assigned by the trial court, an appellate court
will affirm.
7. Constitutional Law: Initiative and Referendum. Under Nebraska constitutional
provisions vesting the legislative power of the state in the Legislature, but reserv-
ing to the people the right of initiative and referendum, the Legislature on the one
hand and the electorate on the other are coordinate legislative bodies, and there is
no superiority of power between the two. In the absence of specific constitutional
restraint, either may amend or repeal the enactments of the other.
8. ____: ____. Neb. Const. art. III, § 3, suspends the operation of legislation pend-
ing the outcome of a referendum vote only where, among other requirements, the
petition was signed by not less than 10 percent of the registered voters.
9. Schools and School Districts. Neb. Rev. Stat. § 79-1094 (Reissue 2008) expressly
authorizes the school board of any district maintaining more than one school to
close any school or schools within such district.
10. Judgments: Attorney Fees. A court shall award as part of its judgment and in
addition to any other costs otherwise assessed reasonable attorney fees and court
costs against any attorney or party who has brought or defended a civil action
that alleges a claim or defense which a court determines is frivolous or made in
bad faith.
hASkeLL v. mADISON CTy. SCh. DIST. NO. 0001 	669
Cite as 17 Neb. App. 669
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:14 AM CST

11. Actions: Attorney Fees: Words and Phrases. In the context of Neb. Rev. Stat.
§ 25-824 (Reissue 2008), a frivolous action is one in which a litigant asserts a
legal position wholly without merit, that is, without rational argument based on
law and evidence to support the litigant’s position.
12. Actions: Attorneys at Law. Attorneys and litigants should not be inhibited in
pressing novel issues or in urging a position which can be supported by a good
faith argument for an extension, modification, or reversal of existing law.
13. Actions. Any doubt about whether a legal position is frivolous or taken in bad
faith should be resolved in favor of the one whose legal position is in question.
Appeal from the District Court for madison County: robert
b. ensz, Judge. Affirmed in part, and in part reversed.
John 	F. 	Recknor, 	of 	Recknor, 	Williams 	& 	Wertz, 	for
appellants.
Joshua J. Schauer, of Perry, Guthery, haase & Gessford, P.C.,
L.L.O., and, on brief, karen A. haase and Adam J. Prochaska,
of harding & Schultz, P.C., L.L.O., for appellees.
inbody, Chief Judge, and sievers and CasseL, Judges.
CasseL, Judge.
INTRODUCTION
Good Cheer Public Schools (Good Cheer) formerly existed
as an elementary-only school district, but was merged into a
“k-12” district under the mandate of 2005 Neb. Laws, L.B.
126. After the merger, voters repealed L.B. 126 by referendum.
mary Lynn haskell and elizabeth mendoza now appeal from
the district court’s orders (1) dismissing their suit for an injunc-
tion to stop the surviving district from closing Good Cheer and
(2) taxing attorney fees to the appellants and their attorneys.
Because the repeal had no retroactive effect, the passage of
the referendum did not revive Good Cheer as a separate legal
entity. But because the issues presented in this case were not
identical to those determined in prior case law and were not
entirely without an arguable basis, the district court abused its
discretion in awarding attorney fees.
BACkGROUND
Before we turn to the background of the instant case, we
summarize the historical events concerning L.B. 126 and its
subsequent repeal by referendum, as the issues in the instant
670 	17 NeBRASkA APPeLLATe RePORTS

appeal revolve around the effect of the repeal. To provide the
historical background, we paraphrase from the decision in Pony
Lake Sch. Dist. v. State Committee for Reorg., 271 Neb. 173,
710 N.W.2d 609 (2006).
L.B. 126 and Its Repeal.
On June 3, 2005, the Legislature passed L.B. 126 over the
Governor’s veto. L.B. 126 required that all Class I school
districts disband and attach to other school districts by June
15, 2006.
On September 1, 2005, a group called Nebraskans for Local
Schools Committee filed a referendum petition to repeal L.B.
126. The petition contained the signatures of approximately
7.7 percent of Nebraska’s registered voters. The Secretary of
State determined that the petition did not contain sufficient sig-
natures to suspend the operation of L.B. 126 pursuant to Neb.
Const. art. III, § 3. This would have required the signatures
of 10 percent of registered voters. Therefore, L.B. 126 went
into effect.
The appellants have alleged that on November 7, 2006,
Nebraska voters repealed L.B. 126 in a referendum vote.
Instant Case.
The appellants filed a “Complaint for Injunctive Relief,
Declaratory Judgment, and monetary Damages” with the dis-
trict court against madison County School District No. 0001,
also known as madison Public Schools, and its board mem-
bers, Paul Randles, George moyer, Douglas Wagner, harlow
hansen, mark higby, and Steve Ruh (collectively madison).
The complaint alleged that the appellants were injured by
madison’s decision to close Good Cheer, because their children
would be prevented from attending Good Cheer. The complaint
also alleged that Good Cheer was a Class I school district and
that “[a]s a result of the enactment of [L.B.] 126, the State
Reorganization Committee purported to dissolve Good Cheer
. . . and attach its geographic territory and assign its property
both real and personal to . . . madison . . . .” The appellants
further alleged that the madison school board decided to close
Good Cheer effective at the end of the 2007-08 school year
but lacked the power to do so because the repeal of L.B. 126
hASkeLL v. mADISON CTy. SCh. DIST. NO. 0001 	671
Cite as 17 Neb. App. 669

restored Good Cheer to its former status as an independent
Class I school district.
The district court granted madison’s motion to dismiss pur-
suant to Neb. Ct. R. Pldg. § 6-1112(b)(1) and (6). In doing so,
the district court applied the doctrine of res judicata. Neither of
the appellants has previously been a party to litigation involv-
ing L.B. 126.
madison also moved for sanctions pursuant to Neb. Rev.
Stat. § 25-824 (Reissue 2008). The district court granted sanc-
tions in the amount of $6,700 in attorney fees, one-third of
which was taxed to the appellants and two-thirds of which was
taxed to the appellants’ attorneys.
This timely appeal followed.
ASSIGNmeNTS OF eRROR
The appellants assign that the trial court erred (1) in granting
madison’s motion to dismiss, (2) in finding the doctrine of res
judicata applicable to this case, and (3) in finding the litigation
frivolous and granting sanctions against the appellants.
STANDARD OF ReVIeW
[1,2] An appellate court reviews de novo a lower court’s
dismissal of a complaint for failure to state a claim. Ichtertz
v. Orthopaedic Specialists of Neb., 273 Neb. 466, 730 N.W.2d
798 (2007). Dismissal under § 6-1112(b)(6) should be granted
only in the unusual case in which a plaintiff includes allega-
tions that show on the face of the complaint that there is some
insuperable bar to relief. Crane Sales & Serv. Co. v. Seneca
Ins. Co., 276 Neb. 372, 754 N.W.2d 607 (2008).
[3] On appeal, a trial court’s decision allowing or disallow-
ing attorney fees under § 25-824 for frivolous or bad faith liti-
gation will be upheld in the absence of an abuse of discretion
by the trial court. Brummels v. Tomasek, 273 Neb. 573, 731
N.W.2d 585 (2007).
ANALySIS
Res Judicata.
The appellants request that we consider whether the district
court erred in finding that res judicata precluded their cause of
action. We decline to do so, because (1) the answer depends
672 	17 NeBRASkA APPeLLATe RePORTS

upon a theory of “virtual representation” not yet considered by
the Nebraska Supreme Court and (2) there are alternate grounds
which are sufficient to uphold the district court’s dismissal of
the appellants’ complaint under § 6-1112(b)(6).
The district court dismissed the appellants’ complaint pur-
suant to § 6-1112(b)(1) and (6) on the basis of res judicata.
The court adopted the reasoning of Nolles v. State Com.
Reorganization School Dist., 524 F.3d 892 (8th Cir. 2008). In
Nolles, the eighth Circuit Court of Appeals applied the doc-
trine of “virtual representation” to preclude the plaintiffs’ claim
that L.B. 126 constituted a violation of their fundamental right
to vote. The eighth Circuit determined that the exact same
issue was validly decided on the merits in Pony Lake Sch. Dist.
v. State Committee for Reorg., 271 Neb. 173, 710 N.W.2d 609
(2006), which case precluded the claim even though the plain-
tiffs in Pony Lake Sch. Dist. were completely different from the
plaintiffs in Nolles.
[4,5] Although the eighth Circuit purported to apply Nebraska
law, the eighth Circuit utilized a theory of res judicata not yet
recognized in Nebraska. The Nebraska Supreme Court has
held that the doctrine of res judicata, or claim preclusion, bars
the relitigation of a matter that has been directly addressed or
necessarily included in a former adjudication if (1) the former
judgment was rendered by a court of competent jurisdiction,
(2) the former judgment was a final judgment, (3) the former
judgment was on the merits, and (4) the same parties or their
privies were involved in both actions. Jensen v. Jensen, 275
Neb. 921, 750 N.W.2d 335 (2008). The difference between
Nebraska law and the eighth Circuit decision lies in the defini-
tion of “privity.” The Nebraska Supreme Court has held that
privity requires, at a minimum, a substantial identity between
the issues in controversy and a showing that the parties in the
two actions are really and substantially in interest the same. See
Torrison v. Overman, 250 Neb. 164, 549 N.W.2d 124 (1996).
In Nolles, the eighth Circuit adopted an expansive definition
of privity termed “virtual representation,” which the Nebraska
Supreme Court has not yet adopted. Virtual representation is
“‘an equitable theory rather than . . . a crisp rule with sharp
corners and clear factual predicates, such that a party’s status
hASkeLL v. mADISON CTy. SCh. DIST. NO. 0001 	673
Cite as 17 Neb. App. 669

as a virtual representative of a nonparty must be determined
on a case-by-case basis.’” Nolles v. State Com. Reorganization
School Dist., 524 F.3d at 902, quoting Gonzalez v. Banco Cent.
Corp., 27 F.3d 751 (1st Cir. 1994).
[6] Because we find no Nebraska precedent either adopting or
rejecting the virtual representation theory of privity, we decline
to resolve the case before us on the ground of res judicata but
nevertheless find that the district court correctly sustained the
motion to dismiss. Where the record adequately demonstrates
that the decision of the trial court is correct, although such
correctness is based on a ground or reason different from that
assigned by the trial court, an appellate court will affirm. In re
Estate of Lamplaugh, 270 Neb. 941, 708 N.W.2d 645 (2006).
As we explain more fully below, we conclude that the appel-
lants’ complaint does not set forth a cause of action recognized
under Nebraska law and that the complaint was properly dis-
missed pursuant to § 6-1112(b)(6).
Failure to State Cause of Action.
The premise underlying the appellants’ cause of action is
that the repeal of L.B. 126 reestablished Good Cheer even
though, as the appellants alleged, “the State Reorganization
Committee purported to dissolve Good Cheer” pursuant to
L.B. 126. The appellants argue that the repeal of L.B. 126
rendered L.B. 126 a nullity, nullified all actions taken pursu-
ant to L.B. 126, and thus restored all Class I schools to their
status prior to the enactment of L.B. 126. The appellants sup-
port their argument by citing to Pony Lake Sch. Dist. v. State
Committee for Reorg., 271 Neb. 173, 192, 710 N.W.2d 609,
625 (2006), wherein the Supreme Court stated as follows in
concluding that the referendum vote to repeal L.B. 126 would
not merely be advisory: “If the voters reject L.B. 126 at the
referendum election, the act will stand repealed. . . . To repeal
is to rescind or abrogate an existing law.” The appellants argue
that this language—specifically the word “rescind”—requires
us to analogize the repeal of a law pursuant to a referendum to
the rescission of a contract. The appellants insist that because
rescission restores the parties to the status quo as if the con-
tract had never existed, a referendum which “rescind[s] . . .
674 	17 NeBRASkA APPeLLATe RePORTS

an existing law” must similarly restore everyone to status quo
as if the law had never existed. See brief for appellants at 22
(emphasis omitted).
[7] however, the rules of contract law are not applicable to
measures passed via initiative or referendum. The Nebraska
Supreme Court has recognized that measures passed via initia-
tive or referendum are to be treated the same as bills passed by
the Legislature. See Klosterman v. Marsh, 180 Neb. 506, 143
N.W.2d 744 (1966). Under Nebraska constitutional provisions
vesting the legislative power of the state in the Legislature, but
reserving to the people the right of initiative and referendum,
the Legislature on the one hand and the electorate on the other
are coordinate legislative bodies, and there is no superiority of
power between the two. See id. In the absence of specific con-
stitutional restraint, either may amend or repeal the enactments
of the other. Id. Thus, the rules of contract law do not apply in
the instant case.
[8] Further, in the instant case, Neb. Const. art. III, § 3,
prevents the referendum vote from repealing L.B. 126 retro-
actively. Although this section does not explicitly prohibit
retroactive repeal, the operation of the section would be sub-
stantially impeded if we treated the repeal of L.B. 126 as
retroactive. Neb. Const. art. III, § 3, suspends the operation
of legislation pending the outcome of a referendum vote only
where, among other requirements, the “petition [was] signed
by not less than ten percent of the registered voters of the
state.” A petition containing the signatures of 5 percent of reg-
istered voters triggers a referendum vote but does not suspend
the operation of legislation. Id. In Pony Lake Sch. Dist. v. State
Committee for Reorg., supra, the Nebraska Supreme Court
decided that the petition to repeal L.B. 126 did not contain suf-
ficient signatures to suspend the operation of L.B. 126 pending
the referendum vote. In effect, the appellants request that we
declare that the referendum accomplished retrospectively what
Neb. Const. art. III, § 3, prevented prospectively—the suspen-
sion of the operation of L.B. 126 from its effective date until
the date of its repeal. We decline to do so, because it would
render meaningless the 10-percent requirement contained in
Neb. Const. art. III, § 3.
hASkeLL v. mADISON CTy. SCh. DIST. NO. 0001 	675
Cite as 17 Neb. App. 669

The appellants also urge that because the referendum was
not an advisory vote and successfully repealed L.B. 126—
which had eliminated Class I school districts—the referendum
must have had some effect on the reestablishment of Class I
school districts. There indeed was such an effect: Nebraskans
may now organize new Class I school districts pursuant to
Neb. Rev. Stat. § 79-403 (Reissue 2008). At oral argument,
the appellants claimed and madison conceded that a practical
difficulty—the requirement of consent of the k-12 district now
encompassing the area of the former Class I district—makes
the creation of a new Class I district unlikely. But we reject the
appellants’ argument that creation of a new Class I district is
impossible in the legal sense. There has indeed been an impor-
tant change in the law accomplished by the referendum vote.
however, the vote did not have the effect which the appellants
desired—the repeal did not operate to reestablish the former
Class I school districts.
[9] Because the repeal of L.B. 126 did not affect the already
completed dissolutions of Class I school districts and their
attachments to other school districts, madison’s school board
had the unrestricted ability to close Good Cheer as of April 14,
2008, when the board adopted a motion declaring such action.
Neb. Rev. Stat. § 79-1094 (Reissue 2008) expressly authorizes
the school board of any district maintaining more than one
school to “close any school or schools within such district.”
moreover, Neb. Rev. Stat. §§ 79-525 and 79-526 (Reissue
2008) vest school boards with the power to make decisions
regarding school premises. madison’s school board was fully
empowered to close Good Cheer. The district court did not err
in dismissing the appellants’ complaint.
Sanctions.
The appellants argue that the district court abused its discre-
tion in imposing sanctions pursuant to § 25-824. The district
court imposed sanctions based on its determination that this
case was frivolous because it was precluded by res judicata.
Because we deem it inappropriate to decide the primary issue
in this case on the basis of res judicata and because the instant
case was the first case addressing the claim of retroactivity
676 	17 NeBRASkA APPeLLATe RePORTS

after the referendum vote, we conclude that sanctions were
not appropriate.
[10,11] A court shall award as part of its judgment and
in addition to any other costs otherwise assessed reasonable
attorney fees and court costs against any attorney or party who
has brought or defended a civil action that alleges a claim or
defense which a court determines is frivolous or made in bad
faith. Baltensperger v. United States Dept. of Ag., 250 Neb.
216, 548 N.W.2d 733 (1996). In the context of § 25-824, a friv-
olous action is one in which a litigant asserts a legal position
wholly without merit, that is, without rational argument based
on law and evidence to support the litigant’s position. Cornett
v. City of Omaha Police & Fire Ret. Sys., 266 Neb. 216, 664
N.W.2d 23 (2003).
[12] In the instant case, the appellants presented an issue
similar to but distinct from the issue decided in Pony Lake Sch.
Dist. v. State Committee for Reorg., 271 Neb. 173, 710 N.W.2d
609 (2006). In Pony Lake Sch. Dist., the Nebraska Supreme
Court determined that the referendum petition for L.B. 126
would not suspend the operation of L.B. 126, pursuant to Neb.
Const. art. III, § 3, pending the referendum election, because
there were not sufficient signatures. In the case before us, the
appellants posed the question of whether a successful refer-
endum operated retroactively to the statute’s original effec-
tive date. Although we have determined that in substance, the
appellants have requested the same thing prohibited by Pony
Lake Sch. Dist., they have asserted a rational argument derived
from the language of that decision. Attorneys and litigants
should not be inhibited in pressing novel issues or in urging
a position which can be supported by a good faith argument
for an extension, modification, or reversal of existing law.
Shanks v. Johnson Abstract & Title, 225 Neb. 649, 407 N.W.2d
743 (1987).
[13] Because in considering sanctions, we must resolve any
doubt about the appellants’ legal position in their favor, we
conclude that the district court abused its discretion in award-
ing attorney fees. Any doubt about whether a legal position is
frivolous or taken in bad faith should be resolved in favor of
the one whose legal position is in question. Cornett v. City of
hASkeLL v. mADISON CTy. SCh. DIST. NO. 0001 	677
Cite as 17 Neb. App. 669

Omaha Police & Fire Ret. Sys., supra. Although in the case
before us, the appellants’ argument is somewhat farfetched, we
cannot say that it was wholly without merit.
CONCLUSION
Because the appellants are not entitled to relief from the
operation of L.B. 126 prior to its repeal and the repeal was
not retroactive, we conclude that Good Cheer, a former Class I
school district disbanded pursuant to L.B. 126, no longer exists.
Therefore, the appellants’ complaint premised on the existence
of Good Cheer fails to state a cause of action. The district court
did not err in dismissing the appellants’ complaint. however,
because the appellants’ allegation that the repeal of L.B. 126
applied retroactively was not frivolous, we conclude that the
district court’s award of attorney fees constituted an abuse of
discretion, and we reverse the award.
affirMed in part, and in part reversed.
678 	17 NeBRASkA APPeLLATe RePORTS