Behrens v. Blunk

454 	284 NEBRASKA REPORTS
allegedly negligent treatment of Daniel. Thus, again, as a mat-
ter of law, Wrenshall did not owe a duty of care to Sean during
her posttransplant treatment of Daniel.
R emaining assignments of eRRoR
The plaintiffs have three remaining assignments of error,
regarding (1) whether Sean suffered legally cognizable dam-
ages, (2) whether competing experts on the standard of care
make summary judgment inappropriate, and (3) whether the
court erred in denying the motion to continue the summary
judgment hearing. Because Wrenshall did not owe a duty of
care to Sean during her posttransplant treatment of Daniel,
we conclude that the remaining assignments of error are with-
out merit.
CONCLUSION
Wrenshall did not owe a duty of care to Sean, the donor,
during 	the 	posttransplant 	treatment 	of 	Daniel, 	the 	donee.
Therefore, we hold that the district court did not err in granting
summary judgment in favor of Wrenshall and UNMCP.
affiRmed.
stephan, milleR-leRman, and Cassel, JJ., not participating.
BRyan s. BehRens, an individual, et al.,
appellants, v. C hRistian R. Blunk,
an individual, et al., appellees.
822 N.W.2d 344
Filed October 5, 2012. 	No. S-12-093.
1. Limitations of Actions: Appeal and Error. The point at which a statute of
limitations begins to run must be determined from the facts of each case, and the
decision of the district court on the issue of the statute of limitations normally
will not be set aside by an appellate court unless clearly wrong.
2. Limitations of Actions. The period of limitations begins to run upon the viola-
tion of a legal right, that is, when an aggrieved party has the right to institute and
maintain suit.
3. Limitations of Actions: Negligence. If a claim for professional negligence is
not to be considered time barred, the plaintiff must either file within 2 years of
the alleged act or omission or show that its action falls within an exception to
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:40 AM CST

BEHRENS v. BLUNK 	455
Cite as 284 Neb. 454
Neb. Rev. Stat. § 25-222 (Reissue 2008). The language of § 25-222 provides for
a discovery exception to the statute of limitations; additionally, under certain
circumstances, a continuous relationship can toll the running of § 25-222.
4. Limitations of Actions. The 1-year discovery exception of Neb. Rev. Stat.
§ 25-222 (Reissue 2008) is a tolling provision, but it applies only in those cases
in which the plaintiff did not discover and could not have reasonably discovered
the existence of the cause of action within the applicable statute of limitations.
5. ____. Under the discovery principle, a cause of action accrues and the discov-
ery provision begins to run when there has been discovery of facts constituting
the basis of the cause of action or the existence of facts sufficient to put a per-
son of ordinary intelligence and prudence on inquiry which, if pursued, would
lead to the discovery. It is not necessary that the plaintiff have knowledge of
the exact nature or source of the problem, but only knowledge that the prob-
lem existed.
6. Limitations of Actions: Malpractice. In order for a continuous relationship to
toll the statute of limitations regarding a claim for malpractice, there must be a
continuity of the relationship and services for the same or related subject matter
after the alleged professional negligence. Continuity does not mean the mere
continuity of the general professional relationship.
Appeal from the District Court for Douglas County: J.
patRiCk mullen, Judge. Affirmed.
David A. Domina, of Domina Law Group, P.C., L.L.O., for
appellants.
Mark C. Laughlin and Patrick S. Cooper, of Fraser Stryker,
P.C., L.L.O., for appellees Christian R. Blunk and Berkshire
& Blunk.
William R. Johnson and John M. Walker, of Lamson,
Dugan & Murray, L.L.P., for appellees Christian R. Blunk and
Abrahams, Kaslow & Cassman, L.L.P.
heaviCan, C.J., C onnolly, stephan, mCC oRmaCk, milleR-
leRman, and Cassel, JJ.
heaviCan, C.J.
INTRODUCTION
The district court granted summary judgment in favor of
Christian R. Blunk, Berkshire and Blunk, and Abrahams Kaslow
& Cassman LLP (collectively defendants) and dismissed the
complaint filed by Bryan S. Behrens; Bryan Behrens Co., Inc.;
National Investments, Inc.; and Thomas Stalnaker (collectively

456 	284 NEBRASKA REPORTS
plaintiffs), who filed this appeal. We conclude that plaintiffs’
suit is barred by the applicable statute of limitations and
accordingly affirm the decision of the district court.
BACKGROUND
This is the second appearance of this case before this court.1
In January 2008, the U.S. Securities and Exchange Commission
filed a civil enforcement action against all plaintiffs except
Stalnaker. On July 28, Stalnaker was appointed receiver of all
funds and assets of Behrens, National Investments, and other
Behrens-related companies.
In April 2009, the federal government indicted Behrens
on charges of securities fraud, mail fraud, wire fraud, and
money laundering. We explained the criminal allegations in our
prior opinion:
The criminal 	allegations 	give 	context to the civil
action. The indictment alleged a Ponzi scheme. Behrens
owned a company that provided financial planning advice
and offered insurance products to clients. He was regis-
tered to sell securities. In 2002, he purchased [National
Investments], which was a Nevada real estate investment
company. Behrens defrauded 25 [National Investments]
investors out of $8.2 million. He induced some of his
insurance and securities clients to cash out their annui-
ties 	or 	investment 	accounts 	and 	invest 	in 	[National
Investments]. He told investors that (1) they were invest-
ing in [National Investments]; (2) their investments would
produce a 7- to 9-percent rate of return, with little to no
risk; and (3) they would receive back their principal in
5 to 10 years. Behrens would normally issue a promis-
sory note to investors with these promises. Instead of
investing their money in real estate, he used it to support
an extravagant personal lifestyle and other businesses
that he acquired. He deposited the investors’ money into
bank accounts that he controlled and then transferred the
money to other bank accounts to conceal its source. He
1 See Behrens v. Blunk, 280 Neb. 984, 792 N.W.2d 159 (2010), modified 281
Neb. 228, 796 N.W.2d 579 (2011).

BEHRENS v. BLUNK 	457
Cite as 284 Neb. 454
used the investment money from later investors to make
monthly payments to earlier investors.2
Prior to the filing of the indictment, in December 2008,
plaintiffs originally filed their complaint alleging that Blunk
had committed legal malpractice. In addition to Blunk, plain-
tiffs sued Blunk’s former partnership, Berkshire and Blunk,
and the firm that later employed Blunk, Abrahams Kaslow
& Cassman, contending that Blunk’s negligent acts occurred
when he was employed at both firms.
As we discussed in our prior opinion, both the civil and crim-
inal cases were proceeding at roughly the same time. During
the course of the civil case, certain discovery requests were
made of Behrens by the various defendants. Behrens declined
to respond to those requests, citing his Fifth Amendment right
against compulsory self-incrimination. As a result of Behrens’
claim, the district court dismissed the legal malpractice action.
This court reversed the dismissal, concluding that the district
court erred in applying a rule of automatic dismissal when
a plaintiff invoked his or her right against self-incrimination
during discovery. We remanded the cause to the district court
with instructions to “balance the parties’ interests and consider
whether a less drastic remedy would suffice.”3
In April 2010, Behrens pled guilty to securities fraud in fed-
eral court and was later sentenced to 60 months’ imprisonment
and ordered to pay restitution of $6,841,921.90. In September
2010, plaintiffs filed an amended complaint. In that complaint,
plaintiffs alleged that if they had been
properly, correctly and responsibly advised about the
promissory notes, their status as securities, registration
requirements, issuance requirements, and requirements
necessarily complied with to promote the promissory
notes under state and federal securities law, the busi-
ness model recommended, supported, and maintained as
proper by Blunk from 1996 until recent months, could not
have come into existence, grown, expanded, eventually
borrowed approximately $7.5 million, and, when it failed,
2 Id. at 986-87, 792 N.W.2d at 162.
3 Id. at 997, 792 N.W.2d at 168.

458 	284 NEBRASKA REPORTS
incur debt it could not pay, which debt was deemed by
investigative authorities to be the joint and several debt
of all Plaintiffs.
Discovery was then conducted. A motion for summary judg-
ment was filed by defendants, arguing that the action was
barred by the statute of limitations, the doctrine of in pari
delicto, and by defendants’ lack of negligence. Blunk addi-
tionally filed a motion for judgment on the pleadings, arguing
that he was not a proper party to the action because plaintiffs’
claims against him had been discharged in bankruptcy. The
district court granted the motions and dismissed the complaint
as to all defendants. The district court found that the action was
barred by both the applicable statute of limitations and by the
doctrine of in pari delicto and found for defendants.
ASSIGNMENTS OF ERROR
On appeal, plaintiffs assign, restated and consolidated, that
the district court erred in finding their claims were barred
by (1) the statute of limitations and (2) the doctrine of in
pari delicto.
STANDARD OF REVIEW
[1] The point at which a statute of limitations begins to run
must be determined from the facts of each case, and the deci-
sion of the district court on the issue of the statute of limita-
tions normally will not be set aside by an appellate court unless
clearly wrong.4
ANALYSIS
[2] In plaintiffs’ first assignment of error, they argue the
district court erred in finding that its legal malpractice claim
was barred by the applicable statute of limitations. This action
is one for professional negligence and is therefore governed by
the statute of limitations set forth in Neb. Rev. Stat. § 25-222
(Reissue 2008):
Any action to recover damages based on alleged pro-
fessional negligence or upon alleged breach of warranty
in rendering or failure to render professional services
4 Bellino v. McGrath North, 274 Neb. 130, 738 N.W.2d 434 (2007).

BEHRENS v. BLUNK 	459
Cite as 284 Neb. 454
shall be commenced within two years next after the
alleged act or omission in rendering or failure to render
professional services providing the basis for such action;
Provided, if the cause of action is not discovered and
could not be reasonably discovered within such two-year
period, then the action may be commenced within one
year from the date of such discovery or from the date of
discovery of facts which would reasonably lead to such
discovery, whichever is earlier . . . .
The period of limitations begins to run upon the violation of
a legal right, that is, when an aggrieved party has the right to
institute and maintain suit.5
[3] If a claim for professional negligence is not to be
considered time barred, the plaintiff must either file within
2 years of the alleged act or omission or show that its
action falls within an exception to § 25-222. The language of
§ 25-222 provides for a discovery exception to the statute of
limitations; we have additionally recognized that under certain
circumstances, a continuous relationship can toll the running
of § 25-222.6
Plaintiffs contend first that they could not and did not dis-
cover Blunk’s malpractice until December 7, 2007, and that
this suit, brought on December 4, 2008, was timely under the
discovery exception to § 25-222. But defendants argue that
Behrens should have discovered any alleged malpractice years
earlier, in October 2001.
Alternatively, plaintiffs assert that Behrens’ and Blunk’s
relationship was continuous from 1996 until 2008 and that the
statute of limitations was tolled until the end of that relation-
ship. As such, their suit, brought within 2 years of the end of
that relationship, was timely. Defendants, however, contend
that under the facts presented, the continuous relationship rule
is inapplicable.
Generally, a receiver is held to stand in the shoes of the
entity in receivership and holds the property by the same legal
right and title as the person for whose property he or she is
5 Egan v. Stoler, 265 Neb. 1, 653 N.W.2d 855 (2002).
6 See, e.g., Bellino v. McGrath North, supra note 4.

460 	284 NEBRASKA REPORTS
receiver.7 Thus Stalknaker, as receiver, stands in Behrens’
shoes and is subject to the same defenses to which Behrens
is subject.
Discovery Exception to § 25-222.
[4] This court has said that the 1-year discovery exception
of § 25-222 is a tolling provision, but that it applies only in
those cases in which the plaintiff did not discover and could
not have reasonably discovered the existence of the cause of
action within the applicable statute of limitations.8 The district
court assumed that the initial 2-year statute of limitations set
forth in § 25-222 had expired in 1998 and that Behrens did
not and could not have discovered the malpractice within that
period. As such, the discovery exception was triggered. On
appeal, neither party takes issue with these assumptions. And
for the purposes of our analysis, we likewise assume that the
discovery exception was triggered.
[5] Under the discovery principle,
a cause of action accrues and the . . . discovery provi-
sion . . . begins to run, when there has been discovery of
facts constituting the basis of the cause of action or the
existence of facts sufficient to put a person of ordinary
intelligence and prudence on inquiry which, if pursued,
would lead to the discovery. . . . It is not necessary
that the plaintiff have knowledge of the exact nature or
source of the problem, but only knowledge that the prob-
lem existed.9
Before the district court, and now on appeal, plaintiffs
contend that Behrens could not have discovered the mal-
practice until December 7, 2007, when Behrens sought other
counsel 	after 	learning 	that 	the 	Securities 	and 	Exchange
Commission had opened an investigation into his business
7 65 Am. Jur. 2d Receivers § 116 (2011). Cf., Ottaco Acceptance, Inc. v.
Larkin, 273 Neb. 765, 733 N.W.2d 539 (2007); State, ex rel. Spillman, v.
Security State Bank, 116 Neb. 521, 218 N.W. 405 (1928); State, ex. rel.
Davis, v. American State Bank, 114 Neb. 740, 209 N.W. 621 (1926).
8 See Egan v. Stoler, supra note 5.
9 Board of Regents v. Wilscam Mullins Birge, 230 Neb. 675, 684, 433
N.W.2d 478, 484 (1988).

BEHRENS v. BLUNK 	461
Cite as 284 Neb. 454
dealings. But defendants argue, and the district court agreed,
that Behrens should have discovered the alleged malpractice
years earlier, in October 2001. In October 2001, both Behrens
and Blunk were notified by the Nebraska Department of
Banking that the department was investigating Behrens’ use of
promissory notes and was questioning whether that use might
qualify as a security and constitute a violation of the Securities
Act of Nebraska. At that time, Behrens was informed that
a violation of the act could subject Behrens to criminal and
civil liability.
This investigation was ongoing until at least April 2003.
During that investigation, the department was in contact with
Blunk, who was acting on Behrens’ behalf. The record contains
evidence that Behrens not only received notice of the investi-
gation, but that Behrens participated in responding to requests
from the department in the course of the investigation and was
copied on most, if not all, of Blunk’s responses to the depart-
ment’s requests for information. Behrens appears to concede
that he was aware of the investigation beginning in 2001, but
contends that he thought Blunk had dealt with the matter and
that it was no longer an issue.
This case is factually similar to Sass v. Hanson.10 In Sass,
a client was informed by the Internal Revenue Service that
an investigation had begun regarding whether the client’s
use of a particular tax election was permissible. The Court
of Appeals concluded that for statute of limitations purposes,
the client’s “knowledge was very complete” based upon the
letter received by the Internal Revenue Service and other cor-
respondence that he had received on the topic.11 The Court
of Appeals rejected the argument that the client was not on
notice because he was expressly told that he was not entitled
to the election in question, concluding that he “had knowledge
which, if not actual knowledge of his potential claim, was
certainly sufficient, if pursued, to lead to the discovery of the
alleged malpractice.”12
10 Sass v. Hanson, 5 Neb. App. 28, 554 N.W.2d 642 (1996).
11 Id. at 36, 554 N.W.2d at 647.
12 Id.

462 	284 NEBRASKA REPORTS
Plaintiffs offered at the summary judgment hearing Behrens’
testimony that he did not learn of the alleged malpractice until
December 2007 and that he had no idea that promissory notes
could be treated as securities. But we disagree and conclude
that the 2001 incident started the clock on the discovery excep-
tion to the statute of limitations. The department’s investiga-
tion was sufficient under Nebraska law to put Behrens on
notice that promissory notes could be securities and to provide
Behrens with knowledge which, if pursued, would have led to
the discovery of Blunk’s alleged negligence. As such, the dis-
covery exception to § 25-222 began running in October 2001
and had expired by October 2002, more than 6 years prior to
the filing of the malpractice action in this case.
Continuous Relationship Rule.
[6] This court has also, upon occasion, considered whether a
continuous relationship might operate to toll the statute of limi-
tations set out in § 25-222. In order for such a relationship to
toll the statute of limitations regarding a claim for malpractice,
there must be a continuity of the relationship and services for
the same or related subject matter after the alleged professional
negligence.13 Continuity does not mean the mere continuity of
the general professional relationship.14
Behrens alleges that his professional relationship with Blunk
began sometime in 1996 and ended no earlier than December
7, 2007, and might have continued until at least April 2008,
and that thus, his time to file suit was tolled for 2 years beyond
the end of the relationship. Blunk contests this assertion, argu-
ing that the relationship was not continuous within the meaning
of Nebraska law and that, even if it had been, under the facts of
this case, Behrens’ suit was still untimely.
We reject plaintiffs’ contention that Behrens’ and Blunk’s
professional relationship was continuous within the meaning
of Nebraska law from 1996 until late 2007 or early 2008. A
review of the record does not support the conclusion that there
was a continuity of relationship for the same or related subject
13 Reinke Mfg. Co. v. Hayes, 256 Neb. 442, 590 N.W.2d 380 (1999).
14 Id.

BEHRENS v. BLUNK 	463
Cite as 284 Neb. 454
matter following the malpractice. At most, the record shows
that during this time Behrens and Blunk had a general profes-
sional relationship, which is not considered continuous for the
purposes of this exception.
We note that Behrens’ and Blunk’s relationship might be
considered continuous from October 2001, when Behrens
was notified of the department’s investigation, until April
2003, when that investigation was complete, because the rela-
tionship dealt with that specific investigation. But assuming
without deciding that this relationship was continuous for that
period of time, and also assuming without deciding that this
continuous relationship could toll not the statute of limita-
tions but the running of Behrens’ discovery period under the
statute, we nevertheless conclude that Behrens’ suit, brought
more than 5 years after the termination of this relationship,
was untimely.
Because we conclude that Behrens’ suit was untimely, we
need not decide whether it was also barred by the doctrine of
in pari delicto.
CONCLUSION
Behrens’ suit is barred by the 2-year statute of limitations set
forth in § 25-222. The decision of the district court in favor of
Blunk and his codefendants is affirmed.
affiRmed.
WRight, J., not participating.