                         IN THE NEBRASKA COURT OF APPEALS

               MEMORANDUM OPINION AND JUDGMENT ON APPEAL

                                     IN RE TRUST OF MORRIS


  NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
 AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).


                       IN RE AMENDED AND RESTATED IRREVOCABLE TRUST
                               OF BEVERLY J. MORRIS, DECEASED.


                                DIANE RICH ET AL., APPELLEES,
                                             V.
                                DR. ALLEN MORRIS, APPELLANT.


                              Filed June 24, 2014.   No. A-13-313.


       Appeal from the County Court for Douglas County: JOSEPH P. CANIGLIA, Judge.
Affirmed.
       James D. Sherrets, Diana J. Vogt, and Robert S. Sherrets, of Sherrets, Bruno & Vogt,
L.L.C., for appellant
       Kristopher J. Covi, of McGrath, North, Mullin & Kratz, P.C., L.L.O., for appellees.


       INBODY, Chief Judge, and IRWIN and BISHOP, Judges.
       IRWIN, Judge.
                                      I. INTRODUCTION
        Dr. Allen Morris, trustee of the irrevocable trust of Beverly J. Morris, deceased, appeals
an order of the county court for Douglas County, Nebraska, denying his application to vacate a
prior order and finding him in contempt. On appeal, Morris has assigned numerous errors related
to the court’s refusal to vacate the prior order and the court’s finding of contempt. We find no
merit to the assertions on appeal regarding the court’s ruling denying vacation of the prior order.
We find that the finding of contempt is not appealable. We affirm.




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                                        II. BACKGROUND
         Beneficiaries of the irrevocable trust of the deceased filed an action in the county court in
October 2011, seeking to compel an accounting by the trustee, Morris. In the amended
application, the beneficiaries alleged that a prior case in the district court, in which a deed of
trust transferring property from the deceased to Morris had been challenged, had been defended
by Morris in his personal capacity. The beneficiaries alleged that Morris had incurred attorney
fees in his personal capacity, but had converted trust assets to his own use to pay his personal
attorney fees. The beneficiaries sought to have Morris restore $66,787.06 to the trust and to
distribute the trust assets according to its terms.
         Morris answered the application. In his answer, Morris alleged that he had defended the
district court case both in his personal capacity and in his official capacity as trustee. Morris
alleged that he had authority, as trustee, to pay attorney fees incurred in defending the district
court case. Morris alleged that there were no funds in the trust to be distributed.
         In March 2012, the parties appeared for trial on the application to compel accounting.
The parties represented to the court that they had worked out a resolution and had reached a
settlement agreement. The agreement was read into the record. The agreement provided that
there was then slightly more than $10,000 in the trust and that Morris would repay slightly more
than $63,000 into the trust within 90 days. The agreement then called for distribution of a portion
of the $10,000 on the following Monday and called for distribution of the remaining amounts
once paid in, within 90 days. Morris personally represented to the court that he agreed.
         On March 29, 2012, the court entered an order incorporating the parties’ agreement. The
court’s order iterated the terms that had been stated in open court, including that Morris was
supposed to have distributed a portion of the $10,000 that was already in the trust by March 4,
that Morris was to pay slightly more than $63,000 into the trust by May 31, and that Morris was
to distribute the total amounts according to the terms of the trust by May 31.
         On June 1, 2012, the beneficiaries filed a motion seeking to have Morris held in
contempt. The beneficiaries noted the prior agreement of the parties and the court’s order
consistent with that agreement, and alleged that despite the prior agreement and court order,
Morris had made no payments and all communications with Morris’ counsel had been ignored.
         Morris responded to the contempt request by moving to vacate the court’s prior order.
Morris alleged that he had lacked sufficient mental capacity to enter into the agreement, that
there had been a mistake, and that he had been unable to understand the terms he had agreed to.
         The court held a single hearing, at which testimony and evidence was adduced
concerning both the motion to vacate the prior order and the request to have Morris held in
contempt.
         During the hearing, Morris presented evidence establishing that he had suffered from
multiple sclerosis (MS), diagnosed as early as 2003. Morris had previously been a surgeon, but
was unable to continue in that capacity, although he did continue being a doctor. In February
2007, Morris suffered a workplace injury that caused significant worsening of his condition, and
he ceased practicing medicine in May 2007. Morris’ doctor testified about physical and cognitive
impacts of MS. He testified that Morris’ condition was a “chronic degenerative disorder” that
was getting worse. He ultimately gave an opinion that as of June 2011, Morris was “not able to



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make an independent, informed decision.” He testified that his opinion would be the same
concerning March 2012.
         On cross-examination, Morris’ doctor acknowledged that he had not conducted any
evaluation of Morris between June 2011 and March 2012. He also acknowledged that “MS
patients, like all individuals, can have good days and bad days” and that Morris might be able to
perform better mentally some weeks than other weeks.
         Morris also presented evidence that he relied heavily on his wife to serve as a “cognitive
aid.” His wife testified that Morris has trouble following conversations, does not handle stress
well, and generally “needs a lot of help.” She testified that “[o]nce . . . things are explained to
him generally he can understand them, but he needs help.” She testified that she also suffers from
MS and that she had been ill prior to the March 2012 hearing where the parties entered into the
settlement agreement. She testified that she believed that Morris wanted to “just get out of
[t]here” and was willing to “do whatever.” She testified that the next day she and Morris “really
weren’t too clear on exactly what had occurred” at the hearing.
         Morris testified that he had been told that his condition had worsened over the years. He
testified that he had been told that it impacts his ability to understand things. He testified that
stress increases his symptoms, and he testified about the stresses leading up to the March 2012
hearing. He testified that his primary objective that day had been getting out of court and getting
his wife out of court because she was ill. He testified that he did not understand what he had
done. He testified that the next day, he did not recall having entered into a settlement agreement.
         Morris testified that he believed he was fit to continue acting as a trustee. He later
testified that he was serving as the trustee of another trust as well. He testified that he believed
that if given sufficient help and time, he had the ability to administer a trust.
         The attorney who had represented Morris at the time of the March 2012 hearing also
testified. He testified that the parties at that time had engaged in settlement negotiations and that
he had not been concerned about Morris’ understanding of what was going on. The attorney
testified that during the negotiations, Morris asked questions, negotiated a period of time for his
repayment of money to the trust, and discussed the terms of the settlement agreement with the
attorney. He testified that he had known that Morris suffered from MS, but had been unaware of
“the extent of it” at the time.
         At the conclusion of the hearing, Morris’ counsel moved for a directed verdict and argued
that he had shown as a matter of law that Morris had not been competent to enter into a
settlement agreement on the date in question. The beneficiaries’ counsel argued that the medical
testimony was not believable because it suggested that Morris got worse every day and was
substantially worse than 5 years prior, that the medical testimony established that Morris had
good days and bad days, and that Morris’ doctor had not conducted an evaluation for 1 year
before the date in question. The beneficiaries’ counsel also argued that the evidence
demonstrated that the parties had engaged in a 1½-hour negotiation, that everyone involved was
stressed, but not that Morris did not understand what was going on.
         The court made specific findings that it had “heard the medical testimony” and had “seen
[Morris] and his wife testify” and that “the medical testimony just doesn’t jive with what [the
court] saw before [its] own eyes.” The court denied the motion to vacate the prior order
implementing the settlement agreement.


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        The parties then presented brief evidence concerning the request to hold Morris in
contempt. The parties stipulated that Morris had not complied with the court’s prior order.
        Morris testified that he did not have money to comply with the order. He testified that he
had quit his medical practice in 2007, had not worked since then, and lived on disability
payments. He also testified that he had no assets to liquidate.
        Morris acknowledged that the trust had in excess of $10,000 in it and acknowledged that
there was sufficient money in the trust to allow him to comply with the prior order’s first
required distribution of approximately $9,000. He testified that he could not “mentally” bring
himself to comply with that order, but acknowledged that there was money in the trust to
allow it.
        Morris testified that he had a joint bank account, but was unaware of the balance in the
account. He testified that he served as the trustee of another trust, but was unaware of whether
any assets in that trust were available to him. He testified that he could not remember if the other
trust had any bank accounts.
        At the conclusion of the hearing, the court found that Morris was in violation of the prior
court order and found him to be in contempt.
        The court entered a written order in which the court made findings that Morris had been
aware of the terms of the settlement agreement incorporated into the prior court order and had
participated in negotiating the terms. The court found that Morris’ testimony established that he
had knowledge and an understanding of what the order required and that he had entered into the
settlement voluntarily. The court denied the motion to vacate the prior court order and found that
Morris had been willfully disobedient. The court ordered Morris to distribute slightly more than
$9,000 of the money then in the trust “immediately” and ordered him to pay slightly less than
$46,000 for the benefit of the trust beneficiaries within 60 days. The order provided that
“[f]ailure to comply . . . shall result in appropriate contempt penalties to be delivered by the
court.”
                                III. ASSIGNMENTS OF ERROR
        On appeal, Morris raises a number of assignments of error asserting that the county court
erred in refusing to vacate the prior order and in finding him in contempt. Morris also asserts that
the court should have recused itself because of bias.
                                          IV. ANALYSIS
                                      1. MOTION TO VACATE
        Morris first asserts that the county court erred in refusing to vacate the prior order, which
prior order had incorporated the terms of the settlement agreement agreed to by the parties in
March 2012. In this regard, Morris primarily argues that the court erred in not finding him
incompetent to enter into a settlement agreement, in rejecting medical testimony, and in refusing
to vacate the prior order under equity powers. We find no merit to these assertions.
                                      (a) Standard of Review
      We initially address the appropriate standard of review for this case. Morris asserts that
we should review the county court’s ruling on his motion to vacate the prior order under a de


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novo standard of review because the motion to vacate requested that the district court exercise its
equitable authority to vacate an order. The beneficiaries assert that we should review the county
court’s ruling under an abuse of discretion standard.
        We initially note that there appears to be a direct conflict in the case law concerning the
appropriate standard of review for a Nebraska appellate court reviewing a lower court’s ruling on
a motion to exercise equitable authority to vacate an order within the same term in which the
order was entered.
        In Hornig v. Martel Lift Systems, 258 Neb. 764, 770, 606 N.W.2d 764, 769 (2000), the
Nebraska Supreme Court very clearly and explicitly ruled that the appropriate standard of review
when reviewing a district court’s ruling on a motion to vacate and set aside a prior order of
dismissal pursuant to the district court’s independent equity jurisdiction “is de novo on the
record.” In that case, the Supreme Court reviewed a district court order vacating a prior
dismissal; the motion to vacate was filed outside of the term in which the dismissal was filed, but
within 6 months of the end of the term. The Supreme Court recognized that there was, at that
time, confusion as to the applicable standard of review. The court noted it had previously held
that an appellate court would reverse a decision on a motion to vacate or modify a judgment only
upon a showing of an abuse of discretion and quoted such a holding in its prior decision in Thrift
Mart v. State Farm Fire & Cas. Co., 251 Neb. 448, 558 N.W.2d 531 (1997). See Hornig v.
Martel Lift Systems, supra. The court specifically distinguished the application of the abuse of
discretion standard in the Thrift Mart case, holding that the moving party in that case had sought
to have the dismissal order vacated under both the trial court’s statutory authority and under its
independent equity jurisdiction. Hornig v. Martel Lift Systems, supra. The court specifically held
that “[t]o the extent that Thrift Mart reviewed the trial court’s refusal to exercise its independent
equity powers for abuse of discretion, that decision is overruled” and very clearly stated that
“[t]he correct standard of review for a trial court’s exercise of equity jurisdiction is de novo on
the record, with independent conclusions of law and fact.” Hornig v. Martel Lift Systems, 258
Neb. at 770, 606 N.W.2d at 769.
        Three years later, however, in Hartman v. Hartman, 265 Neb. 515, 657 N.W.2d 646
(2003), the Nebraska Supreme Court reviewed a case in which a party moved to vacate a
dissolution of marriage decree. The party sought vacation of the decree under both the court’s
statutory authority and under the court’s independent equity powers. The district court dismissed
the motion to vacate, and the party appealed.
        In its analysis of the issue, the Supreme Court first concluded that although the party had
based its motion to vacate in part on the district court’s statutory authority to vacate prior orders,
the statutory basis pled by the party applied only to applications to vacate made outside of the
term in which the order was entered. Because the party had sought to vacate the decree during
the same term in which it was entered, the court concluded that the statutory grounds for
vacation pled by the party were not applicable. Thus, the court limited its analysis of the issue to
a determination of whether the district court had erred in not exercising its inherent equitable
authority to vacate a decision within the same term.
        The Supreme Court noted that “[i]t is well settled that a district court has the inherent
authority to vacate or modify a decision within the same term that the decision is rendered.”
Hartman v. Hartman, 265 Neb. at 519, 657 N.W.2d at 649. The court then recognized that a


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district court has equitable power to vacate a judgment during the term in which it was entered
on grounds which include, but are not limited to, those enumerated in Neb. Rev. Stat.
§ 25-2001(4) (Reissue 2008), which statute provides statutory grounds for vacation of a
judgment out of term. See Hartman v. Hartman, supra.
         The Supreme Court then specifically stated that “[b]ecause the decision to vacate an
order anytime during the term in which the judgment is rendered is within the discretion of the
court such a decision will be reversed only if the district court abused its discretion.” Hartman v.
Hartman, 265 Neb. at 519, 657 N.W.2d at 649. The court ultimately concluded that the district
court “did not abuse its discretion in denying the motion to vacate.” Id. at 521, 657 N.W.2d
at 650.
         In Fitzgerald v. Fitzgerald, 286 Neb. 96, 835 N.W.2d 44 (2013), the district court entered
a default order modifying a dissolution of marriage decree. Thirteen days later--within the same
term--a party filed a motion for new trial, to alter or amend the modification order, or to vacate
it. The district court overruled the motions for new trial and to alter or amend, but granted the
motion to vacate. On appeal, the Nebraska Supreme Court recognized that the district court had
“inherent power to vacate or modify its own judgment at any time during the term in which the
court issued it” and that “we review the court’s order doing so for an abuse of discretion.” Id. at
102, 835 N.W.2d at 49. The Supreme Court ultimately concluded that the district court did not
“abuse its discretion” in granting the motion to vacate. Id. at 106, 835 N.W.2d at 51.
         In Johnson v. Johnson, 282 Neb. 42, 803 N.W.2d 420 (2011), a dissolution of marriage
decree was entered, and within the same term, one party moved to vacate the decree. On appeal
from the district court’s denial of the motion, the Nebraska Supreme Court stated that “[w]e will
reverse a decision on a motion to vacate only if the litigant shows that the district court abused its
discretion.” Id. at 44, 803 N.W.2d at 422. The court did not include any discussion of equitable
powers, but inasmuch as the request to vacate was made within term, it is apparent that it was a
request for the district court to exercise its equitable powers, and the Supreme Court again
applied an abuse of discretion standard of review.
         In its ruling in Johnson v. Johnson, supra, the Supreme Court cited to Destiny 98 TD v.
Miodowski, 269 Neb. 427, 693 N.W.2d 278 (2005), in which the court also indicated an abuse of
discretion standard of review applied to reviewing a district court’s ruling on a motion to vacate
that had been filed within the same term as the order sought to be vacated. In Destiny 98 TD v.
Miodowski, supra, the court ultimately ruled that the district court had erred on a matter of
statutory interpretation that merited reversal, and the court did not make a finding of an abuse of
discretion.
         We conclude that the Supreme Court’s jurisprudence, Hornig v. Martel Lift Systems, 258
Neb. 764, 606 N.W.2d 704 (2000), notwithstanding, has been consistent since 2003 in indicating
that when a court is moved to vacate a prior order entered within the same term of court, under
the court’s inherent authority to do so, such a decision is within the discretion of the court and is
reviewed on appeal for an abuse of discretion. We also note that although the cases discussed
above are all district court cases, it has long been recognized that county courts also have
inherent authority to vacate or set aside orders entered within the same term as an equitable
authority incidental to the jurisdiction conferred by statute to act in particular areas of law. See,
In re Estate of Jensen, 135 Neb. 602, 283 N.W. 196 (1939); Volland v. Wilcox, 17 Neb. 46, 22


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N.W. 71 (1885). See, also, General Serv. Bureau v. Moller, 12 Neb. App. 288, 572 N.W.2d 41
(2003) (district court and appellate court reviewed county court’s refusal to set aside default
judgment for abuse of discretion and iterating propositions of law concerning inherent authority
to vacate or modify within term). Thus, we apply an abuse of discretion standard of review to our
review of the county court’s decision denying Morris’ application to vacate.
                            (b) Merits of Appeal on Motion to Vacate
         Morris argues that the county court erred in denying his motion to vacate the prior order.
In this regard, he primarily argues that the evidence established that because of his MS and
stresses he was under at the time of the settlement agreement that led to the prior order, he was
unable to understand what he was agreeing to. He argues that the uncontroverted medical
testimony established that he lacked capacity to enter into a settlement agreement and that,
accordingly, the court’s prior order should have been vacated.
         Although it is accurate to note that the beneficiaries did not present medical evidence to
contradict the testimony of Morris’ doctor, we do not find the medical evidence to be
uncontroverted. Rather, the beneficiaries’ counsel raised issues concerning the credibility of
Morris’ doctor and Morris through cross-examination of the witnesses.
         Although Morris’ doctor testified that Morris had been diagnosed with MS as early as
2003 and described MS as a “chronic degenerative disorder” that was getting worse, he also
acknowledged that he had not conducted any evaluation of Morris between June 2011 and March
2012. He had not evaluated Morris’ condition, or cognitive abilities, for nearly 1 year prior to the
date of the hearing where the parties entered into the settlement agreement, and there was no
evidence that he observed or evaluated Morris in any way on the date in question. Morris’ doctor
also testified that “MS patients, like all individuals, can have good days and bad days” and that
Morris might be able to perform better mentally some weeks than other weeks.
         Although Morris’ doctor ultimately gave an opinion that as of June 2011 Morris was “not
able to make an independent, informed decision,” he did not testify that Morris was unable to
make informed decisions when receiving sufficient advice and assistance. On the date in
question, when Morris entered into the settlement agreement, he was represented by counsel who
was involved in the settlement negotiations. Although Morris’ counsel from the date in question
testified that he had been unaware of the “extent” of Morris’ MS at the time, he was aware that
Morris suffered from MS. Morris’ counsel testified that during the negotiations, Morris asked
questions, negotiated a period of time for repayment of money to the trust, and discussed the
terms of settlement with him.
         Morris also presented evidence that he relied heavily on his wife as a cognitive aid, and
that she also suffered from MS and was ill at the time of the hearing when the settlement
agreement was entered into. Although his wife testified that Morris had trouble following
conversations and needed help, she also testified that “[o]nce . . . things are explained to him
generally he can understand them.” As noted, the evidence indicates that Morris had counsel at
the time and that he and his counsel discussed the settlement negotiations and the terms of
settlement. When the parties appeared in court and informed the court that a settlement had been
reached, Morris specifically represented to the court that he agreed with its terms and the court
had the opportunity to hear and observe him at that time.


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        At the conclusion of the hearing in this case, the beneficiaries’ counsel argued to the
court that Morris’ doctor’s testimony would suggest his condition had progressively gotten worse
over the past 5 years and that the doctor was not believable. The beneficiaries’ counsel argued
that the evidence demonstrated the parties engaged in a negotiation, that everyone was under
stress at the time, but that the evidence did not demonstrate Morris did not know what was going
on. The court agreed and indicated in open court that, having seen and heard the testimony of the
witnesses, Morris’ doctor’s testimony and opinion did not “jive” with his observations of Morris.
        At the conclusion of the hearing in this case, the court entered an order in which it made
specific findings about the credibility of the witnesses. The court made specific findings that
Morris was aware of the terms of the settlement agreement reached by the parties and
participated in working out the terms of the agreement. The court specifically found that “the
manner in which [Morris] testified and his testimony itself proves his knowledge of the effect of
his agreement and the impact of it, and that he entered into it voluntarily.”
        Even though the motion to vacate was brought seeking to invoke the county court’s
inherent powers, we do not turn a blind eye to the fact that the crucial issue to be determined
rested heavily on the credibility of the witnesses. In an appeal from an equity action, when
credible evidence is in conflict on material issues of fact, we consider and give weight to the fact
that the trial court observed the witnesses and accepted one version of the facts over another.
American Amusements Co. v. Nebraska Dept. of Revenue., 282 Neb. 908, 807 N.W.2d 492
(2011). In this case, the credible evidence was in conflict because, as noted above, questions
about credibility or the sufficiency of the medical opinions and Morris’ own testimony were
raised through cross-examination; those questions on cross-examination created a conflict in the
evidence and called into question the correct conclusion to be drawn from the evidence. The
county court made a credibility finding, and we give weight to it.
        We find no abuse of discretion by the county court in denying Morris’ application to
vacate the order adopting the parties’ negotiated settlement agreement. We also note, for the sake
of completeness, that even if we reviewed the county court’s decision de novo on the record, as
Morris urged, we would give weight to the court’s conclusions based on the credibility of the
witnesses and would similarly find no merit to Morris’ assertion on appeal that the county court
erred.
                                           2. CONTEMPT
        Morris next asserts that the county court erred in finding him in contempt. Morris argues
primarily that the court erred in finding a willful violation because there was not a sufficient
showing that he was capable of complying with the prior court order. Because the court’s finding
of contempt was not accompanied by any sanction, we find that the contempt ruling is not a
final, appealable order.
        The law in Nebraska has long been that the finding of contempt alone, without a
noncontingent order of sanction is not appealable. See, Meisinger v. Meisinger, 230 Neb. 37, 429
N.W.2d 721 (1988); State ex rel. Kandt v. North Platte Baptist Church, 225 Neb. 657, 407
N.W.2d 747 (1987); In re Contempt of Liles, 216 Neb. 531, 344 N.W.2d 626 (1984). See, also,
In re Interest of Karlie D., 19 Neb. App. 135, 809 N.W.2d 510 (2011) (analogizing interlocutory
order in juvenile proceeding to one in contempt proceeding making findings of contempt but


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imposing no sanction and concluding such situation results in no final order from which to
appeal).
        In this case, the only order presented in our record concerning Morris’ being held in
contempt included the court’s finding that Morris had willfully disobeyed the court’s prior order
by not paying any of the amounts ordered to be paid, despite acknowledging in his own
testimony that part of the money was in the trust and available to make payments. The court
directed Morris to comply and concluded that “[f]ailure to comply with the above terms . . . shall
result in appropriate contempt penalties to be delivered by the court.” Thus, no actual sanction
was included in the court’s order.
        Because the court made a finding of contempt but imposed no sanction, the contempt
finding is not appealable.
                                             3. RECUSAL
        Finally, Morris asserts that the county court erred in not recusing itself. Morris argues
that the court exhibited bias.
        In his reply brief, Morris acknowledges that “[i]f this court sustains the trial court’s ruling
in this case the issue of recusal is irrelevant. However, if this court reverses the decision and
returns the case for further proceedings, [the trial judge] should recuse himself.” Reply brief for
appellant at 9. Morris’ arguments about the trial judge’s alleged bias and need for recusal
concern Morris’ assertions that the court erred in denying his motion to vacate the prior order.
        Inasmuch as we have concluded that the county court’s denial of the motion to vacate
should be affirmed, we decline to further address the issue of recusal, consistent with Morris’
assertion the issue is now irrelevant.
                                                                                           AFFIRMED.




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