State ex rel. Stenberg v. Consumer's Choice Foods

to support Draganescu’s conviction and that the court did not err
in sentencing him to 5 to 11 years’ imprisonment.
A ffirmed .
S tAte of N ebrASkA ex rel . doN S teNberg , AttorNey geNerAl ,
Appellee ANd croSS-AppellANt , v . coNSumer ’S choice
foodS, iNc ., et Al ., AppelleeS, ANd JAyco AcceptANce
corporAtioN, AppellANt ANd croSS-Appellee .
755 N.W.2d 583
Filed August 29, 2008. 	No. S-07-240.
1. Consumer Protection: Equity. The Consumer Protection Act, Neb. Rev. Stat.
§§ 59-1601 through 59-1622 (Reissue 2004 & Cum. Supp. 2006), is equitable
in nature.
2. Deceptive Trade Practices: Equity. The terms of the Uniform Deceptive Trade
Practices Act, Neb. Rev. Stat. §§ 87-301 through 87-306 (Reissue 1999 & Cum.
Supp. 2006), provide only for equitable relief consistent with general principles
of equity.
3. Equity: Appeal and Error. In an appeal of an equity action, an appellate court
tries the factual questions de novo on the record and reaches a conclusion inde-
pendent of the findings of the trial court, provided, however, that where credible
evidence is in conflict on a material issue of fact, an appellate court considers and
may give weight to the fact that the trial judge heard and observed the witnesses
and accepted one version of the facts rather than another.
4. Consumer Protection: Contracts: Assignments: Debtors and Creditors: Sales.
The holder/assignee of a retail installment contract which includes the Federal
Trade Commission’s holder rule is subject to any claim or defense the debtor could
assert against a seller, as long as the claim or defense arises out of or is connected
with the original transaction.
5. Consumer Protection: Debtors and Creditors: Sales. The Federal Trade
Commission’s holder rule was designed to reallocate the cost of seller misconduct
to the creditor, who is in a better position to absorb the loss or recover the cost from
the guilty party—the seller.
6. Consumer Protection. Pursuant to the Consumer Protection Act, Neb. Rev. Stat.
§§ 59-1601 through 59-1622 (Reissue 2004 & Cum. Supp. 2006), unfair methods
of competition and unfair or deceptive acts or practices in the conduct of any trade
or commerce shall be unlawful.
7. Deceptive Trade Practices. The Uniform Deceptive Trade Practices Act, Neb. Rev.
Stat. §§ 87-301 through 87-306 (Reissue 1999 & Cum. Supp. 2006), provides that a
person has engaged in a deceptive trade practice when, in the course of business, he
or she represents that goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits, or quantities that they do not have.
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	481
Cite as 276 Neb. 481
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:53 AM CST

8. Damages: Appeal and Error. The amount of damages to be awarded is a determi-
nation solely for the fact finder, and its action in this respect will not be disturbed
on appeal if it is supported by evidence and bears a reasonable relationship to the
elements of the damages proved.
9. Consumer Protection: Debtors and Creditors. The Federal Trade Commission’s
holder rule limits a debtor’s recovery to the amounts paid by the debtor.
10. Attorney Fees: Appeal and Error. A trial court’s decision awarding or denying
attorney fees will be upheld absent an abuse of discretion.
11. Consumer Protection: Deceptive Trade Practices: Equity. A consumer can
seek equitable relief under both the Consumer Protection Act, Neb. Rev. Stat.
§§ 59-1601 through 59-1622 (Reissue 2004 & Cum. Supp. 2006), and the Uniform
Deceptive Trade Practices Act, Neb. Rev. Stat. §§ 87-301 through 87-306 (Reissue
1999 & Cum. Supp. 2006).
12. Appeal and Error. In a review de novo on the record, an appellate court reap-
praises the evidence as presented by the record and reaches its own independent
conclusions with respect to the matters at issue.
13. ____. An appellate court will not consider an issue on appeal that was not pre-
sented to or passed upon by the trial court.
Appeal from the District Court for lancaster County: S teveN
d. burNS, Judge. Affirmed.
Nichole S. bogen and James b. luers, of Wolfe, Snowden,
hurd, luers & Ahl, l.l.P., for appellant.
Jon bruning, Attorney general, and Jeffrey A. gaertig for
appellee State of Nebraska.
heAvicAN, 	C.J., 	W right, 	coNNolly, 	gerrArd, 	S tephAN,
mccormAck, and miller -lermAN, JJ.
W right, J.
I. NATURe oF CASe
The State of Nebraska, through its Attorney general, brought
this action against Consumer’s Choice Foods, Inc.; its principals,
Chris Johnson and Jason Johnson; and its sales manager, Kimberly
Stigge-Johnson (collectively CCF). The State alleged CCF had
violated the Uniform Deceptive Trade Practices Act (UDTPA),
see Neb. Rev. Stat. §§ 87-301 through 87-306 (Reissue 1999
& Cum. Supp. 2006), and the Consumer Protection Act (CPA),
see Neb. Rev. Stat. §§ 59-1601 through 59-1622 (Reissue 2004
& Cum. Supp. 2006). Jayco Acceptance Corporation (Jayco),
which had purchased consumer installment contracts from CCF,
was also named as a defendant.
482 	276 NebRASKA RePoRTS

The district court for lancaster County entered judgment
against CCF and awarded damages to certain consumers. It
also awarded costs, attorney fees, civil penalties, and injunctive
relief. Jayco was found to be jointly and severally liable with
CCF, but the amount recoverable from Jayco was limited to
$96,308.21 plus interest and costs. Jayco was ordered to send
notices to credit and collection organizations on behalf of each
consumer, stating that the contract had been obtained by decep-
tion and had been rescinded. Jayco appealed, and the State
has cross-appealed.
II. SCoPe oF ReVIeW
[1,2] The CPA is equitable in nature. State ex rel. Douglas v.
Schroeder, 222 Neb. 473, 384 N.W.2d 626 (1986). The terms
of the UDTPA provide only for equitable relief consistent with
general principles of equity. Sid Dillon Chevrolet v. Sullivan,
251 Neb. 722, 559 N.W.2d 740 (1997).
[3] In an appeal of an equity action, an appellate court tries
the factual questions de novo on the record and reaches a
conclusion independent of the findings of the trial court, pro-
vided, however, that where credible evidence is in conflict on
a material issue of fact, an appellate court considers and may
give weight to the fact that the trial judge heard and observed
the witnesses and accepted one version of the facts rather than
another. Archbold v. Reifenrath, 274 Neb. 894, 744 N.W.2d
701 (2008).
III. FACTS
CCF used installment contracts to sell food service plans and
appliances to consumers. It supplied frozen foods, meats, and
nonperishable dry goods but did not provide perishable items
such as bread, milk, and fresh produce. Prospective consumers
were told by CCF representatives that they would reduce their
costs and would receive higher quality food. CCF also repre-
sented that its program would save the consumers time. The
telephone marketers told the consumer that CCF would provide
a new freezer that did not cost “‘anything extra.’” Sales repre-
sentatives then met with the consumer at home and represented
the program as a savings of time and money.
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	483
Cite as 276 Neb. 481

CCF offered several types of purchase programs. In the pre-
mium program, the consumers enrolled in a 48-month plan.
They were promised a 20-percent discount on food at the end of
the term, a new freezer or other appliance, and a free ninth order
with upgrade. Consumers were told that the freezer was included
in the cost of food or at no additional cost, but salespeople were
trained not to use the term “free.”
Consumers were asked to sign two contracts: a food contract
and a freezer contract. The food contract required a purchase of
6 months’ worth of food at a price of $199 to $519 per month.
The food contract was renewable every 6 months.
Under the freezer contract, consumers were offered a freezer,
an alternate appliance, electronic equipment, or a gift certificate.
Consumers were told there was no extra charge for the item. As
part of the 48-month program, consumers also signed a member-
ship contract at a cost of $90 to $99 per month for 48 months.
The price of the food contract was reduced by the amount of
the membership contract. Consumers could choose whether to
renew the food contract at any time after the initial 6-month
trial, but if no food was ordered after that period, consumers
were required to pay the monthly membership contract for the
entire 48 months.
CCF stored dry goods and paper products in a warehouse. It
had a walk-in freezer for meat and frozen products. CCF pur-
chased the dry goods, paper, and nonperishable products in bulk
at retail grocery stores and paid retail prices. Freezers and refrig-
erators were purchased from an appliance store and delivered to
CCF customers at a cost of between $400 and $500.
In 2002, CCF had financial difficulties and by April was issu-
ing checks without sufficient funds. At that time, CCF frequently
shorted consumers on their food orders. however, it continued to
sell membership contracts into September 2002 and went out of
business December 31. CCF’s principals and its sales manager
filed suggestions of bankruptcy in August 2003.
CCF’s business practice was to immediately assign its inter-
ests in the contracts to Jayco in consideration for a portion of
the total value of the contract, less a percentage which Jayco
would realize through receipt of the consumers’ payments over
the 4-year period.
484 	276 NebRASKA RePoRTS

After receiving more than 120 complaints about CCF and
Jayco, the Attorney general requested that the Nebraska State
Patrol investigate. In January 2001, the State Patrol began an
undercover operation, and in April 2002, the State Patrol video-
taped an encounter with one of CCF’s sales representatives. The
videotape shows a representative of CCF stating that its program
would save the consumer time and money and that the food
costs would never go up. As an incentive, CCF would provide a
new freezer, which would include a 100-percent parts-and-labor
warranty. The freezer was represented as being included in the
program. The $99 monthly payment was represented as part of
the food contract, because, as the representative stated, no one
would pay $4,800 for a freezer.
The suit against CCF and Jayco asserted three causes of
action: (1) violation of the UDTPA by representing that goods
or services had characteristics, uses, or benefits that they did
not have, including the representation that the food service plan
would save consumers time and money and that the freezer,
appliance, or gift certificate was free or at no additional cost; (2)
violation of the UDTPA by engaging in unconscionable acts or
practices in connection with consumer transactions by inducing
consumers to sign both a food contract and a freezer contract;
and (3) violation of the CPA by engaging in unfair and deceptive
acts or practices in the conduct of trade or commerce by repre-
senting that the freezer, appliance, or gift certificate was free.
The State sought injunctive relief prohibiting the defendants
from continuing the deceptive practices, restitution, rescission of
the agreements, a civil penalty against each of the defendants,
and recovery of costs and attorney fees.
At trial, 36 consumers testified that they did not save time
or money as represented by CCF. They were led to believe that
they would receive free freezers, but later learned that they were
required to pay Jayco either a $90 or $99 monthly payment for
the 48-month membership benefit or freezer contract even if
they were no longer receiving food from CCF.
The district court entered joint and several judgment in
favor of the State and against CCF and Jayco in the amount of
$96,308.21, to be distributed among 34 former CCF custom-
ers. The court awarded a total of $115,480.50 in attorney fees,
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	485
Cite as 276 Neb. 481

jointly and severally against CCF and Jayco. The court also
awarded costs in the amount of $10,457.14, also jointly and
severally against the parties. The court determined that the total
amount to be recovered from Jayco could not exceed $96,308.21
plus costs. It concluded that collection of costs from Jayco was
not limited by the Federal Trade Commission’s holder rule (FTC
holder Rule), 16 C.F.R. § 433.2 (2008). Jayco appeals, and the
State cross-appeals.
IV. ASSIgNmeNTS oF eRRoR
Jayco claims the district court erred in finding that it violated
§§ 59-1602 and 87-302(a)(5) and in awarding excessive dam-
ages, injunctive relief, civil penalties, costs, and attorney fees.
In its cross-appeal, the State asserts that the district court
misconstrued the CPA, the UDTPA, and the FTC holder Rule
by limiting the State’s recovery from Jayco.
V. ANAlYSIS
1. ftc holder rule
Jayco is the only defendant that has appealed to this court.
Thus, we consider the basis of Jayco’s liability under the causes
of action brought by the State. The district court concluded
Jayco’s liability was based upon 16 C.F.R. § 433.2, the FTC
holder Rule. Jayco was the assignee of CCF’s installment con-
tracts, and under the FTC holder Rule, an assignee or holder of
consumer credit contracts is subject to all claims that the con-
sumer may assert against the seller.
The federal regulation provides in pertinent part:
In connection with any sale or lease of goods or services
to consumers, in or affecting commerce as “commerce” is
defined in the Federal Trade Commission Act, it is an unfair
or deceptive act or practice within the meaning of section 5
of that Act for a seller, directly or indirectly, to:
(a) Take or receive a consumer credit contract which
fails to contain the following provision in at least ten point,
bold face, type:
NoTICe
ANY 	holDeR 	oF 	ThIS 	CoNSUmeR 	CReDIT
CoNTRACT 	IS 	SUbJeCT 	To All 	ClAImS AND
486 	276 NebRASKA RePoRTS

DeFeNSeS WhICh The DebToR CoUlD ASSeRT
AgAINST The SelleR oF gooDS oR SeRVICeS
obTAINeD 	PURSUANT 	heReTo 	oR 	WITh 	The
PRoCeeDS heReoF. ReCoVeRY heReUNDeR bY
The DebToR ShAll NoT exCeeD AmoUNTS PAID
bY The DebToR heReUNDeR.
16 C.F.R. § 433.2. The regulation interprets the Federal Trade
Commission Act. Maberry v. Said, 911 F. Supp. 1393 (D.
Kan. 1995).
[4] Pursuant to the FTC holder Rule, “a consumer-debtor
may assert against a creditor-assignee of a consumer credit
contract any and all affirmative claims for recovery, as well as
defenses, that the consumer-debtor would be entitled to assert
against the seller had the contract not been assigned.” Beemus
v. Interstate Nat. Dealer Serv., 823 A.2d 979, 986 (Pa. Super.
2003). In other words, the holder/assignee of a retail install-
ment contract which includes the FTC holder Rule is subject
to any claim or defense the debtor could assert against a seller,
as long as the claim or defense arises out of or is connected
with the original transaction. Primus Auto Financial Serv. v.
Brown, 163 ohio App. 3d 746, 840 N.e.2d 254 (2005). “Claims
and defenses may be raised against the assignee, even where
the seller . . . is insolvent, as long as the claims were asserted
or could have been asserted against the seller.” Id. at 749, 840
N.e.2d at 257.
The purpose of the FTC holder Rule was to modify the
effect of the holder-in-due-course rule on consumer purchases
of goods and services. Ambre v. Joe Madden Ford, 881 F.
Supp. 1182 (N.D. Ill. 1995). The holder-in-due-course principle
allowed the creditor to assert its right to be paid by the consumer
even if there was misrepresentation, breach of warranty or con-
tract, or fraud on the part of the seller. Simpson v. Anthony Auto
Sales, Inc., 32 F. Supp. 2d 405 (W.D. la. 1998). “Under the
holder[-]in[-]due[-]course rule, a consumer’s obligation to pay
for goods or services was not conditioned upon the seller’s cor-
responding duty to perform his promises.” Ambre v. Joe Madden
Ford, 881 F. Supp. at 1185. If a consumer purchased defective
goods on credit, the obligation to pay the third-party creditor
remained, even though the seller failed to perform. Id.
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	487
Cite as 276 Neb. 481

[5] The FTC holder Rule was “designed to reallocate the cost
of seller misconduct to the creditor, who is in a better position
to absorb the loss or recover the cost from the guilty party—the
seller.” Riggs v. Anthony Auto Sales, Inc., 32 F. Supp. 2d 411,
416 (W.D. la. 1998). See, also, Simpson v. Anthony Auto Sales,
Inc., supra; Maberry v. Said, supra; Home Sav. Ass’n v. Guerra,
733 S.W.2d 134 (Tex. 1987).
In the case at bar, the FTC holder Rule allows a CCF con-
sumer to assert against Jayco any affirmative claim for recovery
that the consumer could assert against CCF. The only express
limitation in the rule concerns the maximum recovery available
to a debtor. Beemus v. Interstate Nat. Dealer Serv., supra.
In the State’s petition, Jayco was named as a defendant. It
was alleged that Jayco had purchased consumer installment
contracts sold by CCF during the previous 4 years. The action
was not brought against Jayco for its conduct, but because it
was an assignee of the contracts from CCF. The petition alleged
that the “[r]espondents” violated the CPA and the UDTPA, but it
does not contain any specific allegations against Jayco. It is clear
that Jayco’s liability is based upon the FTC holder Rule, as the
district court so found.
Jayco does not argue that the FTC holder Rule does not
apply, and it concedes that the rule should be applied here. Thus,
under the rule, CCF consumers could assert claims for recovery
against Jayco as the assignee of the contracts between the con-
sumers and CCF. Jayco’s liability therefore arises from the fact
that CCF violated the CPA and/or the UDTPA and the fact that
Jayco was the assignee of the consumer contracts with CCF. See
Milchen v. Bob Morris Pontiac-GMC Truck, 113 ohio App. 3d
190, 197, 680 N.e.2d 698, 703 (1996) (assignee agreed to be
“derivatively liable” for seller’s violations of Consumer Sales
Practices Act when it accepted terms of consumer contract). If
CCF violated the CPA and/or the UDTPA, Jayco was subject to
all claims which the consumers could assert against CCF. As the
holder of the contracts assigned from CCF, Jayco was, in effect,
subject to any claims made against CCF. If CCF violated the
CPA and/or the UDTPA, Jayco could be held liable, subject to
the limitations in the FTC holder Rule. We therefore examine
whether CCF violated the CPA and/or the UDTPA.
488 	276 NebRASKA RePoRTS

(a) Violation of CPA
[6] Pursuant to the CPA, “[u]nfair methods of competition
and unfair or deceptive acts or practices in the conduct of any
trade or commerce shall be unlawful.” § 59-1602. The CPA does
not define “unfair” or “deceptive,” and this court has not defined
these terms in case law. The U.S. District Court for the District
of Nebraska has interpreted the CPA in a case involving a dis-
pute between merchants. The court stated that in order to prove
an unfair practice when merchants have entered into a contract,
the plaintiff must prove that the practice either “(1) fell within
some common-law, statutory, or other established concept of
unfairness or (2) was immoral, unethical, oppressive, or unscru-
pulous.” Raad v. Wal-Mart Stores, Inc., 13 F. Supp. 2d 1003,
1014 (D. Neb. 1998). In addition, the plaintiff must “show that
the promisor had no intent to perform the promise when it was
made” and the plaintiff must “prove that the practice possessed
the tendency or capacity to mislead, or created the likelihood of
deception.” Id.
The record in this case is replete with examples of deceptive
acts on the part of CCF that were unethical and unscrupulous.
most of the consumers who testified had signed 48-month mem-
bership contracts that included the notice required under the
FTC holder Rule. A majority of the consumers signed contracts
that required them to purchase a freezer or appliance, rather than
receiving it free as represented to them by the CCF representa-
tive. Consumers testified that even if they had a freezer, they
accepted the freezer from CCF because the company “implied
that it would be silly of us not to take the free freezer because
it was free” or “it was part of the bonus” of becoming a CCF
consumer. After making monthly payments of $90 or $99 on the
freezer contracts over a 4-year period, consumers ended up pay-
ing as much as $4,752 for a freezer, even though they no longer
received food and service from CCF.
CCF told consumers that they would save time and money
by signing a food contract, when in reality, consumers saved
neither. Consumers testified that they spent more money on food
than they had before entering into the contracts. CCF’s prices
were higher when compared to the same product in a grocery
store. one consumer used CCF’s point system to determine he
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	489
Cite as 276 Neb. 481

paid $15 for a bag of brand-name hash browns that normally
cost about $2 at the grocery store. The food contracts were
based on a point system that was illusory because it did not
inform the consumers as to how much food they would receive
each month.
Consumers testified they did not save time because they went
to the grocery store 12 to 15 times in a month to buy items not
provided by CCF or to supplement their orders. When they ran
out of items from CCF, the consumers spent time on the tele-
phone trying to reorder from CCF. It also took time to rearrange
the food when it was delivered, because the food was not placed
in the freezer in an orderly fashion.
There was evidence that the deceptive practices of CCF were
aggravated by the fact that CCF had no intention of keeping its
promises or agreements. The company continued to sell contracts
even after it began to have financial difficulty and was going out
of business. The sales techniques of CCF had the capacity to
mislead, because consumers were led to believe they would save
time and money by enrolling in the program. And it was rep-
resented to them that the freezer or another appliance was free
as a part of the program, when the reality was that the consum-
ers were paying more than $4,000 for the freezer over a 4-year
period. The evidence presented at trial established that CCF
engaged in unfair and deceptive practices in the sale of assets
and services and in commerce as contemplated by the CPA. The
record supports a finding that CCF violated the CPA.
(b) Violation of UDTPA
[7] The UDTPA provides that a person has engaged in a
deceptive trade practice when, in the course of business, he
or she “[r]epresents that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits, or quanti-
ties that they do not have.” § 87-302(a)(5). Thus, to establish a
violation of the UDTPA, there must have been a representation
regarding the nature of goods or services and the representation
must have been for characteristics or benefits that the goods or
services did not have.
CCF represented that the freezer offered to consumers was
provided at no extra charge. however, the freezer was included
490 	276 NebRASKA RePoRTS

as a part of the 48-month contract, which required consumers
to sign two separate contracts: one for food and one for the
freezer. The freezer contract required them to pay an extra $90
to $99 per month for 48 months. over the course of the contract,
the consumers would pay an additional $4,000 for the freezer,
which CCF purchased from another retailer for between $400
and $500.
Consumers were deceived in other ways. one consumer
requested an electric stove as her “free” appliance to replace
her gas stove. CCF promised installation of the stove, but at
the time of trial, the stove was still in the consumer’s garage.
Several consumers reported that they attempted to use the
freezer or food spoilage warranty included in the membership
contract, but received no help from CCF. The company also
refused to honor the guarantees of a price freeze and satisfac-
tion with the food. It failed to provide a nationwide network
for consumers if they moved out of Nebraska and refused to
offer the lifetime 20-percent discount as promised. CCF also
failed to provide the free ninth order as provided in the member-
ship contract.
Consumers were told that they needed to sign both a food
contract and a freezer contract because “it was law, you cannot
combine food and service contracts.” They were told that the
Attorney general’s office had recommended two contracts. This
representation was false. In addition, consumers were told that
the contracts would not be sold to a third party, but the contracts
were sold to Jayco.
The evidence showed that CCF sold goods and services that
were not as advertised, misrepresented the characteristics of
goods and services, caused misunderstanding as to the source of
goods and services, and caused confusion and misunderstand-
ing as to CCF’s affiliation with other food service businesses
throughout the country, all in violation of the UDTPA.
(c) Jayco’s liability
Jayco, as the holder of CCF’s contracts, was liable under
the FTC holder Rule for CCF’s violations under the CPA and
the UDTPA. Jayco was liable on any claims or defenses upon
which the consumers succeeded. The district court found that
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	491
Cite as 276 Neb. 481

the consumers were entitled to recover from Jayco on the claims
they had against CCF to the extent of any money they paid to
Jayco. The record showed that Jayco purchased the membership
contracts of 34 of the 36 consumers from CCF and that Jayco
had been paid $96,308.21 by those consumers. Thus, Jayco was
liable to the extent it received proceeds on 34 of the member-
ship contracts.
both the CPA and the UDTPA are equitable in nature. See,
Sid Dillon Chevrolet v. Sullivan, 251 Neb. 722, 559 N.W.2d 740
(1997); State ex rel. Douglas v. Schroeder, 222 Neb. 473, 384
N.W.2d 626 (1986). Thus, this is an appeal of an equity action,
and as such, this court tries the factual questions de novo on the
record and reaches a conclusion independent of the findings of
the trial court, provided, however, that where credible evidence
is in conflict on a material issue of fact, an appellate court con-
siders and may give weight to the fact that the trial judge heard
and observed the witnesses and accepted one version of the facts
rather than another. Archbold v. Reifenrath, 274 Neb. 894, 744
N.W.2d 701 (2008).
CCF bought its food and freezers from other retail establish-
ments. It was therefore obvious that CCF would not be able to
pass on savings to consumers and that CCF knew the products
it was selling were not as advertised. CCF promised goods and
services that it did not intend to deliver. We have reviewed the
factual questions de novo on the record and reach an indepen-
dent conclusion that the evidence supports a finding that CCF
violated the CPA and the UDTPA. Under the FTC holder Rule,
Jayco is therefore liable for CCF’s actions.
2. AWArd
having found that Jayco was liable, we next consider the
district court’s award of damages. The court determined that the
FTC holder Rule limits the debtors’ recovery against Jayco to
the amount the debtors paid on the membership contracts, which
was $96,308.21.
The State has filed a cross-appeal as to the amount of dam-
ages awarded. The State argues that it should be able to recover
attorney fees because the CPA and the UDTPA provide for dis-
cretionary attorney fees.
492 	276 NebRASKA RePoRTS

The 	Federal 	Trade 	Commission’s 	bureau 	of 	Consumer
Protection has stated:
“[The FTC Holder Rule] limits the consumer to a
refund of monies paid under the contract, in the event
that an affirmative money recovery is sought. In other
words, the consumer may assert, by way of claim or
defense, a right not to pay all or part of the outstanding
balance owed the creditor under the contract; but the con-
sumer will not be entitled to receive from the creditor
an affirmative recovery which exceeds the amounts of
money the consumer has paid in. . . . The limitation on
affirmative recovery does not eliminate any other rights
the consumer may have as a matter of local, state, or fed-
eral statute.”
Riggs v. Anthony Auto Sales, Inc., 32 F. Supp. 2d 411, 416 (W.D.
la. 1998).
In Nebraska, both the CPA and the UDTPA allow for attorney
fees. Under the CPA, the prevailing party may recover the costs
of the action, including a reasonable attorney fee, at the court’s
discretion. § 59-1608(1). The court may make additional orders
to restore money or property acquired by any act prohibited in
the CPA. § 59-1608(2). The UDTPA provides that costs shall
be allowed to the prevailing party and that attorney fees may be
allowed. § 87-303.
[8] The amount of damages to be awarded is a determination
solely for the fact finder, and its action in this respect will not
be disturbed on appeal if it is supported by evidence and bears a
reasonable relationship to the elements of the damages proved.
Roth v. Wiese, 271 Neb. 750, 716 N.W.2d 419 (2006). The district
court calculated the amount of damages to be awarded against
Jayco by determining the amount of money Jayco received on
the contracts it obtained by assignment from CCF.
The issue whether the FTC holder Rule limits the amount
of recovery against Jayco is one of first impression before
this court. Courts are divided as to the award of attorney fees.
In Kish v. Van Note, 692 S.W.2d 463 (Tex. 1985), the Texas
Supreme Court awarded attorney fees in a deceptive practices
action where the contract included the FTC holder Rule. The
court held the assignee bank jointly liable for attorney fees
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	493
Cite as 276 Neb. 481

on appeal. In Home Sav. Ass’n v. Guerra, 733 S.W.2d 134
(Tex. 1987), the court held the assignee liable for attorney
fees because the assignee waived its claim to the allocation of
attorney fees at trial by failing to object. In Oxford Finance
Companies, Inc. v. Velez, 807 S.W.2d 460 (Tex. App. 1991), the
court relied on Home Sav. Ass’n v. Guerra, supra, noting that
the Guerra court’s position was consistent with a determination
that a buyer’s recovery against a creditor/assignee is limited.
The court held that the buyer could recover only the attorney
fees that resulted from her attorney’s pursuit of claims against
the assignee lender.
The National Consumer law Center (Center), in its treatise
on unfair and deceptive acts and practices, states:
The purpose of attorney fees is to encourage settlement,
make it economically feasible for consumers to bring small
claims, and to discourage sellers and creditors from using
their superior legal resources to wear down the consumer.
All of these purposes would be thwarted if attorney fees
were lumped in with the recovery on the merits and capped
at the amount of the creditor’s maximum liability.
Jonathan Sheldon et al., Unfair and Deceptive Acts and Practices,
§ 6.6.3.5 at 614 (6th ed. 2004). The Center stated that the
“creditor’s liability for the consumer’s attorney fees should not
be capped by the creditor’s maximum liability for seller-related
claims.” Id. because the right to recover is based on a decep-
tive practices statute, not on the FTC holder Rule, the phrase
“‘recovery hereunder’” should not apply to the recovery of
attorney fees and should not be subject to the cap. Id.
Some courts have allowed attorney fees but limited the
amount under the FTC holder Rule. The federal court in
louisiana held that the plaintiff could recover a share of attor-
ney fees, “provided that the maximum recovery by any plaintiff
may not exceed the amount paid [the holder] by that plaintiff.”
Simpson v. Anthony Auto Sales, Inc., 32 F. Supp. 2d 405, 410
(W.D. la. 1998).
In Riggs v. Anthony Auto Sales, Inc., 32 F. Supp. 2d 411 (W.D.
la. 1998), the court stated that the purpose of the language in
the FTC holder Rule is to not allow a consumer to recover more
than he has paid. The court stated:
494 	276 NebRASKA RePoRTS

A rule of unlimited liability would place the creditor
in the position of an insurer or guarantor of the seller’s
performance. This court does not construe this to be the
purpose of the FTC rule. Accordingly, this court holds that
a creditor’s derivative liability for seller misconduct under
the FTC rule is limited to the amount paid by the consumer
under the credit contract. . . . [e]ach lender’s liability is
limited to the amount paid to it by that plaintiff.
Id. at 417. See, also, Simpson v. Anthony Auto Sales, Inc., supra;
Home Sav. Ass’n v. Guerra, 733 S.W.2d 134 (Tex. 1987).
The Riggs court awarded each plaintiff his or her actual dam-
ages, the costs of the action, and the “lender’s pro rata share of
reasonable attorney’s fees, provided that the maximum recovery
by any plaintiff may not exceed the amount paid the lender by
that plaintiff.” 32 F. Supp. 2d at 417.
The ohio Court of Appeals held that attorney fees were not
“claims” that the consumer could assert under the FTC holder
Rule where the assignee was not involved in effecting consumer
transactions. Hardeman v. Wheels, Inc., 56 ohio App. 3d 142,
565 N.e.2d 849 (1988). The assignee should not be subject to
claims which “encompass penalties specifically designed to be
assessed against the supplier . . . for the supplier’s statutory or
common-law infractions.” Id. at 146, 565 N.e.2d at 853.
The State argues that the fee award should not be capped by
the FTC holder Rule’s language and cites another section of the
Center’s treatise, which states:
If this limit applied to attorney fees as well, this would
effectively insulate holders from such awards, even if
they refused to reach reasonable settlements of [defective
practices] claims. Courts have thus found that the holder is
liable for the consumer’s attorney fees, even if these fees
exceed the amount of the debt, at least for attorney fees
incurred to overcome the holder’s denial of liability.
Jonathan Sheldon et al., Unfair and Deceptive Acts and Practices,
§ 8.8.9 at 812 (6th ed. 2004).
[9] We agree with the federal court’s interpretation in Riggs v.
Anthony Auto Sales, Inc., supra, that the FTC holder Rule limits
a debtor’s recovery to the amounts paid by the debtor. We con-
clude that under the FTC holder Rule, the maximum recovery
STATe ex Rel. STeNbeRg v. CoNSUmeR’S ChoICe FooDS 	495
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by any plaintiff may not exceed the amount paid to the holder by
that plaintiff; the debtor may not recover more than the amount
the debtor paid. In this case, Jayco was paid $96,308.21 by
CCF consumers and judgment was entered against Jayco in that
amount, along with interest and costs.
[10] In the cases cited above, the claims were brought by the
consumers. here, the petition was filed by the State through the
Attorney general, and it is the State which seeks attorney fees
for the time spent by its Attorney general. A trial court’s deci-
sion awarding or denying attorney fees will be upheld absent an
abuse of discretion. In re Trust of Rosenberg, 273 Neb. 59, 727
N.W.2d 430 (2007). We find no abuse of discretion in the dis-
trict court’s award which held that the total recovery from Jayco
could not exceed $96,308.21, the amount paid by the consum-
ers to Jayco, plus court costs of $10,457.14 and interest at the
rate of 7.094 percent per annum. The award was proper under
the FTC holder Rule. The State’s cross-appeal asserting that it
should be able to recover attorney fees is without merit.
[11] Jayco also argues that it should not have been subject
to injunctive relief, which is available under the CPA and the
UDTPA but not provided for in the FTC holder Rule. We dis-
agree. Under the FTC holder Rule, Jayco is subject to the same
claims and defenses that a consumer might have against CCF,
the originator of the contract. A consumer can seek equitable
relief under both the CPA and the UDTPA. See §§ 59-1609
and 87-303. The FTC holder Rule does not limit the type of
remedies that can be sought against a holder in due course. The
district court was correct in granting the injunctive relief.
3. remAiNiNg ASSigNmeNtS of error
[12] Jayco asserts that the district court abused its discretion
in relying on irrelevant evidence and evidence not identified in
the pretrial order. however, Jayco does not identify any spe-
cific evidence or testimony that was irrelevant and erroneously
received by the district court. In a bench trial, the court is pre-
sumed to have considered only competent and relevant evidence
in making its decision. See Eicher v. Mid America Fin. Invest.
Corp., 270 Neb. 370, 702 N.W.2d 792 (2005). In a review de
novo on the record, an appellate court reappraises the evidence
496 	276 NebRASKA RePoRTS

as presented by the record and reaches its own independent con-
clusions with respect to the matters at issue. In re Trust Created
by Isvik, 274 Neb. 525, 741 N.W.2d 638 (2007). This court tries
factual questions de novo on the record and does not consider
any impermissible or improper evidence. See Gomez v. Savage,
254 Neb. 836, 580 N.W.2d 523 (1998). our de novo review
of the record does not reveal that the district court abused its
discretion in the admission of evidence in contravention to the
pretrial order.
[13] Jayco also claims the district court erred in failing to
grant judgment to it under § 87-303.01(1), which provides that
an “unconscionable act or practice by a supplier in connection
with a consumer transaction” is a violation of the UDTPA.
Jayco argues that the CCF contracts were not unconscionable.
however, the district court made no findings of fact or conclu-
sions of law as to the unconscionability of the actions of CCF
or Jayco. An appellate court will not consider an issue on appeal
that was not presented to or passed upon by the trial court.
Reimers-Hild v. State, 274 Neb. 438, 741 N.W.2d 155 (2007).
We need not address this alleged error any further.
We find no merit to the remaining assignments of error
asserted by Jayco.
VI. CoNClUSIoN
The judgment of the district court is affirmed. The cross-
appeal has no merit, and it is dismissed.
A ffirmed .
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