§ 25-21,188.01.Check or instrument; wrongful refusal to endorse; liability; attorney's fees; awarded when.

Section 25-21,188.01 addresses a narrow but concrete problem: a check written to pay for property already subject to a lien or security interest, where more than one party has a claim to the proceeds. The statute covers checks issued in payment for property subject to a lien under several named articles of Chapter 52 or Chapter 54, or for farm products subject to a security interest under Article 9 of the Uniform Commercial Code or Chapter 52, Article 13. When a payee, endorser, or endorsee on such a check wrongfully refuses to endorse it over to another payee, endorser, or endorsee who is a superior lienholder, superior secured party, or otherwise legally entitled to the check, the refusing party is liable in damages to the person entitled to that endorsement.

The section backs that liability with a fee-shifting rule. A court has to assess attorney’s fees and costs, on motion of a party or on the court’s own motion, if it finds that a payee, endorser, or endorsee wrongfully refused to endorse the check, or that a party or attorney brought or defended any part of the action for reasons that were frivolous, or interposed solely for delay or harassment. The same mandatory fee-shifting applies if the court finds that an attorney or party unnecessarily expanded the proceedings through other improper conduct, including abuse of civil discovery procedures.

Together, these provisions give a superior lienholder or secured party a direct damages remedy against wrongful refusal to endorse, backed by a fee-shifting rule aimed at discouraging drawn-out or bad-faith litigation over who was entitled to the check in the first place.