Anderson v. A & R Ag Spraying & Trucking
306 Neb. 484
| Neb. | 2020Background
- Randy Anderson and Michael Rafert formed A & R Ag Spraying and Trucking, Inc.; each owned 50% and the business operated informally (no bylaws, meetings, or buyout agreement). Randy died in 2015 and his shares passed to his widow, Cheryl Anderson.
- In early 2017 Cheryl and Rafert deadlocked when attempting to organize the corporation; Cheryl petitioned for judicial dissolution under Neb. Rev. Stat. § 21-2,197(a)(2).
- Rafert filed an election to purchase Cheryl’s shares under § 21-2,201, sought a stay of dissolution, and asked the court to determine the fair value of Cheryl’s shares; A & R did not file an election to purchase.
- At bench trial each side presented a CPA valuation: Labenz (for Rafert) used an income/discounted cashflow approach (arriving at a positive business value but negative equity after subtracting debt); Pofahl (for Cheryl) favored an asset-based approach and concluded a substantially higher value.
- The district court adopted an income approach, adjusted both experts’ figures, averaged the results to value A & R at $639,914 (Cheryl’s 50% = $319,957), entered judgment against Rafert and A & R, and awarded Cheryl possession of two corporate vehicles; A & R and Rafert appealed.
Issues
| Issue | Plaintiff's Argument (Cheryl) | Defendant's Argument (A & R / Rafert) | Held |
|---|---|---|---|
| Whether court could enter judgment against A & R though the corporation did not elect to purchase shares | A & R was named in the dissolution petition and may be bound by the court’s ordering on buyout | A & R did not file an election to purchase and thus was not a party to the election-to-purchase proceedings; court lacked statutory authority to enter judgment against the corporation | Judgment against A & R vacated — corporation was not a party to the election-to-purchase proceedings and court lacked authority to enter judgment against it |
| Whether the district court erred in valuing A & R (failure to consider full corporate debt; speculative adjustment) | The income approach was appropriate; the court properly adjusted expert opinions and produced a reasonable fair-value figure | Court should have subtracted full corporate debt and given weight to Labenz’s methodology; valuation is too high | Affirmed as to Rafert — court reasonably applied the income approach, considered debt service (not full lump-sum subtraction), and reached a valuation with acceptable factual and principled basis |
| Whether the court properly awarded two corporate vehicles to Cheryl under § 21-2,201(e) | The award was an appropriate equitable expense allocation under § 21-2,201(e) given the litigation circumstances | Award improperly transferred corporate assets; no findings of probable grounds for expense award; A & R was not a party to the purchase proceedings | Award of corporate vehicles vacated — court lacked authority to award corporate assets absent corporation’s participation and required statutory findings |
Key Cases Cited
- Rigel Corp. v. Cutchall, 245 Neb. 118, 511 N.W.2d 519 (equitable appraisal principles for fair value of corporate shares)
- Fredericks Peebles v. Assam, 300 Neb. 670, 915 N.W.2d 770 (appellate de novo review in equity and weight given to trial-court credibility findings)
- Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 (trial-court valuation of closely held corporation is reasonable if grounded in fact and principle)
- Stoneman v. United Neb. Bank, 254 Neb. 477, 577 N.W.2d 271 (proceeding to determine fair value of corporate shares is equitable)
- Becker v. Natl. American Ins. Co., 202 Neb. 545, 276 N.W.2d 202 (context for equitable relief and valuation considerations)
- State ex rel. BH Media Group v. Frakes, 305 Neb. 780, 943 N.W.2d 231 (statutory interpretation principles)
- In re Estate of Tizzard, 14 Neb. App. 326, 708 N.W.2d 277 (vacatur of orders entered without jurisdiction)
- Midwest Renewable Energy v. American Engr. Testing, 296 Neb. 73, 894 N.W.2d 221 (subject-matter jurisdiction does not confer authority to grant relief beyond statute)
- Warren v. Balto. Transit Co., 220 Md. 478, 154 A.2d 796 (quoted for the principle that fair value should indemnify the dissenter for what was lost by not going along with controlling shareholders)