Anderson v. A & R Ag Spraying & Trucking
946 N.W.2d 435
Neb.2020Background
- Randy Anderson and Michael Rafert formed A & R Ag Spraying and Trucking, Inc. (A & R) in 2000; each owned 50%. After years of informal operation, Randy died in 2015 and his shares passed to his wife, Cheryl Anderson.
- Cheryl petitioned for judicial dissolution under Neb. Rev. Stat. § 21-2,197(a)(2) after the corporation became deadlocked; Rafert elected to purchase Cheryl’s shares under § 21-2,201 and sought a stay and a court determination of fair value.
- Bench trial featured two valuation experts: Labenz (income approach leading to a negative equity result after subtracting total debt) and Pofahl (initial hybrid then asset-based approach, valuing the company between ~$720,000–$1,000,000).
- The district court applied the income approach, adjusted aspects of both experts’ opinions, averaged the adjusted figures, and set A & R’s value at $639,914 (Cheryl’s 50% share at $319,957); it entered judgment against Rafert and A & R and allowed Cheryl to keep two corporate vehicles.
- A & R and Rafert appealed, challenging (1) entry of judgment against A & R (which did not elect to purchase), (2) the court’s valuation, and (3) the award of corporate vehicles to Cheryl.
Issues
| Issue | Plaintiff's Argument (Anderson) | Defendant's Argument (A & R / Rafert) | Held |
|---|---|---|---|
| Whether the court could enter judgment against A & R (the corporation) when A & R did not elect to purchase shares | Court could order payment by the corporation as part of the dissolution/election proceedings and bind corporate interests to effect a buyout | A & R did not file an election to purchase and thus was not a party to the election-to-purchase proceedings; the court lacked authority to enter judgment against A & R | Judgment against A & R vacated — corporation was not a party to the election-to-purchase and court lacked statutory authority to enter judgment against it |
| Whether the court erred in valuing the corporation (did it improperly ignore/underweight corporate debt or otherwise speculate) | The court’s income-approach valuation and adjustments to both experts were supported by the evidence and appropriate for a going concern | Court failed to properly account for the corporation’s ~$1,152,000 debt and should have depressed value accordingly | Aff’d as to Rafert — trial court’s income-based valuation was reasonable, based on expert testimony, and properly handled debt consistent with the income approach |
| Whether the court could award corporate vehicles to Cheryl under § 21-2,201(e) | Vehicles were properly awarded as part of equitable relief/expenses to the petitioning shareholder given the litigation circumstances | Award constituted an improper transfer of corporate assets; A & R did not elect to purchase and the court made no statutory findings permitting expenses | Award of the corporate vehicles vacated — court lacked authority to award corporate assets absent proper statutory findings and A & R’s participation |
Key Cases Cited
- Rigel Corp. v. Cutchall, 245 Neb. 118, 511 N.W.2d 519 (1994) (equitable nature of appraisal proceedings and standard of review for valuation)
- Fredericks Peebles v. Assam, 300 Neb. 670, 915 N.W.2d 770 (2018) (weight of expert testimony and de novo equitable review with deference to trial court fact findings when evidence conflicts)
- Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 (2005) (trial court valuation of closely held corporations need only have acceptable basis in fact and principle)
- In re Estate of Tizzard, 14 Neb. App. 326, 708 N.W.2d 277 (2005) (appellate duty to determine lower court jurisdiction and vacate orders entered without jurisdiction)
- Midwest Renewable Energy v. American Engr. Testing, 296 Neb. 73, 894 N.W.2d 221 (2017) (distinction between subject-matter jurisdiction and authority to grant particular relief)
- Warren v. Balto. Transit Co., 220 Md. 478, 154 A.2d 796 (1959) (discussion of indemnifying dissenters by ascertaining actual worth lost by dissenting shareholder)