Benjamin v. Bierman
943 N.W.2d 283
Neb.2020Background
- Mark Benjamin died April 14, 2015; his wife Brenda (as personal representative) inherited his LLC interests: 1/2 of Sixth Street Rentals, LLC (Rentals) and 1/3 of Sixth Street Development, LLC (Development).
- Operating agreements allowed the company to repurchase a deceased member’s interest at "fair market value," to be agreed between the company and the estate or, if no agreement within 90 days, determined by a mutually agreeable independent appraiser; payment due within 120 days of establishing value.
- Parties agreed to an appraisal by Terry Galloway with valuation date December 31, 2014; Galloway’s March 2016 report valued Rentals at $144,400 (Mark’s share $72,200) and Development at $5,641,700 (Mark’s share $1,880,900), the latter including $1.75M life-insurance proceeds.
- Appellees (Doug and others) refused to close the buyouts after disputes arose—principally over related BD Construction valuations—and Brenda sued seeking accounting, dissolution, specific performance, and damages.
- The district court found appellees breached the operating agreements, ordered accountings, declined to dissolve either LLC, and awarded Brenda $22,200 for Rentals and $473,233 for Development (plus interest); both sides appealed.
Issues
| Issue | Plaintiff's Argument (Benjamin) | Defendant's Argument (Bierman et al.) | Held |
|---|---|---|---|
| Standing to seek judicial dissolution of the LLCs | Brenda (as personal representative) may seek dissolution under Neb. Rev. Stat. § 21‑147(a)(4)(B) or (a)(5)(B) | Brenda is not a member after Mark’s death and therefore lacks statutory standing to apply for dissolution | Court: Brenda lacks standing; dissociation on death ends membership and statutory right to seek dissolution |
| Contract interpretation: method to determine "fair market value" | Operating agreements unambiguously require either mutual agreement or a mutually agreeable independent appraiser to fix fair market value | Term "fair market value" is ambiguous or requires extrinsic valuation factors beyond the agreement | Court: Agreement is clear; fair market value is set by the mutually agreed independent appraiser if no agreement is reached |
| Validity, independence, timing, and date of Galloway appraisal (including whether appraisal was substantially complete by Nov 30, 2015, and valuation date Dec 31, 2014) | Galloway was the mutually agreed appraiser; parties agreed to Dec. 31, 2014 valuation; report was substantially complete by Nov. 30, 2015 | Appraisal was biased, not independent, should use Apr. 14, 2015 valuation, or defendants’ appraiser values are controlling | Court: No clear error — parties agreed to Galloway and Dec. 31, 2014; Galloway was independent at appraisal time and his appraisal was substantially complete by Nov. 30, 2015; his values govern under the agreements |
| Breach, remedies (good‑faith negotiation, specific performance, damages, interest) | Appellees failed to negotiate in good faith and refused to close; damages and interest are appropriate | Appellees negotiated and rejection was tied to unresolved BD issues; if breach exists, specific performance should be ordered or defendants’ appraiser adopted | Court: Appellees breached by failing to close after conditions in agreements were met; breach was substantial (not minor), so specific performance was denied; damages and interest (accruing 120 days after valuation established) were awarded |
Key Cases Cited
- U.S. Pipeline v. Northern Natural Gas Co., 303 Neb. 444, 930 N.W.2d 460 (2019) (standards for judicial dissolution under Nebraska LLC law)
- Ray Anderson, Inc. v. Buck’s Inc., 300 Neb. 434, 915 N.W.2d 36 (2018) (principles of contract interpretation; unambiguous contracts enforced according to plain meaning)
- Fredericks Peebles v. Assam, 300 Neb. 670, 915 N.W.2d 770 (2018) (factfinder’s role in evaluating expert testimony and witness credibility)
- Albers v. Koch, 185 Neb. 25, 173 N.W.2d 293 (1969) (specific performance should not be awarded where breach constitutes a substantial failure of the exchange)
- Robertson v. Jacobs Cattle Co., 285 Neb. 859, 830 N.W.2d 191 (2013) (appellate standards and deference in equity and contract disputes)