847 N.W.2d 283
Neb.2014Background
- In 2002 Linscott, Shasteen, and Brock formed SLB, a professional corporation; Linscott drafted a proposed (but unsigned) shareholder agreement allocating one-third of fees to a departing shareholder for existing/in-process cases.
- After circulating the proposed agreement, Shasteen and Brock sent Linscott a letter asking him to leave and stating either to keep his cases or “divide them as per the proposed agreement.”
- Following Linscott’s withdrawal in September 2004, the parties began splitting fees consistent with the proposed agreement: 68 checks were exchanged between the parties from September 2004 through January 2005, representing fees from 134 cases.
- Dispute arose after Brock learned some transfers were made without his knowledge and the parties stopped exchanging checks; Linscott sued individually and derivatively seeking accounting, breach of contract, and related relief.
- The district court initially found an enforceable agreement for accounting but later vacated damages findings, concluding (1) lack of specific material terms (notably no definition of “net fees”) prevented an implied contract and (2) any oral contract was barred by the statute of frauds; the Supreme Court of Nebraska reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parties formed an implied-in-fact contract to split fees | Linscott: conduct, emails, letters, and mutual fee exchanges demonstrate meeting of the minds and partial performance forming an implied contract | Shasteen/Brock: no enforceable contract due to lack of definite material terms (e.g., definition of “net fees”) | Court: Reversed — lack of a written definition of “net fees” alone does not bar finding an implied contract; surrounding conduct and partial performance must be considered on remand |
| Whether the statute of frauds (§36-202) bars enforcement of the alleged oral agreement | Linscott: oral agreement capable of performance within 1 year; statute of frauds inapplicable | Shasteen/Brock: oral agreement is not performable within 1 year (actual performance spanned years), so §36-202 applies | Court: Reversed — statute of frauds only applies if contract cannot be performed within 1 year by its terms; here the oral agreement was capable of performance within 1 year |
| Whether the unfinished business rule requires allocation absent a contrary agreement | Linscott: unfinished business rule may apply to allocate fees to departing partner | Shasteen/Brock: argued against applicability; also asserted (on appeal) corporate statute might require written shareholder agreement | Court: Not decided — remanded for determination whether a contrary implied agreement exists; appellate court declined to address unfinished business rule now |
| Evidentiary and damages-related issues (excluded exhibits, prejudgment interest) | Linscott: district court improperly excluded exhibits and should award damages and prejudgment interest if liability found | Shasteen/Brock: district court acted within discretion; no liability = no interest | Court: Waived/Deferred — some issues waived for failure to argue in opening brief; prejudgment interest/damages reserved to district court on remand if liability found |
Key Cases Cited
- City of Scottsbluff v. Waste Connections of Neb., 282 Neb. 848, 809 N.W.2d 725 (discusses implied-in-fact contracts and objective manifestations of intent)
- Rath v. Selection Research, Inc., 246 Neb. 340, 519 N.W.2d 503 (statute of frauds: contract not to be performed within one year must, by terms, be incapable of performance within one year)
- Kaiser v. Millard Lumber, 255 Neb. 943, 587 N.W.2d 875 (partial performance and contract interpretation principles)
- Zawaideh v. Nebraska Dept. of Health & Human Servs., 285 Neb. 48, 825 N.W.2d 204 (standard of review for questions of law)