Streck, Inc. v. Ryan Family
297 Neb. 773
| Neb. | 2017Background
- Streck, Inc. sued Ryan Family, L.L.C. (the L.L.C.) seeking specific performance of an asserted option to purchase leased real property after Streck alleges it timely exercised the option.
- The L.L.C. is manager-managed; two co-managers (Wayne and Connie Ryan) disagreed on litigation strategy, prompting appointment of a receiver to represent the L.L.C. in the lawsuit.
- The receiver answered and counterclaimed that Streck was in default when it attempted to exercise the option. Streck moved for partial summary judgment that it was not in default.
- Stacy Ryan (a ~20% nonmanaging member of the L.L.C.) filed a complaint in intervention seeking to intervene both in her own right and derivatively on behalf of the L.L.C.; she also sought access to discovery and a continuance.
- The district court denied Ryan’s motion to intervene and denied her continuance request; Ryan appealed the denial of intervention. The Nebraska Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether order denying intervention is appealable | Ryan: implicit that denial was final and appealable | Streck: § 25-1315 requires special language for partial adjudication, so denial may not be final | Court: Order denying intervention is a final, appealable order; § 25-1315 does not alter rule for intervention denials |
| Whether Ryan may intervene in her individual capacity | Ryan: as a 20% member she will gain/lose financially and thus has a direct legal interest | Streck/L.L.C.: membership interest is indirect; management/control rests with managers/receiver | Court: No — financial impact on distributions is indirect and insufficient to establish a direct legal interest for individual intervention |
| Whether Ryan may intervene on behalf of the L.L.C. (derivatively) | Ryan: L.L.C.’s sole asset at stake and receiver/manager are not fully protecting L.L.C. interests | L.L.C./Streck: receiver was appointed and is representing the L.L.C.; derivative remedy has statutory prerequisites | Court: No — Ryan did not meet requirements for derivative relief and did not allege the narrow Holmes exception (corporation wholly unprotected) applies |
| Whether Ryan could expand litigation scope (challenge receiver/manager conduct) via intervention | Ryan: sought to challenge receiver appointment and managers’ conduct as part of intervention | Streck/L.L.C.: intervention limited to issues core to dispute between original parties (lease/option) | Court: Intervention cannot be used to inject unrelated claims; challenges to receiver/operating-agreement breaches are beyond scope and not grounds for intervention |
Key Cases Cited
- Steinhausen v. HomeServices of Neb., 289 Neb. 927 (2015) (LLC member cannot maintain individual claim for wrongs to the LLC; harms to distributions are indirect)
- Spear T Ranch v. Knaub, 271 Neb. 578 (2006) (standards for intervention and requirement of alleging direct legal interest)
- State v. Holmes, 60 Neb. 39 (1900) (very limited exception allowing shareholder intervention when corporation wholly fails to protect corporate interests)
- Ruzicka v. Ruzicka, 262 Neb. 824 (2001) (intervention standards and appellate review of intervention denials)
- Freedom Fin. Group v. Woolley, 280 Neb. 825 (2010) (distinguishing individual claims from corporate/LLC claims and duties owed to members vs. entity)