Streck, Inc. v. Ryan Family
297 Neb. 773
| Neb. | 2017Background
- Streck, Inc. sued Ryan Family, L.L.C. (LLC) for specific performance, alleging the LLC breached a lease option to purchase real property after Streck properly exercised the option. Closing did not occur by the option deadline, prompting suit.
- The LLC is member-managed by two co-managers (Wayne and Connie Ryan) per the operating agreement; Stacy Ryan is a nonmanaging ~20% member.
- Co-managers disagreed about litigation strategy; they jointly requested a receiver be appointed to represent the LLC in the litigation, and the court appointed one.
- The receiver answered and counterclaimed on behalf of the LLC, contending Streck was in default when exercising the option.
- Stacy Ryan filed a Complaint in Intervention (seeking to intervene individually and derivatively on behalf of the LLC), alleging the receiver and managers were not adequately protecting LLC interests; the district court denied intervention and denied continuance of Streck’s summary judgment proceedings. Stacy appealed.
Issues
| Issue | Plaintiff's Argument (Ryan) | Defendant's Argument (Streck/LLC) | Held |
|---|---|---|---|
| Whether an order denying intervention is appealable | Ryan implicitly treated denial as appealable | Streck argued appellate jurisdiction was affected by Neb. Rev. Stat. § 25-1315 | Court held denial of intervention is a final, appealable order; § 25-1315 does not overrule existing jurisprudence on intervention orders |
| Whether Ryan may intervene in her individual capacity | Ryan argued her ~20% LLC membership gives her a direct, legal interest because litigation outcome affects her distributions | Streck/LLC argued a nonmanaging member lacks authority and only has indirect financial interests; managers (or receiver) represent the LLC | Held Ryan has no right to intervene individually: membership’s indirect financial stake is insufficient; managers control LLC affairs under the operating agreement and LLC Act |
| Whether Ryan may intervene derivatively/on behalf of the LLC | Ryan argued the receiver/management inadequately protected LLC interests and thus she should intervene to protect the LLC | Streck/LLC argued the receiver was appointed to and was defending the LLC; Ryan did not satisfy derivative-action prerequisites | Held no right to intervene derivatively: facts do not show the LLC’s interests are unprotected (Holmes exception inapplicable); Ryan did not bring a derivative action or meet its requirements |
| Whether Ryan was entitled to discovery/continuance to oppose summary judgment | Ryan sought access to prior discovery and additional discovery, and a continuance | Streck opposed delay; trial court denied continuance and denied intervention before discovery issues could proceed | Held court did not err to deny intervention; because intervention was properly denied, the remaining discovery/continuance claims were not addressed on appeal |
Key Cases Cited
- Spear T Ranch v. Knaub, 271 Neb. 578 (2006) (articulates standards for intervention and treated intervention denials as final orders)
- Steinhausen v. HomeServices of Neb., 289 Neb. 927 (2015) (members cannot assert claims belonging to the LLC in their individual capacity)
- Ruzicka v. Ruzicka, 262 Neb. 824 (2001) (intervention standards and appellate review of intervention denials)
- State v. Holmes, 60 Neb. 39 (1900) (very limited exception allowing shareholder intervention where corporation cannot or will not protect its interests)
- Freedom Fin. Group v. Woolley, 280 Neb. 825 (2010) (derivative-action principles and when individual claims are distinct from corporate claims)
- Basin Elec. Power Co-op v. Little Blue N.R.D., 219 Neb. 372 (1985) (earlier recognition that orders denying intervention are final for appeal)