Strohmyer v. Papillion Family Medicine
296 Neb. 884
| Neb. | 2017Background
- Three physicians (Strohmyer, Naegele, Mantler) formed Papillion Family Medicine, P.C. (PFM) in 2000; disputed bylaws and buyout provisions existed in unsigned and signed versions.
- Strohmyer gave notice he would leave effective March 31, 2014, then sued PFM for failure to pay postdeparture buyout, unpaid compensation, and alleged breaches of fiduciary duties; PFM counterclaimed for unpaid director/service obligations and unjust enrichment.
- District court concluded PFM was not a valid professional corporation under Nebraska law, fixed the fair value of Strohmyer’s shares (~$104,720), awarded Strohmyer $9,389.27 for unpaid compensation, and awarded PFM $30,673 for alleged fiduciary breaches (Medicaid-related).
- Court found no compensable goodwill (practice value tied to physician presence), accepted defendants’ lower equipment valuation (based on used-sales like eBay), and held physicians were not employees under the Nebraska Wage Payment and Collection Act.
- This appeal challenges share valuation, goodwill exclusion, equipment valuation method, wage/fee awards under the Act, and the finding that Strohmyer breached fiduciary duties by treating Medicaid patients; PFM cross-appeals the court’s finding that no fiduciary duty required Strohmyer to work four days/week.
Issues
| Issue | Strohmyer (Plaintiff) | PFM/Doctors (Defendant) | Held |
|---|---|---|---|
| Valuation of Strohmyer’s shares | Trial miscalculated; court should have used full Exhibit 113 and correct liabilities | Trial valuation (avg of exhibits; adjusted fixed assets) was reasonable | Court’s numeric errors noted but ultimate valuation (~$104,720) affirmed (no reversible error) |
| Goodwill / intangible business value | Practice had intangible assets worth additional value (~$165,000) | No marketable goodwill; client base followed physician, not corporation | No compensable goodwill; court affirmed (goodwill depends on individual physician’s continued presence) |
| Replacement value for medical equipment | Expert’s fair market value higher (~$79,545) | Defendants’ used-market values (eBay/Craigslist) reflect real replacement cost (~$19,755) | Court credited defendants’ evidence; reliance on used-sales valuations upheld |
| Wage/Director fees under Nebraska Wage Payment & Collection Act | Entitled to wages, director fees, and attorney fees as employee | Physicians were independent contractors/directors, not employees under the Act | Physicians were not employees under the Act; no wage/attorney-fee awards under statute; director fees denied due to nonattendance findings |
| Fiduciary breach for treating Medicaid patients | Actions were permitted/ratified or not a breach; damages speculative | Breach: treating Medicaid patients after board decision; sought damages ~$30,673 | Reversed: court erred — defendants ratified Strohmyer’s Medicaid practice by inaction; award to PFM vacated |
| Fiduciary duty to work four days/week (cross-appeal) | N/A (plaintiff disputes existence) | Oral agreement required 4-day workweek; breach entitles PFM to compensation | No enforceable fiduciary duty to work 4 days/week; cross-appeal denied |
Key Cases Cited
- Rauscher v. City of Lincoln, 269 Neb. 267, 691 N.W.2d 844 (discussing de novo review in equity appeals)
- In re Estate of Stuchlik, 289 Neb. 673, 857 N.W.2d 57 (existence/scope of fiduciary duty as legal question)
- Taylor v. Taylor, 222 Neb. 721, 386 N.W.2d 851 (goodwill must be marketable and independent of an individual)
- Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 (professional goodwill is a factual question in dissolution contexts)
- Thomas v. Marvin E. Jewell & Co., 232 Neb. 261, 440 N.W.2d 437 (allocation of clients and goodwill on partner departure)
- Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (officer/director fiduciary duties)
- D & J Hatchery, Inc. v. Feeders Elevator, Inc., 202 Neb. 69, 274 N.W.2d 138 (ratification by silence/inaction)
- Bellino v. McGrath North, 274 Neb. 130, 738 N.W.2d 434 (treatment of partners/officers and work allocation considerations)
- First Baptist Church v. State, 178 Neb. 831, 135 N.W.2d 756 (market value opinion testimony standards)