Strohmyer v. Papillion Family Medicine
296 Neb. 884
| Neb. | 2017Background
- Three physicians (Strohmyer, Naegele, Mantler) formed Papillion Family Medicine, P.C. (PFM) in 2000; disputes arose when Strohmyer gave notice in Dec. 2013 that he would leave effective Mar. 31, 2014, to start his own practice.
- Bylaws dated Oct. 16, 2000, contained a "Buy Out" clause and compensation formula, but there were signature and adoption irregularities; the district court found PFM did not meet formal professional corporation requirements.
- After notice, PFM’s president (Naegele) transferred $90,000 to a trust account then later distributed $30,000 each to Naegele and Mantler; PFM made capital improvements to which Strohmyer objected.
- Strohmyer sued for unpaid postdeparture compensation, director fees, and breach of bylaws; PFM counterclaimed for breach of fiduciary duties (including alleged failure to work 4 days/week and to stop treating Medicaid patients).
- The district court valued Strohmyer’s stock at about $104,720, awarded him $9,389.27 unpaid compensation, found no goodwill, denied wage-act recovery, and awarded PFM $30,673 for breach over Medicaid patients.
- On appeal, the Nebraska Supreme Court affirmed most holdings (valuation, no goodwill, equipment valuation, no Wage Payment Act relief, no director fees), but reversed the award for Medicaid-related fiduciary breach as ratified by PFM’s inaction and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper valuation of Strohmyer’s shares | Court miscalculated net equity and improperly averaged inconsistent valuations; plaintiff entitled to higher value | Defendants relied on adjusted exhibit valuing fixed assets lower (eBay/Craigslist replacement) | Court’s valuation (~$104,720) affirmed (minor calculation errors noted but not reversible) |
| Existence/value of goodwill/intangible assets | Strohmyer: identifiable intangibles and goodwill (~$165,000) should be included | PFM: goodwill not marketable because clients/staff left with physician | No compensable goodwill; affirmed (goodwill depended on physician’s presence) |
| Replacement cost valuation for medical equipment | Plaintiff’s expert: fair market value ~$79,545 | Defendants (Naegele): replacement/fair value ~$19,755 based on used-item listings | Trial court credited Naegele’s evidence; affirmed (testimony admissible and persuasive) |
| Wage Payment Act and director fees/employee status | Strohmyer: entitled to unpaid wages, director fees, attorney fees under Neb. Wage Payment & Collection Act | PFM: physicians were not employees; payments not W-2/1099 wages; director fees conditioned on attendance/participation | Not an employee under the Act; no Wage Act recovery and no director fees awarded; affirmed |
| Fiduciary breach for treating Medicaid patients | Strohmyer: he was authorized/ratified or PFM acquiesced; no recoverable damages | PFM: Strohmyer breached duty by continuing Medicaid patients contrary to board decision; sought damages | Reversed: PFM ratified (or acquiesced to) Strohmyer’s conduct by long inaction; award vacated |
| Alleged fiduciary duty to work 4 days/week | PFM: oral agreement obliged Strohmyer to 4-day week; breach harmed PFM | Strohmyer: no enforceable agreement; defendants never enforced or terminated him | No fiduciary breach for reduced days; affirmed (no enforceable employment contract or adverse effect proven) |
Key Cases Cited
- Taylor v. Taylor, 222 Neb. 721, 386 N.W.2d 851 (1986) (goodwill is a business asset only if marketable independent of an individual's personal practice)
- Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 (2005) (existence/value of professional goodwill is a question of fact)
- Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (2004) (directors/officers occupy fiduciary relations to corporation and shareholders)
- D & J Hatchery, Inc. v. Feeders Elevator, Inc., 202 Neb. 69, 274 N.W.2d 138 (1979) (unauthorized corporate acts may be ratified by silence/inaction)
- Thomas v. Marvin E. Jewell & Co., 232 Neb. 261, 440 N.W.2d 437 (1989) (when departing partners take client files, goodwill value may follow clients)
- Bellino v. McGrath North, 274 Neb. 130, 738 N.W.2d 434 (2007) (partner/physician duties and standards for fiduciary breaches in professional settings)
- Rauscher v. City of Lincoln, 269 Neb. 267, 691 N.W.2d 844 (2005) (appellate standard in equity matters referenced)
- In re Estate of Stuchlik, 289 Neb. 673, 857 N.W.2d 57 (2014) (questions of law vs. fact distinction; cited on fiduciary/scope issues)