Strohmyer v. Papillion Family Medicine
296 Neb. 884
| Neb. | 2017Background
- Strohmyer, Naegele, and Mantler formed Papillion Family Medicine, P.C. (PFM) in 2000, with stock/share ownership among the three physicians.
- A 2000 bylaws buy-out provision contemplated payments on death or departure, but the document wasn’t signed by all doctors and the board later adopted unsigned bylaws.
- Strohmyer notified departure in 2013 and left for a competitor in 2014; Naegele and Mantler financed a buy-out escrow and issued payments to themselves.
- Lower court ruled PFM was not a Nebraska professional corporation, valued Strohmyer’s stock at about $104k, awarded unpaid wages, and awarded PFM damages on a counterclaim.
- The court found no goodwill or intangible value and held Strohmyer not an employee under the Wage Payment and Collection Act; it also found no fiduciary breach for outside work.
- On cross-appeal, the district court’s fiduciary-duty findings were partially reversed and remanded for further proceedings, including stock valuation corrections and ratification analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Stock value determination was flawed | Strohmyer: valuation used inconsistent figures and improper averaging | PFM: court’s valuation was justified by the credible exhibits | No reversible error; adjustments show similar overall value (~$104k) |
| Existence of goodwill in the medical practice | Strohmyer: goodwill or intangibles exist and should be valued | PFM: no goodwill since patients followed departing physician | No recoverable goodwill; district court's finding affirmed |
| Replacement cost for medical equipment | Use expert-based values (Killion) for replacement costs | Naegele's cost-based method (eBay data) is credible | No error; court properly credited replacement-cost valuation |
| Wages/employee status under the Wage Act | Strohmyer was owed wages and director fees as an employee | No employee relationship under §48-1229; no W-2/1099 arrangement | Correctly held Strohmyer not an employee under the Act |
| Fiduciary duty re Medicaid patients and ratification | Strohmyer breached fiduciary duty by Medicaid work; damages justified | Defendants contend no fiduciary breach; potential termination and ratification issues | Strohmyer’s Medicaid conduct not a breach; ratification by inaction nullified damages; remand on related issues |
Key Cases Cited
- Taylor v. Taylor, 222 Neb. 721 (Neb. 1986) (goodwill must be a marketable asset distinct from an individual)
- Detter v. Miracle Hills Animal Hosp., 269 Neb. 164 (Neb. 2005) (professional goodwill as a distributable asset; factual inquiry)
- D & J Hatchery, Inc. v. Feeders Elevator, Inc., 202 Neb. 69 (Neb. 1979) (unauthorized acts may be ratified by the corporation)
- First Baptist Church v. State, 178 Neb. 831 (Neb. 1965) (market value determined by reasonable knowledge and purpose; not solely scientific)