Strohmyer v. Papillion Family Medicine, 296 Neb. 884

Background

Three physicians (Strohmyer, Naegele, Mantler) formed Papillion Family Medicine, P.C. (PFM) in 2000; disputed bylaws contained a buyout provision dated October 16, 2000.
Strohmyer gave notice he would leave PFM effective March 31, 2014, and later sued PFM and the other physicians claiming breach of the bylaws, unpaid compensation/director fees, and fiduciary breaches; defendants counterclaimed for unjust enrichment and breach of duties.
The district court concluded PFM did not meet Nebraska Professional Corporation Act requirements, treated PFM as a business corporation, found the buyout clause ambiguous, and set procedures under the judicial dissolution statute for valuation/election to purchase stock.
After evidentiary proceedings the court fixed Strohmyer’s stock value at roughly $104,720, awarded him $9,389.27 unpaid compensation for March 2014, denied wage‑act remedies, found no goodwill, and awarded PFM $30,673 for alleged fiduciary breaches related to Medicaid patients.
On appeal, the Supreme Court affirmed valuation, goodwill, equipment valuation approach, and denial of wage‑act relief; but reversed the finding that Strohmyer breached a fiduciary duty by treating Medicaid patients and vacated the $30,673 award due to ratification by PFM.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper valuation of Strohmyer’s stock and fixed assets	Court miscalculated value and improperly averaged inconsistent exhibits; higher award due	Court relied on exhibits and adjusted fixed assets to reflect replacement costs (eBay values)	Valuation affirmed (minor calculation errors not material); trial court’s ultimate figure stands
Existence/value of goodwill/intangible assets	Practice had intangible assets worth ~ $165,000 that should be allocated	No marketable goodwill independent of physician; most patients/staff followed Strohmyer	No compensable goodwill; court did not err
Replacement cost valuation for medical equipment	Expert’s fair‑market values should control	Defendants’ eBay/Craigslist‑based replacement costs are reliable and admissible	Trial court permissibly credited defendants’ valuations
Wage‑act (Neb. Rev. Stat. §48‑1229) coverage for director fees/salary/attorney fees	Physicians were employees entitled to wage‑act remedies and fees	Physicians were not employees (set own schedules, no employment agreements)	Not employees under the Act; wage‑act relief properly denied
Fiduciary duty breach for treating Medicaid patients	PFM breached duties by diverting funds; Strohmyer breached by accepting Medicaid patients after directive	Defendants assert Strohmyer disobeyed an agreement to stop Medicaid patients and caused damages	Reversed as to Medicaid claim: PFM ratified Strohmyer’s conduct by long inaction; $30,673 award vacated
Cross‑appeal: obligation to work four days per week	PFM: oral agreement required 4 days/week; breach warranted relief	Strohmyer: no enforceable agreement, no duty; reduced hours were known and accepted	Trial court correctly found no fiduciary breach for working 3 days/week; cross‑appeal denied

Key Cases Cited

Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (Neb. 2004) (directors/officers owe fiduciary duties to corporation and shareholders)
Taylor v. Taylor, 222 Neb. 721, 386 N.W.2d 851 (Neb. 1986) (goodwill is compensable only if a marketable business asset independent of an individual)
Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 (Neb. 2005) (existence/value of professional goodwill is a question of fact)
D & J Hatchery, Inc. v. Feeders Elevator, Inc., 202 Neb. 69, 274 N.W.2d 138 (Neb. 1978) (unauthorized officer acts may be ratified by corporation through silence and inaction)
First Baptist Church v. State, 178 Neb. 831, 135 N.W.2d 756 (Neb. 1965) (market value testimony need not be exhaustive; witness may form intelligent opinion from adequate knowledge)