Wayne L. Ryan Revocable Trust v. Ryan
308 Neb. 851
| Neb. | 2021Background
- Streck, a closely held S‑corporation that develops hematology and molecular diagnostics products, was majority-owned by trusts controlled by the Ryan family; Connie Ryan obtained voting control in 2013 and became CEO.
- Connie ran a company-led sale process called “Project Blizzard” in 2014 that produced several IOIs/LOIs (highest LOI $590M); Dr. Wayne Ryan and other family members were largely excluded and criticized the process as flawed.
- The Wayne L. Ryan Revocable Trust (RRT) sued Connie and Streck alleging shareholder oppression and breach of fiduciary duty and sought dissolution; Streck elected to purchase the RRT’s shares under Neb. Rev. Stat. § 21‑20,166, prompting a court valuation proceeding.
- At a 9‑day bench trial each side offered valuation experts (Reilly/Riddle for RRT; Risius for Streck); the court adopted much of RRT’s proposed findings, credited Reilly and Riddle, rejected Risius, and fixed fair value of the RRT’s 52.275% interest at $467 million.
- The court awarded prejudgment interest under § 21‑20,166(5)(a) (12% statutory rate) from Streck’s election date (Jan 19, 2015) through Aug 12, 2019 (≈ $256 million) and ordered Streck to pay the fair value portion in a lump sum within 10 days; Streck appealed.
Issues
| Issue | Plaintiff's Argument (RRT) | Defendant's Argument (Streck) | Held |
|---|---|---|---|
| Whether the trial court erred by adopting RRT’s proposed findings verbatim | Adoption was permissible where RRT’s submission was supported by the evidence and the court exercised independent judgment | Adoption denied independent judicial review; verbatim adoption improper | No error; court’s findings supported by record, minor mistakes harmless |
| Proper fair value of RRT’s shares | Reilly’s DCF/GPTC/GMA synthesis (with 14% S‑corp premium) reliably established $467M; LOIs understated value because Project Blizzard was flawed | Risius’s lower synthesis (~$304M) and the LOIs/transaction evidence should control (Dell) | Affirmed valuation at $467M; court credited Reilly and Riddle, found Risius and LOIs unreliable due to a defective sales process |
| Entitlement to prejudgment interest and applicable procedure | §21‑20,166(5)(a) authorizes prejudgment interest for petitioning shareholder absent bad‑faith rejection; no evidence of bad faith | Prejudgment interest governed by §45‑103.02; RRT did not satisfy procedural prerequisites for interest on unliquidated claims | §21‑20,166 governs here; interest discretionary and allowable; no bad‑faith refusal found; award affirmed |
| Whether court abused discretion by denying Streck’s request to pay in installments | Streck could not afford lump sum within 10 days and should be permitted installment payments | RRT asked for lump sum; court found Streck had capacity/planned ability to pay and misrepresented liquidity | No abuse of discretion; court properly ordered lump sum based on credibility findings |
Key Cases Cited
- Rigel Corp. v. Cutchall, 245 Neb. 118, 511 N.W.2d 519 (Neb. 1994) (articulates fair‑value standard and factors to measure what the shareholder lost)
- Dell v. Magnetar Global Master Fund, 177 A.3d 1 (Del. 2017) (discusses weight to give deal/transaction evidence vs. DCF in appraisal contexts)
- Uptime Corp. v. Colorado Research Corp., 161 Colo. 87, 420 P.2d 232 (Colo. 1966) (treats trial judge’s adoption of prevailing party’s proposed findings)
- Anderson v. A & R Ag Spraying & Trucking, 306 Neb. 484, 946 N.W.2d 435 (Neb. 2020) (standards for judicial valuation review and deference to factfinder)
- AVG Partners I v. Genesis Health Clubs, 307 Neb. 47, 948 N.W.2d 212 (Neb. 2020) (prejudgment interest award reviewed de novo)
- Link v. L.S.I., Inc., 793 N.W.2d 44 (S.D. 2010) (trial court discretion to order lump‑sum or installment payment under analogous statutory scheme)