Wayne L. Ryan Revocable Trust v. Ryan
308 Neb. 851
| Neb. | 2021Background:
- Streck, a closely held S-corporation in diagnostics founded by Dr. Wayne L. Ryan, experienced rapid growth and received multiple investor indications during a 2014 sale process called "Project Blizzard." Connie Ryan (majority voting shares) ran the sale process and excluded Dr. Ryan and other family members from key steps.
- Project Blizzard produced several IOIs/LOIs (highest LOI ~$590M); management terminated the process without accepting a sale. The Ryan family trust (RRT), holding 52.275% of stock, sued for shareholder oppression and breach of fiduciary duty; Streck elected to purchase the petitioning shareholder’s shares under Neb. Rev. Stat. § 21-20,166.
- The district court set the valuation date as October 29, 2014, and after a 9-day bench trial heard conflicting expert valuations: RRT’s expert (Reilly) valuing the shares at $467M and Streck’s expert (Risius) valuing them far lower.
- The court adopted the RRT’s proposed findings, credited Reilly and other RRT evidence that Project Blizzard was flawed, rejected Risius as biased/downward, fixed fair value for the RRT shares at $467M, and entered an order directing Streck to purchase the shares.
- The court also awarded prejudgment interest under § 21-20,166(5)(a) (12% statutory rate) from January 19, 2015 through August 12, 2019 (approx. $256M) and refused Streck’s request to pay by installment, ordering payment of the fair-value portion within 10 days. Streck appealed.
Issues:
| Issue | Plaintiff's Argument (RRT) | Defendant's Argument (Streck) | Held |
|---|---|---|---|
| Adoption of proposed findings | Court may adopt a prevailing party’s proposed findings when supported by the record. | Adopting RRT’s findings verbatim shows lack of independent judicial review and contains errors prejudicing Streck. | Adoption permissible; court exercised independent judgment; any isolated errors were harmless and not prejudicial. |
| Fair value of shares | Reilly’s DCF, GPTC, and GMA analyses (plus S-corp premium and cash) reliably establish $467M; LOIs were distorted by a flawed sales process. | Risius’ lower valuation and the Project Blizzard LOIs better reflect market value; Reilly erred (synergies, improper multiples, oversized comps). | Court credited Reilly, discredited Risius as downward-biased; found LOIs unreliable due to a defective sales process; affirmed $467M valuation. |
| Prejudgment interest | §21-20,166(5)(a) authorizes discretionary prejudgment interest on fair-value award; RRT did not refuse payment in bad faith. | Interest governed by §45-103.02 and procedural prerequisites were not met for unliquidated claims; no entitlement. | §21-20,166 governs; court may award interest unless petitioner acted in bad faith; no bad-faith rejection found; interest awarded from Streck’s election date. |
| Payment in installments | N/A (RRT sought full purchase) | Streck cannot pay lump sum within 10 days and requested installments for equity/feasibility. | Trial court found Streck not credible and able to pay; refused installment plan; order for lump-sum payment affirmed. |
Key Cases Cited
- Rigel Corp. v. Cutchall, 245 Neb. 118, 511 N.W.2d 519 (1994) (describing fair-value standard and rejecting discounts for lack of control/marketability for petitioning shareholder)
- Dell, Inc. v. Magnetar Global Master Fund, 177 A.3d 1 (Del. 2017) (appraisal context on weight to deal price vs. DCF and market evidence)
- Uptime Corp. v. Colorado Research Corp., 420 P.2d 232 (Colo. 1966) (discussing trial court adoption of prevailing party’s proposed findings)
- Anderson v. A & R Ag Spraying & Trucking, 306 Neb. 484, 946 N.W.2d 435 (2020) (equitable nature of fair-value proceedings and de novo appellate review with deference on credibility)
- AVG Partners I v. Genesis Health Clubs, 307 Neb. 47, 948 N.W.2d 212 (2020) (prejudgment interest reviewed de novo)