Wayne L. Ryan Revocable Trust v. Ryan ( 2017 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/06/2017 12:12 AM CDT
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
Wayne L. Ryan R evocable Trust et al., appellees,
v. Constance “Connie” Ryan and Streck, I nc.,
appellees, and Timothy Coffey et al., all in their
individual capacities and in their capacities as
qualified beneficiaries of the Eileen Ryan
R evocable Trust, appellants.
___ N.W.2d ___
Filed September 15, 2017. No. S-16-628.
1. Interventions: Appeal and Error. Whether a party has the right to
intervene in a proceeding is a question of law. On a question of law,
an appellate court is obligated to reach a conclusion independent of the
determination reached by the court below.
2. Jurisdiction: Appeal and Error. Before reaching the legal issues
presented for review, it is the duty of an appellate court to determine
whether it has jurisdiction over the matter before it.
3. Interventions: Final Orders: Appeal and Error. Neb. Rev. Stat.
§ 25-1315 (Reissue 2016) does not supersede Nebraska’s final order
jurisprudence regarding orders denying intervention.
4. ____: ____: ____. An order denying intervention is a final, appeal-
able order.
5. Interventions. As a prerequisite to intervention under Neb. Rev. Stat.
§ 25-328 (Reissue 2016), the intervenor must have a direct and legal
interest of such character that the intervenor will lose or gain by the
direct operation and legal effect of the judgment which may be rendered
in the action.
6. ____. An indirect, remote, or conjectural interest in the result of a suit
is not enough to establish intervention as a matter of right.
7. Interventions: Pleadings. Simply having a claim that arises out of the
same facts as the claims at issue in the litigation does not constitute
having a sufficient interest to support intervention.
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
8. ____: ____. A person seeking to intervene must allege facts showing
that he or she possesses the requisite legal interest in the subject matter
of the action.
9. ____: ____. For purposes of ruling on a motion for leave to intervene,
a court must assume that the intervenor’s factual allegations set forth in
the complaint are true.
10. ____: ____. A prospective intervenor can raise his or her claims or
defenses, but those claims or defenses must involve the same core issue
as the claims between the existing parties. Intervenors can raise only
issues that sustain or oppose the respective contentions of the origi-
nal parties.
11. Interventions. An intervenor is bound by any determinations that were
made before he or she intervened in the action. In other words, an inter-
venor must take the suit as he or she finds it.
12. ____. It is generally understood that the right to intervene does not
carry with it the right to relitigate matters already determined, and an
intervenor is admitted to the proceeding as it stands with respect to any
pending issues.
13. Appeal and Error. An issue not presented to or decided by the trial
court is not appropriate for consideration on appeal.
Appeal from the District Court for Sarpy County: William
B. Zastera, Judge. Affirmed.
Paul Heimann, Bonnie M. Boryca, and Karen M. Keeler, of
Erickson & Sederstrom, P.C., for appellants.
Thomas H. Dahlk and Victoria H. Buter, of Kutak Rock,
L.L.P., and Ronald E. Reagan, of Reagan, Melton & Delaney,
L.L.P., for appellee Streck, Inc.
Larry E. Welch, Jr., and Damien J. Wright, of Welch Law
Firm, P.C., for appellee Constance “Connie” Ryan.
Heavican, C.J., Wright, Cassel, Stacy, and Funke, JJ.
Per Curiam.
This case involves an appeal from an order denying
intervention in a corporate dissolution action. Because we
find the intervenors are seeking only to relitigate matters
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
already decided by the court, we affirm the order denying
intervention.
FACTS
1. Parties
Streck, Inc., is a Nebraska corporation with its principal
place of business in La Vista, Sarpy County, Nebraska. The
company manufactures hematology, immunology, and molecu-
lar biology products for clinical and research laboratories.
Streck was founded by Dr. Wayne L. Ryan in 1971. Dr.
Ryan is one of Streck’s directors and is the sole beneficiary
of the Wayne L. Ryan Revocable Trust (RRT), which owns
33 percent of Streck’s voting stock and a majority of Streck’s
nonvoting stock. The sole trustee of the RRT is Dr. Ryan’s
daughter Carol Ryan. Dr. Ryan is also the primary benefi-
ciary of his late wife’s trust, the Eileen Ryan Revocable Trust
(ERRT), which owns about 40 percent of Streck’s nonvot-
ing stock.
Another of Dr. Ryan’s daughters, Constance Ryan (Connie),
is the president and chief executive officer of Streck. Connie
holds a majority of Streck’s voting stock and about 8 percent
of its nonvoting stock.
Stacy Ryan, one of the intervenors in this action, is also one
of Dr. Ryan’s daughters. Stacy redeemed her voting and non-
voting shares of Streck several years ago, but she remains an
income beneficiary of the ERRT, which, as stated previously,
owns nonvoting shares of Streck.
2. Lawsuit Between RRT
and Streck
In October 2014, the RRT filed suit against Streck and
Connie in the Sarpy County District Court. The suit alleged
shareholder oppression under Neb. Rev. Stat. § 21-20,162
(Reissue 2012) and breach of fiduciary duty. The relief sought
included, among other things, “the dissolution of Streck.”
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
On January 19, 2015, Streck filed an “Election to Purchase”
the RRT’s shares pursuant to the provisions of Neb. Rev. Stat.
§ 21-20,166 (Reissue 2012). That statute allows a corporation
involved in a judicial dissolution action brought by sharehold-
ers to elect to purchase the shares owned by the petitioning
shareholders rather than dissolve.1 If, within 60 days after fil-
ing the election, the parties reach agreement on the fair value
of the shares, the court “shall enter an order directing the
purchase of the petitioner’s shares upon the terms and condi-
tions agreed to by the parties.”2 If the parties are unable to
reach an agreement, the court, “upon application of any party,
shall stay such proceedings and determine the fair value of the
petitioner’s shares” as of the day before the date the election
was filed or any other date the court deems appropriate.3 After
an election has been filed under this statute, the underlying
dissolution action may not be “discontinued or settled, nor
may the petitioning shareholder sell or otherwise dispose of
his or her shares, unless the court determines that it would be
equitable to the corporation and the shareholders, other than
the petitioner, to permit such discontinuance, settlement, sale,
or other disposition.”4
Although not raised by the parties, we note for the sake of
completeness that § 21-20,166 was repealed by the Legislature
in 2014.5 Originally, the repeal was to be operative in 2016, but
the operative date was amended by 2015 Neb. Laws, L.B. 157,
§ 10, to January 1, 2017. The repeal was due to the Legislature’s
2014 adoption of the Nebraska Model Business Corporation
Act (NMBCA) and repeal of Nebraska’s Business Corporation
Act. The Legislature’s intent in adopting the NMBCA was
1
§ 21-20,166(1).
2
§ 21-20,166(3).
3
§ 21-20,166(4).
4
§ 21-20,166(2).
5
2014 Neb. Laws, L.B. 749, § 298.
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
to harmonize inconsistent terminology and move Nebraska
to the same statutory scheme as 31 other jurisdictions.6 The
election provisions under the new NMBCA statute are substan-
tially similar to the election provisions under the now-repealed
§ 21-20,166.7 And, more important, the NMBCA contains a
saving provision that expressly provides that the repeal of
any statute by the NMBCA “does not affect” any “dissolution
commenced under the statute before its repeal, and the . . . dis-
solution may be completed in accordance with the statute as if
it had not been repealed.”8 As such, we conclude the repeal of
§ 21-20,166 does not materially affect our analysis.
On March 23, 2015, Streck filed an application to stay the
proceedings, pursuant to § 21-20,166(4). In support of its
motion, Streck alleged 60 days had elapsed and the parties had
been unable to reach agreement regarding the fair value of the
RRT’s shares. Streck asked the court to stay further proceed-
ings and determine the fair value of the RRT’s shares as of
October 29, 2014 (the day before the RRT’s complaint was
filed). On the same date, Connie filed a motion to determine
fair value and stay further proceedings, which motion sought
substantially the same relief as Streck’s application.
On April 28, 2015, the court granted the applications and
motions for stay. The court stayed the case to permit limited
discovery on the issue of fair value and to allow the par-
ties to reach possible agreement regarding the fair value of
the shares.
3. Stacy’s First Complaint
in I ntervention
On June 16, 2015, while the case was stayed, Stacy filed
a complaint in intervention. She alleged that 3 years earlier,
6
Introducer’s Statement of Intent, L.B. 749, Committee on Banking,
Commerce, and Insurance, 103d Leg., 2d Sess. (Feb. 3, 2014).
7
See Neb. Rev. Stat. § 21-2,201 (Cum. Supp. 2016).
8
Neb. Rev. Stat. § 21-2,232 (Cum. Supp. 2016).
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
Streck and Connie had fraudulently induced her to redeem her
voting and nonvoting shares of Streck for a purchase price that
was substantially less than was legal and equitable. Although
Stacy was not a shareholder of Streck at the time she filed her
complaint in intervention, she asserted a variety of theories
against both Streck and Connie, the details of which are not
relevant to the issues on appeal.
On July 9, 2015, the court entered an order denying Stacy’s
complaint in intervention, finding that the claim she was
asserting did not involve the same core issue as the claims
between Streck and the RRT.9 No appeal was taken from
this order.
4. Cross-Motions for Partial
Summary Judgment
On January 20, 2016, the RRT filed a motion for partial
summary judgment, seeking an order that discounts should
not be applied to the determination of the fair value of the
RRT’s shares. Shortly thereafter, Streck also filed a motion
for partial summary judgment, seeking a determination that
as a matter of law, it had validly exercised its election to
purchase the RRT’s shares, and that § 21-20,166(2) did not
permit the RRT to challenge the election, because it autho-
rized setting an election aside only if it was found not to be
in the best interests of the corporation or the nonpetitioning
shareholders.
On April 25, 2016, the court entered an order granting both
parties’ motions for partial summary judgment. With respect
to the RRT’s motion, the court held that discounts should
not be applied to the determination of the fair value of the
RRT’s shares. With respect to Streck’s motion, the court held
that Streck was entitled to exercise an election to purchase
the RRT’s shares pursuant to § 21-20,166 and had validly
done so. With the election declared valid, the only matter
9
See Ruzicka v. Ruzicka, 262 Neb. 824, 635 N.W.2d 528 (2001).
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Nebraska Supreme Court A dvance Sheets
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
remaining for the court to consider was the determination of
the “fair value” of the shares, subject to the election pursuant
to § 21,20-166. Trial on that issue was scheduled to begin
July 5.
5. Second Complaint
in I ntervention
On May 13, 2016—more than 1 year after Streck filed its
election and several weeks after the district court granted sum-
mary judgment finding the election valid—Stacy filed a second
complaint in intervention, joined by her adult children Timothy
Coffey, Sean Coffey, and John Ryan Coffey (collectively the
intervenors). The intervenors are 4 of the 16 Ryan family
members who are income beneficiaries of the ERRT. They
alleged a statutory right to intervene pursuant to Neb. Rev.
Stat. § 25-328 (Reissue 2016).
The intervenors’ complaint did not allege any issue with
respect to the fair value of the RRT’s shares. Instead, it
addressed the issue of whether Streck’s election to purchase
the RRT’s shares was valid. The intervenors alleged they had
been prevented from “showing the Court that the election to
purchase is not in the best interests of [the ERRT]” and wanted
to show that Streck’s special litigation committee “did not act
independently, did not perform due diligence, and [was] not
objective when making [its] decision to purchase” the RRT’s
shares. The intervenors alleged that “[t]he purchase of Dr.
Ryan’s Streck shares will dilute or diminish the value of the
[ERRT’s] shares and the [intervenors’] future interest in them.”
As such, they sought to intervene in order to ask that the court
“alter, amend, or vacate” its earlier order granting summary
judgment on the validity of the election and “stay adjudication
of that issue” until after the intervenors had an opportunity to
conduct full discovery and “be fully heard” on the validity of
the election.
Streck and Connie each filed motions to strike the interve-
nors’ complaint. They argued the intervenors did not have a
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
direct and legal interest in the matter being litigated, because
(1) all that was left to decide was the fair value of the RRT’s
shares and (2) the remaining issue had no direct bearing
on the intervenors, who were not Streck shareholders, but
merely income beneficiaries of the ERRT, which held non-
voting Streck shares. They also argued that to the extent the
intervenors were attempting to challenge issues previously
determined involving the validity of Streck’s election, their
intervention was untimely, because summary judgment already
had been granted on the issues and allowing intervention to
challenge the summary judgment would impermissibly expand
the proceedings. Finally, they argued that intervention would
be futile because, under Nebraska law, one who intervenes
has to take the case as they find it and the issues the interve-
nors wanted to challenge had already been decided on sum-
mary judgment.
On June 21, 2016, the court entered an order striking the
complaint in intervention. The court stated its reasoning on the
record, explaining that the intervenors had waited too long to
intervene, had shown only an indirect interest in the subject
matter of the litigation, and, in any event, were seeking relief
the court could not grant. The intervenors timely appealed, and
we moved the appeal to our docket.10
II. ASSIGNMENTS OF ERROR
The intervenors assign, renumbered, that the district court
erred in (1) ruling they did not have a direct and legal interest
in the proceedings and striking the complaint in intervention
on that basis, (2) ruling the complaint in intervention was
untimely and striking it on that basis, and (3) ruling it could
not fashion relief for the intervenors on the claims in their
complaint in intervention and striking it on that basis.
10
See Neb. Rev. Stat. § 24-1106(3) (Reissue 2016).
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Nebraska Supreme Court A dvance Sheets
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
III. STANDARD OF REVIEW
[1] Whether a party has the right to intervene in a proceed-
ing is a question of law.11 On a question of law, an appellate
court is obligated to reach a conclusion independent of the
determination reached by the court below.12
IV. ANALYSIS
1. Jurisdiction
[2] Before reaching the legal issues presented for review, it
is the duty of an appellate court to determine whether it has
jurisdiction over the matter before it.13 Streck argues we lack
jurisdiction over this appeal, because the order denying inter-
vention did not comply with the provisions of Neb. Rev. Stat.
§ 25-1315 (Reissue 2016).
[3,4] We recently addressed, and rejected, this same argu-
ment in Streck, Inc. v. Ryan Family.14 There, we concluded that
our jurisprudence regarding the finality of orders denying inter-
vention15 had not been superseded by § 25-1315, and we reiter-
ated that an order denying intervention is a final, appealable
order.16 We conclude the intervenors have appealed from a final
order, and Streck’s argument to the contrary is without merit.
2. Statutory Intervention
(a) Legal Framework
The intervenors claim a right to intervene under § 25-328,
which provides:
11
Ruzicka v. Ruzicka, supra note 9.
12
Id.
13
Trainum v. Sutherland Assocs., 263 Neb. 778, 642 N.W.2d 816 (2002).
14
Streck, Inc. v. Ryan Family, post p. 773, ___ N.W.2d ___ (2017). Cf.
Guardian Tax Partners v. Skrupa Invest. Co., 295 Neb. 639, 889 N.W.2d
825 (2017).
15
See, e.g., Basin Elec. Power Co-op v. Little Blue N.R.D., 219 Neb. 372,
363 N.W.2d 500 (1985).
16
Streck, Inc. v. Ryan Family, supra note 14.
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Nebraska Supreme Court A dvance Sheets
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
Any person who has or claims an interest in the mat-
ter in litigation, in the success of either of the parties to
an action, or against both, in any action pending or to
be brought in any of the courts of the State of Nebraska,
may become a party to an action between any other per-
sons or corporations, either by joining the plaintiff in
claiming what is sought by the complaint, or by uniting
with the defendants in resisting the claim of the plaintiff,
or by demanding anything adversely to both the plaintiff
and defendant, either before or after issue has been joined
in the action, and before the trial commences.
[5-9] As a prerequisite to intervention under § 25-328, the
intervenor must have a direct and legal interest of such char-
acter that the intervenor will lose or gain by the direct opera-
tion and legal effect of the judgment which may be rendered
in the action.17 An indirect, remote, or conjectural interest in
the result of a suit is not enough to establish intervention as
a matter of right.18 Simply having a claim that arises out of
the same facts as the claims at issue in the litigation does not
constitute having a sufficient interest to support intervention.19
Therefore, a person seeking to intervene must allege facts
showing that he or she possesses the requisite legal interest
in the subject matter of the action.20 For purposes of ruling
on a motion for leave to intervene, a court must assume that
the intervenor’s factual allegations set forth in the complaint
are true.21
[10,11] Our jurisprudence also recognizes some practical
limitations on the right to intervene. A prospective interve-
nor can raise his or her claims or defenses, but those claims
17
Spear T Ranch v. Knaub, 271 Neb. 578, 713 N.W.2d 489 (2006).
18
Id.
19
See Kirchner v. Gast, 169 Neb. 404, 100 N.W.2d 65 (1959).
20
Spear T Ranch v. Knaub, supra note 17.
21
Id.
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
or defenses must involve the same core issue as the claims
between the existing parties.22 Intervenors can raise only issues
that “sustain or oppose the respective contentions of the [origi-
nal parties].”23 The intervenor is bound by any determinations
that were made before he or she intervened in the action.24
In other words, “‘[a]n intervene[o]r must take the suit as he
finds it . . . .’”25
(b) Intervenors’ Complaint
[12] It is settled law that one who intervenes is bound by
any determinations that were made before he or she inter-
vened in the action.26 In other words, “‘[a]n intervene[o]r must
take the suit as he finds it . . . .’”27 It is generally understood
that the right to intervene does not carry with it the right to
relitigate matters already determined,28 and an intervenor is
admitted to the proceeding as it stands with respect to any
pending issues.29
At the time the intervenors filed their complaint, the only
disputed issue remaining for determination by the court in this
judicial dissolution was the fair value of the RRT’s shares.
The intervenors’ complaint, however, makes no allegations
regarding that issue. The allegations in the complaint instead
22
See Ruzicka v. Ruzicka, supra note 9.
23
State ex rel. Nelson v. Butler, 145 Neb. 638, 650, 17 N.W.2d 683, 691
(1945).
24
See School Dist. of Gering v. Stannard, 196 Neb. 367, 242 N.W.2d 889
(1976).
25
Drainage District v. Kirkpatrick-Pettis Co., 140 Neb. 530, 538, 300 N.W.
582, 587 (1941).
26
School Dist. of Gering v. Stannard, supra note 24.
27
Drainage District v. Kirkpatrick-Pettis Co., supra note 25, 140 Neb. at
538, 300 N.W. at 587.
28
See, e.g., Arizona v. California, 460 U.S. 605, 103 S. Ct. 1382, 75 L. Ed.
2d 318 (1983).
29
59 Am. Jur. 2d Parties § 227 (2012).
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WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 297 Neb. 761
challenge only the already-settled question of the validity of
Streck’s election. Because the intervenors are seeking to use
intervention as a vehicle for relitigating issues previously
determined by the court, the complaint in intervention was
properly stricken.
[13] The intervenors argue on appeal that even if their
interests do not support statutory intervention, the district
court should have permitted them to intervene as a matter of
equity. Independent of the intervention statutes, we have held
that a court with equitable jurisdiction may allow persons to
intervene as a matter of equity in a proper case.30 But here,
equitable intervention was neither alleged as a basis for the
complaint in intervention nor clearly argued before the district
court. An issue not presented to or decided by the trial court is
not appropriate for consideration on appeal.31
V. CONCLUSION
For the foregoing reasons, we affirm the judgment of the
district court.
A ffirmed.
Miller-Lerman and K elch, JJ., not participating.
30
See Department of Banking v. Stenger, 132 Neb. 576, 272 N.W. 403
(1937).
31
Ameritas Invest. Corp. v. McKinney, 269 Neb. 564, 694 N.W.2d 191
(2005).