Bierman v. Benjamin

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
08/14/2020 08:08 AM CDT
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
Douglas S. Bierman and James A. Hoppenstedt,
appellees and cross-appellants, v.
Brenda L. Benjamin, personally and
individually, et al., appellants
and cross-appellees.
___ N.W.2d ___
Filed May 22, 2020. No. S-18-915.
1. Summary Judgment: Appeal and Error. An appellate court will affirm
a lower court’s grant of summary judgment if the pleadings and admit-
ted evidence show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from those facts and
that the moving party is entitled to judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, the court views the
evidence in the light most favorable to the party against whom the
judgment was granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
3. Contracts. The interpretation of a contract and whether the contract is
ambiguous are questions of law subject to independent review.
4. Appeal and Error: Words and Phrases. Plain error exists where there
is an error, plainly evident from the record but not complained of at
trial, which prejudicially affects a substantial right of a litigant and is of
such a nature that to leave it uncorrected would cause a miscarriage of
justice or result in damage to the integrity, reputation, and fairness of the
judicial process.
5. Appeal and Error. An appellate court may, at its option, notice plain
error.
6. Contracts. In interpreting a contract, a court must first determine, as a
matter of law, whether the contract is ambiguous.
7. Contracts: Words and Phrases. A contract is ambiguous when a word,
phrase, or provision in the contract has, or is susceptible of, at least two
reasonable but conflicting interpretations or meanings.
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
8. Contracts. When the terms of a contract are clear, a court may not
resort to rules of construction, and the terms are to be accorded their
plain and ordinary meaning as an ordinary or reasonable person would
understand them.
9. ____. The fact that the parties have suggested opposing meanings of a
disputed instrument does not necessarily compel the conclusion that the
instrument is ambiguous.
10. Contracts: Evidence. A contract found to be ambiguous presents a
question of fact and permits the consideration of extrinsic evidence to
determine the meaning of the contract.
Appeal from the District Court for Buffalo County: John H.
Marsh, Judge. Reversed and remanded for further proceedings.
Bradley D. Holbrook and Nicholas R. Norton, of Jacobsen,
Orr, Lindstrom & Holbrook, P.C., L.L.O., for appellants.
William J. Lindsay, Jr., and John A. Svoboda, of Gross &
Welch, P.C., L.L.O., Kenneth F. George, of Ken George Law
Office, and Luke M. Simpson, of Bruner, Frank & Schumacher,
L.L.C., for appellees.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Per Curiam.
INTRODUCTION
Plaintiffs Douglas S. Bierman (Doug) and James A.
Hoppenstedt (Jim) filed a complaint against Brenda L.
Benjamin and BD Construction, Inc./Kearney (BD), alleging
various causes of action: to require Brenda to sell shares of
BD, to remove Brenda as an officer and director of BD, for
an accounting, and for damages based upon breach of fidu-
ciary duty. Following a grant of partial summary judgment in
favor of Doug and Jim and a trial, the court set a value for
BD, found that Brenda had breached her fiduciary duty to
BD, removed Brenda as an officer and director of BD, and
awarded Brenda $1,703,197.79. We reverse, and remand for
further proceedings.
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
BACKGROUND
BD is a construction company operated out of Kearney,
Nebraska. At all times relevant to this litigation, BD had three
shareholders: Mark W. Benjamin, who was a director and
president and owned 59 percent of the shares; Doug, a director
who owned 25 percent of the shares; and Jim, also a direc-
tor, who owned 16 percent of the shares. The three entered
into a buy-sell agreement on September 29, 2009, which
provided for the sale and purchase of BD shares in a variety
of scenarios.
Mark died on April 14, 2015. On May 26, Brenda was
appointed to serve as president of BD, but Doug ran the com-
pany on a day-to-day basis. On April 20, 2016, Brenda termi-
nated the employment of Doug and Jim. On May 6, Doug and
Jim filed this lawsuit against Brenda and BD, initially seeking
specific performance of the buy-sell agreement, an accounting,
and the appointment of new officers and directors. Doug and
Jim also sought damages for wrongful termination and breach
of fiduciary duty.
Prior to trial, Doug and Jim filed a motion for summary
judgment seeking a finding that the buy-sell agreement was
enforceable. The district court granted summary judgment to
Doug and Jim on that issue. The court reserved for trial the
issue of the value of BD. Following trial, the district court val-
ued BD, as of the date of Mark’s death, at $3.8 million, with
Mark’s 59-percent interest valued at $2.242 million. In addi-
tion, the district court found that Brenda breached her fiduciary
duty to BD and its shareholders in various ways. In accordance
with the preceding findings, the district court awarded Brenda
$1,703,197.79 for Mark’s interest in BD. Brenda appeals, and
Doug and Jim cross-appeal.
ASSIGNMENTS OF ERROR
On appeal, Brenda alleges that the district court erred in
(1) granting partial summary judgment finding the buy-sell
agreement enforceable; (2) finding that she acted in bad faith,
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
finding that she breached her fiduciary duties, and in removing
her as a director and officer of BD; (3) not admitting testimony
from Brenda’s advisors regarding the good faith and reason-
ableness of the process utilized to set bonuses and of Brenda’s
review of applicable industry standards; (4) setting the value of
Mark’s shares, both because April 14, 2015, the date of Mark’s
death, bore no relationship to the value of BD and because
life insurance proceeds received by BD on Mark’s life were
excluded; and (5) allowing a certified public accountant to tes-
tify regarding bonuses and compensation, because he was not
qualified as an expert.
On cross-appeal, Doug and Jim assign that the district court
erred in (1) reducing their damage award by 59 percent as to
the distribution of bonuses, (2) failing to reinstate the debt or
receivables owed to BD by Brenda and the estate, and (3) not
awarding them attorney fees.
STANDARD OF REVIEW
[1,2] An appellate court will affirm a lower court’s grant
of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from
those facts and that the moving party is entitled to judgment
as a matter of law. 1 In reviewing a summary judgment, the
court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives such
party the benefit of all reasonable inferences deducible from
the evidence. 2
[3] The interpretation of a contract and whether the con-
tract is ambiguous are questions of law subject to indepen-
dent review. 3
1
Merrick v. Fischer, Rounds & Assocs., ante p. 230, 939 N.W.2d 795
(2020).
2
Id.
3
DH-1, LLC v. City of Falls City, ante p. 23, 938 N.W.2d 319 (2020).
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
[4,5] Plain error exists where there is an error, plainly evi-
dent from the record but not complained of at trial, which prej-
udicially affects a substantial right of a litigant and is of such
a nature that to leave it uncorrected would cause a miscarriage
of justice or result in damage to the integrity, reputation, and
fairness of the judicial process. 4 An appellate court may, at its
option, notice plain error. 5
ANALYSIS
Brenda assigns that the district court erred when it granted
partial summary judgment in favor of Doug and Jim on the
issue of the enforceability of the buy-sell agreement.
As relevant to this issue, article III of the buy-sell agreement
states that “in the event of the death of a Shareholder, and only
in such event, the Corporation will be required and shall, to the
fullest extent permitted by applicable law, purchase the shares
of stock of the Deceased Shareholder from the legal representa-
tive of the Deceased Shareholder’s estate.”
Article V purports to deal with the determination of pur-
chase price in the event of the sale of shares. Section 5.1
applies where the shares are for sale pursuant to an offer of the
disposing shareholder. Section 5.2 purports to apply to “Other
Operative Events” and provides:
In the case of all other Operative Events other than the
Death of Shareholder, the price per share of the shares of
stock shall be paid by the Corporation and/or the Non-
disposing Shareholders. The price per share shall be the
price which is agreed to annually by the Shareholders and
attached hereto as an Exhibit. In the event of the failure
to agree for two (2) consecutive years, the parties agree
that the Corporation will employ an independent third
party to appraise the business and determine the price per
4
Mays v. Midnite Dreams, 300 Neb. 485, 915 N.W.2d 71 (2018).
5
Id.
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305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
share, with appraisal costs split between the Corporation
and the Shareholders as a group.
(Emphasis supplied.)
The district court found that the agreement was unambigu-
ous, reasoning that the exclusion for “the death of a share-
holder” noted in the first sentence did not modify the pricing
method set forth in the second sentence. For that reason, the
court concluded that the pricing method set forth in the second
sentence should be used to calculate the share price for all
operative events.
[6-10] In interpreting a contract, a court must first deter-
mine, as a matter of law, whether the contract is ambiguous. 6
A contract is ambiguous when a word, phrase, or provision
in the contract has, or is susceptible of, at least two reason-
able but conflicting interpretations or meanings. 7 When the
terms of a contract are clear, a court may not resort to rules of
construction, and the terms are to be accorded their plain and
ordinary meaning as an ordinary or reasonable person would
understand them. 8 The fact that the parties have suggested
opposing meanings of a disputed instrument does not neces-
sarily compel the conclusion that the instrument is ambigu-
ous. 9 A contract found to be ambiguous presents a question
of fact and permits the consideration of extrinsic evidence to
determine the meaning of the contract. 10
None of the parties have challenged the district court’s under-
lying determination that the buy-sell agreement was unambigu-
ous, though they disagree as to the meaning of the agreement.
But an appellate court may, at its option, notice plain error. 11
6
Wintroub v. Nationstar Mortgage, 303 Neb. 15, 927 N.W.2d 19 (2019).
7
Id.
8
Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015).
9
Id.
10
David Fiala, Ltd. v. Harrison, 290 Neb. 418, 860 N.W.2d 391 (2015).
11
Mays v. Midnite Dreams, supra note 4.
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
We do so here because we find the buy-sell agreement to be
clearly ambiguous on the question of what pricing mechanism,
if any, is set forth by the document.
In this case, we find the buy-sell agreement to be suscep-
tible to multiple meanings. Most notably, section 3.1 provides
that in the event of the death of a shareholder, BD is required,
“[s]ubject to the terms and conditions as set forth herein,” to
purchase those shares from the estate of the deceased share-
holder. While the agreement provides for the procedure to
be followed for such a purchase via section 6.3, it does not
include any explicit provision with language setting forth the
price to be paid in that event. Article V purports to deal with
the “Determination of Purchase Price,” but has language that
could be read as excluding “the death of a shareholder” from
that particular pricing mechanism.
While section 3.1 states that the agreement sets forth certain
“terms and conditions” to follow to effectuate such a pur-
chase, there is an interpretation of the agreement that would
not provide all necessary “terms and conditions.” In addition,
we observe that language in the agreement allowing for the
purchase of life insurance policies to facilitate the purchase of
the shares as required by the agreement could arguably be read
as providing a pricing mechanism for the purchase of shares in
the event of the death of a shareholder.
In short, it is not possible to determine the meaning of the
buy-sell agreement as applied to the death of a shareholder.
We find plain error in the district court’s determination that the
buy-sell agreement was unambiguous. The interpretation of an
ambiguous contract presents an issue of fact not appropriate
for determination on summary judgment. The consideration of
extrinsic evidence is necessary to determine the meaning of
the buy-sell agreement.
Accordingly, we find merit to Brenda’s assignment of error
asserting that the grant of partial summary judgment was
in error. We reverse the district court’s grant of summary
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
BIERMAN v. BENJAMIN
Cite as 305 Neb. 860
judgment and remand the cause to the district court for fur-
ther proceedings. Because we find that the grant of summary
judgment was error, we decline to reach the remainder of
Brenda’s assignments of error or to reach Doug and Jim’s
cross-appeal.
CONCLUSION
The district court’s grant of summary judgment is reversed
and the cause remanded for further proceedings.
Reversed and remanded for
further proceedings.