Strohmyer v. Papillion Family Med., P.C.

296 Neb. 884

896 N.W.2d 612

Jeffry L. STROHMYER, M.D., appellant and cross-appellee,

v.PAPILLION FAMILY MEDICINE, P.C., a Nebraska professional corporation, et al., appellees and cross-appellants.

No. S-16-381.

Supreme Court of Nebraska.

Filed June 9, 2017.

Russell S. Daub, Omaha, and W. Eric Wood, of Downing, Alexander & Wood, Bellevue, for appellant.

Larry R. Forman, of Hillman, Forman, Childers & McCormack, for appellees.

Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

Heavican, C.J.

I. INTRODUCTION

Dr. Jeffry L. Strohmyer, Dr. Robert G. Naegele, and Dr. Edward M. Mantler formed Papillion Family Medicine, P.C. (PFM), located in Papillion, Nebraska. On December 31, 2013, Strohmyer provided notice that he was leaving PFM to start his own medical practice, effective March 31, 2014.

Strohmyer filed suit against PFM, Naegele, and Mantler due to PFM's failure to "buy out" Strohmyer and pay associated director fees following his departure. Strohmyer also contests PFM's calculation of the value of its stock, assets, and goodwill. PFM, Naegele, and Mantler counterclaimed.

The district court found that PFM was not a corporation under the laws of Nebraska. It further (1) held that the value of Strohmyer's stock was $104,220, (2) awarded Strohmyer $9,389.27 in unpaid compensation, and (3) awarded PFM damages in the amount of $30,673 on its cross-complaint. Strohmyer appeals. We affirm in part, and in part reverse and remand for further proceedings not inconsistent with this opinion.

II. BACKGROUND

1. FACTUAL HISTORY

(a) Formation of PFM

In 2000, Strohmyer, Naegele, and Mantler incorporated PFM, a Nebraska professional corporation conducting a medical and surgical practice, with its principal place of business in Papillion.

The articles of incorporation were filed on September 15, 2000. The three doctors were listed as the sole directors and shareholders of PFM. Naegele was elected to serve as president, Strohmyer as vice president, and Mantler as secretary and treasurer. A document entitled "By-Laws of the Papillion Family Medicine, P.C. As of October 16, 2000" contains a "Buy Out" section outlining payment due to a doctor after death or departure, but it was not signed by any of the doctors. Naegele testified that he drafted this document and viewed it only as a draft for discussion at a directors' meeting.

A second document, entitled "Bylaws of Papillion Family Medicine, P.C.," was signed only by Mantler in his role as secretary of PFM. With his signature, Mantler certified that the bylaws were adopted by the board of directors on December 4, 2000. The bylaws stated that "the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number is required by law." These bylaws did not include any process for a director's departure from PFM, as a "buy out" or otherwise.

A third document, entitled "By-Laws of the Papillion Family Medicine, P.C. As of October 16, 2000," is identical to the first bylaws, but was signed by Mantler on April 2, 2012. With his signature, Mantler certified that the bylaws were adopted by the board of directors on October 16, 2000.

(b) Relevant Portions of Articles of Incorporation and Bylaws

The relevant portion of the October 16, 2000, bylaws states the following under the "Buy Out" section:

Upon death or departure the doctor or his estate will be paid every two weeks at the usual time, a pay check, which is the actual accounts receivable that are collected, less 1/3 expenses of the corporation. These payments will continue for 6 months regardless of the remaining accounts receivable....

....

... For 2nd 6 months of the year after leaving, the doctor or his estate is paid 1/3 of the total assets at the time of departure, d[i]vided by 1/3, pai[d] in equal amounts over 6 months.

The October 16, 2000, bylaws also describe physician compensation:

1. The basis for physician compensation shall be calculated on the amount collected from a set of physician charges, not on the amount billed.

a. To this amount collected, one third of the common charges collected will be added. The common charges are all bills submitted by the physician assistants and all lab and x-ray charges.

b. From the collections shall be subtracted one third of the common expenses, including but not limited to common expenses, equipment, and supplies.

c. Also subtracted will be any expenses peculiar to the physician himself....

d. Once the final amount is reconciled for a given pay period, the physician will draw money equal to 90% of an average of the ... amount of money collect[ed] in the last 4 pay periods (a period of roughly 2 months).

As relevant, article V of PFM's articles of incorporation provides:

A director of the corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for any action taken, or any failure to take action as a director except for liability (i) for the amount of financial benefit received by a director to which he or she is not entitled; (ii) for intentional infliction of harm on the corporation or its shareholders; (iii) for a violation of Neb. Rev. Stat. § 21-2096 ; and (iv) for an intentional violation of criminal law.

And article X provides in part:

Any shareholder who ceases to be eligible to be a shareholder as herein provided shall be obligated forthwith to dispose of all of his shares to the Corporation or to some other person qualified to be a shareholder, all on such terms and conditions as the shareholders and the Board of Directors shall determine.

(c) Agreement to Work 4 Days Per Week

Naegele and Mantler claim that in forming the corporation, they had a verbal agreement to each work 4 days per week at PFM, but that this agreement was never recorded in writing. Naegele testified that prior to this lawsuit, he never provided Strohmyer anything in writing that stated Strohmyer had to work 4 days per week. In addition, the directors did not sign a noncompete document or any other document that might establish liability to each other or to PFM for starting another practice.

Strohmyer testified that prior to and following the formation of PFM, he worked as an associate medical director for Uninet Healthcare Network. From 2001 to 2007, Strohmyer served in various medical staff leadership positions for Alegent Health (Alegent). In 2008, Strohmyer began working as the "Campus Medical Director and Quality Officer" at Alegent, requiring him to work 1½ days per week.

In 2009, Strohmyer became "Medical Director" at Alegent, which required that Strohmyer work "two full days" per week. Throughout that time, Strohmyer also worked as a hospitalist at Alegent. This limited his time at the clinic to 3 days per week. Naegele testified that prior to this lawsuit, he never provided Strohmyer anything in writing that said that he objected to Strohmyer's involvement with Alegent or the outside work Strohmyer was doing.

(d) Nebraska Wage Payment and Collection Act

In his prayer for relief, Strohmyer sought his wages and attorney fees pursuant to the Nebraska Wage Payment and Collection Act (the Act).¹

Section 48-1229 states in relevant part:

(1) Employee means any individual permitted to work by an employer pursuant to an employment relationship or who has contracted to sell the goods or services of an employer and to be compensated by commission. Services performed by an individual for an employer shall be deemed to be employment, unless it is shown that (a) such individual has been and will continue to be free from control or direction over the performance of such services, both under his or her contract of service and in fact ... and (c) such individual is customarily engaged in an independently established trade, occupation, profession, or business........

(6) Wages means compensation for labor or services rendered by an employee, including fringe benefits, when previously agreed to and conditions stipulated have been met by the employee, whether the amount is determined on a time, task, fee, commission, or other basis.

Section § 48-1231 states in relevant part:

(1) An employee having a claim for wages which are not paid within thirty days of the regular payday designated or agreed upon may institute suit for such unpaid wages in the proper court. If an employee establishes a claim and secures judgment on the claim, such employee shall be entitled to recover (a) the full amount of the judgment and all costs of such suit and (b) if such employee has employed an attorney in the case, an amount for attorney's fees assessed by the court, which fees shall not be less than twenty-five percent of the unpaid wages.

(e) Medicaid Patients

A portion of Strohmyer's practice was devoted to Medicaid patients. In an April 18, 2005, memorandum from Naegele to all clinic staff, Naegele stated that "Mantler's patient list is now closed to all Medicaid patients" and that "Strohmyer and ... Naegele will continue for the moment to see current Medicaid patients, and will evaluate new Medicaid patients on a case-by-case basis." The directors' meeting minutes for January 27, 2006, state that all three doctors were in attendance and discussed that "Naegele chooses to leave Medicaid" and that "Strohmyer and PA Gilroy will continue to serve Medicaid population. Much of this will be in ... Strohmyer's nursing home rounds. No other providers at PFM will see Medicaid patients." However, Naegele testified that in 2006, he verbally instructed Strohmyer and Mantler to close their practice to Medicaid patients. Strohmyer testified that he was never told that he could not take Medicaid patients.

(f) Strohmyer's Departure From PFM

In late 2012 or early 2013, Strohmyer stopped talking to Naegele and Mantler. On April 19, 2013, Strohmyer sent Naegele a letter requesting that the directors "define exit strategies" for PFM. He requested that the directors have the "office attorney formalize these documents over the next few...