R. Michael Gross, M.D., and C. Michael Kelly, M.D. v. GIKK Investments, LLC, et al.

Summary

The Nebraska Court of Appeals affirmed summary judgment for GIKK Investments, LLC, and related defendants in a dispute concerning former members’ alleged contractual rights to proceeds from transactions involving GIKK and Midwest Surgical Hospital. The court also upheld the exclusion of the plaintiffs’ expert testimony, concluding that portions of the testimony addressed legal questions and that the plaintiffs had not shown that a qualifying sale of substantially all of GIKK’s units or assets occurred.

Holdings

1. The phrase substantially all is unambiguous in this contractual context and means a sale that, quantitatively or qualitatively, would result in a fundamental change in the nature of GIKK's business.
2. The transactions did not constitute a sale of substantially all of GIKK's membership units or assets, either individually or in the aggregate, and reasonable minds could not differ on that conclusion.
3. The transactions did not derogate Gross's and Kelly's contractual rights because section 17.2 preserved only a right to participate in proceeds from a future sale of substantially all of GIKK's units or assets; it did not protect the value of GIKK from reduction before such a sale.
4. The district court properly excluded portions of Professor Morse's opinions that attempted to define substantially all and derogation or otherwise offered legal conclusions concerning the meaning of the unambiguous contract.
5. Even assuming that a small portion of Professor Morse's report concerning the factual details of the transactions was admissible, its exclusion was harmless because the transactions did not constitute a sale of substantially all of GIKK's units or assets.

Questions Presented

1. Whether the postretirement admission of new members, amendment and use of a redemption formula, and sale of 49.9 percent of GIKK's interest in MSH constituted, individually or in the aggregate, a sale of substantially all of GIKK's units or assets under the parties' agreements.
2. Whether the transactions operated in derogation of Gross's and Kelly's contractual rights under section 17.2 of GIKK's Operating Agreement.
3. Whether the district court erred in excluding Professor Morse's expert testimony under Nebraska Evidence Rule 27-702 and the applicable expert-evidence standards.
4. Whether any error in excluding the expert testimony was prejudicial.

Disposition

affirmed