Summary
The Nebraska Supreme Court affirmed a judgment in favor of accountant Robert Dick and his new firm, Bland & Associates, in litigation arising from Dick’s departure from Koski Professional Group, P.C. The court addressed peremptory challenges, jury instructions, directed verdict, contract defenses involving a shareholder buyout agreement, fiduciary duties, tortious interference, trade secrets, and related claims. The court concluded that the asserted errors did not warrant reversal.
Topics
Practice areas
Questions Presented
- Whether the allocation of three peremptory challenges each to Dick and Bland required reversal.
- Whether the jury should have been instructed that Dick's alleged breach of fiduciary duty, the corporate bylaws, or the implied covenant of good faith and fair dealing constituted a prior material breach excusing KPG's performance under the shareholder agreement.
- Whether Dick's delivery of stock certificates free of liens was a condition precedent to KPG's duty to repurchase his shares.
- Whether KPG was entitled to a directed verdict or a new trial on its breach-of-fiduciary-duty counterclaim based on Dick's conduct before and after resignation.
- Whether the district court improperly excluded evidence, denied amendment of the pleadings, or refused instructions concerning fiduciary duty, corporate opportunities, confidential information, equitable clawback damages, and professional-conduct commissions.
- Whether the judgments on KPG's counterclaims and third-party claims were supported by the evidence and whether the challenged evidentiary and instructional rulings were prejudicial.
Holdings
- A party challenging an unequal allocation of peremptory challenges must demonstrate from the record that it exercised all of the challenges allotted to it. Because KPG failed to preserve a record showing exhaustion of its challenges, it could not establish reversible error.
- Delivery of stock certificates free of liens was not a condition precedent to KPG's duty to purchase Dick's shares under the shareholder agreement.
- KPG was not entitled to instructions allowing Dick's alleged breach of fiduciary duty or the implied covenant of good faith and fair dealing to operate as an affirmative defense to Dick's claim under the shareholder buyout provision.
- An alleged breach of KPG's corporate bylaws could not constitute a prior material breach excusing KPG's performance under the separate shareholder agreement.
- The district court did not err by denying KPG's motion for directed verdict on its breach-of-fiduciary-duty counterclaim.
Key quotations
“The law does not allow the implied covenant of good faith and fair dealing to be an everflowing cornucopia of wished-for legal duties; indeed, the covenant cannot give rise to new obligations not otherwise contained in a contract’s express terms.” (649)
“Shareholder agreements may be freestanding of corporate bylaws.” (653)
Factual background
Robert Dick worked for Koski Professional Group, P.C., for 22 years and became a vice president and 30-percent shareholder. After resigning and joining Bland & Associates, many clients independently followed him, and Dick sought a mandatory repurchase of his shares under KPG's shareholder agreement. KPG refused to complete the buyout, asserting that Dick had breached fiduciary duties, corporate bylaws, and other obligations, while Dick maintained that he was ready and willing to perform the buyout obligations. The jury found for Dick on the repurchase claim and against KPG on its counterclaims and third-party claims.
Procedural history
Dick sued KPG for breach of a shareholder agreement requiring KPG to repurchase his shares after his voluntary departure. KPG asserted affirmative defenses and counterclaims involving fiduciary duty, bylaws, trade secrets, tortious interference, conspiracy, and unjust enrichment, and brought third-party claims against Bland. After trial, the jury awarded Dick $470,312.51 and found against KPG on its claims. The district court entered judgment, and KPG appealed while Dick and Bland cross-appealed.