Summary
The Nebraska Supreme Court reviewed a dispute involving the enforceability and interpretation of a buy-sell agreement for a closely held construction corporation after the death of a shareholder. The court held that the agreement was ambiguous regarding the pricing mechanism applicable to a shareholder's death, making interpretation dependent on extrinsic evidence and inappropriate for summary judgment. The court reversed the district court's partial summary judgment and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the district court erred in granting partial summary judgment after determining that the buy-sell agreement was unambiguous and enforceable as to the purchase of a deceased shareholder's shares.
- Whether the buy-sell agreement was ambiguous concerning the pricing mechanism applicable when a shareholder died.
Holdings
- The buy-sell agreement was clearly ambiguous because it was susceptible to multiple reasonable meanings concerning what pricing mechanism, if any, applied to a deceased shareholder's shares.
- Summary judgment was improper because the ambiguous agreement required consideration of extrinsic evidence and therefore presented a factual issue not appropriate for resolution on summary judgment.
Key quotations
“In short, it is not possible to determine the meaning of the buy-sell agreement as applied to the death of a shareholder.” (866)
“The interpretation of an ambiguous contract presents an issue of fact not appropriate for determination on summary judgment.” (867)
Factual background
BD Construction, Inc./Kearney had three shareholders, including Mark Benjamin, who owned 59 percent of the shares, and plaintiffs Douglas Bierman and James Hoppenstedt, who owned the remaining shares. The shareholders entered into a buy-sell agreement in 2009, and Mark died in 2015; Brenda Benjamin was subsequently appointed president. After Brenda terminated Bierman and Hoppenstedt, they sued seeking enforcement of the agreement, an accounting, corporate changes, and damages for wrongful termination and breach of fiduciary duty.
Procedural history
The Buffalo County District Court granted partial summary judgment to Bierman and Hoppenstedt, determining that the buy-sell agreement was enforceable. After trial, the court valued the corporation, found that Benjamin breached fiduciary duties, removed her as an officer and director, and awarded her $1,703,197.79 for Mark Benjamin's shares. The Nebraska Supreme Court reversed the partial summary judgment and remanded for further proceedings, declining to reach the remaining assignments of error and cross-appeal.
Remand instructions
The district court must conduct further proceedings, including consideration of extrinsic evidence to determine the meaning of the ambiguous buy-sell agreement and the applicable pricing mechanism.