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STROHMYER v. PAPILLION FAMILY MEDICINE

Cite as 296 Neb. 884

Jeffry L. Strohmyer, M.D., appell

cross-appellee, v. Papillion Family Med

a Nebraska professional corporation, et 

appellees and cross-appe

___ N.W.2d ___

Filed June 9, 2017. No. S-16-381.

1. Equity: Appeal and Error. In an appeal of an equitable action, an 

appellate court tries factual questions de novo on the record and reaches 

a conclusion independent of the findings of the trial court, provided that 

where credible evidence is in conflict on a material issue of fact, the 

appellate court considers and may give weight to the fact that the trial 

judge heard and observed the witnesses and accepted one version of the 

facts rather than another.

2. Fraud: Judgments. The existence of a fiduciary duty and the scope of 

that duty are questions of law for a court to decide.

3. Corporations. An officer or a director of a corporation occupies a 

fiduciary relation toward the corporation, and must comply with the 

applicable fiduciary duties in his or her dealings with the corporation 

and its shareholders.

4. Corporations: Liability: Damages. A violation by a trustee of a duty 

required by law, whether willful, fraudulent, or resulting from neglect, is 

a breach of trust, and the trustee is liable for any damages proximately 

caused by the breach.

5. Corporations. An officer or a director of a corporation occupies a fiduciary relation toward the corporation and its stockholders and should 

refrain from all acts inconsistent with his or her corporate duties.

6. Partnerships. Partners must exercise the utmost good faith in all their 

dealings with the members of the firm and must always act for the common benefit of all.

Appeal from the District Court for Sarpy County: Willi

B. Zastera, Judge. Affirmed in part, and in part reversed and

remanded for further proceedings.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

07/27/2017 12:10 AM CDT
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Russell S. Daub, and W. Eric Wood, of Downing, Alexander 

& Wood, for appellant.

Larry R. Forman, of Hillman, Forman, Childers & 

McCormack, for appellees.

Heavican, C.J., Wright, Miller-Lerman, Casse

Kelch, and Funke

Heavican, C

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 His

(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.
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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, Strohmeyer 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 
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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.
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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 11⁄2 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.
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(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 

1 See Neb. Rev. Stat. § 48-1228 et seq. (Reissue 2010 & Cum. Supp. 2016).
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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 weeks.” 

On April 24, Naegele sent Strohmyer a letter referencing the 

bylaws and explaining the “Buy Out” provisions set forth in 

the bylaws of October 16, 2000.

On December 31, 2013, Strohmyer gave Naegele and 

Mantler notice that he was leaving PFM, effective March 31, 

2014, to open his own medical practice. Naegele responded in 

his position as president of PFM, and stated that PFM agreed 
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to “follow the ‘Buy Out’ provisions of the bylaws of October 

16, 2000, upon which we three members agreed.” That same 

day, Naegele transferred a check in the amount of $90,000 

from the PFM account for deposit to a trust fund. Naegele 

testified that he “estimated to buy a doctor out would be about 

$30,000” and that Naegele and Mantle would each receive 

$30,000 when they retired. It was listed in PFM’s tax returns 

as a “Buy-Out Escrow.” That money was later refunded in its 

entirety to PFM. On March 4, 2014, PFM distributed $30,000 

to Naegele and $30,000 to Mantler.

Following Strohmyer’s notice of departure from PFM, 

Naegele updated the office with new paint, carpet, and an 

x-ray machine. Strohmyer claims he did not know about any 

of these costs incurred, nor did he provide his approval for the 

purchases. Naegele claims that the office was overdue for these 

updates and that he thought the improvements were necessary 

to attract a new doctor to the practice.

On March 7, 2014, Strohmyer’s attorney sent a letter to 

Naegele, stating that

use of practice cash to pay for practice and leasehold 

remodeling constitutes misappropriation and breach of 

the By-laws with respect to the amounts of compensation received from prior earnings to be paid to the 

physicians.

Any cash on hand now in the practice accounts (held 

for emergencies or high deductible situations) or for 

available cash is to be paid to . . . Strohmyer forthwith. . 

. . If you have plans to use . . . Strohmyer’s share of the 

cash for any other purpose, please advise . . . Strohmyer 

immediately with an explanation and amounts planned to 

be used.

On April 11, 2014, pursuant to the October 16, 2000, bylaws’ 

“Buy Out” provision, Naegele sent a letter to Strohmyer’s 

attorney, stating that based on his calculations, the expenses 

were greater than the income between March 31 and April 

11, 2014, and that “[b]ecause the bylaws prohibit charging a 
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former partner or his estate in the case of a negative balance, 

the net sum for a check today is zero dollars.” He further stated 

that he “anticipated this outcome for ongoing payments.” In a 

letter dated April 25, 2014, Naegele stated that for the period of 

April 14 to April 25, the expenses again exceeded the income, 

and that the net sum for a check to Strohmyer was zero.

2. Procedural His

On April 28, 2014, Strohmyer filed suit against PFM, 

Naegele, and Mantler. His operative complaint, filed October 

14, alleges that defendants—PFM, Naegele, and Mantler—

(1) breached the October 16, 2000, bylaws by failing to pay 

the wages due Strohmyer, by concealing $90,000, by refusing Strohmyer access to the financial records of PFM, and 

by using income and assets that would have otherwise been 

disbursed to Strohmyer to purchase capital assets and make 

capital improvements; (2) acted in violation of Neb. Rev. Stat. 

§§ 21-2212 and 21-2213 (Reissue 2012), which constituted 

grounds for judicial dissolution of PFM due to defendants’ 

repudiation of the bylaws and failure to redeem Strohmyer’s 

shares and due to the deadlock and oppressive conduct, all of 

which violate the articles of incorporation; (3) refused to pay 

Strohmyer wages, compensation, and/or director fees prior to 

and/or after his departure from PFM, in violation of the Act; 

(4) breached a fiduciary duty due to defendants’ claim that the 

expenses of PFM have exceeded and will continue to exceed 

the total fees collected by PFM, and due to defendants’ capital upgrades without notice to or approval of Strohmyer that 

have diverted funds that would have otherwise been paid to 

Strohmyer; and (5) failed to pay sums due to Strohmyer, thus 

requiring declaratory and injunctive relief, because compensation should have been paid to Strohmyer either as director fees 

or as postdeparture compensation and/or asset value under 

PFM’s bylaws.

PFM, Naegele, and Mantler filed an answer and counterclaim to the first amended complaint. In the counterclaim, 
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they argued that (1) Strohmyer failed to engage in directors’ 

activities and attend directors’ meetings, and thus should not 

receive compensation for services as a director of PFM; (2) 

the services Strohmyer performed for Alegent and Uninet 

Healthcare Network during his time at PFM were performed 

“in violation of Strohmyer’s duty to expend his best full-time 

professional efforts through PFM for the mutual benefit of the 

Physicians”; (3) following an agreement among the PFM physicians to refrain from accepting Medicaid patients, Strohmyer 

continued to provide medical services to Medicaid patients; 

and (4) while the physicians agreed to spend 4 days per workweek attending to patients of PFM, Strohmyer spent only 3 

days per week attending to such patients. Accordingly, they 

argued that Strohmyer was unjustly enriched.

In Strohmyer’s reply to defendants’ answer and his answer 

to defendants’ counterclaim, he alleged as an affirmative 

defense that (1) defendants in recent years called no directors’ 

meetings and, in the alternative, distribution of director fees 

was not conditioned on attendance at directors’ meetings; (2) 

Strohmyer’s work for Alegent and Uninet Healthcare Network 

was “known, acquiesced to, and agreed to” by defendants and 

not in violation of the articles of incorporation; (3) the Act 

prevents defendants from reducing or delaying payment of 

compensation owed to Strohmyer; (4) the recovery of director 

fees paid to Strohmyer prior to 2010 are barred by the statute 

of limitations; (5) the causes of action and damages asserted 

by defendants for the recovery of income earned by Strohmyer 

as a result of his outside employment by Alegent or Uninet 

Healthcare Network prior to 2010 are barred by the statute of 

limitations; and (6) the causes of action and damages asserted 

by defendants are barred by the doctrine of laches, the doctrine 

of estoppel, and the statute of frauds.

The district court issued an order stating that PFM “does not 

meet the requirements of a professional corporation as dictated 

in the Nebraska Professional Corporation Act,” because (1) 

the articles of incorporation do not comply with the Nebraska 
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Professional Corporation Act,2 (2) there are no minutes indicating that PFM’s alleged bylaws were adopted, and (3) the 

alleged bylaws from October 16, 2000, were not signed.

The court further held that the buyout clause was so ambiguous as to be unenforceable under Nebraska law. The court 

found that PFM was a business corporation and not a professional corporation, and that there was insufficient evidence 

to judicially dissolve the corporation. Accordingly, the court 

found it necessary to “stay the proceedings or any further order 

by this Court until the parties comply with Neb. Rev. Stat. 

§ 21-20,166.”

On May 22, 2015, Strohmyer subsequently filed a motion to 

exclude ex parte communications and for clarification of the 

earlier order. Following a hearing on that motion, the district 

court ordered:

a. The Defendant corporation is given until July 13, 

2015, to elect whether to purchase the common stock 

of [Strohmyer]. If it does, [Strohmyer’s] counsel is to 

forthwith notify the Court at which time the Court will 

set down for hearing the evidentiary hearing needed to 

resolve the remaining issues if the parties cannot reach 

an agreement as to value as set forth in the statute. 

The hearing will follow the 60 day time allocated per 

the statute.

b. During the 60 day period following the election to 

purchase, the parties are to attempt to set the gross value 

of [Strohmyer’s] common stock and the terms of payment. The Court will thereafter involve itself, if needed, 

in determining the effect of the remaining unresolved 

issues on the value and any other matters associated with 

the judicial dissolution statute.

On July 13, 2015, defendants filed an election to purchase 

Strohmyer’s stock in PFM in accordance with a July 7, 2015, 

2 Neb. Rev. Stat. § 21-2201 et seq. (Reissue 2012).
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agreement between the parties. The 60-day period for the parties to determine whether they could reach fair value expired 

without agreement.

Following a March 21, 2016, hearing, the court held that in 

determining the value of the stock of PFM on April 1, 2014, 

“the most compelling [are] Exhibits #46 and #113.” The court 

stated that in each of these exhibits, “[Strohmyer] used the 

appraised value of the fixed assets proposed by [his] expert, 

being Exhibit #36 of a value of $79,495.” However, the court 

found Naegele’s testimony most persuasive, placing “the value 

of the fixed assets at $19,765, based upon cost when he purchased them on E-Bay.” The court accordingly adjusted “the 

fair value of the Stock in Exhibits 46 and 113 by $19.91 per 

share,” which set “a value per share on Exhibit #46 at $96.35 

per share and on Exhibit #113 at $113.09, for an average 

fair value per share of $104.72,” thus, “setting the value of 

[Strohmyer’s] stock at $104,720.00.” The court then ordered 

that “the value of [Strohmyer’s] stock is fixed in the amount 

of $104,220.” (This is an apparent contradiction. Our calculations indicate that the proper value based on the district court’s 

calculation is $104,720.)

The court also found that there was “no goodwill or intangible value to [the] medical practice, where one of the physicians 

leaves and takes his patients and part of the staff with him.”

The court next found that under § 48-1229 of the Act, 

Strohmyer was not entitled to compensation for March 2014. 

The court held that none of the physicians met the definition of 

an employee under the Act and that any sums due did not fall 

within the Act, because (1) there were no employment agreements between PFM and the physicians which set out specific 

compensation, (2) each of the physicians set his own schedule 

and saw his own patients, and (3) there was no evidence that 

the monthly payments to the physicians were paid as “W-2 

wages or 1099 compensation.”

The court found that “Exhibit #18 is the correct determination of the amounts due to [Strohmyer] for the period of 
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March 2014.” Accordingly, Strohmyer was awarded the sum 

of $9,389.27 as unpaid compensation. The court stated that 

“the director’s fees which were being held in trust, have been 

considered in the Court’s valuing of [Strohmyer’s] stock.”

Next, the court concluded that due to the lack of employment 

contracts, [Strohmyer] did not breach a fiduciary duty when he 

worked 3 days per week for 4 years, because no fiduciary duty 

had been created. In addition, the court held that Strohmyer 

breached a fiduciary duty by treating Medicaid patients after 

the board of directors made a decision to cease treatment of 

Medicaid patients. The court determined that Strohmyer damaged PFM in the amount of $30,673.

III. ASSIGNMENTS OF ERROR

Strohmyer assigns, restated and consolidated, that the district court erred in (1) miscalculating the value of PFM’s 

share value and the amount of fixed assets due to Strohmyer, 

which led to an inequitable result; (2) finding that PFM had 

no compensable goodwill to which Strohmyer was entitled; 

(3) relying upon the values obtained from eBay in determining 

the replacement cost for medical equipment; (4) not awarding 

compensation for director fees, salary, and attorney fees as an 

employee covered by the Act; and (5) finding that Strohmyer 

breached a fiduciary duty by continuing to accept Medicaid 

patients, holding him liable for a physician assistant’s continued treatment of Medicaid patients, and in its calculation of 

damages based on these claims.

On cross-appeal, PFM assigns, restated and consolidated, 

that the district court erred in finding that Strohmyer owed no 

fiduciary duty to the corporation to work 4 days per week and 

compensating PFM for this breach even though the court found 

that Strohmyer owed a fiduciary duty to the corporation to 

cease taking Medicaid patients.

IV. STANDARD OF REVIEW

[1] In an appeal of an equitable action, an appellate court 

tries factual questions de novo on the record and reaches 
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a conclusion independent of the findings of the trial court, 

provided that where credible evidence is in conflict on a 

material issue of fact, the appellate court considers and may 

give weight to the fact that the trial judge heard and observed 

the witnesses and accepted one version of the facts rather 

than another.3

[2] The existence of a fiduciary duty and the scope of that 

duty are questions of law for a court to decide.4

V. ANALYSIS

1. PFM’s Net Eq

Strohmyer argues that the district court miscalculated the 

value of PFM’s shares. The lower court held that Strohmyer’s 

stock was worth $104,720. We note that the court made a 

minor misstatement of the numbers when it then ordered 

“the value of [Strohmyer’s] stock is fixed in the amount of 

$104,220.” The lower court based its calculation on the following exhibits.

(a) Exhibit 46

In exhibit 46, entitled “Reconciliation of Assets as of 

March 31, 2014,” the “Total Adjusted Assets” are listed as 

$348,767.90, or $116.26 per share. Exhibit 46 was drafted by 

Strohmyer’s expert witness Todd Lehigh.

(b) Exhibit 113

Exhibit 113, entitled “Reconciliation of Net Liquid and 

Fixed Assets Before Intangibles & Goodwill as of March 31, 

2014,” lists the net equity before intangibles/business goodwill at $401,174.14. Exhibit 113 was also drafted by Lehigh. 

Exhibit 113 contains the same values as exhibit 46, and in 

addition includes: prepaid supplies on hand ($11,829.86), other 

3 Rauscher v. City of Lincoln, 269 Neb. 267, 691 N.W.2d 844 (2005).

4 In re Estate of Stuchlik, 289 Neb. 673, 857 N.W.2d 57 (2014), modified on 

denial of rehearing 290 Neb. 392, 861 N.W.2d 682 (2015).
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fixed assets per exhibit 35 ($79,545), daily supplies ($31,774), 

adjusted accounts receivable ($143,043.60), accounts payable 

($11,185.41), payroll taxes ($3,391.32), and salary due to 

Strohmyer ($9,389.27).

(c) Exhibits 35 and 36

Exhibit 36 is a copy of the notes written by Strohmyer’s 

expert witness Doug Killion, for his retrospective appraisal 

report. That report valued PFM’s fixed assets at $79,545, 

based on the fair market value. Killion’s report is found in 

exhibit 35.

(d) Exhibit 98

Exhibit 98 is a calculation by Naegele of the value of PFM’s 

fixed assets based on the cost of each item in similar condition 

found on “eBay and Craigslist.” Exhibit 98 contains the same 

items described in exhibit 36, but calculates the fair market 

value at $19,755.

(e) Trial Court’s Calculation

The trial court found that exhibits 46 and 113 were credible 

valuations of the corporate shares of PFM. However, the court 

found that Naegele’s assessment of fixed assets in exhibit 98 

was a more persuasive valuation than Killion’s assessment in 

exhibit 36. Because the share values in exhibits 46 and 113 

were based on the cost of replacement in exhibit 98, the court 

adjusted the values in exhibits 46 and 113. The court accordingly subtracted the difference in cost of replacement between 

exhibits 36 and 98 and divided it by 3,000 shares, which 

equaled $19.91 per share.

For exhibit 46, the court deducted $19.91 in calculating 

the amount of $96.35 per share. For exhibit 113, the court 

deducted $19.91 to arrive at $113.09 per share. The court then 

averaged these two amounts. The average value was $104.72. 

Each director was issued 1,000 shares; therefore, the court 

multiplied $104.72 by 1,000 to arrive at a value of $104,720 

for Strohmyer’s shares.
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(f) Errors in Trial Court’s Calculation

(i) PFM’s Share Value

Strohmyer argues that the district court miscalculated the 

value of PFM’s shares by “using inconsistent accounting and 

averaging logic,” which led to an inequitable and unjust 

result. Strohmyer contends that the court should have awarded 

him $16,740 as the difference in value between exhibits 46 

and 113.

Under a de novo standard of review, we give weight to the 

lower court’s assessments of credibility. However, we find that 

the district court erred in its calculations using the values in 

these exhibits.

First, the court made a minor misstatement of the numbers 

in its calculations. The court stated that the value of fixed 

assets in exhibit 36 was $79,495, whereas exhibit 36 lists the 

value of fixed assets as $79,545. In addition, the court stated 

that Naegele placed the value of the fixed assets at $19,765, 

when the value listed in exhibit 98 was $19,755.

Second, the court averaged the values calculated in exhibits 

46 ($348,767.90) and 113 ($401,174.14). In drafting each of 

these exhibits, Lehigh included everything listed in exhibit 46 

in his valuation in exhibit 113. Because the lower court found 

exhibit 113 credible, it implicitly found all of the additional 

line items listed in exhibit 113 to be credible. It is therefore 

illogical to average the valuation in exhibit 113 with the more 

basic valuation in exhibit 46.

Because the trial court found the additional line items to be 

credible, under a de novo standard of review, we find that it 

should have relied only upon the valuation from exhibit 113. 

In support of our conclusion that the district court erred in 

averaging the two exhibits, we note that the adjusted value of 

exhibit 46 does not contain the fixed asset valuation per exhibit 

35 of $79,545. By subtracting the difference in value of fixed 

assets of $59,790 ($79,545 − $19,755) from the net value in 

exhibit 113 of $401,174.14, the adjusted net equity value of 

exhibit 113 should equal $341,384.14.
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Third, we find an error in the calculation in exhibit 113. 

In exhibit 113, “Account Payables” and “Payroll Taxes” are 

treated as assets. Our review indicates that these items should 

be treated as liabilities. In Lehigh’s testimony, he does not 

address why he has listed these items as assets rather than 

as liabilities.

By treating the “Account Payables” and “Payroll Taxes” 

as liabilities rather than assets, and adjusting the value of 

fixed assets to the value in exhibit 98 (Naegele’s calculation), 

the adjusted net equity value of exhibit 113 is $312,230.68. 

Thus, the value of Strohmyer’s shares would be $104,077. 

Despite the lower court’s calculation errors, this value is 

almost the same as the court’s valuation of Strohmyer’s shares 

at $104,720. This is not a material difference. Hence, we find 

no reversible error in the court’s ultimate valuation of shares 

at $104,720.

(ii) Director Fees

Strohmyer argues that the lower court failed to award onethird of the “Net Quarterly Director Fees” to Strohmyer and 

that he should be awarded $72,991.22 accordingly.

In exhibit 113, entitled “Reconciliation of Net Liquid and 

Fixed Assets Before Intangibles & Goodwill,” Lehigh calculated the “Total Adjusted Equity Before Director Fees” 

as $620,147.82. Lehigh then subtracted the “Net Quarterly 

Director Fees (1/3 for each shareholder)” from the total. 

In his testimony, Lehigh states that he arrived at the “Net 

Quarterly Director Fees” amount by adding the following 

components:

[C]ash in [the] bank per QuickBooks [in the amount of] 

37,143, the litigation escrow account [in the amount] 

of the 90,000, [and] the outstanding checks from 2008 

through 2013 [are also included]. And then . . . the deposits for the carpet, painting, X-ray machine, the real estate 

taxes and for painting [are included in the amount], and 

all those numbers totaled the [amount of] 318,973.68.
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Lehigh then subtracted $100,000 from this amount for operating capital in the business, based on the testimony of the 

assistant office manager, to arrive at the value of $218,973.68 

as director fees.

The lower court stated in its order that “[Strohmyer] and 

Defendants were the sole Directors of the Corporation.” The 

court stated thereafter that “[Strohmyer] for the two years prior 

to his departure refused to attend Director’s meetings.” The 

court further noted that “the director’s fees which were being 

held in trust, have been considered in the Court’s valuing of 

[Strohmyer’s] stock.”

In exhibit 46, director fees were not listed in the valuation 

of PFM’s net equity. In exhibit 113, as mentioned above, director fees were subtracted in valuing the net equity. Therefore, 

in its calculation of net equity owed to Strohmyer, the court 

awarded only one-third of the value of PFM. It merely subtracted the director fees from the total net equity and did not 

make a separate finding of the amount of director fees due to 

Strohmyer. Our reading of the record is that the lower court 

made a factual finding that Strohmyer was a director of PFM, 

but that Strohmyer was not entitled to director fees, because 

he did not attend directors’ meetings. Because this was a factual finding, we hold that under a de novo standard of review, 

the lower court did not err in finding that Strohmyer was not 

entitled to director fees.

2. Good

Strohmyer argues that the district court erred in “not awarding an additional $55,000.00 for intangible assets . . . and by 

treating intangible assets in the same category as goodwill 

assets.”5 PFM contends that there is “no goodwill to divide 

upon dissolution of a professional enterprise when the clients 

remain with the firm taking their files.”6 The district court 

5 Brief for appellant at 31.

6 Brief for appellees at 23.
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held that there was “no goodwill or intangible value to a medical practice, where one of the physicians leaves and takes his 

patients and part of the staff with him.”

In Taylor v. Taylor,

7

 this court addressed whether a physician’s professional corporation, of which he was the sole 

practitioner and shareholder, had professional goodwill that 

could be included as an asset in the marital estate upon dissolution of the marriage. In Taylor, we characterized goodwill as

“‘the advantage or benefit which is acquired by an establishment beyond the mere value of the capital, stock, 

funds, or property employed therein, in consequence of 

the general public patronage and encouragement which it 

receives from constant or habitual customers, on account 

of its local position or common celebrity, or reputation for 

skill or affluence, or punctuality, or from other accidental 

circumstances or necessities, or even from ancient partialities or prejudices.’”8

This court further stated that

where goodwill is a marketable business asset distinct 

from the personal reputation of a particular individual, 

as is usually the case with many commercial enterprises, 

that goodwill has an immediately discernible value as 

an asset of the business and may be identified as an 

amount reflected in a sale or transfer of such business. 

On the other hand, if goodwill depends on the continued presence of a particular individual, such goodwill, 

by definition, is not a marketable asset distinct from 

the individual.9

Therefore, we held that in the context of the division of marital property under Neb. Rev. Stat. § 42-365 (Reissue 1984), 

“goodwill must be a business asset with value independent 

7 Taylor v. Taylor, 222 Neb. 721, 386 N.W.2d 851 (1986).

8 Id. at 727-28, 386 N.W.2d at 856-57.

9 Id. at 731, 386 N.W.2d at 858.
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of the presence or reputation of a particular individual, an 

asset which may be sold, transferred, conveyed, or pledged.”10

Accordingly, “[w]hether goodwill exists and whether goodwill has any value are questions of fact.”11 We held, on 

those facts, that the district court did not err in concluding 

that plaintiff’s medical practice did not have any compensable goodwill.

In Detter v. Miracle Hills Animal Hosp.,

12 this court 

addressed whether a professional corporation can have goodwill as a distributable asset in a corporate dissolution proceeding. We reiterated the holding in Taylor, that “the existence of 

professional goodwill as a distributable asset presents a question of fact.”13

In its analysis, the Detter court cited Thomas v. Marvin E. 

Jewell & Co.,

14 in which three partners left a partnership to 

begin their own partnership, and evidence showed that the 

departing partners took the files of the clients they wished to 

retain and contacted those clients. After the transition, “[m]ost 

of the clients stayed with the firm that possessed the client 

file.”15 We held that the parties received all of the goodwill to 

which they were entitled, because “each of the two factions 

took the clients and whatever goodwill was available at the 

time of dissolution.”16

Strohmyer’s expert witness on intangible asset valuation 

testified that according to his calculations, the intangible assets 

were worth $165,000. The witness stated that “from a business appraiser’s standpoint . . . there’s not business goodwill 

10 Id. at 731, 386 N.W.2d at 858-59.

11 Id. at 732, 386 N.W.2d at 859.

12 Detter v. Miracle Hills Animal Hosp., 269 Neb. 164, 691 N.W.2d 107 

(2005).

13 Id. at 175, 691 N.W.2d at 115-16.

14 Thomas v. Marvin E. Jewell & Co., 232 Neb. 261, 440 N.W.2d 437 (1989).

15 Id. at 266, 440 N.W.2d at 441.

16 Id. at 268, 440 N.W.2d at 443.
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in this practice, but there’s value of intangible assets, identifiable intangibles.”

Among these identifiable intangibles, the witness listed 

PFM’s computer system, patient records, and assembled workforce. However, Strohmyer testified that he did not take any 

patient files, though he did send letters to his patients informing them of his departure. Approximately 50 percent of those 

patients followed him to his new practice. Naegele testified 

that eight PFM employees, almost one-third of PFM’s staff, 

also followed Strohmyer to his new practice. Furthermore, 

Naegele produced a spreadsheet showing that there was a 

$543,578.22 decrease in PFM revenues between the last 9 

months of 2013, while Strohmyer was at PFM, and the 

last 9 months of 2014, after Strohmyer had departed. While 

Strohmyer’s witness testified that there were unidentified 

intangible assets with value, there was also significant evidence that any goodwill depended on the continued presence 

of Strohmyer, not merely on PFM.

Similar to Taylor, the lower court here heard the expert 

witnesses and gave more weight to the testimony that there 

was no goodwill or unidentified intangible value to the medical practice. Under a de novo standard of review, the district 

court did not err in finding that there was no goodwill to the 

medical practice. Strohmyer’s second assignment of error is 

without merit.

3. Replacement Cost

Medical Equi

Strohmyer contends that the district court erred in accepting Naegele’s testimony about replacement costs for medical 

equipment over the values testified to by Strohmyer’s expert.

(a) Relevant Law

Generally,

[a]n owner’s opinion testimony as to the value of his 

or her property cannot be based on naked conjecture or 

solely speculative factors. In addition, purely hearsay 
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evidence as to the value of a chattel is insufficient as 

a basis for testimony predicated thereon by the owner. 

However, information received in part from others has 

been held to be unobjectionable.17

The Iowa Supreme Court, in W & W Livestock Enterprises, 

Inc. v. Dennler,

18 stated that “[i]t is generally held that the price 

for which personal property sells at a bona fide sale is competent evidence of its value.”

In First Baptist Church v. State,

19 this court addressed how 

to determine the market value of the land at issue. We held that

“[m]arket value is not a question of science or skill upon 

which experts alone may give an opinion. [Citation omitted.] It is necessary only to show that he has the means of 

forming an intelligent opinion derived from an adequate 

knowledge of the nature and kind of property in controversy, and of its value. [Citation omitted.] It is not essential that every witness expressing an opinion shall have 

all-inclusive information of every detail of the elements 

entering into the value. . . .”20

The Nebraska Court of Appeals has also addressed a similar 

question and held that it was not an abuse of discretion for 

the lower court to rely upon a valuation of personal property based on “garage sale and ‘craigslist’ prices” in a marriage dissolution.21

(b) Testimony at Trial

At trial, several witnesses testified as to the estimation of 

the value of replacement cost for PFM’s medical equipment. 

17 31A Am. Jur. 2d Expert and Opinion Evidence § 232 at 267 (2012).

18 W & W Livestock Enterprises, Inc. v. Dennler, 179 N.W.2d 484, 489-90 

(Iowa 1970).

19 First Baptist Church v. State, 178 Neb. 831, 135 N.W.2d 756 (1965).

20 Id. at 835, 135 N.W.2d at 758-59 (emphasis in original).

21 See McIver v. McIver, No. A-13-052, 2013 WL 5434646 at *6 (Neb. App. 

Oct. 1, 2013) (selected for posting to court website).
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Strohmyer offered the PFM’s accountant’s report of the assets, 

liabilities, and stockholders’ equity for income tax basis on 

December 31, 2013, in which report the medical equipment 

was valued at $113,502. Killion, Strohmyer’s expert witness, testified that fair market value of the medical equipment 

was $79,545.

In addition, during cross-examination, Naegele testified that 

his estimated values showed the fair value, which he defined 

as “what is the stuff actually worth, what did I buy it for or 

could replace it for, and your appraiser defined fair market 

value in a way that I disagree.” He stated that his calculation 

was the fair and reasonable value because he “bought almost 

everything used on eBay or Craigslist.”

Based on this understanding of fair market value, Naegele 

prepared exhibit 98, which lists the cost of replacement as 

$19,755. In the exhibit, Naegele also included printouts of each 

of the items and their listed prices on eBay, for which he based 

his estimations of replacement value.

The lower court judge heard the testimony from each of the 

witnesses and found Naegele’s testimony to be more persuasive. Under a de novo standard of review, we cannot conclude 

that the district court erred in this finding. Strohmyer’s third 

assignment of error is without merit.

4. Awarding Wages Under 

Strohmyer argues that the district court erred in failing to 

award attorney fees, director fees, and salary under the Act. 

The district court held that none of the physicians met the 

definition of employees under the Act, nor was there evidence 

presented that the payments they received were paid as “W-2 

wages or 1099 compensation.”

An individual is not an employee under the Act if the “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.”22 Testimony established 

22 § 48-1229(1)(a).
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that Strohmyer set his own work schedule and unilaterally 

limited the number of days he worked at PFM, did not speak 

to Naegele and Mantler in the last 2 years before his departure 

from PFM, and continued to receive Medicaid patients after 

Naegele and Mantler decided that PFM should no longer treat 

Medicaid patients. In addition, Strohmyer was not working 

at PFM under an employment agreement. Accordingly, under 

§ 48-1229, Strohmyer “has been and will continue to be free 

from control or direction over the performance of such services” and is thus not an employee under the Act. Thus, the 

district court did not err in finding that Strohmyer was not an 

employee under § 48-1229. Strohmyer’s fourth assignment of 

error is without merit.

5. Fiduciary Duty

Medicaid Pati

Strohmyer next assigns that the district court erred in awarding PFM $30,673 on its allegation that Strohmyer’s continued 

treatment of Medicaid patients was a breach of his fiduciary 

duty and that the calculation of damages on this claim was 

purely speculative.

[3,4] An officer or a director of a corporation occupies a 

fiduciary relation toward the corporation, and must comply 

with the applicable fiduciary duties in his or her dealings with 

the corporation and its shareholders.23 A violation by a trustee 

of a duty required by law, whether willful, fraudulent, or resulting from neglect, is a breach of trust, and the trustee is liable 

for any damages proximately caused by the breach.24

In D & J Hatchery, Inc. v. Feeders Elevator, Inc.,

25 this court 

discussed ratification of a corporate officer’s unauthorized acts 

by the corporation:

23 Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (2004).

24 Id.

25 D & J Hatchery, Inc. v. Feeders Elevator, Inc., 202 Neb. 69, 74, 274 

N.W.2d 138, 141 (1979).
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“‘The unauthorized acts of an officer of a corporation 

may be ratified by the corporation by conduct implying 

approval and adoption of the act in question. Such ratification may be express, or may be inferred from silence 

and inaction, and if the corporation, after having full 

knowledge of the unauthorized act, does not disavow the 

agency and disaffirm the transaction within a reasonable 

time, it will be deemed to have ratified it.’”

In a memorandum from Naegele to all clinic staff, dated 

April 18, 2005, Naegele states 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 minutes for the January 27, 2006, 

directors’ meeting states 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.” Naegele testified that at the meeting on January 27, 

Naegele and Mantler both wanted to discontinue treatment 

of all Medicaid patients and that Strohmyer disagreed, but 

this was not written down. Naegele testified that he verbally 

instructed Strohmyer to close his practice to Medicaid patients 

in 2006 because the two votes against continuing Medicaid 

treatment were controlling. Naegele testified that Strohmyer 

responded that “he would continue to do whatever he wanted 

to do.”

Despite these alleged instances in which Strohmyer was 

instructed to cease treating Medicaid patients, Naegele also 

testified that there were “many, many issues” and that he “was 

afraid of a wrongful termination lawsuit” and “never wanted to 

confront [Strohmyer] on the issue until he left.”

As in D & J Hatchery, Inc., ratification of a corporate 

officer’s unauthorized acts “may be inferred from silence and 

inaction, and . . . the corporation [had] full knowledge of the 
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unauthorized act.” Naegele’s April 18, 2005, memorandum 

to PFM’s staff and the minutes from the January 27, 2006, 

directors’ meeting indicate that the three physicians discussed 

ceasing treatment of Medicaid patients in 2006, but that they 

agreed that Strohmyer could continue treating such patients. 

Naegele provides no evidence of any oral agreement in 2006 

that all doctors at PFM must cease taking Medicaid patients.

Even if Strohmyer was not authorized by PFM to accept 

Medicaid patients, Naegele’s testimony, in addition to the 

meeting minutes and the memorandum, indicates that Naegele 

and Mantler had full knowledge of Strohmyer’s continued 

treatment of Medicaid patients in 2006. After having full 

knowledge, they took no action to stop Strohmyer from accepting such patients until Strohmyer filed a complaint in 2014, 

thus failing to “‘disaffirm the transaction within a reasonable 

time.’”26 This inaction, from 2006 to the filing of the complaint 

in 2014, amounts to ratification of Strohmyer’s unauthorized 

acts. Therefore, we conclude that PFM, Naegele, and Mantler 

ratified Strohmyer’s actions. As such, Strohmyer’s fifth assignment of error has merit, and the order awarding PFM $30,673 

must be vacated.

6. PFM’s Cross-A

On cross-appeal, PFM assigns that the district court erred 

in finding that Strohmyer owed no fiduciary duty to the corporation to work 4 days a week and in failing to compensate 

PFM for this breach. The district court found that PFM had 

no employment contracts setting out the terms of employment; as such, no fiduciary duty existed. In addition, the 

court noted that PFM had the authority under the terms of the 

bylaws to terminate Strohmyer’s employment, but failed to do 

so, and that Strohmyer’s work production during the 3 days 

per week he worked was substantially the same as Naegele’s 

and Mantler’s.

26 Id.
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[5,6] An officer or a director of a corporation occupies a 

fiduciary relation toward the corporation and its stockholders 

and should refrain from all acts inconsistent with his or her 

corporate duties.27 Partners must exercise the utmost good faith 

in all their dealings with the members of the firm and must 

always act for the common benefit of all.28

Naegele claims that the three doctors had an oral agreement 

to work 4 days per week at PFM. Strohmyer contends that 

no such agreement existed. Through the course of his time at 

PFM, Strohmyer reduced his hours from 4 days per week to 3 

days per week because of his outside employment. The minutes 

for the directors’ meeting held June 23, 2006, at which all three 

doctors were listed as present, state: “Discussed and agreed: 

. . . Strohmyer to pursue medical directorship at Midlands. 

Discussed how that would impact [the] practice.” And in a 

meeting on May 1, 2009, the minutes state:

Strohmyer . . . brought up the possibility that Alegent 

might offer him a significant amount of money to become 

a hospital administrator . . . . We therefore had a frank 

conversation about that and the need to start planning for 

it. . . . Mantler and . . . Naegele were supportive of whatever steps he needs to take to best take care of his family 

and himself . . . .

The minutes from PFM’s meetings indicate Strohmyer stated 

to the other doctors that he would be taking these outside positions and that it could impact his work at PFM. There is no evidence that prior to this litigation, the other doctors attempted 

to enforce this alleged oral agreement to work 4 days per 

week. Nor was any evidence introduced that Strohmyer’s other 

employers competed with PFM.

Strohmyer’s charges to patients at PFM decreased after taking the positions at Alegent in 2008. However, Strohmyer’s 

charges remained comparable to Naegele’s and Mantler’s 

27 Bellino v. McGrath North, 274 Neb. 130, 738 N.W.2d 434 (2007).

28 Id.
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between 2008 and 2013. Therefore, we find that neither 

Strohmyer’s work for other employers nor his decision to 

work 3 days per week at PFM was “inconsistent with his . . . 

corporate duties” at PFM.29 Strohmyer did not breach a fiduciary duty to PFM by failing to work at PFM’s office 4 days 

per week. PFM’s sole assignment of error on cross-appeal is 

without merit.

VI. CONCLUSION

The district court did not err in its ultimate valuation of 

Strohmyer’s shares, in finding that PFM had no goodwill 

for which Strohmyer was entitled to compensation, in relying upon the values PFM obtained from eBay in determining 

the replacement cost for medical equipment, and in failing 

to award compensation for director fees and salary as an 

employee covered by the Act.

However, we find that the district court erred in finding 

that Strohmyer breached a fiduciary duty by continuing to 

accept Medicaid patients, in holding Strohmyer liable for a 

physician assistant’s continued treatment of Medicaid patients, 

and in its calculation of damages based on these claims. The 

district court did not err in finding on PFM’s cross-appeal that 

Strohmyer did not breach a fiduciary duty by failing to work at 

PFM 4 days per week.

Accordingly, we affirm in part, and in part reverse and 

remand for further proceedings not inconsistent with this 

opinion.

 Affirmed in part, and in part revers

remanded for further proceedin

29 See id. at 144, 738 N.W.2d at 446.