RICHARD QUALSETT, INDIVIDUALLY AND AS ATTORNEY IN FACT FOR THE FORMER SHAREHOLDERS OF OASIS PUBLISHING, INC., APPELLANT,
DAVID ABRAHAMS, INDIVIDUALLY AND AS ATTORNEY IN FACT FOR THE FORMER SHAREHOLDERS OF OASIS PUBLISHING, INC., APPELLEE
[Copyrighted Material Omitted]
opinion is not Designated for Permanent Publication.
from the District Court for Lancaster County: STEPHANIE F.
R. Creager, of Anderson, Creager & Wittstruck, P.C., L.L.O.,
E. Zimmerman and John C. Hahn, of Jeffrey, Hahn, Hemmerling &
Zimmerman, P.C., L.L.O., for appellee.
PIRTLE and RIEDMANN, Judges.
Neb.App. 959] Riedmann, Judge.
Qualsett, in his capacity as attorney in fact for the former
shareholders of Oasis Publishing, Inc. (Oasis), filed a
complaint against David Abrahams, a former Oasis shareholder,
alleging breach of fiduciary duty. Abrahams filed a
counterclaim, seeking a declaration that he was entitled to
recovery of funds Qualsett was withholding from him. In
response to the counterclaim, Qualsett asserted the
affirmative defense of recoupment, based upon Abrahams'
alleged breach of fiduciary duty. The district court for
Lancaster County (1) granted summary judgment to Abrahams on
Qualsett's complaint, on the basis that the statute of
limitations barred Qualsett's claim against him, and (2)
entered judgment for Abrahams on his counterclaim, rejecting
Qualsett's claim for recoupment, following a bench trial.
Qualsett appeals both orders.
Neb.App. 960] After reviewing the record on appeal, we agree
that Qualsett was not entitled to recoupment on Abrahams'
counterclaim, because he failed to prove all of the elements
of a breach of fiduciary duty claim. Because Qualsett was
unsuccessful on his breach of fiduciary duty claim asserted
as a defense to Abrahams' counterclaim, we need not
determine whether the statute of limitations barred his
affirmative claim of breach of fiduciary duty asserted in his
complaint. Therefore, we affirm the court's order in
favor of Abrahams.
Abrahams, and Craig Smith formed Oasis. Abrahams served as
president and managed the day-to-day activities of the
company, while Qualsett provided the majority of the
company's financial backing and Smith contributed
financially and to marketing. Some smaller shareholders also
purchased Oasis stock. The business of Oasis involved
creating digital, searchable versions of statutes and case
law. Through litigation, Oasis obtained a license from West
Publishing Company that allowed it to utilize that
company's case law pagination.
April 2001, Oasis shareholders negotiated the sale of all of
Oasis' stock to Jurisearch Holdings, LLC (Jurisearch). To
effectuate the sale, the Oasis shareholders signed an
irrevocable power of attorney naming Qualsett, Abrahams, and
Smith as attorneys in fact for Oasis. The stock purchase
agreement with Jurisearch involved a cash payment at closing
of $1,110,000, largely to retire Oasis' debt, and a
promissory note upon which Jurisearch was to make monthly
interest payments followed by balloon principal payments
in June 2001 and April 2003. The parties also agreed during
negotiations that Abrahams would go to work for Jurisearch
following the sale to assist with the transition. Although
Abrahams began working with Jurisearch immediately after the
stock sale, his employment agreement was not signed until
later that year. Abrahams ultimately signed two contracts at
the same time: [23 Neb.App. 961] an employment agreement and
a noncompetition agreement (the noncompete agreement). Two
versions of the employment agreement appear in the record.
One version of the employment agreement references the
noncompete agreement, which in turn references an employment
agreement; the other version makes no reference to the
noncompete agreement. Abrahams' employment agreements
paid him in membership units or in stock options. His
noncompete agreement paid him separately $10,000 per month
for 2 years.
April 2003, Jurisearch's final balloon principal payment
came due and the former Oasis shareholders learned that
Jurisearch would be unable to pay what it owed. Qualsett,
Abrahams, and Smith, operating under their power of attorney,
approved a 1-year extension of Jurisearch's principal
payment with continued interest payments. In March 2004,
former Oasis shareholders again rolled over Jurisearch's
principal payment. Annual rollovers of the principal amount
due to Jurisearch's inability to pay continued in this
manner until the April 2007 principal payments were coming
due. Qualsett states that after the 2006 rollover agreement,
he learned that Abrahams had been receiving payments on a
noncompete agreement as well as an employment agreement from
Jurisearch. Qualsett took over negotiations of the 2007
rollover from Abrahams because he was upset that Abrahams was