                 United States Court of Appeals
                             For the Eighth Circuit
                        ___________________________

                                No. 17-3185
                        ___________________________

                                   Deborah Rasby

                        lllllllllllllllllllllPlaintiff - Appellant

                                           v.

                                   James D. Pillen

                       lllllllllllllllllllllDefendant - Appellee
                                      ____________

                    Appeal from United States District Court
                      for the District of Nebraska - Omaha
                                 ____________

                             Submitted: June 14, 2018
                            Filed: September 28, 2018
                                  ____________

Before LOKEN, GRUENDER, and ERICKSON, Circuit Judges.
                          ____________

LOKEN, Circuit Judge.

       In 1994, Deborah Rasby received a ten percent minority shareholder interest
when Progressive Swine Technologies (“PST”) was formed to provide management
services to customers in the swine industry. She also received a five or ten percent
interest in five other entities to which PST provided management services. James
Pillen owned the remaining shares. Rasby served as PST’s accountant until she
retired in May 2011. On June 29, 2012, Rasby sold her minority interests to Pillen
for $ 2,350,000. In this diversity action, Rasby alleges that Pillen’s actions created
“significant economic duress” that forced her to sell her minority interests. She seeks
restitution of the excess benefit Pillen received and asserts damage claims for
fraudulent misrepresentation, securities fraud, denial of corporate opportunity, and
breach of fiduciary duty.

       After substantial discovery, the district court1 granted Pillen’s motion for
summary judgment, concluding that undisputed facts establish no actionable duress,
Rasby produced no evidence that the Unit Purchase Agreement was fraudulently
induced, and therefore the agreement’s mutual release provision bars all her claims.
Rasby appeals. Reviewing the grant of summary judgment de novo and the facts in
the light most favorable to Rasby, the non-moving party, we affirm.

                                           I.

        Like the district court, we begin with the economic duress issue because, if the
Unit Purchase Agreement was not the product of duress and was not fraudulently
induced, then the mutual release likely bars Rasby’s other damage claims. On appeal,
Rasby argues the district court “erred in deciding multiple factual issues when
dismissing Rasby’s economic duress claim.” However, under Nebraska law, which
governs this diversity action, “[w]hat constitutes duress is a question of law, but the
existence of duress is a question of fact.” Lustgarten v. Jones, 371 N.W.2d 668, 672
(Neb. 1985). Thus, the district court made no error in granting summary judgment
if the facts viewed most favorably to Rasby do not constitute economic duress as a
matter of law.




      1
       The Honorable Joseph F. Bataillon, United States District Judge for the
District of Nebraska.

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       The test under Nebraska law for determining what constitutes duress is well-
established:

             To be voidable because of duress, an agreement must not only be
      obtained by means of the pressure brought to bear, but the agreement
      itself must be unjust, unconscionable, or illegal. The essence of duress
      is the surrender to unlawful or unconscionable demands. It cannot be
      predicated upon demands which are lawful, or the threat to do that
      which the demanding party has a legal right to do.

Id., quoting Carpenter Paper Co. v. Kearney Hub Pub. Co., 78 N.W.2d 80, 84 (1956).
To prove pressure that establishes duress, Rasby must show “application of such
pressure or constraint that compels a person to go against that person's will and takes
away that person's free agency, destroying the power of refusing to comply with the
unjust demands of another.” Bock v. Bank of Bellevue, 434 N.W.2d 310, 315 (Neb.
1989). In addition, she must show that the resulting agreement was “unjust,
unconscionable, or illegal.” “Threatening to take advantage of business exigency to
impose unjust demands is commonly referred to as ‘economic duress’ or a ‘business
compulsion.’” City of Scottsbluff v. Waste Connections of Neb., Inc., 809 N.W.2d
725, 744 (Neb. 2011). However, “[c]oercion does not include hard bargaining.” Id.

       Here, Rasby testified that her working relationship with Pillen deteriorated
after his daughter joined PST, leading her to retire in May 2011. Before then, in
addition to paying Pillen and Rasby salaries, PST had distributed its profits in good
years, providing Rasby funds to pay income taxes she owed as a shareholder of this
“Subchapter S” corporation. After she retired, Pillen stopped these PST distributions
to Rasby, leaving her fearful that she could not afford to pay taxes due on her PST
investment. Rasby hired Roger Wells, an experienced Omaha mergers and
acquisition attorney, to consider her options. They concluded that sale of the
minority interests was her best option.



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       In an April 2012 letter to Rasby, Pillen stated: “our plan is to liquidate [PST]
since it no longer meets our business objectives. . . . [Y]ou will receive ten percent
of the net assets available for distribution [which] we anticipate . . . would be just
over $50,000.” The letter went on to offer to buy Rasby’s interests in the other five
entities for a total of $1,881,029. Rasby considered this offer substantially below the
fair market value of her interests. She and Wells discussed various options, including
selling her interests to Pillen, selling to a third party, and suing Pillen for minority
shareholder oppression. Rasby ultimately decided to sell her shares, and Wells
proceeded to negotiate the Unit Purchase Agreement with Pillen’s attorney.

       Pillen provided Rasby and Wells the calculations used by the accountant Pillen
hired to value Rasby’s interests. Rasby considered retaining her own valuation expert
but did not do so. She continued to consider other options, including litigation, but
ultimately agreed to accept $2,350,000 for her interests in the six entities and
repayment of her outstanding loan to one entity. The attorneys exchanged drafts of
a purchase agreement. Wells suggested a provision releasing Rasby from future
claims by Pillen; the attorneys agreed on the mutual release that became part of the
signed agreement. Rasby reviewed the release before signing. She knew it was a
complete release of liability on both sides and did not find it ambiguous. However,
Rasby testified, she signed the Unit Purchase Agreement because of economic duress:

      Q. And were you concerned that if you did not have cash distributions
      from these entities, you would not be able to pay those tax obligations?

      A. I was beyond concerned. I was terrified. . . . [I]t would eat up within
      a few years all of our savings, all of our retirement, everything.

Rasby further testified that she had no realistic options: she could not afford
shareholder oppression litigation, and she could not sell her interests on the open
market “given Jim Pillen’s actions” as majority shareholder.


                                          -4-
      The district court concluded that Rasby failed to show economic duress as a
matter of law:

             Rasby has presented insufficient evidence that Pillen placed any
      unlawful or unconscionable demands on her in connection with
      negotiating the agreement. Rasby was an experienced businesswoman
      and accountant and was represented by competent counsel. She had
      enough business sense to contact an attorney and the record shows she
      participated in the negotiations for the agreement. She presented a
      counter-offer making a demand for additional compensation. She
      discussed the matter with a valuation expert. She was offered an
      opportunity to obtain an independent valuation, but did not pursue it.
      Her attorney testified the agreement was neither improper nor
      unconscionable.

             Contrary to her assertions, the record shows Rasby had
      alternatives to signing the Unit Purchase Agreement, including the
      pursuit of litigation. . . . The evidence shows she considered and rejected
      that alternative for what appear to be valid reasons, that is, the cost of
      bringing the action, the time to resolution, her likelihood of success, and
      her exposure to a countersuit.

       After careful review of the summary judgment record, we agree with the
district court’s analysis. Rasby proved neither element of actionable economic
duress. She claimed severe economic pressure, but it was self-inflicted and not
proven to be severe. She voluntarily retired from PST, giving up an $85,000 annual
salary. As a small minority shareholder, she had no reasonable expectation that the
six entities would continue to pay distributions (dividends) to help her pay taxes, and
she failed to present evidence quantifying her financial predicament and its source.
She complained that Pillen substantially increased his salary after she retired, but of
course that would reduce taxes she would owe for her share of the entities’ profits.
Nor did Rasby provide evidence that Pillen’s actions destroyed her free agency to
choose whether to enter into the Unit Purchase Agreement. Minority shareholders


                                         -5-
in close corporations frequently face challenges in disposing of their equity interests.
But Rasby was a sophisticated professional, represented by an experienced attorney,
who considered other options before selling her interests to Pillen in an agreement
that included a broad mutual release of claims. See Anselmo v. Mfrs. Life Ins. Co.,
771 F.2d 417, 420 (8th Cir. 1985).

       Nor did Rasby put forth evidence establishing the other element of actionable
economic duress -- that the Unit Purchase Agreement including a mutual release
provision was “unjust, unconscionable, or illegal.” An unconscionable agreement is
one that is “manifestly unfair or inequitable.” Myers v. Neb. Inv. Council, 724
N.W.2d 776, 799 (Neb. 2006) (citation omitted). It was neither unfair nor inequitable
for Pillen to seek to purchase the interest of a minority shareholder who was no
longer actively involved in the enterprise. He offered a substantial sum for shares
that Rasby acquired without a cash investment, he disclosed the calculations his
advisor used in valuing Rasby’s interest, and he invited her to consult her own
valuation expert. The valuation of small minority interests in six different entities is
likely to lead to differences of opinion. For litigation purposes, Rasby makes the
unlikely assertion that she was paid only twenty percent of her interests’ fair value.
Far more credible is the testimony of Wells, her attorney in the negotiations, that the
ultimate price Pillen paid was not unconscionable. We agree with the district court
that the Unit Purchase Agreement was not unconscionable as a matter of law.

                                          II.

       Rasby argues the Unit Purchase Agreement containing the mutual release of
claims is voidable because it was induced by Pillen’s misrepresentations that he
planned to liquidate PST “since it no longer meets our business objectives,” whereas
she later discovered that Pillen started a new business -- Pillen Family Farms -- which
continued to provide the same business services as PST. Under Nebraska law, to



                                          -6-
establish fraudulent inducement warranting rescission of an executed contract, Rasby
must show:

      that a representation was made; that the representation was false; that the
      representation was known to be false when made, or was made
      recklessly without knowledge of its truth and as a positive assertion; that
      it was made with the intention that the plaintiff should rely on it; that the
      plaintiff reasonably did so rely; and that the plaintiff suffered damage as
      a result.

Bock, 434 N.W.2d at 315 (citation omitted); see Caruso v. Moy, 81 N.W.2d 826, 830
(Neb. 1957). In rejecting this claim, the district court concluded that “Rasby has not
identified any positive assertion by Pillen that was known to be false.” We agree.
First, the statement advising of a plan to liquidate PST was primarily a statement of
future intention, made in the context of what Pillen intended to do if Rasby was
unwilling to sell her minority interest. There is no evidence that Pillen would not
have commenced a formal liquidation proceeding had Rasby not agreed to sell her
shares. Second, “liquidation” is an ambiguous term in this context. After acquiring
Rasby’s shares, a decision to restructure the business as a family business that
included his children as owners could be accomplished by formal liquidation of PST,
or by change of name and ownership within the existing corporation. Finally, “no
longer meets our business objectives” does not necessarily mean getting out of the
business; it would include restructuring Pillen’s various entities to include new
owners, new services, or new ways to provide the services PST had been providing.
Thus, the district court correctly determined Rasby failed to show a fraudulent
misrepresentation on which she relied in entering into the Unit Purchase Agreement.

                                          III.

      Because Rasby did not enter into the Unit Purchase Agreement as the result of
actionable economic duress, and the Agreement was not the result of fraudulent

                                          -7-
inducement, we agree with the district court that the Agreement’s mutual release
provision bars Rasby’s other claims, including the claim that Pillen breached his
fiduciary duty to a minority shareholder by forcing Rasby to sell her shares, and the
claim that Pillen had previously deprived her of a corporate opportunity by acquiring
ownership interests in other entities that provided services to the swine industry
without offering Rasby the opportunity to acquire minority interests in those entities.

      The judgment of the district court is affirmed.
                     ______________________________




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