ANCHORAGE, Alaska (Legal Newsline) – The Supreme Court of Alaska has ruled in favor of Alaskan real estate company Calais after a former shareholder alleged that her dissolution dividends were appraised incorrectly.
Judge Joel Harold Bolger on June 2 wrote that the plaintiff’s requests were inappropriate and would violate the terms of the original agreement that the Supreme Court upheld between the two parties regarding how the courts should intervene in matters of appraisals.
Bolger remanded the case to recalculate post-judgment interest in favor of the plaintiff, but affirmed the appraised amount by the Superior Court in favor of the defendant.
In 2007, former Calais Co. shareholder Deborah Ivy filed a complaint for involuntary dissolution of the company. Calais Co. does business in real estate acquisition, development, rental and leasing and owns significant tracts of land in Anchorage.
In 2009, Ivy and Calais reached a settlement agreement in which Calais agreed to purchase Ivy's shares at “fair value” as determined by a three-member panel of appraisers. The agreement required the appraisers to consider the possibility of a going concern sale, and if they concluded that such a sale was possible, to determine which of the two valuation options would return a higher value.
The appraisers disagreed over the fair value of Calais, with two of the appraisers agreeing the fair value of Calais was $92.5 million. One appraiser dissented. The Superior Court ultimately ordered Calais to purchase Ivy's shares based on the majority appraisers' valuation.
Calais appealed, arguing that the two majority appraisers had failed to comply with the appraisal procedure mandated by the agreement and the agreement's definition of “fair value.”
In the initial appeal, the Supreme Court remanded so that the Superior Court could correct the majority appraisers’ erroneous belief that “fair value” was equal to “fair market value.”
The Superior Court on remand directed the appraisers that the fair market value of Calais’ assets is just one factor to be considered in determining the fair value of the company. The Superior Court’s instructions also quoted Alaska statute, providing that the fair value shall be determined based on the liquidation value, considering the possibility of sale of the entire business as a going concern in a liquidation sale.
The panel of appraisers gave their new estimate along with the reasoning behind it. The Superior Court awarded Ivy’s dissolution to be based off the new estimate of $54 million.
Ivy appealed to the Supreme Court, stating that the Superior Court should have given explicit instructions on how to obtain the value. Ivy argues that the appraisers failed to consider the possibility of a sale of Calais as a going concern and that this failure demonstrates a lack of understanding or completion of the contractually assigned task. Ivy asked that the Supreme Court set aside the panel’s revised appraisal.
In the Supreme Court opinion, Bolger stated that Ivy has not shown that the appraisers failed to consider the possibility of sale of the entire business as a going concern.
Bolger also opined that the court’s role under the agreement is not to determine whether the appraisers accurately valued the company, but only whether they understood and completed the contractually assigned task. Ivy’s appeal, Bolger stated, is asking the court to make an inference that is inappropriate.
Bolger concluded that Ivy is entitled to post-judgment interest reduced by any dividends Ivy has received on her shares in Calais since the July 2010 judgment. Bolger affirmed the superior court’s enforcement of the settlement agreement, but reversed the Superior Court’s denial of post-judgment interest.
The Supreme Court has remanded for calculation of post-judgment interest minus the dividends that Ivy has received.
Ivy was represented by Phillip Paul Weidner and Lisa Rosano, Phillip Paul Weidner & Associates, APC, Anchorage, and Charles E. Cole, Law Offices of Charles E. Cole in Fairbanks, Alaska.
Jeffrey M. Feldman, Summit Law Group, Seattle, Washington; and Susan Orlansky, Reeves Amodio LLC, Anchorage, represented appellees Calais Co. Inc., J. Foss, The C.R. Foss Living Trust, McMac Family LLP, John McManamin, Matthew Sweeney, and Michael Peterson.
The Supreme Court of the State of Alaska case number S-15967