RONALD A. BROOKS, individually, and on behalf of W.B.H. Corp., a domestic corporation, Appellant,
JOANN E. HORNER, individually, as officer and director of W.B.H. Corp.,) and as trustee and beneficiary of the GEORGE HORNER TRUST; the GEORGE HORNER TRUST; HELEN H. WARNER, individually and as officer and director of W.B.H. Corp.; and John Does 1-3, Appellees
Appeal from the Superior Court of the State of Alaska, Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge. Superior Court No. 4FA-11-01845 CI.
James M. Hackett, Law
Office of James M. Hackett, Fairbanks, for Appellant.
James D. DeWitt and Gary
A. Zipkin, Guess & Rudd, P.C., Fairbanks, for Appellees.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.
This case arises from a dispute over the sale of a corporate asset during the winding up of a closely held corporation. Two of the shareholders successfully bid to purchase the asset; the other shareholder claims they failed to overcome their conflict of interest and prove that the transaction was just and reasonable as to the corporation. Following trial, the superior court found in favor of the interested shareholders, in large part because the disinterested shareholder had voted to approve the transaction with full knowledge
of the material facts. The disinterested shareholder appeals. We affirm, concluding that the superior court did not clearly err in its findings of fact or err in its application of Alaska law and the corporation's by laws.
II. FACTS AND PROCEEDINGS
Ronald Brooks was a director and one-third shareholder of W.B.H. Corp., a closely held Alaska corporation formed in 1991. The other two shareholder-directors were Joann Horner and Helen Warner. At the times relevant to this lawsuit, the corporation's sole asset was a group of contiguous mining claims north of Fairbanks called Bittner Lode. Despite the parties' agreement to share costs equally, Horner and Warner for a number of years paid Brooks's share of the annual payments necessary to maintain the mineral leases. By 2009 W.B.H. had no revenue, cash reserves of only $485, and accounts payable in excess of $85,000.
At the annual shareholders' meeting in December 2009, the three shareholders agreed that their best course was to dissolve the corporation and liquidate its sole asset. They discussed the corporation's debts and the anticipated costs of winding up, and they agreed that they would accept a minimum bid price of $100,000 for Bittner Lode. Horner and Warner proposed to set the bid deadline for March 31, 2010, but Brooks pushed for a June date instead, arguing that bidders would need time in good weather conditions to inspect the claims. Horner responded that a later sale would mean another year of upkeep costs for the cash-strapped corporation, and Brooks's motion failed to get a second. Brooks then voted with Horner and Warner to dissolve the corporation and appoint Horner " to supervise and direct the winding up process," on the condition, unanimously accepted, that Horner have discretion to extend the bid opening by 45 days. Brooks told Warner he was too busy to be involved in the dissolution.
After the meeting Horner and Warner approached Donald Keill, a mining engineer, about undertaking an advertising campaign to market Bittner Lode. On Keill's advice Horner decided to use the corporation's remaining cash reserves to develop a sales brochure and a compact disc containing the most recent geological data on the area around Bittner Lode. Rather than advertise in mining periodicals, which they thought would be too costly for the likely return in exposure, Horner and Warner attended a series of mining conventions between January and March 2010, where they distributed copies of their brochure.
Meanwhile, John Burns, the corporation's attorney, drafted a confidentiality agreement and criteria for the submission of bids; these included a requirement that bidders show proof of financial pre-qualification by March 20, 2010, and a disclaimer of corporate liability for inaccuracies in the data on the compact disc. In February 2010 Horner and Warner reviewed and approved these terms and conditions.
By early March the marketing campaign had drawn interest from only one prospective bidder, Johannes Halbertsma, who ultimately decided not to bid. In late March Horner and Warner, fearing there would be no bids and anxious to complete the winding up process before enduring another year of upkeep costs, decided to submit their own bid. Their bid was $105,000 made in the name of the George Horner Trust/Helen Warner Joint Venture (JV), a joint venture they had created in the mid-1980s. Horner testified that she and Warner reached the $105,000 figure on the belief that it would satisfy all the corporation's liabilities, and they submitted a financial pre-qualification letter after the March 20 deadline but before the bid opening.
Horner called a meeting on April 2 at Burns's office for the bid opening. All three directors attended. Warner briefly described the efforts to market Bittner Lode; Horner then turned the meeting over to Burns, who opened the box where sealed bids were kept and revealed that there was only one bid, the JV's. Brooks moved that the bid be accepted. He raised no objection to the sale, despite Burns's caveat that it represented an apparent conflict of interest, and the directors voted unanimously to approve it. Horner and Warner presented a cashier's ...