Calais Company, Inc. v. Kyzer Ivy
2013 Alas. LEXIS 69
| Alaska | 2013Background
- Ivy, a Calais stockholder, sought involuntary dissolution under AS 10.06.628; settlement allowed Calais to buy Ivy’s shares for fair value via a three-appraiser panel; two appraisers valued Calais at $92.5M, one dissented at $43M due to alleged omissions; the superior court declined to resolve the meaning of fair value and ordered purchase at the majority’s value; Calais appealed seeking enforcement of the Agreement’s procedures and AS 10.06.630(a).
- Appraisers were Ivy’s Steve MacSwain, Calais’s Timothy Lowe, and Kenneth Gain; Lowe dissented and argued the majority omitted liquidation costs and taxes under AS 10.06.630(a).
- The February 2010 superior court order directed the panel to re-evaluate fair value under the Agreement and AS 10.06.630(a) with specific criteria; the majority asserted “fair value” equaled “fair market value” and refused to consider liquidation costs, taxes, or Lowe’s participation.
- Calais filed a second enforcement motion; the court held it lacked authority to alter the appraisers’ merits and declined to intervene; Calais appealed again."
- The Alaska Supreme Court held that the superior court had authority to enforce the Agreement and review the appraisers’ compliance with the contractual terms; it rejected the majority’s interpretation of “fair value” as mere fair market value and held that fair value must be determined on a liquidation basis under AS 10.06.630(a); the case is remanded for the panel to calculate fair value in accordance with AS 10.06.630(a) and the Agreement, with all three appraisers participating as a panel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the superior court had authority to review appraisal procedures | Ivy contends no review of the process is authorized | Calais argues paragraph 23 grants enforcement authority for all aspects | Yes, court has authority to enforce and review compliance with the Agreement. |
| What does 'fair value' mean under the Agreement | Ivy asserts fair value is not to be supplemented by liquidation costs | Calais argues fair value can be interpreted within the Agreement to include liquidation elements | Fair value means liquidation value under AS 10.06.630(a). |
| Did the majority appraisers follow the Agreement and AS 10.06.630(a) | Majority ignored liquidation costs and taxes and excluded Lowe from process | Majority adhered to the Agreement's process as interpreted by them | No; the majority failed to comply and Lowe was excluded; remand for proper panel process. |
| Is the three-appraiser panel required to work as a panel | Record shows exclusion of Lowe violated panel dynamics | Panel could proceed by majority | Panel must work together with all three members; remand to ensure collaboration. |
Key Cases Cited
- Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc., 252 P.3d 1011 (Alaska 2011) (authority to review appraisal for contract compliance when terms define task)
- Salt Lake Tribune Publishing Co. v. Management Planning, Inc., not provided (Alaska) (enforcement and review of contract terms and appraisal procedures)
- Smith v. Cleary, 24 P.3d 1245 (Alaska 2001) (contract interpretation is a question of law reviewed de novo)