DEBORAH KYZER IVY, Individually and as a Derivative Plaintiff on behalf of the interests of CALAIS COMPANY, INC., and its SHAREHOLDERS v. CALAIS COMPANY, INC., C.R. “KELLY” FOSS, Individually, and as a Shareholder and Former President and Board Member of CALAIS COMPANY, INC., JUDY FOSS, Individually and as President and Board Member and Shareholder of CALAIS COMPANY, INC., THE C.R. FOSS LIVING TRUST, McMAC FAMILY, LLP, THE RODNEY L. JOHNSTON TRUST, BRIAN W. DURRELL, Individually, and DURRELL LAW GROUP, PC, WELLS FARGO ALASKA TRUST COMPANY, NA, JOHN MCMANAMIN, as a Shareholder and Officer, and Former Officer and Board Member and General Manager of CALAIS COMPANY, INC. (but not individually), MATTHEW SWEENEY, Individually and as Putative Director of CALAIS COMPANY, INC., MICHAEL PETERSON, as a Board Member and Shareholder of CALAIS COMPANY, INC. (but not individually), and JANE/ JOHN DOE(S) I to XX CONSPIRATORS
Supreme Court No. S-15967
Superior Court No. 3AN-07-08813 CI
THE SUPREME COURT OF THE STATE OF ALASKA
June 2, 2017
Opinion No. 7176
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email corrections@akcourts.us.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, William F. Morse, Judge.
Appearances: Phillip Paul Weidner and Lisa Rosano, Phillip Paul Weidner & Associates, APC, Anchorage, and Charles E. Cole, Law Offices of Charles E. Cole, Fairbanks, for Appellant. Jeffrey M. Feldman, Summit Law Group, Seattle, Washington, and Susan Orlansky, Reeves Amodio LLC, Anchorage, for Appellees Calais Company, Inc., J. Foss, The C.R. Foss Living Trust, McMac Family, LLP, J. McManamin, M. Sweeney, and M. Peterson. Notice of nonparticipation filed by Patrick B. Gilmore, Atkinson, Conway & Gagnon, Anchorage, for Appellees B. Durrell and Durrell Law Group, PC. Notice of nonparticipation filed by Gary A. Zipkin and Michael S. McLaughlin, Guess & Rudd P.C., Anchorage, for Appellee Wells Fargo Alaska Trust Co., N.A. No appearance by Appellee Rodney L. Johnston Trust.
Before: Stowers, Chief Justice, Winfree, Bolger, and Carney, Justices. [Maassen, Justice, not participating.]
I. INTRODUCTION
Deborah Ivy is a shareholder in Calais Company, Inc., a closely held corporation. Ivy sued Calais in 2007 seeking dissolution of the company. The parties settled, and Calais agreed to buy out Ivy‘s shares of the company based on a valuation of Calais conducted by a three-member appraisal panel. The appraisers returned an initial valuation in 2009. The superior court approved that valuation, but Calais appealed. We reversed and remanded, concluding that the appraisers had failed to understand their contractually assigned duty. The appraisal panel returned a second valuation in October 2014, which the superior court again approved. Ivy now appeals, arguing (1) that on remand the superior court improperly instructed the appraisers; (2) that the appraisers made substantive errors in their valuation; and (3) that she is entitled to post-judgment interest. For the reasons explained below, we affirm the appraisal panel‘s valuation of Calais, but we reverse the superior court‘s denial of Ivy‘s request for post-judgment interest.
II. FACTS AND PROCEEDINGS
A. Prior Proceedings In Calais Co. v. Ivy
As this court summarized in Calais Co. v. Ivy,1 Ivy filed suit against Calais in 2007 seeking involuntary dissolution of the corporation under
holdings and not, in his view, the “fair value” of the corporation as required by the Agreement. Specifically, he objected to the majority‘s failure to account for any applicable capital gains taxes and liquidation costs. The superior court upheld the majority‘s valuation, and Calais appealed to this court.
We first determined that the terms of the Agreement authorized the superior court to review the appraisers’ decision in order to ensure that the appraisers complied with the contractual terms of the Agreement.3 We distinguished this from second-guessing the valuation reached by the appraisers, which was expressly prohibited by the Agreement.4 We then interpreted “fair value” as used in the Agreement to mean not the “fair market value” of the company‘s assets (as the majority appraisers assumed), but the “liquidation value” of the company, as that term is used in
B. Proceedings On Remand
On remand the superior court instructed the appraisers to calculate the fair value of Calais in accordance with our opinion and to submit a report stating that value and describing their reasoning. The panel members then completed their appraisal and issued a report. The report explained that the appraisers summed up the individual property values of Calais‘s real estate holdings to arrive at a “cumulative Market Value” of $87,580,000. The report then explained how the appraisers subtracted liquidation
costs and capital gains taxes and accounted for Calais‘s other assets and liabilities to reach a final “fair value” of $54 million.
Ivy moved the superior court to reject the panel‘s determination of fair value. Ivy‘s motion focused primarily on the fact that the appraisers had calculated the value of Calais based on a piecemeal sale of the company‘s assets, rather than on a sale of the entire company as a going concern. She contended that the value of Calais in a sale of the entire company as a going concern would have resulted in a much higher “fair value” for the company, and that the appraisers were therefore required to take this approach because they were required to choose the valuation method that achieved the “maximum return.” Ivy also asserted various other errors in the appraisers’ valuations.
The superior court rejected Ivy‘s arguments and accepted the appraisers’ report. Ivy moved for reconsideration, largely repeating the arguments she had already made and also requesting post-judgment interest. The superior court denied reconsideration and also denied her request for interest.
Ivy now appeals, arguing that (1) the superior court improperly instructed the appraisers on remand; (2) the appraisers made substantive errors in their valuation; and (3) she is entitled to post-judgment interest.
III. DISCUSSION
A. The Appraisal Panel Was Properly Instructed.
In Calais we remanded to the superior court to remand to the appraisal panel with “explicit instructions to calculate ‘fair value’ as defined by
correctly applied our mandate on remand.8 For the reasons we are about to explain, Ivy‘s argument is without merit.
We remanded in Calais so that the superior court could correct the majority appraisers’
Ivy, however, makes much of our requirement that the superior court issue “explicit instructions.” According to Ivy, this language meant that the superior court was required not only to instruct the appraisers to “calculate ‘fair value’ as defined by
The detailed instructions requested by Ivy, however, would have violated the Agreement‘s requirement that “the appraisers . . . exercise their expertise and judgment in their determination [of the fair value of Calais] . . . without input or communication from [the parties].” Furthermore, Ivy‘s proposed instruction requiring the appraisers to calculate the fair value of Calais as a going concern would have been plainly inappropriate. As we noted in Calais, the Agreement specifically refers “to fair value under
B. Ivy Has Not Shown Any Error In The Appraisal.
Ivy also challenges the appraisal panel‘s determination of the fair value of Calais. She argues that the appraisers failed to consider a sale of Calais as a going concern, that the appraisers’ report was inadequately detailed, and that the appraisers made various other errors in valuing the company‘s assets and liabilities. For the reasons explained below, we reject Ivy‘s arguments.
1. Ivy has not shown that the appraisers failed to “tak[e] into account the possibility of sale of the entire business as a going concern.”
As we have already discussed, the Agreement required the appraisers to determine
Ivy‘s argument rests on a factual assertion: that the appraisers did not, in fact, “tak[e] into account the possibility of a sale of the entire business as a going concern” during their deliberations. But rather than support this assertion with any direct evidence of the appraisers’ process, Ivy asks this court to make an inference. She argues that the appraisers were required to choose the valuation method — either a piecemeal sale of assets or a sale of the company as a going concern — that returned the highest fair value for the company. And according to Ivy, the value of Calais in a going concern sale is much more than the $54 million valuation reached by the appraisers.16 Therefore, Ivy reasons, the appraisers must have failed to consider the possibility of a going concern sale during their deliberations.
As we explained in Calais, however, “[t]he court‘s role [under the Agreement] is not to determine whether the third party [appraisers] accurately valued the item . . . but whether the [appraisers] understood and carried out the contractually assigned task.”17 Ivy‘s argument ignores that distinction. She asks us to decide that the appraisers must have failed to “carr[y] out the contractually assigned task” because they reached (according to Ivy) an inaccurate valuation. To address this argument would require us to substitute our judgment for the judgment of the expert appraisers in order
“to determine whether the third party [appraisers] accurately valued” Calais. We reaffirm our prior holding 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.18
We are careful, however, to limit our holding by noting that although apparent inaccuracies generally do not provide a direct basis for rejecting an appraisal panel‘s valuation, they may entitle a party to discovery into the appraisal process. As the Wisconsin Supreme Court has noted, review of an appraisal award is “usually,” but not “always,”
2. The appraisers’ report was adequately detailed.
Ivy next argues that the appraisers’ report failed to comply with the
instructions issued by the superior court. The superior court‘s instructions required that the appraisers “describe the reasoning behind the conclusion as to ‘fair value’ ” and “describe how the panel calculated the ‘fair market value’ of Calais‘s assets and the calculation and treatment of capital gains tax liabilities and other liquidation expenses.” The superior court found that the appraisal panel‘s report complied with these instructions. Because the superior court was in the best position to determine the meaning of the instructions it issued, we review its determination that the panel complied with those instructions for abuse of discretion.22
We conclude that the superior court did not abuse its discretion in determining that the report issued by the appraisal panel complied with the court‘s instructions to “describe the reasoning behind the conclusion as to ‘fair value.’ ” The report explained that each appraiser separately determined the fair market value of each of Calais‘s properties, the estimated marketing costs and capital gains tax liability, and the value of Calais‘s other assets and liabilities. The report then described how the appraisers combined their independent appraisals to reach a fair value of $54 million. We do not think anything else was required by the superior court‘s instruction to “describe the reasoning behind the conclusion as to ‘fair value.’ ” We also note that nothing else was required by the Agreement itself, which only specified that “[u]pon completion of the appraisal process, the appraiser(s) shall be directed to prepare and deliver . . . a final report stating the appraised value of the fair value of Calais under the criteria set out in [the Agreement].”
3. Ivy did not preserve her other challenges to the panel‘s valuation.
Ivy makes a number of other challenges to the panel‘s valuation, but most of those arguments were either not raised at all below,23 or else were raised only after Ivy filed her motion for reconsideration.24 An argument is ordinarily not preserved for appeal if it was not raised below,25 or if it was only raised after the party filed a motion for reconsideration.26 We therefore conclude that Ivy failed to preserve a number of her arguments
Ivy did raise one claim of error briefly below: that the appraisers erred in failing to account for Calais‘s tax basis in its real estate properties when they calculated the “effective tax rate.” But Ivy‘s initial motion papers objecting to the appraisers’ valuation totaled more than 50 pages, and she only raised the tax basis issue in a single cursory sentence. She included no citations to the record or to any relevant legal authority. To preserve an issue for appeal, the party must have “raised the issue below”27
and specified her grounds for doing so.28 This preservation rule serves “important judicial policies: ensuring that there is ‘a ruling by the trial court that may be reviewed on appeal, . . . afford[ing] the trial court the opportunity to correct an alleged error,’ and creating a sufficient factual record so ‘that appellate courts do not decide issues of law in a factual vacuum.’ ”29 Here, we conclude that Ivy‘s single sentence, lacking any factual support or legal authority, was insufficient to preserve her argument on appeal.30 We need not address that argument further.
C. Ivy Is Entitled To Post-Judgment Interest.
Ivy‘s final argument on appeal is that the superior court erroneously denied
her post-judgment interest.31 Ivy received a “final judgment” in a July 6, 2010, order issued by the superior court. We reversed that order in Calais.32 Calais concedes that Ivy would have been entitled to post-judgment interest from the July 2010 order to the date of payment if this court had affirmed the original valuation by the appraisal panel. But Calais apparently believes that the July 2010 judgment is no longer the correct judgment from which to calculate post-judgment interest after our reversal in Calais. We find Calais‘s argument unpersuasive, and we therefore conclude that Ivy should be awarded post-judgment interest in this case. We do, however, agree with Calais on one important point: Ivy‘s post-judgment interest award should be reduced by any dividends Ivy has received on her shares in Calais since the July 2010 judgment.
1. Alaska Appellate Rule 509 applies here.
reversed.”33 Since it is clear that our result in Calais was a reversal, the question is simply whether our directions on remand were “directions that a judgment for money be issued by the trial court.”34
We conclude that they were. We have previously addressed this question in two other cases. In Brotherton v. Brotherton we found that a remand for “a clarification of the findings with regard to [a piece of] property, and any necessary adjustments to the distribution resulting from these issues” amounted to a reversal “with directions that a judgment for money be issued by the trial court” within the meaning of Rule 509.35 We reached the same conclusion in Reust v. Alaska Petroleum Contractors, Inc.36 when considering a remand “for reduction of . . . lost wages awards . . . , for application of the punitive damages cap . . . , and for review of the recalculated punitive damages award for excessiveness.”37
Notably, we concluded that our remands in Brotherton and Reust fell within the scope of Rule 509 even though they required the superior court to conduct further fact finding or legal analysis. In Brotherton the superior court on remand was required
to make new factual findings as to whether a piece of property was marital or premarital property.38 In Reust the superior court was required to examine whether the new punitive damages award was “excessive.”39
In this case, we reversed the superior court‘s final order and remanded “to the superior court to remand to the panel with instructions to calculate the fair value of Calais as defined by
2. Awarding Ivy post-judgment interest does not do an injustice to Calais, but the award should be lowered by the amount of dividends Ivy has received on her Calais shares since her final judgment.
In addition to arguing that
her shares in Calais since her final judgment should be subtracted from her post-judgment interest award.
Calais‘s first argument is that Ivy is not entitled to any interest because she was not entitled to receive any money until the panel returned an appraisal that complied with the Agreement. At first glance, this argument appears compelling. As we have previously stated, “[t]he real question in awarding interest . . . is whether the debtor has had use of money for a period of time when the creditor was actually entitled to it.”42 Under the Agreement Calais was only required to pay Ivy for her shares “following receipt of the appraisal report described in Paragraph 5.” Paragraph 5 of the Agreement required the appraisers “to determine the fair value of Calais in accordance with this Settlement Agreement and
But “[w]e interpret settlement agreements as contracts,”44 and “[t]he objective of contract interpretation is to determine and enforce the reasonable expectations of the parties.”45 The expectation of the parties was that Ivy would be paid
well within a year of the superior court‘s approval of the Agreement. The Agreement provided that the three appraisers would be selected or appointed within 45 days of the execution of the Agreement. The appraisers were then to appraise the fair value of Calais “as promptly as is practicable,” and the parties agreed “not to nominate any appraiser who cannot commit to complete the work required by this Agreement within [120] days following their appointment or selection.” Calais was then required to pay Ivy within 60 days of receiving the panel‘s report. In total, the parties expected that Calais would pay Ivy within 225 days of the execution of the Agreement — i.e. by January 7, 2010. The parties did not expect six more years of litigation to resolve this dispute. Given these facts, we cannot say that awarding Ivy post-judgment interest beginning in July 2010 would do an injustice.
Calais next argues that Ivy is not entitled to post-judgment interest because Calais‘s delay in payment was Ivy‘s fault — specifically, because Ivy has refused to sign a letter authorizing the sale of Ivy‘s shares while this appeal has been pending. But Alaska “view[s] interest on damage awards to be a form of compensation for the period that the plaintiff remains ‘less than whole,’ ” and we therefore “do not consider responsibility for a delay of payment as a factor in making an interest award.”46 As we have explained, “[f]or us to rule otherwise would amount to awarding [the appellee debtor] the free use of [the appellant creditor‘s] money and also impose a ‘chilling effect’ upon a judgment creditor‘s right to appeal an award he feels is not entirely adequate.”47
Finally, Calais argues that an award of interest would be unfair because Ivy has received dividends from her shares in Calais throughout this litigation. According to an affidavit filed by Calais‘s counsel, Ivy has received dividends totaling $447,500
since she placed her shares in escrow. (This affidavit appears to be the only evidence of such payments, but Ivy has not disputed this fact on appeal.) If Ivy has, in fact, received any dividends since her July 2010 final judgment, we agree that it would be unfair for her to also receive the full amount of post-judgment
IV. CONCLUSION
For the reasons explained above, we AFFIRM the superior court‘s enforcement of the settlement agreement but REVERSE the superior court‘s denial of post-judgment interest. We REMAND for calculation of post-judgment interest minus the dividends Ivy has received.
BOLGER
Justice