Alaska Plastics, Inc. v. Coppock
621 P.2d 270 (Alaska 1980)
Stefano, Gillam, and Crow each owned 300 shares of Alaska Plastics. Crow got a divorce and had to give his ex-wife, Muir, 150 shares (a 1/6 interest in the corporation).
- After numerous failed attempts to negotiate a purchase or settlement, she sued both directly and derivatively.
- The most they offered her was $20,000, and an accountant valued the shares between $23,000-$40,000.
- The directors failed to inform her of shareholders meetings, gave themselves director’s fees, and basically just kept her out of the loop.
The trial judge awarded Muir $32,000 for her shares, and ordered the directors to cover attorneys fees, interest, and costs.
- The offer she received was oppressive.
The rights of a minority shareholder in a close corporation who allegedly has been deprived of benefits accorded to other shareholders.
Could not force the corporation to purchase her shares. See, Brodie v. Jordan.
From a dissatisfied shareholder’s point of view, the most successful remedy is likely to be a requirement that the corporation buy his or her shares at their fair value. Ordinarily, there are four ways in which this can occur:
(1) Provision in the articles of incorporation or by-laws.
(2) Petition the court for involuntary dissolution of the corporation.
(3) Demand a statutory right of appraisal upon some significant change in corporate structure, such as a merger.
(4) In some circumstances, a purchase may be justified as an equitable remedy upon a finding of a breach of a fiduciary duty between directors and shareholders and the corporation or other shareholders.
The court held that the first three didn’t apply, so they looked into the fourth possibility only.
- “The rule of equal opportunity in stock purchases by close corporations provides equal access to these benefits for all stockholders.”
- The Court noted that the director’s fees could possibly constitute a constructive dividend, and remanded to determine that issue.
- As for the derivative claim, the court held that a failure to insure the plant, keeping large reserves of cash in noninterest-bearing accounts, and loaning money at below prevailing interest rates was insufficient to establish a breach of duty towards the corporation.