Opinion ID: 2466486
Heading Depth: 1
Heading Rank: 5

Heading: The district court's fair value determination

Text: An appellate court reviews a district court's determination of fair value under an appraisal statute such as NRS 92A.490 under an abuse of discretion standard. See Gonsalves, 701 A.2d at 360; see also In re 75,629 Shares of Common Stock, 169 Vt. 82, 725 A.2d 927, 931 (1999); Dodd v. Potomac Riverside Farm, Inc., 222 W.Va. 299, 664 S.E.2d 184, 190 (2008). Appellants argue that the district court abused its discretion here by not deciding fair value based on the four factors discussed in Steiner Corp. v. Benninghoff, 5 F.Supp.2d 1117, 1123 (D.Nev.1998). But in Steiner, the court indicated that it already decided, in a prior, unreported decision, that `fair value' would be determined by considering (1) the pre-merger market value of the shares, discounted for illiquidity, (2) the pre-merger enterprise value of the corporation as a whole, (3) the pre-merger net asset value of the corporation, and (4) any other factor bearing on value. Each measure of value will then be assigned a certain weight, and then averaged appropriately. Id. (quotations omitted). [6] Here, the district court was not provided the evidence necessary to calculate and apply the Steiner factors reliably. [7] Where, as here, a controlling stockholder has provided [limited] evidence, either pre-merger or during the trial, to enable the Court of Chancery to perform its mandated task, the Court may rely upon its expertise and upon whatever evidence is presented to determine fair value independently. Montgomery Cellular Holding, 880 A.2d at 222. This left the district court free to use whatever methodology was supportable by the record to reach a valuation result, id., whether by adhering to one of the parties' properly supported valuations or by fashioning its own. See In re Appraisal of Metromedia Intern. Group, 971 A.2d 893, 900 (Del.Ch.2009). ([A]fter having considered the parties' legal arguments and the respective experts' reports and testimony supporting their valuation conclusions, the Court has broad discretion either to select one of the parties' valuation models or to fashion its own.). In light of the flexible standard of determining fair value, under which the district court is to consider all relevant factors presented by each of the parties and any independent examiner, and considering the evidence presented by Cordillera and appellants, we conclude that appellants have not demonstrated that the district court abused its discretion in calculating the fair value of Cordillera's shares. The district court considered several factors reflecting value, including the price that Cordillera paid for the shares of stock in 2006 and the price that appellants indicated on an SEC document as the offering price of the series B preferred stock on the merger date, all of which were $3 per share. While neither party provided extensive calculations as to the shares' fair value, the district court did not abuse its discretion in determining the fair value of Cordillera's shares based on the evidence before it. As such, we affirm the district court's judgment. We concur: GIBBONS and PICKERING, JJ.