Court Opinion

ID: 2786095
Source: CourtListenerOpinion
Date Created: 2015-03-13 17:02:25.768256+00
Date Added: 2024-06-11T11:05:00.985644
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      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.

               THE SUPREME COURT OF THE STATE OF ALASKA

RONALD A. BROOKS, individually, )

and on behalf of W.B.H. Corp., a        )
              Supreme Court No. S-15341
domestic corporation,                   )

                                        )
              Superior Court No. 4FA-11-01845 CI
                     Appellant,         )

                                        )
              OPINION
              v.                        )
                                        )               No. 6988 - March 13, 2015
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.

              Appearances: 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.

              MAASSEN, Justice.
I.     INTRODUCTION

              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 bylaws.
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.1 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

       1
            Under AS 38.05.210-.212, W.B.H. was required to perform labor, pay rent,
and pay royalties on all minerals mined from land subject to its claims.

                                           -2-                                        6988
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.2
                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

      2
             Brooks denied saying this, but the superior court believed Warner’s
testimony that he did. We defer to the superior court’s credibility finding. See Riggs v.
Coonradt, 335 P.3d 1103, 1107 (Alaska 2014) (noting that “the trial court, not this court,
performs the function of judging the credibility of witnesses and weighing conflicting
evidence” (internal quotation marks and citations omitted)).

                                            -3-                                       6988

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 check for the full bid price immediately after
the meeting, and within three days Warner prepared and signed draft minutes of the
meeting.
              Two months later, Brooks sent a letter to Horner and Warner in which he
formally objected to the sale of Bittner Lode and demanded that they call a corporate
meeting to reopen bidding; they did not do so. He brought suit individually and on
behalf of W.B.H. to void the sale and re-convey Bittner Lode to the corporation. Brooks
alleged that Horner and Warner breached their fiduciary duty to W.B.H. in the marketing

                                           -4-                                       6988

and sale of the mining claims, concealed and misrepresented facts material to the sale,
and usurped a corporate opportunity.
             Following a six-day bench trial, the superior court made extensive factual
findings. It concluded that the sale of Bittner Lode was a conflict of interest but that
Horner and Warner overcame it.         It also found that Horner and Warner neither
misrepresented the sale process nor breached their fiduciary duty to the corporation: the
evidence failed to support Brooks’s claims that they undervalued Bittner Lode, withheld
information from him, or marketed the claims in a manner that would discourage
bidding.
             Brooks appeals. He argues that the sale is void under both AS 10.06.450(b)
and AS 10.06.478(a) because (1) Horner and Warner did not disclose all the facts
material to the sale; (2) Brooks lacked authority and adequate notice when he voted to
approve it; and (3) the transaction, overall, was not just and reasonable.
III.   STANDARDS OF REVIEW
             “We apply our independent judgment to any questions of law, adopting the
rule of law that is most persuasive in light of precedent, reason, and policy.”3 Questions
of interpretation of the meaning of written documents are questions of law unless there
is conflicting evidence as to the parties’ intent.4 “We employ the clearly erroneous
standard to review a lower court’s factual findings.”5 We reverse factual findings “only

       3
             Holmes v. Wolf, 243 P.3d 584, 588 (Alaska 2010) (quoting McCormick v.
Reliance Ins. Co., 46 P.3d 1009, 1011-12 (Alaska 2002)).
       4
            Sprucewood Inv. Corp. v. Alaska Hous. Fin. Corp., 33 P.3d 1156, 1161
(Alaska 2001).
       5
             Harris v. AHTNA, Inc., 193 P.3d 300, 305 (Alaska 2008).

                                          -5-                                       6988

if we are left with a definite and firm conviction that a mistake has been made after
considering the record as a whole.”6
IV.    DISCUSSION
              Horner and Warner were shareholders and directors when they bid on the
corporation’s single asset, Bittner Lode, and because of their fiduciary duty to the
corporation and the other shareholder-director, they had the burden of proving that the
transaction was fair.7 For ordinary transactions, directors have the protection of the
business judgment rule as long as they meet the standard of care set out in
AS 10.06.450(b) — “the care . . . that an ordinarily prudent person in a like position
would use under similar circumstances.”8 But as Brooks correctly points out, the law
requires a higher standard when a transaction involves director self-interest.9 This higher

       6
              Id.
       7
              See Alaska Plastics, Inc. v. Coppock, 621 P.2d 270, 276 (Alaska 1980)
(“The existence of a fiduciary duty between shareholders would justify careful scrutiny
and shifting the burden onto the defendants to show that the transaction was fair.” (citing
13 W. JAEGER , W ILLISTON ON CONTRACTS § 1626A at 806-08 (3d ed. 1970))).
       8
                AS 10.06.450(b) requires a director to “perform the duties of a director . . .
in good faith, in a manner the director reasonably believes to be in the best interests of
the corporation, and with the care, including reasonable inquiry, that an ordinarily
prudent person in a like position would use under similar circumstances.” See also
Henrichs v. Chugach Alaska Corp., 250 P.3d 531, 537 (Alaska 2011) (“The essence of
[the business judgment] doctrine is that courts are reluctant to substitute their judgment
for that of the board of directors unless the board’s decisions are unreasonable.” (quoting
Alaska Plastics, 621 P.2d at 278)).
       9
              See, e.g., Norlin Corp. v. Rooney, Pace Inc., 744 F.2d 255, 265 (2d Cir.
1984) (holding that “the business judgment rule governs only where the directors are not
shown to have a self-interest in the transaction at issue,” and that “[o]nce self-dealing . . .
is demonstrated, the duty of loyalty supersedes the duty of care, and the burden shifts to
the directors to prove that the transaction was fair and reasonable to the corporation”
                                                                               (continued...)
                                            -6-                                         6988
standard is codified in AS 10.06.478(a), which requires a court to find that (1) “the
material facts as to the transaction and as to the director’s interest are fully disclosed or
known to” the other directors; (2) the board nonetheless approves the transaction “in
good faith,” not counting the votes of the interested directors; and (3) “the person
asserting the validity of the contract or transaction sustains the burden of proving that the
contract or transaction was just and reasonable as to the corporation at the time it was
authorized, approved, or ratified.”10 We agree with the superior court’s conclusion that
this standard was met in this case.11
       A.	    The Superior Court Did Not Clearly Err In Finding That Brooks Had
              Knowledge Of All Facts Material To The Sale.
              The superior court found that Brooks “had knowledge of the material facts
of the transaction before he moved to approve it and voted yes on his motion.” The court
found specifically that Brooks “was made aware of the bidding requirements” and the
minimum bid price, which he in fact had voted to approve in December 2009; knew of
the corporation’s marketing efforts; “was aware of the general market climate”; and was

       9
        (...continued)
(internal quotation marks and citation omitted)).
       10	
              AS 10.06.478(a)(2).
       11
              As a preliminary matter, we reject Brooks’s apparent contention that the
superior court clearly erred in deciding that the April meeting was a directors’ meeting
rather than a shareholders’ meeting (though Brooks contends that the meeting was not
valid however characterized). AS 10.06.478(a)(1) and (2) apply somewhat different
standards for determining the propriety of self-interested transactions depending on
whether it is shareholders or directors who approve them. Though there was evidence
to the contrary, the superior court’s decision that the April meeting was a directors’
meeting was supported by Warner’s contemporaneous characterization of it as such in
the draft minutes and by the nature of the business conducted, which fell within the scope
of the directors’ dissolution activities. We see no clear error in this finding.

                                            - 7 -	                                     6988
“charged with knowledge that as the only disinterested director, the law vested him with
sole authority to approve or disapprove the sale of the lode by casting his vote.”
              Brooks argues on appeal that one other material fact was concealed from
him: that the JV had not met the deadline for proving its financial pre-qualification. The
bid submission criteria required that “[a]ll bidders must be prequalified by submitting
verification of financial ability not later than March 20, 2010,” but the JV submitted its
pre-qualification letter on March 25, five days late.
              Although Brooks addressed this issue in the superior court through his
cross-examination of Burns, the corporation’s attorney, he does not appear to have
argued that it represented an omission of material fact.              The superior court
understandably did not include the JV’s failure to meet the financial pre-qualification
deadline among the allegations it analyzed. But even considering the issue,12 we see no
error in the superior court’s conclusion that Brooks “had knowledge of the material
facts” before voting to approve the transaction.
              Burns testified that he selected March 20 as the deadline for financial pre-
qualification arbitrarily, counting back from the bid deadline of March 31; that on March
25 he received the JV’s financial pre-qualification letter from a bank confirming that it
had funds available in the amount of its potential bid; and that as corporate counsel he
independently confirmed that the letter satisfied the bid criteria and should be accepted.
It is undisputed that the corporation had the letter in hand at the time the JV filed its bid
(on the March 31 deadline) and before the bid opening, in time to satisfy the deadline’s
apparent purpose of assuring the directors that any bid under consideration was

       12
               Horner and Warner do not argue on appeal that Brooks has waived this
point. Because it is fully briefed without objection, we exercise our discretion to address
it. See In re B.L.J., 717 P.2d 376, 381 n.5 (Alaska 1986) (considering issue not listed in
points on appeal where “the issue has been briefed and the appellee and court are
sufficiently informed of the matters in issue”).
                                            -8-                                       6988
financially supported. The JV in fact was financially qualified to make the bid, as was
conclusively demonstrated by its immediate payment by cashier’s check following the
bid opening. And Brooks was plainly not relying on the pre-qualification deadline; it is
his position on appeal, in fact, that he did not know the deadline existed until after the
sale process was over, and that in his view it was unrealistically early.
              Brooks does not explicitly argue that he would have voted against the sale
of Bittner Lode had he only known that the JV was late in filing its financial pre-
qualification letter. He argues, however, that Burns’s assurance to the directors that the
JV met the bid criteria was nonetheless a material misrepresentation; that because of it
Brooks was unaware of all the “material facts as to the transaction”; that his vote in favor
of the transaction was not a fully informed one; and that Horner and Warner therefore
failed to carry their burden of satisfying the first element of the test of AS 10.06.478(a).
              But the missed deadline was material only if a reasonable director would
have considered it important in deciding how to vote.13 It is undisputed that the JV filed
its financial pre-qualification letter before its bid, before the bid deadline, in time for
Burns to verify it, and in time for the information to be useful to the board. It is
undisputed that the JV was, in fact, financially qualified. And it is undisputed that the
JV’s bid exceeded the minimum bid and was, ultimately, the only bid the board could
consider. Brooks has no convincing explanation as to why, under these circumstances,
a reasonable director would have found it important that the JV had filed its financial
pre-qualification letter five days after the deadline. We therefore reject his contention

       13
               See Brown v. Ward, 593 P.2d 247, 250 & n.6 (Alaska 1979) (“Federal
authorities have established that a misrepresentation is material if there is a substantial
likelihood that a reasonable shareholder would consider it important in deciding how to
vote. . . . Common law concepts of materiality are not in essence different.” (citing TSC
Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976); R ESTATEMENT (S ECOND ) OF
TORTS § 538(2) (1977))).
                                          -9-                                        6988
that, as of the time he voted, he did not know “the material facts as to the transaction and
as to the [other directors’] interest,” as required by AS 10.06.478(a).14
       B.	    The Superior Court Did Not Clearly Err In Finding That The Board
              Approved The Sale In Good Faith By A Sufficient Vote.
              Brooks does not dispute that he made the motion to accept the JV’s bid at
the April 2010 meeting and that he then, along with Horner and Warner, voted in favor
of his motion.15 For purposes of determining the transaction’s validity, his is the only
vote that counted.16 He argues, however, that his vote was void because notice of the
meeting was defective and because he lacked the authority to take actions in pursuance
of the corporation’s dissolution. We reject both these arguments.
              1.	    Brooks waived notice by attending the directors’ meeting.
              Alaska Statute 10.06.470(b) provides that a “special meeting of the board
. . . shall be held as provided in the bylaws or, in the absence of a bylaw provision, after
either notice in writing sent 10 days before the meeting or notice by electronic means,
personal messenger, or comparable person-to-person communication given at least
72 hours before the meeting.” The W.B.H. bylaws provide that “[a]ttendance of a
director at a meeting shall constitute waiver of notice of that meeting unless he attends
for the express purpose of objecting to the transaction of business because the meeting

       14	
              Emphasis added.
       15
              Brooks does not argue that Horner and Warner should have abstained from
voting. We have held that “it is unworkable to require participants in closely-held
businesses to disqualify their votes on matters involving self-interest.” Stevens ex rel.
Park View Corp. v. Richardson, 755 P.2d 389, 394 (Alaska 1986). “Decisions made in
a small corporation often have a direct and immediate financial impact on many or all of
the participants. Yet, it seems to us that that is not a sufficient ground for disqualifying
their votes.” Id. (footnote omitted).
       16
              AS 10.06.478(a)(2) requires approval of the transaction at issue “by a
sufficient vote without counting the vote of the interested director or directors.”
                                         - 10 -	                                    6988
has not been lawfully called or convened.” Brooks contends that this provision is void
because it conflicts with the notice requirement of AS 10.06.470(b). The statute,
however, expressly allows corporations to adopt different procedures in their bylaws;
besides, the bylaws’ waiver provision closely follows a waiver provision in a later
section of the statute. Alaska Statute 10.06.470(c) provides that “[n]otice of a meeting
need not be given to a director . . . who attends the meeting without protesting before the
meeting or at its commencement the lack of notice.”
              Brooks argues in the alternative that because the first sentence of the
relevant W.B.H. bylaw allows directors to waive notice of special board meetings in
writing, the second sentence — addressing waiver by attendance — must apply only to
the regular annual meeting, not to a special meeting like the one called in April to review
bids.17 But under the bylaws, regular annual meetings do not require notice at all. The
waiver provision can logically apply only to other meetings for which notice is ordinarily
required. And allowing a director to waive notice of special meetings by attendance
reflects the reality that such meetings — unlike the regular annual meeting — may need
to be called on shortened time to address corporate issues as they arise.
              In short, the W.B.H. bylaws allow waiver by attendance, the relevant
statutes do not require something else, and the superior court did not clearly err when it
found that Brooks waived notice of the April meeting by attending it without protest.

       17
              The provision provides, in full:
                     Section 5. Waiver of Notice. A director may waive in
              writing notice of a special meeting of the board either before
              or after the meeting; and his waiver shall be deemed the
              equivalent of giving notice. Attendance of a director at a
              meeting shall constitute waiver of notice of that meeting
              unless he attends for the express purpose of objecting to the
              transaction of business because the meeting has not been
              lawfully called or convened.
                                           - 11 -                                    6988
             2.     Brooks had authority to vote to approve the sale.
             Brooks also argues that he lacked authority to approve the sale at the April
2010 meeting because it was a directors’ meeting, and the board of directors lacks
authority to “dissolve [the corporation] on its own initiative.”18 The superior court
agreed that the April 2010 meeting was a directors’ meeting, noting that Warner prepared
and signed draft minutes of the meeting and labeled them as minutes of a special
directors’ meeting, and that opening and accepting bids –– the stated purpose of the
meeting –– was part of the directors’ oversight of the dissolution process.
             But it was at the December 2009 shareholders’ meeting that Brooks,
Horner, and Warner had voted unanimously to dissolve the corporation and liquidate
Bittner Lode.19 Alaska Statute 10.06.615(b) provides that “[i]f a voluntary proceeding
for winding up has commenced, the board shall continue to act as a board and has
powers . . . to wind up and settle its affairs.” Consistent with these facts in this legal
framework, the superior court concluded that the board of directors was acting within its
power “to wind up and settle its affairs” when Brooks, as a disinterested director, voted

      18
              AS 10.06.605(b) lists only three exceptions in which the board of directors,
rather than the shareholders, has authority to wind up and dissolve a corporation: “if the
corporation has (1) been adjudicated bankrupt; (2) disposed of all of its assets and has
not conducted any business for a period of five years immediately preceding the adoption
of the resolution to dissolve the corporation; or (3) issued no shares.” This case falls
under none of these exceptions.
      19
              AS 10.06.605(a) (“A corporation may elect voluntarily to wind up and
dissolve by . . . the vote of shareholders taken at a special or annual meeting.”).
                                           - 12 -                                   6988
to approve the JV’s bid at the April 2010 meeting.20 We see no error in the superior
court’s decision of this issue.
       C.	    The Superior Court Did Not Clearly Err In Deciding That The Sale
              Was Just And Reasonable.
              Finally, Brooks challenges the superior court’s conclusion that Horner and
Warner met their burden of proving the final element of the test under
AS 10.06.478(a)(2): that “the transaction was just and reasonable as to the corporation
at the time it was authorized.”      Brooks contends that Horner and Warner made
unreasonable or bad faith decisions in their marketing campaign and that the superior
court erred when it reviewed the reasonableness of the minimum bid price under the
common law business judgment rule rather than the “entire fairness test” applicable to
situations where a director’s loyalty is in question.21 We are unpersuaded by these
arguments.
              We have never had occasion to explain what makes a self-interested
transaction “just and reasonable” in a context like this one. Most courts model their
standard in such cases after Delaware’s, which requires “the [self-interested] directors
to prove that the bargain [was] at least as favorable to the corporation as they would have
required if the deal had been made with strangers.”22 This exacting standard has come

       20
             See AS 10.06.615(a) (“Voluntary proceedings for winding up the
corporation commence upon the resolution of shareholders or directors of the corporation
electing to wind up and dissolve, or upon the filing with the corporation of a written
consent of the shareholders.”).
       21
              See, e.g., Nixon v. Blackwell, 626 A.2d 1366, 1375-76 (Del. 1993)
(distinguishing the “entire fairness test” when a director’s loyalty is in question from the
business judgment rule, which protects decisions made under a director’s duty of care).
       22
            Gottlieb v. Heyden Chem. Corp., 90 A.2d 660, 663 (Del. 1952); see, e.g.,
Kim v. Grover C. Coors Trust, 179 P.3d 86, 91 (Colo. App. 2007); Feldheim v. Sims, 800
                                                                        (continued...)
                                        - 13 -	                                  6988
to be known as the “entire fairness” test, and it “requires judicial scrutiny regarding both
fair dealing and fair price.”23 Assuming without deciding that “just and reasonable” for
purposes of AS 10.06.478(a)(2) requires the same level of proof as the “entire fairness”
test, as Brooks contends it does,24 we see no error in the superior court’s conclusion that
the transaction at issue here satisfied the statutory standard.
              First, with regard to the JV’s bid price of $105,000, the superior court
pointed out that it is in excess of the minimum bid unanimously approved by the
shareholders, including Brooks, in their December 2009 meeting, and that if the same bid
had come from an otherwise-qualified third party instead of interested directors, the
corporation “would have been legally obligated to sell for that price.” Since the bid price

       22
        (...continued)
N.E.2d 410, 421-22 (Ill. App. 2003); Cookies Food Prods., Inc. v. Rowedder, 430
N.W.2d 447, 454 (Iowa 1988); Becker v. Knoll, 239 P.3d 830, 835 (Kan. 2010);
Demoulas v. Demoulas Super Markets, Inc., 677 N.E.2d 159, 180-81 (Mass. 1997);
Alpert v. 28 Williams St. Corp., 473 N.E.2d 19, 26-27 (N.Y. 1984); Rock v. Rangos, 61
A.3d 239, 255 (Pa. 2013); Willard ex rel. Moneta Bldg. Supply, Inc. v. Moneta Bldg.
Supply, Inc., 515 S.E.2d 277, 287 (Va. 1999).
       23
               See, e.g., Kahn v. Tremont Corp., 694 A.2d 422, 428 (Del. 1997)
(“Regardless of where the burden lies, when a controlling shareholder stands on both
sides of the transaction the conduct of the parties will be viewed under the more exacting
standard of entire fairness. . . .”); Burcham v. Unison Bancorp, Inc., 77 P.3d 130, 149
(Kan. 2003) (“The entire fairness standard is exacting and requires judicial scrutiny
regarding both fair dealing and fair price.” (internal quotation marks and citation
omitted)).
       24
              Brooks mistakenly contends that the superior court applied the business
judgment rule to “the overall transaction” rather than a heightened standard implicated
by Horner’s and Warner’s conflict of interest. The superior court applied the business
judgment rule only to the shareholders’ decision of the minimum bid price, addressed
below. It properly analyzed the “overall transaction” in the context of the applicable
conflict-of-interest statute, AS 10.06.478(a).
                                          - 14 -                                  6988
is no less favorable to the corporation than would have been required “if the deal had
been made with strangers,”25 the price was necessarily fair.
              Nor do we fault the superior court for reviewing the shareholders’ approval
of a minimum bid price under the business judgment rule, by which “courts are reluctant
to substitute their judgment for that of the board of directors unless the board’s decisions
are unreasonable.”26 Although the law does apply a different standard to director
decisions involving a conflict of interest, the parties here decided on the minimum bid
price at their December shareholders’ meeting, well before Horner and Warner created
the conflict by deciding to submit a self-interested bid.27 To support his argument that
the minimum bid price was unreasonable, Brooks points to trial testimony by the
defendants’ expert in evaluating mining claims, who concluded that “[t]he price of
$100,000 would be considered a really good buy.”28 But it was undisputed that the
corporation lacked the resources in 2010 for a reliable valuation of the claim and needed
to sell the asset soon in order to wind up the corporation and pay off its debts. Under
these circumstances, and in the absence of any evidence of an earlier conflict of interest,
the superior court properly deferred to the judgment of the parties when together they

       25
              Gottlieb, 90 A.2d at 663.
       26
              Henrichs v. Chugach Alaska Corp., 250 P.3d 531, 537 (Alaska 2011)
(quoting Alaska Plastics, Inc. v. Coppock, 621 P.2d 270, 278 (Alaska 1980)); see also
Betz v. Chena Hot Springs Grp., 657 P.2d 831, 835 (Alaska 1982) (noting that “[a]bsent
bad faith, breach of a fiduciary duty, or acts contrary to public policy, we will not
interfere with . . . management decisions”).
       27
            The superior court found credible Warner’s testimony that she and Horner
decided on March 30 that they would submit their bid.
       28
             Brooks’s own expert, on the other hand, testified that no reasonable bidder
would offer $100,000 for Bittner Lode without significantly more time for due diligence
than the corporation was willing to provide.
                                        - 15 -                                     6988
decided, “as shareholders and directors,” that $100,000 was the minimum bid their
corporation would accept.
             Brooks also challenges as unfair and unreasonable a number of steps in the
marketing and bid process. He argues that Horner and Warner failed to market the
property as agreed, preparing a “flawed sales brochure” instead of advertising in mining
magazines. But as the superior court found, Brooks had agreed to delegate winding-up
activities to Horner, informing Warner that he was too busy to be involved in them
himself. It was undisputed that the corporation lacked the resources to do much more
than it did. And more importantly, Brooks was fully aware of the marketing strategy
pursued — and the limits of the market — when he voted to approve the sale of Bittner
Lode to the JV.
             Brooks also contends that the financial pre-qualification requirement, the
corporation’s disclaimer of liability for inaccuracies in the geological data, and the
March 31, 2010 bid deadline were unreasonable because they discouraged potential
bidders. Burns testified that the pre-qualification requirement and the disclaimer were
intended to avert “phantom numbers that never would materialize” and the expenses that
accompany buyer’s remorse, thus limiting the field to serious bidders. While it is true
that potential bidders might have wanted more time to inspect Bittner Lode, a later sale
could have meant another year of upkeep costs which W.B.H. was in no condition to
bear. And nothing in the testimony of Halbertsma, the single prospective bidder,
suggested that any of the disputed bid conditions dissuaded him from submitting a bid,
and there was no other evidence that the disputed conditions discouraged potential
bidders. Having carefully weighed the marketing efforts and bid conditions against the
corporation’s need to liquidate its sole asset at minimal cost, the superior court did not
clearly err in finding that the transaction was just and reasonable.

                                          - 16 -                                    6988

V.   CONCLUSION
     We AFFIRM the judgment of the superior court.

                              - 17 -                 6988