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                 SUPREME COURT OF ARKANSAS
                                       N". cv-15-898

                                                 opinion Delivered: May 25,2017


CLYDE N. BOOTH AND FRANK W.
BOOTH                                            APPEAL FROM THE SEBASTIAN
                               APPELLANTS        COUNTY CIRCUIT COURT
                                                 INO. CV-14-0130-VI]
V.
                                                 HONORABLE JAMES O. COX,
CANDICE A. FRANKS, BANK                          JUDGE
COMMISSIONER OF THE STATE OF
ARKANSAS                                         AFFIRMED.
                                   APPELLEE


                           SHAWN A. 'WOMACK, Associate Justice


        Appellants Clyde and Frank Booth appeal from the decision of the Sebastian Counry

 Circuit Court dismissing their challenge to a bank merger and the constitutionality of the

 procedures followed in that merger by the Appellee, the commissioner of the Arkansas State

 Banking Board ("the Board"). For the reasons stated below, we atlirm.

        The Booths were minoriry stockholders in First Communiry Bank of Crawford

 Counry ("FCB"), each owning 50 shares of stock that they had purchased at a per-share

 price of$100. FirstBank reached an agreement on October 22,2013, to merge with FCB;

 First Bank would be the surviving entiry. As part of the required merger process, First Bank

 filed an application with the Board on November 15, 2A13. In compliance with Bank

 Department Regulation 46.403.1, First Bank published notice of the application       in   the

 Arkansas Democrat-Gazette on three equally spaced days during a    window ten days before
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and after the actual filing of the application.r The November 1,5,2013 application triggered

the fifteen-day window under Arkansas Code Annotated section 23-46-406(a)(1) (Repl.

201,5) during which any person wishing           to appear in opposition to the application before

the Board must file a written protest. It is uncontested that the Booths did not file a written

protest during this period.

       On December 6, 2013, FCB notified its stockholders, including the Booths, of the

upcoming meeting to vote on the plan of merger. This notice contained the proposed $.01

per-share valuation of their stock holdings and information about their rights as dissenting

stockholders should rhey choose to oppose the merger. The shareholder meeting occurred

on December 19,201,3; the merger plan was adopted despite the Booths'votes against it,

and the Booths gave notice to FCB that they intended to exercise their dissenters' rights

under Arkansas Code Annotated section 23-48-506. The Booths reafhrmed their intention

to dissent several   days later. OnJanuary   7   , 201,4, they notified First Bank that they intended

to challenge the constitutionaliry of the merger procedure.

       The Board conducted its formal hearing-the proceeding that had been announced

via newspaper in November-on January 1,6, 201,4. The Board approved the merger. The

Booths were not present. On February 1,0, 201.4, the Booths filed a complaint                   in the
Sebastian Counry      Circuit Court seeking review of the Board's decision under         a   variefy of

theories, but the claims can be simplified for our discussion here into two broad categories:

(1) The Board did not adequately fulfill its duties under administrative law in reaching its

decision and (2) the statutes and regulations followed by the Board unconslitutionally


       I The notice dates were November 6, L3, and 20,201,3.


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infringe on the due process and properry rights of minoriry stockholders. The circuit court

dismissed the constitutional and statutory claims as not preserved because the Boorhs did

not raise them at the administrative hearing.       It did, however,   hold that even nonparties

affected    by   administrative decisions are entitled      to an appeal under the Arkansas
Administrative Procedure Act. Upon conducting         a   review of the administrative record, the

court concluded that the Board's original order contained inadequate findings of fact and

conclusions of law. The court remanded to the Board to expand upon the order.

         The Booths then wrote to the Board, requesting an opportuniry to present their

arguments in advance of the additional administrative action required by the circuit court.

The Board rejected the Booths' attempts, citing their failure to object within the 15-day

postapplication window of Arkansas Code Annotated section 23-46-406(r)(1). The Board

issued its expanded findings in January 201.5, and the Booths renewed their objections to

the whole process with an amended complaint in the circuit court. In an August 14,2015

order, the circuit court determined that the updated findings were sufficient and reaffirmed

that the Boorhs had failed to preserve their substantive objections due to their failure to

present these objections before the Board.

         As their brief makes clear, the Booths' primary concern is the low value placed on

their shares in the merger of First Bank and FCB. They regard the $.01 per-share payout               as


a   violation of fundamental properry rights and due process because, they    assert,   the   assets are


worth closer to $100 per share. To the extent that the Booths have a special right                    as


minoriry, dissenting shareholders to vindicate their claim of undervaluing, ir is first             and

foremost through the bank's shareholder meeting. Having failed to stop or alter the merger



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terms at that juncture, the Booths could have utilized the process under Arkansas Code

Annotated section 23-48-506 by which dissenters can receive additional appraisals of their

shares' value.   Notice of dissent must be given at or prior to the meeting approving the

action, and the stockholder must follow with a written demand of payment within ten days

after the meeting. Ark. Code Ann. S 23-48-506(b)(1). The bank fixes an initial value on

the shares within twenfy days of the meeting, and         if the stockholders wish to accept the

offbr, they must do so within thirry days of the meeting. Ark. Code Ann. S 23-48-506(b)(3)-

(4).   If the stockholders do not accept this initial   assessment,   the statute provides that the

stockholders are entitled to a second opinion from a panel of three appraisers-one chosen

by the stockholders, one by the bank, and one by the first two appraisers. Ark. Code Ann.

S 23-48-506(c).    If the value chosen by the majoriry of this panel is still unsatisfactory to the

dissenting stockholders, they may still appeal     within five   days   to the bank commissioner,

who is empowered to fix the final value of the shares. Id.

         The record indicates that the Booths began an attempt under this statute to       address


their claims of undervaluation; at the shareholder meeting, they gave notice of dissent under

section 23-48-506. After the Board first approved the merger, the Booths' pursuit of the

appraisal remedy was more equivocal. They attempted to give "conditional notice" of their

inlent to seek a section 23-48-506 appraisal but asserted that any action under the statute

should be halted pending the circuit court's action on their litigation over broader

constitutional clairns. As the Board noted in response, there is no statutory provision for

conditional notice. The timeline for additional appraisal to vindicate dissenting shareholders'

claims is mechanical and nondiscretionary. The Board instead treated the conditional notice
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as   effective notice. These communications demonstrate that the Booths were aware of the

specific avenue provided by Arkansas law             for   dissenting shareholders   to challenge an
allegedly deficient valuation in a merger agreement.

         The Booths instead argue on appeal that the Board's notice of its general hearing on

the merger was constitutionally deficient     as   applied to shareholders. They base this argument

on precedent from both the United States Supreme Court and this court that "newspaper

notice" alone is insufficient when reasonable diligence could uncover the names                 and


residences of the parties involved     in a proceeding for which notice is required. In        those

circumstances, the state must require targeted notice through mail or other means to satisfii

due process.    See   Mullane v. Central Hanouer Bank      & Trust C0.,339 U.S. 306, 319 (1950).

The Booths' reliance on these     cases,   however, is misplaced. As discussed above, the Booths

were timely informed of all private and public avenues in which their status as shareholders

entitled them to challenge the bank's valuation of their shares. The Board's hearings on

proposed mergers address broader considerations, most notably whether the merging banks

complied with statucory requiremen[s and whether the merger will create a financially sound

resulting bank. The hearing did not implicate the Booths in any special way that would

require more than the newspaper announcements afforded to any other citizen who may

wish to cornment on a merger's economic impact on the state.

         Because we hold that the Board's notice of the merger hearing was not deficient,        rzu'e



agree   with the circuit court's determination thar the Booths' failure to file a written protest

within che statutory window prevented them from making arguments before the Board.

The arguments were therefore not preserved for judicial review.
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Affirmecl"

Frank W. Booth, for appellants.

Leslie Rutledge, Att'y Gen., by: Juliane Chavis, Deputy Att'y Gen., for appellee.
