      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@appellate.courts.state.ak.us.



               THE SUPREME COURT OF THE STATE OF ALASKA


CALAIS COMPANY, INC.,                          )
                                               )        Supreme Court No. S-13884
              Appellant,                       )
                                               )        Superior Court No. 3AN-07-08813 CI
      v.                                       )
                                               )        OPINION
DEBORAH KYZER IVY,                             )
individually and as a Derivative               )        No. 6784 – May 31, 2013
Plaintiff on behalf of the interests           )
of CALAIS COMPANY, INC. and                    )
its SHAREHOLDERS,                              )
                                               )
              Appellee.                        )
                                               )


              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, William F. Morse, Judge.

              Appearances: Jeffrey M. Feldman and Susan Orlansky,
              Feldman Orlansky & Sanders, Anchorage, for Appellant.
              Phillip Paul Weidner, Weidner & Associates, Anchorage, and
              Charles E. Cole, Law Offices of Charles E. Cole, Fairbanks,
              for Appellee.

              Before: Fabe, Winfree, and Stowers, Justices. [Carpeneti,
              Chief Justice, and Christen, Justice, not participating.]

              STOWERS, Justice.
I.    INTRODUCTION
             In 2007, Deborah Kyzer Ivy, a shareholder of Calais Company, Inc.
(Calais), filed a complaint against Calais seeking involuntary corporate dissolution. In
May 2009, Ivy and Calais reached a settlement agreement (Agreement) in which Calais
agreed to purchase Ivy’s shares at “fair value” as determined by a three-member panel
of appraisers. The appraisers disagreed over the fair value of Calais. Two of the
appraisers agreed the fair value of Calais was $92.5 million; one appraiser dissented,
valuing Calais at $43 million.
             Calais sought to enforce the Agreement in superior court, arguing the two
majority appraisers had failed to comply with the appraisal procedure mandated by the
Agreement and the Agreement’s definition of “fair value.” The superior court ultimately
declined to rule on the issue, concluding that interpreting the term “fair value” was
beyond its scope of authority under the terms of the Agreement. Consequently, the court
ordered Calais to purchase Ivy’s shares based on the majority appraisers’ valuation.
             Calais appeals. We reverse the superior court’s final order and remand for
the court to remand to the appraisers with explicit instructions to calculate the “fair
value” of Calais as defined by AS 10.06.630(a), as required by the Agreement.
II.   FACTS & PROCEEDINGS
             Calais does business in real estate acquisition, development, rental, and
leasing, and owns “significant tracts of land” in Anchorage. In 2007, Ivy — one of 30
individual stockholders and owner of 6.25% of Calais stock — filed a complaint against
Calais; her complaint seeking involuntary dissolution under AS 10.06.628 included both
personal and derivative claims.1     In May 2009 the parties reached a settlement

      1
              Alaska Statute 10.06.628(b) states that the grounds for involuntary
dissolution are:
                                                                    (continued...)

                                          -2-                                     6784
agreement.
      A.        Settlement Agreement
                Under the Agreement, Ivy agreed to dismiss her claims and Calais agreed


      1
          (...continued)
                 (1) the corporation has abandoned its business for more than
                 one year;
                (2) the corporation has an even number of directors who are
                equally divided and cannot agree as to the management of its
                affairs, so that its business can no longer be conducted to
                advantage or so that there is danger that its property and
                business will be impaired or lost, and the holders of the
                voting shares of the corporation are so divided into factions
                that they cannot elect a board consisting of an uneven
                number;
                (3) there is internal dissension and two or more factions of
                shareholders in the corporation are so deadlocked that its
                business can no longer be conducted with advantage to its
                shareholders, or the shareholders have failed at two
                consecutive annual meetings at which all voting power was
                exercised to elect successors to directors whose terms have
                expired or would have expired upon election of their
                successors;
                (4) those in control of the corporation have been guilty of or
                have knowingly countenanced persistent and pervasive fraud,
                mismanagement or abuse of authority or persistent unfairness
                toward shareholders, or the property of the corporation is
                being misapplied or wasted by its directors or officers;
                (5) in the case of any corporation with 35 or fewer
                shareholders of record, liquidation is reasonably necessary
                for the protection of the rights or interests of the complaining
                shareholder or shareholders; or
                (6) the period for which the corporation was formed has
                terminated without extension.

                                              -3-                                  6784

to purchase all of Ivy’s shares of Calais stock. Paragraph 5 of the Agreement described
the procedure for valuing Ivy’s shares. Calais and Ivy were to each nominate one
appraiser, and these two appraisers were to select a third. The appraisers were to
“determine the fair value of Calais in accordance with [the] Settlement Agreement and
AS 10.06.630(a),[2] as of the date of [the] Settlement” using “their expertise and
judgment” and “giving due consideration to all Calais liabilities and to the fair market
value of all Calais assets.” In arriving at the “appraised fair value of Calais,” the
appraisers were not to apply any discount due to the number of shareholders or
distribution of shares, nor consider the “impact or value of any speculative future
development of Calais property or assets, or any speculative projected or assumed profits
or revenues that might be derived from any future development of Calais property or
assets.” The appraisers could, however, “consider future opportunities to develop the
property, subject to all existing leases and commitments, to the extent and only to the


      2
             Alaska Statute 10.06.630(a) states:
             Subject to a contrary provision in the articles of
             incorporation, in a suit for involuntary dissolution under
             AS 10.06.628 the corporation or, if it does not elect to
             purchase, the holders of 50 percent or more of the voting
             power of the corporation, the “purchasing parties”, may avoid
             the dissolution of the corporation and the appointment of a
             receiver by purchasing for cash the shares owned by the
             plaintiffs, the “moving parties”, at their fair value. The fair
             value shall be determined on the basis of the liquidation
             value, taking into account the possibility of sale of the entire
             business as a going concern in a liquidation. The election of
             the corporation to purchase may be made by the approval of
             the outstanding shares excluding shares held by the moving
             parties.

(Emphasis added.)

                                           -4-                                     6784

extent that those future opportunities impact the fair value of the property as of the
appraisal date.”
              The appraisers were to prepare “a final report stating the appraised value
of the fair value of Calais under the[se] criteria.” The value of Ivy’s shares were then to
be determined by calculating 6.25% of the appraised fair value of Calais. Paragraph 5(d)
of the Agreement states: “An agreement on the value of Calais need only be reached by
two of the three appraisers, and that valuation shall be binding on the parties and shall
not be subject to any further review, dispute, or appeal.” But Paragraph 23 of the
Agreement states:
              Superior Court Judge William Morse shall retain jurisdiction
              over this matter for the purpose of enforcing all terms and
              conditions of this Settlement Agreement . . . . Should a
              dispute arise concerning any aspect of this Agreement, and
              should any party seek judicial assistance to secure
              enforcement of the Agreement, the Court, in its discretion,
              may award full reasonable and appropriate costs and
              attorney’s fees to the prevailing party in the dispute, in
              connection with resolution of the dispute.
       B.	    Appraisal And Dissent
              Ivy named Steve MacSwain and Calais named Timothy Lowe as their
respective appraisers; MacSwain and Lowe selected Kenneth Gain as the third appraiser.
In November 2009 MacSwain and Gain reported that they both agreed on the appraised
“fair market value” of Calais “when valued in accordance with the Settlement
Agreement.” They appraised the value at $92.5 million; Lowe disagreed, appraising
Calais’s value at $43 million.
              Lowe explained in a dissent that he believed MacSwain and Gain’s
agreed-upon fair market value did not comply with the instructions of the Agreement or
AS 10.06.630(a) because they omitted: (1) the capital gains tax liability for Calais’s


                                           -5-	                                      6784

appreciated real property; (2) the actual costs that would be incurred in the liquidation
of the company; and (3) the time value of money during the disposition or liquidation
period. Lowe also explained that both MacSwain and Gain were unwilling to consider
or acknowledge their omission of these costs after Lowe encouraged them to do so,
explaining that both were “valuing the equity of [Calais] as a direct real property interest
and not as equity in a corporation [and] only in the context of market value and not in the
mandated context of liquidation value.” Lowe clarified his belief that the appraisal
panel’s assignment under the Agreement was to determine the fair value of Calais on a
liquidation basis, as defined by AS 10.06.630(a), not the fair market value of Calais’s
assets. Lowe concluded that the value agreed upon by MacSwain and Gain should be
set aside or be subject to further review because it did not provide a reliable estimate of
the fair value of Calais.
         C.   First Motion To Enforce
              In December 2009 Calais filed a motion in the superior court to enforce the
Agreement. Calais asked the court to find that the appraisers had not followed the
procedures set forth in the Agreement and to remand the appraisal to the appraisers with
directions to comply with the Agreement’s instructions to determine Calais’s fair value
by taking into account liquidation costs, including capital gains tax liabilities. Ivy
opposed Calais’s motion, contending the Agreement did not authorize review by the
court.
              Superior Court Judge William F. Morse granted Calais’s motion in part,
setting forth his findings and conclusions on February 2, 2010. The court distinguished
between reviewing the appraisers’ valuation, which it believed it was prohibited from
doing under the terms of the Agreement, and reviewing the appraisers’ process in making
the valuation to determine whether the appraisers had complied with the procedures and
standards outlined in the Agreement. The court concluded that the parties’ explicit grant

                                            -6-                                       6784

of authority to enforce the Agreement authorized the court to review the appraisers’
procedures for compliance with the Agreement. The superior court reviewed the
Agreement and determined that the parties intended the appraisers to determine the “fair
value of Calais” as defined by AS 10.06.630(a), not the “fair market value” of Calais’s
assets. The court then issued a limited order directing the parties to “advise the panel
that it should again evaluate the fair value of Calais” and to convey to the panel
instructions that the court had drafted,3 which included paragraphs from the Agreement

      3
             The superior court’s instructions to the appraisal panel provided:
             You are instructed to determine the “fair value of Calais” in
             accordance with the Settlement Agreement and
             AS 10.06.630(a), as of the date of the Settlement,
             May 15, 2009. This means that you must prepare your
             appraisal in accordance with the provisions of both the
             Settlement Agreement and AS 10.06.630(a).
             To be “in accordance with the Settlement Agreement,” your
             determination must comply with Paragraphs 5(a) and (b) of
             the Settlement Agreement, which state, in relevant part:
             (a) . . . [T]he appraisers shall exercise their expertise and
             judgment in that determination [of fair value], giving due
             consideration to all Calais’ liabilities, and to the fair market
             value of all Calais’ assets. The appraisers shall make their
             determination of the fair value of Calais without input or
             communication from Calais or the Defendants or Ivy, either
             orally or in writing, except as provided by Paragraph 5(e).
             (b)    In arriving at the appraised fair values of Calais there
             shall be: 1) no discount as to appraising fair value of Calais
             due to the number of shareholders or dilution of ownership of
             shares; 2) no consideration by the appraisers of the impact or
             value of any speculative future development of Calais
             property or assets, but the appraisers may consider future
             opportunities to develop the property, subject to all existing
                                                                            (continued...)

                                           -7-                                      6784

and AS 10.06.630(a).
                 Following the court’s February 2010 order, Lowe made repeated attempts
to communicate with MacSwain and Gain. MacSwain and Gain each sent brief e-mails
to Lowe regarding their continued involvement as appraisers, but those e-mails did not
respond to any of Lowe’s substantive questions or concerns regarding the appraisal
process and the superior court’s order. Lowe also asked the parties’ counsel and the
court to assist him in getting the appraisal panel to work together, but the appraisal panel
never met following the February 2010 order.
                 On April 6, 2010, MacSwain and Gain sent a response to the court in which
they concluded that “fair value,” “fair market value,” and “market value” are
synonymous. They also asserted that deductions for tax consequences and transaction
costs were not appropriate when determining the fair value of Calais because they had
not been explicitly asked to make such deductions. They made no reference to the
definition of “fair value” in AS 10.06.630(a).
                 Lowe prepared a separate response to the court’s February 2010 order and
a report that described MacSwain and Gain’s erroneous procedures and analysis, their


       3
           (...continued)
                  leases and commitments, to the extent and only to the extent
                  that those future opportunities impact the fair values of the
                  property as of [May 15, 2009].
                 To be “in accordance with AS 10.06.630(a),” your
                 determination must comply with AS 10.06.630(a) which
                 provides, in relevant part:
                 (a) . . . The fair value shall be determined on the basis of the
                 liquidation value, taking into account the possibility of sale
                 of the entire business as a going concern in a liquidation.



                                               -8-                                    6784

refusal to work as a panel, and their general disregard of the Agreement’s prescribed
procedures and directions.
      D.     Second Motion To Enforce
             On April 8, 2010, Calais filed a second motion to enforce, asserting that the
majority appraisers still had not complied with the Agreement’s procedures for valuing
Calais or with the court’s February 2010 order. Specifically, Calais claimed that the
majority: (1) had not complied with the requirement to use the definition of “fair value”
in AS 10.06.630(a); and (2) had violated the court’s “express directive that the matter be
decided by ‘the panel’ — not by the majority members acting on their own.” Calais
asked the court to reject the majority appraisers’ report and to enforce the Agreement by
ensuring that fair value was determined in accordance with the terms and procedures of
the Agreement. Ivy filed a cross-motion to enforce the Agreement, asking the court to
order Calais to pay her 6.25% of the valuation determined by the majority appraisers.
             In June 2010 the superior court denied Calais’s motion and granted Ivy’s,
concluding that it had no authority under the Agreement to do anything further. The
court concluded that choosing between the majority appraisers’ definition of “fair value”
and the dissent appraiser’s definition of “fair value” and declaring that one or the other
complied with the Agreement would be outside the scope of authority delegated to the
superior court to enforce the Agreement. The court made no findings or conclusions
regarding the majority appraisers’ failure to include Lowe in the appraisal process
following the February 2010 order.
             The superior court issued a final order in July 2010, reaffirming that its
June 2010 order would be the court’s final action. Calais appeals.




                                           -9-                                      6784

III.   STANDARD OF REVIEW
              We interpret settlement agreements as contracts.4 The interpretation of
contractual terms is a question of law, which we review de novo.5
IV.    DISCUSSION
              The preliminary issue in this appeal is whether the superior court had
authority to review the procedures and methodology employed by the three-person
appraisal panel under paragraph 23 of the Agreement. This paragraph explicitly grants
“jurisdiction”6 to the superior court to enforce “all terms and conditions” of the
Agreement, notwithstanding paragraph 5(d), which states that a valuation agreed upon
by two of the appraisers would be “binding on the parties” and not “subject to any
further review, dispute, or appeal.” The second issue presented for review is whether the
majority appraisers’ definition of “fair value” and exclusion of Calais’s appraiser from
the appraisal and reappraisal processes violated the express terms of the Agreement.
              Because paragraph 23 of the Agreement expressly provides the superior



       4
            Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc., 252 P.3d 1011,
1014 (Alaska 2011).
       5
             See Smith v. Cleary, 24 P.3d 1245, 1247 (Alaska 2001) (“The settlement
agreement’s scope and effect raise questions of contract law that we review de novo.”).
       6
               While the Agreement explicitly grants “jurisdiction” to the superior court,
this is an incorrect characterization because once the parties invoke the jurisdiction of the
court by filing suit, jurisdiction is always held by the court. See Sea Hawk Seafoods, Inc.
v. State, 215 P.3d 333, 338 (Alaska 2009) (“[A] court has subject-matter jurisdiction over
a case when it has ‘the legal authority . . . to hear and decide [that] particular type of
case.’ . . . AS 22.10.020(a) provides that the superior court has ‘jurisdiction in all civil
and criminal matters.’ ”) (internal citations omitted); see also 21 C.J.S. Courts § 98
(2012) (“In general, jurisdiction once acquired is not lost or divested by subsequent
events.”). Instead, we use the word “authority” since a contract may limit a court’s
authority to review it.

                                            -10-                                       6784

court with continuing authority to enforce “all terms and conditions” of the Agreement
“[s]hould a dispute arise concerning any aspect of th[e] Agreement,” the superior court
has authority to interpret the Agreement and review whether the appraisers complied
with the process and terms for determining fair value. Because the majority appraisers’
definition of “fair value” violates the express terms of the Agreement, we reverse the
superior court’s order and remand to the superior court to remand to the appraisers with
instructions to follow the Agreement’s instructions regarding both appraisal procedures
and fair value determination.
       A.	    The Superior Court Has The Authority To Determine Whether The
              Appraisers Complied With The Terms Of The Settlement Agreement.
              Although the parties agree that the superior court did not have authority
under the Agreement to review the majority appraisers’ valuation of Calais, the parties
dispute whether the superior court had authority to review the majority appraisers’
valuation process or methodology.
                Ivy argues that under the Agreement neither the superior court nor this
court has the authority to review the majority appraisers’ “exercise of their judgment,
expertise, or methods employed” in reaching their determination of Calais’s value.
Specifically, Ivy contends that the majority appraisers’ valuation of Calais is binding and
non-reviewable because both parties “gave up certain rights in exchange for gaining
other rights” when they agreed to waive further review of the majority appraisers’
determination of the fair value of Calais, including the judgment and methods the
majority appraisers used to calculate the fair value. According to Ivy, this forfeiture of
rights was “an important element of consideration for [the] entire [Agreement].”
              Calais argues that paragraph 5(d) of the Agreement does not foreclose all
judicial review of the appraisal process because paragraph 23 expressly grants the




                                           -11-	                                     6784

superior court “jurisdiction” to “enforce,” meaning to “carry out effectively,”7 all terms
and conditions of the Agreement.
             Whether an appraisal conducted pursuant to a contractual settlement
agreement may be subject to review by the trial court generally presents a question that
is governed by the language of the settlement agreement. In this case, paragraph 23 of
the Agreement expressly granted authority to the superior court to enforce the terms of
the Agreement, and the Agreement included specific terms setting forth the procedures
to be used by the appraisal panel in determining the fair value of Calais.
             1.	    Paragraph 23 of the Agreement expressly grants the superior
                    court authority to enforce the terms of the Agreement, including
                    the terms that expressly govern the appraisal procedure.
             Ivy argues that the enforcement clause in paragraph 23 of the Agreement
“simply allows [the] Trial Court to provide [the] Parties relief to enforce [the
Agreement’s] provisions as to consideration.”8 But Ivy does not provide any contractual
language, extrinsic evidence, or legal authority to support her assertion that paragraph
23 only refers to consideration provisions. And paragraph 23’s phrase “[s]hould a
dispute arise concerning any aspect of this Agreement” directly contravenes Ivy’s
interpretation. (Emphasis added.) “Any aspect” means “any aspect.”
             In Salt Lake Tribune Publishing Co. v. Management Planning, Inc., a party
argued that an appraisal of a newspaper’s assets was not subject to judicial review


      7
              Calais cites W EBSTER ’S N INTH N EW COLLEGIATE D ICTIONARY at 412
(1987) for this definition of “enforce.”
      8
             The consideration provisions Ivy specifically points to are: “payment of
money; transfer of stock out of Escrow to Calais; releases; termination of association by
Ivy with Calais and Calais with Ivy; no further claims; release of Stipulation to Dismiss
from Escrow and filing with and signing by Court; prohibiting future contact
involvement by Ivy regarding with Calais, etc.”

                                          -12-	                                     6784

because the parties’ agreement stated the appraisal was “final, binding, and conclusive.”9
The Tenth Circuit rejected this argument because it ignored other terms in the agreement:
The agreement expressly allowed the parties to enforce the agreement in any court and
provided that the appraisal was binding only if it complied with the appraisal provisions
in the agreement, such as the agreement’s definition of “fair market value.”10 The Tenth
Circuit concluded that the trial court had authority to “review the appraisal for the
appraiser’s compliance with the contractual terms.”11
             Like the contract in Salt Lake Tribune, the Agreement here specifically
allows the parties to enforce its terms in the superior court and even provides for costs
and attorney’s fees “[s]hould a dispute arise concerning any aspect of this
Agreement . . . .” And the Agreement includes specific terms regarding the appraisal
process, requiring the appraisers to determine the “fair value” of Calais “in accordance
with [the] Agreement and AS 10.06.630(a).” Judicial review of the appraisers’ process
to determine whether they complied with the express terms of the Agreement is therefore
proper.
             2.	    Courts in other jurisdictions have held that appraisal clauses
                    are generally reviewable for fraud, bad faith, material mistake,
                    or a failure to understand or complete the contractually
                    assigned task.
             Courts in other jurisdictions have held that there are key distinctions
between an arbitration process, which is generally non-reviewable, and an appraisal




      9
             454 F.3d 1128, 1136-37 (10th Cir. 2006).
      10
             Id. at 1137.
      11
             Id. at 1138 (citing Melton Bros., Inc. v. Philadelphia Fire & Marine Ins.
Co., 144 A. 726 (N.J. 1929)).

                                          -13-	                                     6784

process, which is generally reviewable under limited circumstances.12 The Wisconsin
Supreme Court recently discussed the unique characteristics of appraisals and described
what it believed the court’s role should be in reviewing appraisal awards:
               The court’s role is not to determine whether the third party
               [appraisers] accurately valued the item (as if the court itself
               could do a better job), but whether the third party experts
               understood and carried out the contractually assigned task.
               The obvious point of contracting for an appraisal process is
               to keep a jury or court out of that decision. Courts have an
               obligation to enforce this aspect of an agreement between the
               parties by asserting only limited power to review appraisal
               awards.[13]
The Wisconsin court also noted that appraisals deserve a more deferential review
because the appraisal process is a “fair and efficient tool for resolving disputes.”14 But
the court ultimately concluded that, although appraisals are presumptively valid and
should not be “lightly set aside,” an appraisal may be set aside upon a showing of “fraud,
bad faith, a material mistake, or a lack of understanding or completion of the



       12
               See, e.g., Cas. Indem. Exch. v. Yother. 439 So. 2d 77, 79-80 (Ala. 1983)
(noting that an appraisal is distinguishable from arbitration and is not subject to the
various procedural requirements imposed on the arbitration process); Minot Town &
Country v. Fireman’s Fund Ins. Co., 587 N.W.2d 189, 190 (N.D. 1998) (noting that
while both appraisal and arbitration are proceedings designed to effect speedy and
efficient resolutions in lieu of judicial proceedings, there are key distinctions between the
two; for example, arbitration is a quasi-judicial proceeding that ordinarily decides the
entire controversy while appraisal establishes only the amount of a loss and not liability
for the loss); Miller v. USAA Cas. Ins. Co., 44 P.3d 663, 673 (Utah 2002) (noting the
intrinsic differences between appraisal and arbitration).
       13
               Farmers Auto. Ins. Ass’n v. Union Pac. Ry. Co., 768 N.W.2d 596, 607
(Wis. 2009).
       14
               Id.

                                            -14-                                       6784

contractually assigned task.”15 Courts in the District of Columbia, Iowa, Massachusetts,
and Texas have reached similar conclusions and reviewed appraisals for fraud, bad faith,
mistake, or failure to complete the appraisal according to the contractually prescribed
appraisal procedures.16
             As we explain below, the majority appraisers’ response to the superior
court’s February 2010 order demonstrates “a lack of understanding or completion of the
contractually assigned task.”17 As courts in other jurisdictions have held, this issue is
judicially reviewable. We therefore hold that the superior court has the authority to
determine whether the appraisers’ process complied with the contractual terms of the
Agreement and, if it did not, enforce the terms of the Agreement.
      B.	    The Majority Appraisers Failed To Comply With The Agreement’s
             Requirement That The Appraisers Determine The Fair Value Of
             Calais In Accordance With AS 10.06.630(a).
             As previously discussed, the superior court initially determined that the



      15	
             Id. (emphasis added).
      16
               See Wash. Auto. Co. v. 1828 L St. Assocs., 906 A.2d 869, 875 n.3 (D.C.
2006) (holding that a court will not set aside an appraiser’s valuation unless appraisers
have “mistaken their authority, departed from the submission, clearly misconceived their
duties, acted upon some fundamental and apparent mistake, or have been moved by fraud
or bias”); Cent. Life Ins. Co. v. Aetna Cas. & Sur. Co., 466 N.W.2d 257, 260 (Iowa 1991)
(“The [appraisal] award will not be set aside unless the complaining party shows fraud,
mistake or misfeasance on the part of the appraiser or umpire.”); Nelson v. Maiorana,
478 N.E.2d 945, 947 (Mass. 1985) (holding a court is justified in overturning an
appraisal determination only when evidence supports a finding of “fraud, corruption,
dishonesty, or bad faith in the appraisal process or decision”); Wells v. Am. States
Preferred Ins. Co., 919 S.W.2d 679, 683 (Tex. App. 1996) (recognizing an appraisal
award is not binding if “the award was the result of fraud, accident, or mistake” or “was
not made in substantial compliance with the terms of the contract”).
      17
             Farmers Auto. Ins. Ass’n, 768 N.W.2d at 607.

                                          -15-	                                    6784

plain language of the Agreement showed the parties “intended that the appraisers utilize
the statutory definition of ‘fair value’ ” in AS 10.06.630(a) and directed the panel to
reappraise Calais’s fair value “in accordance with the provisions of both the Settlement
Agreement and AS 10.06.630(a).”18 After MacSwain and Gain responded that they had
understood and complied with the Agreement’s provisions, the superior court concluded
that “to inquire further into the merits of the panel’s action or construction of
AS 10.06.630(a) would . . . exceed the authority granted to it by the parties’ Settlement
Agreement.”
              Calais argues that the superior court should have interpreted the meaning
of “fair value” within the context of the Agreement in order to determine whether the
appraisers had complied with the court’s instructions. Calais argues the court should
have concluded that the Agreement’s use of the term “fair value,” the Agreement’s
requirement that all liabilities be taken into account, and the Agreement’s citation to
AS 10.06.630(a) “together require[d] deductions for capital gains tax liabilities and other
costs of liquidation.” In response, Ivy argues that neither the superior court nor this court
has authority to define “fair value” in the context of the Agreement, and she contends
that the “meaning and effect” of the term “fair value” was “committed to [the] sole
discretion and expertise” of the appraisers using their own experience, expert opinions,
and principles of the profession.
              1.	    The court has the authority to interpret the term “fair value”
                     within the context of the Agreement.
              We reiterate that under the plain language of the Agreement and persuasive
case law from other jurisdictions, the court has the authority to resolve disputes
concerning “any aspect” of the Agreement, enforce “all terms and conditions” of the



       18
              See supra note 3 for the text of the superior court’s order.

                                            -16-                                       6784
agreement, and review the appraisers’ process to determine whether they complied with
the Agreement’s provisions. The superior court (and this court) has the authority to
construe the term “fair value” within the context of the Agreement. Interpreting a
contractual term is a legal question for the court,19 not for the appraisers.
               2.	     The plain language of the Agreement shows the parties intended
                       “fair value” to mean “liquidation value.”
               “The objective of contract interpretation is to determine and enforce the
reasonable expectations of the parties.”20 When interpreting contracts, we “[consider]
the contract’s language as well as relevant extrinsic evidence . . . .”21 “The parties’
expectations are assessed by examining the language used in the contract, case law
interpreting similar language, and relevant extrinsic evidence, including subsequent
conduct of the parties.”22
               The Agreement is unambiguous — it plainly states that the parties intended
the   appraisers     to    “determine   the    fair   value   of   Calais   in   accordance
with . . . AS 10.06.630(a),” which provides that “fair value shall be determined on the
basis of the liquidation value, taking into account the possibility of sale of the entire
business as a going concern in a liquidation.” The superior court correctly recognized
this in its first order:
               The Agreement’s reference to AS 10.06.630(a) is telling.
               That subsection describes a mechanism for majority
               shareholders to avoid the dissolution of a corporation at the


       19	
               See Smith v. Cleary, 24 P.3d 1245, 1247 (Alaska 2001).
       20
               Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1004 (Alaska 2004).
       21
               Sowinski v. Walker, 198 P.3d 1134, 1143-44 (Alaska 2008).
       22
            Norville, 84 P.3d at 1004 (quoting Municipality of Anchorage v. Gentile,
922 P.2d 248, 256 (1996)).

                                              -17-	                                   6784

              request of a minority shareholder by the purchase for cash of
              the minority’s shares “at their fair value,” which is to be
              “determined on the basis of liquidation value, taking into
              account the possibility of sale of the entire business as a
              going concern in a liquidation.”[23]
              In their response to the superior court, the majority appraisers interpreted
“fair value” as synonymous with “fair market value.” But the Agreement differentiates
between the two, stating the appraisers shall “determine the fair value of Calais in
accordance with . . . AS 10.06.630(a),” while “giving due consideration to all Calais
liabilities and to the fair market value of all Calais assets.” (Emphasis added.) By the
Agreement’s terms, the “fair market value” of Calais’s assets is just one factor to be
considered in determining the ultimate “fair value” of Calais. To interpret “fair market
value” as synonymous with “fair value,” as the majority appraisers suggest, would render
the Agreement’s distinction meaningless, which would be contrary to our rules of
contract interpretation.24


       23
              It is clear from the appraisers’ correspondence and methodology that they
were not appraising Calais under the going concern option, but rather under the
liquidation of assets option.
       24
              See Rockstad v. Global Fin. & Inv. Co., 41 P.3d 583, 592-93 (Alaska 2002)
(“[T]his definition is excluded . . . by the rule disfavoring interpretations that leave
contract terms meaningless.”). Additionally, we note that the majority appraisers’
assertion that “fair value, market value, and fair market value” are “virtually
synonymous” is not supported by professional appraisal treatises. For example, one
treatise notes that while “market value” is “essentially synonymous” with “fair market
value,” the term “fair value” in business valuations “is usually a legally created
standard.” SHANNON P. P RATT & A LINA V. N ICULITA , V ALUING A BUSINESS : THE
A NALYSIS AND A PPRAISAL OF CLOSELY H ELD COMPANIES 42, 45 (5th ed. 2008). “In
most states, fair value is the statutory standard of value applicable in cases of dissenting
stockholders’ appraisal rights” or in “the dissolution statutes of those states in which
minority stockholders can trigger a corporate dissolution.” Id. at 45. “[P]ublished
                                                                              (continued...)

                                           -18-                                       6784

              3.	    Cases construing “fair value” in the context of dissolution buyout
                     statutes, rather than involuntary dissolution statutes, are not
                     relevant.
              There is no Alaska case law construing “fair value” under AS 10.06.630(a).
Ivy cited several cases from other jurisdictions in her briefing to the superior court to
support her assertion that capital gains taxes should not be deducted when determining
the “fair value” of a corporation.25 These cases discuss “fair value” in the context of
dissenter buyout (in contrast to cases discussing “fair value” in the context of statutes
governing buyout in lieu of involuntary dissolution) and reject deductions for capital
gains tax liabilities and other costs of liquidation.26 Calais persuasively argues that
because Ivy’s cases define “fair value” under dissenter buyout statutes, they are not
relevant for interpreting how the parties here intended “fair value” to be defined: The

       24
         (...continued)
precedents established in various state courts have not equated [fair value] directly to
fair market value”; therefore “[w]hen a situation arises of actual or potential stockholder
dissent or dissolution action, it is necessary to carefully research the legal precedents
applicable to each case” and to “solicit the view of counsel as to the interpretation of fair
value.” Id. (emphasis added). As this treatise explains, “fair value” is generally a
statutory term that is not synonymous with “market value” and “fair market value.” See
also U NIFORM STANDARDS OF PROFESSIONAL A PPRAISAL PRACTICE at 112-13 (2002)
(quoting Appraisal Standards Board, AO-8 (1999)) (distinguishing “market value” from
“fair value” in the context of real property appraisals and stating, “Rarely will market
value and fair value be exactly the same”).
       25	
             See Swope v. Siegel-Robert, Inc., 243 F.3d 486 (8th Cir. 2001); Bogosian
v. Woloohojian, 158 F.3d 1 (1st Cir. 1998); In re 75,629 Shares of Common Stock of
Trapp Family Lodge, Inc., 725 A.2d 927 (Vt. 1999); Matthew G. Norton Co. v. Smyth,
51 P.3d 159 (Wash. App. 2002); Brown v. Arp & Hammond Hardware Co., 141 P.3d
673 (Wyo. 2006).
       26
            See Swope, 243 F.3d at 491; Bogosian, 158 F.3d at 11; Trapp Family
Lodge, 725 A.2d at 931; Matthew G. Norton Co., 51 P.3d at 163; Brown, 141 P.3d at
688.

                                            -19-	                                      6784

Agreement expressly refers to AS 10.06.630(a), which provides the mechanism for a
corporation to avoid dissolution by purchasing the plaintiff’s shares at fair value, and not
AS 10.06.574-.580, Alaska’s dissenter buyout statutes.
              There appears to be minimal precedent discussing how to calculate “fair
value” in the involuntary dissolution context. Calais cites an unpublished case from
California interpreting an involuntary liquidation buyout statute similar to Alaska’s
statute in which the California court affirmed a fair value appraisal that deducted taxes
and other liquidation expenses.27
              We also look to the statutes governing liquidation of a corporation. Under
AS 10.06.655(a)(1)-(2), a corporation is ready to dissolve when state taxes have been
paid or provided for, “the other known debts and liabilities of the corporation have been
paid or adequately provided for,” and the remaining assets have been distributed.
AS 10.06.665 states that after “all of the known debts and liabilities of a corporation in
the process of winding up have been paid or adequately provided for,” the remaining
assets of the corporation shall be distributed to the shareholders according to their
respective rights. It is hard to imagine how costs of sale and applicable income tax
liabilities are not a part of this process.
              Ivy asserts that because her rights were obtained through a settlement, fair
value under AS 10.06.630(a) means something different than liquidation value under the
dissolution statutes. However, Ivy sued under AS 10.06.628 for an involuntary
dissolution; Calais was entitled to avoid the involuntary dissolution under AS 10.06.630



       27
              Khatkar v. Dhillon, No. F053322, 2009 WL 189846, at *11-12 (Cal. App.
Jan. 28, 2009) (citing Abrams v. Abrams-Rubaloff & Assocs., 170 Cal. Rptr. 656
(Cal. App. 1980)) (affirming appraisal of fair value of plaintiffs’ shares made pursuant
to California’s involuntary dissolution buyout statute that deducted taxes and other
liquidation expenses).

                                              -20-                                    6784

by ultimately paying Ivy an estimated “fair value” of what she would have received had
the corporation actually been required to liquidate and dissolve. The parties settled the
lawsuit by specifically referring to fair value under AS 10.06.630(a). The provision in
the Agreement for valuing the corporate assets at fair market value was the obvious
bargained for difference in the normal liquidation process — under AS 10.06.660,
corporate directors overseeing liquidation have the authority to sell or dispose of all or
any part of the assets of the corporation as they deem reasonable, i.e., not necessarily at
fair market value.
              Though relevant case law is scarce, we conclude that Calais’s argument is
more persuasive. Because the Agreement specifically references Alaska’s involuntary
dissolution statute for purposes of determining “fair value,” and because an appraisal of
fair value under involuntary dissolution statutes deducts capital gains tax liabilities and
other liquidation expenses, the appraisal of fair value in this case should also deduct
these liabilities and expenses.
              4.     Summary
              The court has the authority to interpret the Agreement and enforce its terms
by determining whether the appraisal panel complied with the appraisal process
mandated by the Agreement. The plain language of the Agreement demonstrates that the
parties intended “fair value” to mean “liquidation value” under AS 10.06.630(a).28


       28
              We agree with the superior court’s analysis in its February 2, 2010 Order:
              The parties’ decision to refer to the definition of “fair value”
              in AS 10.06.630(a) must have been meaningful and, in order
              that the parties’ decision and Agreement are enforced, it has
              to be given effect. The parties’ use of the term “fair value,”
              in their instructions to the appraisers “to determine the fair
              value of Calais” and the reference to a statutory definition of
                                                                              (continued...)

                                           -21-                                       6784

Because the record shows that the majority appraisers did not take into account capital
gains taxes or liquidation costs when they calculated the “fair value” of Calais, we
remand the appraisal to the superior court to remand to the appraisal panel with explicit
instructions to calculate “fair value” as defined by AS 10.06.630(a), the other terms of
the Agreement, and this opinion.
                 5.    The appraisal panel is required to work together as a panel.
                 Because the appraisal panel will need to determine “fair value” on remand,
we take this opportunity to provide guidance to the superior court should the situation
recur where one of the appraisers is excluded by the others from the appraisal process.
Although the Agreement permits the final valuation of Calais to be determined by a
majority of the three appraisers, the express terms of the Agreement indicate that the
parties intended the panel of appraisers to be composed of three members at all times.
The Agreement also refers to the appraisal procedure as a “process” in which all three
appraisers would participate. The Agreement states that if one of the appraisers selected
by Ivy or Calais became disabled or was “otherwise unable to complete the appraisal
process,” Ivy or Calais “shall have the right to select a substitute appraiser to begin the
appraisal process anew,” and that if the third appraiser became unable to serve, “a
substitute appraiser shall be appointed by the court . . . .” The Agreement also states “the
appraisers as a group may in their discretion communicate as needed with any other
party, individual, or entity” for obtaining information necessary to complete “the
appraisal process.” (Emphasis added.)
                 The record reveals that MacSwain and Gain effectively excluded Lowe


       28
            (...continued)
                  “fair value,” can only reasonably be construed to mean the
                  parties intended that the appraisers utilize the statutory
                  definition of “fair value.”

                                             -22-                                     6784
from the initial appraisal process and from discussions the two may have had following
the superior court’s February 2010 remand order. An appraisal panel works together like
an arbitration panel or a panel of judges — the panel members may individually prepare,
but they meet together as a panel to discuss their case and come to their decision. Just
because one panel member dissents from the majority’s consensus does not mean the
majority may exclude the dissenter from meetings and deliberations of the panel. By the
Agreement’s terms, excluding Lowe violated the parties’ intent that all three appraisers
were to work together in an effort to come to an appraised fair value of Calais. The three
were not required to agree, but they were required to work together as a panel in good
faith.
              On remand the superior court shall direct the appraisal panel to work
together as a panel pursuant to the terms of the Agreement.
V.       CONCLUSION
              We REVERSE the superior court’s final order. Because the majority
appraisers failed to comply with the Agreement and its requirement that their appraisal
of Calais’s fair value be determined in accordance with the Agreement and
AS 10.06.630(a), giving due consideration to all Calais liabilities, we REMAND the
appraisal to the superior court to remand to the panel with instructions to calculate the
fair value of Calais as defined by AS10.06.630(a), other terms of the Agreement, and this
opinion. The court shall also direct the appraisal panel to work together as a panel in its
appraisal process.




                                           -23-                                      6784

