## Facts

- Alaska Plastics, Inc. was incorporated in 1961 by three shareholders (Stefano, Gillam, and Crow), each initially holding 300 shares and serving as the only directors and officers.
- In 1970, Crow transferred 150 shares to his former wife, Patricia M. Coppock, in a divorce settlement, making her a 1/6 minority shareholder.
- Coppock alleged she was excluded from corporate participation, including missed or last-minute notice of several annual shareholders’ meetings between 1971 and 1974.
- The three director-shareholders paid themselves benefits, including $3,000 annual director’s fees (1971–1974) and a $30,000 salary to Gillam as general manager (authorized in 1974), and caused the corporation to pay certain personal travel expenses lacking a business purpose.
- The corporation never declared dividends during the relevant period, and Coppock received no distributions.
- The directors offered to buy Coppock’s shares for $15,000 and later $20,000; Coppock rejected these offers after obtaining a valuation placing her shares between $23,000 and $40,000 (excluding certain property).
- Coppock sued seeking equitable relief, and the trial court ordered Alaska Plastics to purchase her 150 shares for $32,000 plus interest and attorney’s fees.
- Alaska Plastics and the director-shareholders appealed the forced-buyout order; Coppock cross-appealed regarding relief.

## Issues

1. Whether a minority shareholder in a closely held corporation may obtain an order compelling the corporation to purchase her shares at “fair value” absent a statutory appraisal right or a contractual buy-sell provision.
2. Whether an unaccepted offer by the corporation or majority shareholders to buy the minority’s shares can create a legal or equitable obligation to repurchase at a court-determined “fair value.”
3. What remedies are available for alleged majority misconduct in a close corporation, including diversion of corporate earnings through compensation and perquisites while paying no dividends.

## Decision

- The Supreme Court of Alaska reversed the order requiring the corporation to purchase Coppock’s shares at fair value.
- The court held that a compelled buyout was not an available remedy on the record as a matter of law because none of the recognized bases for forcing a repurchase applied.
- The court remanded for the trial court to make adequate findings and consider other remedies that may address any proven wrongdoing.

## Legal Principles

- A court will not compel a close corporation to repurchase a minority shareholder’s stock at “fair value” unless a recognized legal basis exists, such as:
  - a binding bylaw or shareholder agreement requiring purchase upon specified events;
  - a dissolution proceeding in which a buyout may be used as a condition or alternative remedy when misconduct warrants dissolution-type relief;
  - a fundamental corporate change that triggers an appraisal-type remedy; or
  - an applicable statutory appraisal right.
- Unaccepted buyout offers do not create a contract and do not, standing alone, justify a judicially imposed obligation to purchase shares at a court-set price.
- Majority shareholders in a close corporation owe fiduciary duties to minority shareholders; conferring non-pro rata benefits on the majority (e.g., excessive compensation or personal benefits) may support relief such as damages, accounting, or distribution remedies (including constructive dividend-type relief) if proven.
- Equitable relief must be tied to established doctrines and supported by specific factual findings, particularly when addressing alleged disguised distributions through compensation and perquisites.

## Conclusion

The court rejected a mandatory “fair value” buyout of a minority shareholder’s interest in a close corporation absent contract, statute, or a dissolution-type basis, and remanded for fact-supported consideration of alternative remedies for any established fiduciary breaches or improper diversion of corporate earnings.


Alaska Plastics, Inc. v. Coppock, 621 P.2d 270 (Alaska 1980)