Harris v. Ahtna, Inc.

193 P.3d 300, 2008 Alas. LEXIS 135, 2008 WL 4368231
CourtAlaska Supreme Court
DecidedSeptember 26, 2008
DocketS-11769
StatusPublished
Cited by38 cases

This text of 193 P.3d 300 (Harris v. Ahtna, Inc.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harris v. Ahtna, Inc., 193 P.3d 300, 2008 Alas. LEXIS 135, 2008 WL 4368231 (Ala. 2008).

Opinion

OPINION

FABE, Chief Justice.

I. INTRODUCTION

Ahtna Government Services Corporation, a subsidiary of Ahtna, Inc., was organized in 1999. Ahtna, Inc. held a fifty-one percent interest in Ahtna Government Services, while Richard Harris held forty-nine percent. As president of Ahtnua Government Services, Harris facilitated a number of deals between the company and two other companies with which he had relationships, Pacific Native Development Corporation and AEI Pacific. After Harris was terminated from Ahtna Government Services in 2001, it brought suit against him for breach of fiduciary duty and rescission of the stock purchase agreement. Harris counterelaimed on a number of grounds, adding claims against Ahtna, Inc., several Ahtna directors, and Ahtna Government Services's chief financial officer. The trial court found against Harris and awarded nearly $1 million in damages and attorney's fees. Harris appeals, arguing that the trial court imposed an incorrect burden of proof on him, that its findings of fact regarding several transactions were clearly erroneous, and that it improperly admitted an exhibit at trial. Because Ahtna Government Services proved its claims by clear and convincing evidence, because the trial court's factual findings were not clearly erroneous, and because the trial court's admission of the exhibit was not an abuse of discretion, we affirm the trial court's decision in all respects.

II. FACTS AND PROCEEDINGS

A. 1999 Through Early 2001

Ahtna, Inc. is a regional corporation created under the Alaska Native Claims Settlement Act. In the spring of 1999, Darryl Jordan, then president of Ahtna, Inc., asked Harris to join the company in forming a new Ahtna, Inc. subsidiary, Abhtna Government Services Corporation. Harris agreed. Aht-na Government Services's ostensible purpose was to pursue government contracts under the auspices of the United States Small Business Administration's Section 8(a) program. 1 At this point, Harris was also closely related to two other companies. Harris owned Pacific Native Development Corporation, his wife, Sandra Harris, was its president, 2 and he was an officer, and at certain points, president, of AEI Pacific Pacific Native Development assisted section 8(a) firms in procuring government contracts, and AEI Pacific was a section 8(a) contracting firm.

On May 27, 1999, Ahtna Government Services was incorporated. Ahtna, Inc. owned fifty-one percent of Ahtna Government Services's shares and Harris owned forty-nine percent. Ahtna Government Services's or *303 ganizational meeting was held in August 1999. The board consisted of five members, including Jordan as chairperson and Harris as president. In the two-year period between Ahtna Government Services's incorporation and Harris's termination, Harris engineered a number of transactions, each of which the trial court determined was self-dealing and unfair to Ahtna Government Services, breaching Harris's fiduciary duty to the company. Following is a summary of these transactions, based on the trial court's findings:

1. The Clear project

AEI Pacific was the general contractor for a roofing job at Clear Air Force Base that began in the fall of 1999. When AEI Pacific submitted its bid for the work in May of that year, Harris personally guaranteed the bonding for the contract, as did Pacific Native Development. By the time it was awarded the contract, AEI Pacific was insolvent. As president of the company, Harris understood AEI Pacific's financial condition. In November 1999 the Clear project itself was in substantial financial jeopardy, due to significant unpaid bills and the approaching winter. On November 3 Harris, as the president of Aht-na Government Services, signed a subcontract with AEI Pacific committing Ahtna Government Services to complete all remaining work on the project. On November 30 Harris, again in his capacity as Ahtna Government Services president, had Ahtna Government Services pay AEI Pacific's overdue freight bills so that materials could be delivered to complete the project. Despite the extremely cold weather, and against the ree-ommendation of an AEI Pacific employee who had visited the job site, Harris pushed the crew to complete the project through the winter. To postpone the work until spring would have triggered liquidated damages against AEI Pacific, for which Harris would have been personally liable-AEI Pacific was insolvent and Harris had guaranteed the bond. Ahtna Government Services ultimately incurred a $191,000 loss on the project, which the trial court awarded as damages to Ahtrna Government Services.

2. The Kulis project

On the same day that he authorized transfer of the Clear project, Harris, in his capacity as Ahtna Government Services president, signed a subcontract committing Ahtna Government Services to complete another AEI Pacific project, at Kulis Air National Guard Base. Due to AEI Pacific's insolvency, the Kulis project was, like the Clear project, plagued by unpaid debts. The Kulis project was independently bonded, but $48,000 of losses could not be collected. Ahtna Government Services therefore incurred a $48,000 loss on the project, which the trial court awarded as damages to Ahtna Government Services.

3. The Pacific Native Development office space

Pacific Native Development was committed to a lease of office space, a portion of which Harris directed Abhtra Government Services to sublease. At some point Ahtna Government Services assumed the entire lease. The trial court found that the rent Ahtna Government Services paid was excessive because the company did not need more than one-third of the space and that Ahtna Government Services was overcharged by at least $104,000. The trial court awarded these damages to Ahtna Government Services.

4. The cars

Ahtna Government Services rented two vehicles, a Land Rover and a Ford Expedition, from Pacific Native Development at Harris's behest. Ahtna Government Services paid $800 per month for rental of the former and $1,100 per month for rental of the latter. The trial court found that the reasonable monthly rental rates for these vehicles were $300 and $350, respectively. Ahtna Government Services later purchased these vehicles at Harris's behest. It paid $28,585 for the Land Rover, which the trial court valued at $28,185, and $31,150 for the Expedition, the Kelly Blue Book value of which was $18,250. The trial court valued the total overpayment on the cars at $25,400 and awarded that amount to Ahtna Government Services.

*304 5. The billing of Pacific Native Development employees' time

Ahtna Government Services was billed for Pacific Native Development employees' time purportedly spent working on Ahtna Government Services projects. Pacific Native Development did not submit time sheets to Ahbt-na Government Services or provide details about these charges. Harris approved the charges to Ahtna Government Services for Pacific Native Development employees' time.

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Cite This Page — Counsel Stack

Bluebook (online)
193 P.3d 300, 2008 Alas. LEXIS 135, 2008 WL 4368231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harris-v-ahtna-inc-alaska-2008.