AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

The case concerns a dispute between minority shareholders (the Peters Group) and the controlling shareholder (Bennett) of New Mexico Banquest Investors Corporation (NMBIC). The dispute arose from a stock redemption transaction in which NMBIC purchased shares from Banco Bilbao de Vizcaya (BBV) without notifying the Peters Group. The Peters Group alleged that Bennett breached his fiduciary duty by failing to disclose the transaction and sought remedies beyond the statutory appraisal value of their shares, including punitive damages and disgorgement of profits (paras 5-13).

Procedural History

• District Court: The court awarded the Peters Group the statutory appraisal remedy of $99.52 per share but declined to award punitive damages or equitable remedies, finding no fraud or self-dealing by Bennett (paras 12-13).
• Court of Appeals, 2007-NMCA-065: Affirmed the district court’s decision, holding that the Peters Group was not entitled to additional remedies beyond the appraisal value (para 14).

Parties' Submissions

• Peters Group: Argued that Bennett breached his fiduciary duty by failing to disclose the stock redemption transaction, causing harm to the minority shareholders. They sought punitive damages, disgorgement of profits, and a control premium adjustment to the appraisal value (paras 13, 17, 33-34, 47-49).
• NMBIC and Bennett: Contended that the stock redemption transaction was conducted for legitimate business purposes and that the Peters Group suffered no harm from the alleged breach. They also argued that the statutory appraisal remedy was the exclusive remedy available (paras 13, 26-28, 33-35).

Legal Issues

• Did Bennett’s failure to disclose the stock redemption transaction constitute a breach of fiduciary duty?
• Was the Peters Group entitled to remedies beyond the statutory appraisal value, such as punitive damages or disgorgement of profits?
• Should a control premium have been added to the appraisal value of the Peters Group’s shares?
• Was the district court correct in awarding compound interest on the appraisal value?

Disposition

• The Supreme Court of New Mexico affirmed the decisions of the district court and the Court of Appeals, holding that the Peters Group was not entitled to additional remedies beyond the statutory appraisal value (para 53).

Reasons

Per Bosson J. (Chávez and Serna JJ., Pickard and Martinez-Olguin JJ. concurring):

• Breach of Fiduciary Duty: The court found that Bennett breached his fiduciary duty by failing to disclose the stock redemption transaction. However, the breach did not involve fraud or self-dealing, and the Peters Group failed to prove that the breach caused them harm or unjustly enriched Bennett or NMBIC (paras 13, 15-17, 33-35).

• Remedies Beyond Appraisal Value: The court held that the statutory appraisal remedy was the appropriate measure of compensatory damages. Disgorgement was not warranted because there was no causal link between Bennett’s breach and the alleged profits. Punitive damages were also denied as the breach was not motivated by malice or an intent to harm the Peters Group (paras 30-45).

• Control Premium: The court upheld the district court’s decision not to include a control premium in the appraisal value, as the Peters Group had no expectation or ability to control the corporation, and the valuation already excluded a minority discount (paras 47-49).

• Compound Interest: The court affirmed the district court’s award of compound interest, finding that the statutory language allowed for such discretion and that the award was fair and equitable under the circumstances (paras 51-52).