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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Martinez v. Cape Fox (06/10/2005) sp-5909

Martinez v. Cape Fox (06/10/2005) sp-5909

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   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,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA


THOMAS MARTINEZ,              		)
                              			)    Supreme Court No. S-11197
             Appellant,            		)
                              			)    Superior Court No.
     v.                       			)    1KE-97-00294 CI
                              			)
CAPE FOX CORPORATION, an 	)    O P I N I O N
Alaska Corporation, and the BOARD  	)
OF DIRECTORS OF CAPE FOX 	)    [No. 5909 - June 10, 2005]
CORPORATION                   		)
                              			)
             Appellees.            		)
                              			)




          Appeal  from the Superior Court of the  State
          of    Alaska,   First   Judicial    District,
          Ketchikan, Michael A. Thompson, Judge.

          Appearances:   David  W. Rosendin,  David  W.
          Rosendin,  P.C.,  Ketchikan,  for  Appellant.
          Frank  A.  Pfiffner, Hughes Thorsness  Powell
          Huddleston & Bauman LLC, Anchorage, and James
          D.  Nelson,  Betts, Patterson & Mines,  P.S.,
          Seattle, Washington, for Appellees.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          FABE, Justice.


I.   INTRODUCTION

          This  appeal challenges a superior court order imposing

a  permanent  bar from reelection on a former corporate  director

who was found to have engaged in misconduct.  The barred director

argues  principally  that the superior court was  not  authorized

under  AS 10.06.463 to bar him from reelection because he was  no

longer a director at the time of the judgment and that the courts

findings  were  inadequate to support a lifetime  ban.   He  also

argues  that  he  is entitled to partial indemnification  of  his

defense  expenses.  We conclude that the superior court  had  the

authority  to impose a ban under the statute but that the  courts

findings do not support the lifetime ban imposed by the court and

remand  for entry of the fifteen-year ban imposed after  a  prior

trial.    We  also  articulate  seven  factors  that  should   be

considered by courts in future cases in deciding whether to bar a

director from board service under AS 10.06.463.  Finally, we hold

that the appellant was not entitled to partial indemnification of

his legal expenses.

II.  FACTS AND PROCEEDINGS

          Cape  Fox  Corporation (Cape Fox) is an  Alaska  native

corporation based in Saxman.  Cape Fox owned a gift shop known as

The  Village  Store, which was managed by Patricia  Shields,  the

sister  of  appellant Thomas Martinez.  In 1996  the  then  Chief

Executive  Officer  of  Cape  Fox,  Douglas  Campbell,  asked  an

internal  auditor to review the operations of The Village  Store,

which  was experiencing financial losses.  In February  1997  the

auditor  completed  a partial audit and delivered  a  preliminary

report to the Audit Committee of the Cape Fox Board of Directors.

The  auditor  discovered  that  a  significant  amount  of  store

inventory  and  cash  was missing and concluded  that  theft  had

occurred.  The board of directors asked the auditor to conduct  a

thorough  audit,  which began in March 1997. The  audit  revealed

that  $56,760.85 in inventory and $3,426.18 in cash were missing.

The  audit  also disclosed a pattern of short, late,  or  missing

cash  deposits from The Village Store, improperly handled  credit

card transactions, and an unusually large number of voided sales.

The  auditor  discovered that store employees, including  manager

Patricia  Shields,  borrowed money from  The  Village  Store  for

personal  use  and gave store merchandise to family  and  friends

without paying for it.

          In  January  1996, during his term as chairman  of  the

board of directors, Martinez took six jackets valued at $200 each

without  paying for them.  In May 1997, during the  investigation

into  misconduct at The Village Store, Martinez arranged to  have

$1,200 withheld from the money he received for attending director

meetings to pay for the jackets.

          Between February 1995 and June 1996 Martinez improperly

charged Cape Fox for travel expenses.  He charged  meals, movies,

and  personal phone calls above the $60 per diem travel allowance

for  directors, charged Cape Fox for hotel lodging  for  personal

travel,  and  took a $750 travel advance for travel expenses  for

which he had already been paid.  After the auditor filed a report

on director business expenses, Martinez authorized a deduction of

$2,100 from the money he received for attending board meetings to

repay Cape Fox for the improperly charged travel expenses.

          The superior court found that Martinez actively covered

up  the  misconduct of employees at The Village Store,  including

the mismanagement and misconduct of his sister, Patricia Shields.

Martinez  also  retaliated  against  two  directors  by  actively

campaigning  to  unseat  them  as directors  for  inquiring  into

perceived  irregularities  at  The  Village  Store  and  the  job

performance of his sister, Patricia Shields.  The superior  court

found  that  Martinez was instrumental in causing the termination

of  CEO  Ernesta  Ballard for castigating [the  stores]  manager,

Patricia  Shields.  While serving as chairman  of  the  board  of

directors, Martinez told Douglas Campbell, the next CEO,  not  to

mess around with The Village Store upon threat of termination  of

his employment.  Less than a week after Campbell gave Shields  an

unsatisfactory review, Martinez scheduled a special board meeting

to discuss problems with Doug Campbell.

          On August 5, 1997, Cape Fox filed suit against Martinez

and  three  employees  of The Village Store,  including  Patricia

Shields.   On  August  13,  1998,  Cape  Fox  filed  an   amended

complaint.   The  claims  against Martinez  included  conversion,

breach  of  fiduciary duties, and negligent mismanagement.   Cape

Fox  also  requested  that Martinez be  removed  from  office  as

director and be barred for life from reelection as a director  of

Cape Fox.  Martinezs three-year term as a director expired before

the trial, and he did not seek reelection.  He last served on the

board in September 1998.

          After  a  trial  in January 1999 the  jury  returned  a

special  verdict  in favor of Cape Fox on all counts.   The  jury

also  determined that Martinez should have been removed from  the

board  of  directors and should be barred for fifteen years  from

serving  as  a director.  The court treated this portion  of  the

jurys  special  verdict as advisory and entered an order  barring

him from service on the board for fifteen years.

          On  appeal, we held that the trial court had  erred  in

failing  to  instruct the jury on comparative  fault.1   We  also

determined  that  the superior courts conclusory  statement  that

Martinez  had  engaged  in fraudulent or  dishonest  acts,  gross

neglect  of duty and gross abuse of authority or discretion  with

regard  to  Plaintiff  Cape Fox Corporation  did  not  constitute

adequate  findings  under Civil Rule 52(a) and therefore  vacated

the courts order banning him from board service.2

          The  case  was retried in March 2003.  The  jury  again

found  for  Cape Fox on all grounds,3 and advised  that  Martinez

should be barred for life from serving as a director of Cape Fox.

On June 27, 2003, the superior court entered findings of fact and

conclusions  of law.  The superior court found that Martinez  had

committed  fraudulent  and  dishonest  acts  in  regard  to   the

corporation  and had grossly abused his authority and  discretion

as  a  director, and concluded that he should be barred for  life

          from serving as a director of Cape Fox.  The court also entered

judgment against Martinez in the amount of $23,542.63.

          Martinez  appeals the order barring him for  life  from

               service  as  a  director of  Cape  Fox.   He  also

               contends   that   he   is  entitled   to   partial

               indemnification for his defense expenses.

III.      STANDARD OF REVIEW

          Legal  issues are subject to de novo review.4   Because

there is a range of reasonable decisions a trial judge might make

in  determining  how long a bar from corporate board  service  to

impose upon a defendant, this determination is reviewed for abuse

of discretion.5

IV.  DISCUSSION
     
     A.   Alaska Statute 10.06.463 Authorizes the Superior  Court
          To  Bar  a  Former  Director Who Was Not  Removed  from
          Office by the Court.
          
          The  superior court barred Martinez from serving  as  a

director of Cape Fox pursuant to AS 10.06.463, which provides:

               Removal  of director by superior  court.
          The  superior court may, at the suit  of  the
          board or the shareholders holding at least 10
          percent  of the number of outstanding  shares
          of  any  class, remove from office a director
          for   fraudulent  or  dishonest  acts,  gross
          neglect  of duty, or gross abuse of authority
          or   discretion   with   reference   to   the
          corporation  and  may bar from  reelection  a
          director removed in that manner for a  period
          prescribed  by  the  court.  The  corporation
          shall be made a party to the suit.
          
Martinez  argues  on  appeal that AS 10.06.463  applies  only  to

current  directors and does not authorize the superior  court  to

bar  a  former  director  from  future  board  service.   Because

Martinez did not raise this issue in the superior court, he  must

establish  plain  error to prevail on this issue.6   Plain  error

exists  where  an obvious mistake has been made which  creates  a

high likelihood that injustice has resulted.7

          Martinez  notes  that  according  to  the  statute  the

superior court may remove a director for misconduct and  may  bar

          from reelection a director removed in that manner.8  He argues

that  according to the plain language of the statute the superior

court may only bar from reelection a director that it has removed

for misconduct under the statute.  Martinez was a director at the

time the complaint was filed, but was no longer a director at the

time of the trial.  Martinez therefore contends that AS 10.06.463

did not authorize the superior court to bar him from serving as a

director  because the court did not also remove him from  office.

Cape  Fox  argues that Martinezs interpretation of  AS  10.06.463

would  undermine  the objective of the statute  by  permitting  a

dishonest director to thwart a suit to bar him by resigning  from

the board before trial.

          The  plain  language of the statute  arguably  suggests

that the courts removal of a director is a condition for imposing

a  ban  on  his  service on the board.  But we have rejected  the

plain meaning rule;9 [i]n interpreting a statute, we consider its

language, its purpose, and its legislative history, in an attempt

to  give  effect to the legislatures intent, with due regard  for

the  meaning  the  statutory language conveys to  others.10   The

plainer  the  language of the statute, the  more  convincing  the

evidence of contrary legislative intent must be.11  We will ignore

the  plain meaning of an enactment . . . where that meaning leads

to absurd results or defeats the usefulness of the enactment.12

          Interpreting AS 10.06.463 to permit a court to bar from

reelection only directors still sitting on the board at the  time

the  court  enters judgment would defeat the statutes  objective.

The  statute provides two forms of relief for a corporation faced

with  a sitting director who engages in gross misconduct: removal

from  office and a bar from reelection.  Martinezs reading of  AS

10.06.463  would  deny Cape Fox the second  statutory  remedy  of

banning  a  dishonest director from future office simply  because

that  director  chose  to  leave the board  before  judgment  was

entered.   Moreover, the legislative history indicates  that  the

judicial removal statute was designed to facilitate removal of  a

          director for serious misconduct in cases where there are

insufficient  shareholder votes to do so.13  If AS  10.06.463  is

read  to  mean  that  a court may not impose a  future  bar  from

service  on a director who has left the board prior to  judgment,

directors  who  are sued under the statute may avoid  the  courts

future  bar  from service simply by resigning from the  board  or

declining  to stand for reelection at the end of their  term  and

then seeking reelection at a later date.

          Martinez argues that once a director leaves the  board,

shareholder  democracy is sufficient to ensure  that  an  abusive

director  will not be reelected.  But the premise of AS 10.06.463

is  that in some situations shareholder democracy is insufficient

to  ensure removal or to prevent reelection of an unfit  director

and  that  therefore the court must have the power  not  only  to

remove the director but also to bar that director from reelection

for a period of time.  The official comment to the portion of the

Model Business Corporation Act governing removal of directors  by

a  court  describes  situations where shareholder  removal  of  a

director  is  impracticable, such as where the  director  charged

with misconduct personally owns or controls sufficient shares  to

block  removal,  or where the director was elected  by  a  voting

group or cumulative voting and the shareholders with voting power

refuse to remove the director.14  In addition, commentators  have

pointed out that where a director is engaging in misconduct  such

as  fraud that benefits the corporation, the shareholders have no

incentive  to remove the director.15  These scenarios apply  with

equal  force to the reelection of a director who leaves the board

in the face of a suit under the judicial removal statute.

          We  therefore hold that AS 10.06.463 should be read  to

permit  the  superior  court  to  bar  a  former  director   from

reelection where that director was serving on the board when  the

complaint  was filed.16  The superior court did not commit  plain

error by barring Martinez from reelection even though it did  not

remove him from office.

     B.   The Superior Courts Findings Support a Fifteen-Year Ban
          from Board Service, But Not a Lifetime Ban.
          
          Martinez argues that it was an abuse of discretion  for

the  superior  court to bar Martinez for life from service  as  a

Cape Fox director.  We agree.

          After  the  first trial, the jury found  that  Martinez

should  be  barred from service on the board for  fifteen  years.

Because  a  bar from service under AS 10.06.463 is  an  equitable

remedy, the superior court properly treated this portion  of  the

jurys  special verdict as advisory.17  The superior  court  found

that  Martinez  engaged  in fraudulent or dishonest  acts,  gross

neglect of duty, and gross abuse of authority or discretion  with

regard  to  Cape Fox and barred Martinez for fifteen  years.   On

appeal,  we  held  that  the  superior  courts  conclusory  order

regarding  the  ban from service did not satisfy the  requirement

under  Civil  Rule  52(a) that the trial court in  actions  tried

without a jury or with an advisory jury make specific findings of

fact  and conclusions of law18 and ordered the court to make  and

enter findings specifying the particular conduct of Martinez upon

which the relief granted is based.19  We also ordered a new trial

on the issues of comparative fault and damages.20  The jury in the

second trial advised that Martinez should be barred for life from

the  Cape  Fox board.  The superior court made findings  of  fact

regarding Martinezs misconduct, and imposed a lifetime  ban  from

board service on Martinez.

          Although  the  superior  court made  detailed  findings

regarding  the  nature  of Martinezs misconduct,  none  of  those

findings  suggests a reason for increasing the ban  from  fifteen

years  to life following the second trial.  The evidence at  both

trials  revealed  Martinezs multiple  efforts  to  cover  up  his

misconduct.  And the superior courts findings detailed  the  same

conduct  that  was described in the first trial:  taking  leather

jackets without paying for them, improperly charging Cape Fox for

travel  expenses, and covering up the misconduct at  The  Village

Store  by  threatening and retaliating against those who inquired

          about irregularities at the store.  The second advisory jurys

finding that Martinez should be barred for life cannot by  itself

justify  the courts decision to increase the length  of  the  bar

since  it  is  the court, not the jury, that must  determine  the

appropriate equitable relief.21  Because there is no evidence  in

the  record justifying the trial courts decision to increase  the

bar  from the fifteen years imposed after the first trial to  the

lifetime bar imposed after the second trial and because the trial

courts  findings of wrongdoing were all matters available at  the

first  trial  when  the  court imposed the fifteen-year  ban,  we

conclude that it was an abuse of discretion to increase  the  bar

from fifteen years to life following the appeal.

          Moreover, we note that increasing the length of the bar

after  a successful appeal without an explicit discussion of  the

reasons for so doing may constitute a denial of due process.   In

Shagloak  v. State, we held that imposing a more severe  sentence

on  a criminal defendant after a retrial violates the due process

clause  of the Alaska Constitution.22  The United States  Supreme

Court  has  held  that  the  federal constitution  requires  that

whenever a sentencing judge imposes a more severe sentence  on  a

criminal defendant after a retrial following a successful appeal,

the  reasons  for  him  doing  so  must  affirmatively  appear.23

Although  we have not considered the effect an increased  penalty

following  retrial  in  a  civil  case  would  have  on  a  civil

defendants due process rights, the same analysis has been applied

by  other  courts,  though the interest  at  stake  may  be  less

important  than  that in criminal cases.24  We  need  not  decide

whether  the lifetime bar is constitutionally infirm  because  we

hold  that  the  lifetime bar is not supported  by  the  superior

courts findings.

          We  next address whether the original fifteen-year  ban

from  service  is  supported  by the  superior  courts  findings.

Martinez argues that before imposing a bar of any length under AS

10.06.463,  the  court must find that there is  a  likelihood  of

          future misconduct if the bar is not imposed.25  Cape Fox argues

that the statute does not require such a finding.

          By  its terms, AS 10.06.463 does not require the  court

to  make any specific findings prior to imposing a bar from board

service beyond the finding of fraudulent or dishonest acts, gross

neglect  of duty, or gross abuse of authority or discretion  with

reference  to the corporation required for removal of a director.

The  other  state courts that have addressed barring  a  director

from  reelection under similar judicial removal statutes  do  not

require  that  the  court  make a  specific  finding  as  to  the

likelihood  of  future  violations,  nor  do  they  mention   the

defendants  likelihood of future misconduct as a  factor  in  the

decision to impose a bar.26

          Federal  courts interpreting a statute that  permits  a

court  to  bar a person who has committed securities  fraud  from

serving as a director of any public company27 have articulated  a

list  of  factors that may be considered by the  trial  court  in

making  its  determination.28  These  factors  include:  (1)  the

egregiousness  of  the underlying violation; (2)  the  defendants

past record of misconduct; (3) the defendants role or position at

the time of the violation; (4) the defendants degree of scienter;

(5)  the defendants economic stake in the violation; and (6)  the

likelihood that the misconduct will recur.29  Martinez urges us to

adopt  this approach and require the trial court to make findings

on these six factors before imposing a ban under AS 10.06.463.

          Because AS 10.06.463 and its legislative history  offer

the  superior  court little guidance about when a  ban  might  be

appropriate, we prospectively adopt the six-factor test  used  by

the  federal courts as a list of considerations that the superior

court should consider in reaching its determination. We also  add

a  seventh  factor  to  be considered by the  superior  court  in

deciding  whether  to  impose a ban under AS  10.06.463:  whether

there  is  reason to suspect that shareholder democracy  will  be

insufficient  to prevent reelection of an unfit  director.   This

          may be true where, for example, the director charged with

misconduct personally controls a large number of shares, or where

the directors misconduct benefitted the corporation.  This factor

is  relevant because it indicates that intervention by the  court

is  necessary  to ensure that a director who has committed  gross

misconduct  will  not simply be reelected to office.   The  trial

court  need not find that all seven factors are present in  order

to  impose a ban under AS 10.06.463, but should take each  factor

into consideration.

          Because  neither the statute nor our case law  required

findings  on  these factors at the time Martinez was  barred,  we

decline  to  impose these requirements on the superior  court  in

this case.  But we note that although the superior court did  not

phrase its findings explicitly in terms of the seven-factor  test

we announce today, its findings and conclusions suggest that five

of  the  seven  factors are present, including the likelihood  of

future  misconduct.   The  superior  court  found  that  Martinez

improperly  charged  Cape  Fox  for  personal  travel   expenses,

actively  and  intentionally covered up  the  misconduct  at  The

Village  Store,  retaliated against directors and executives  who

inquired  about  the perceived irregularities at the  store,  and

used his position as chairman of the board to intimidate the  CEO

in   an  attempt  to  prevent  inquiries  into  misconduct.   The

dishonesty required for these actions and the evidence  of  abuse

of  power  are sufficient to support a finding that Martinez  was

likely  to commit misconduct in the future.  The facts  found  by

the  superior  court would also support a finding that  Martinezs

conduct  was  egregious,  required a  high  degree  of  scienter,

involved  abuse  of a position of trust in the company,  and  was

motivated   by  personal  economic  gain.   These   findings   of

misconduct  are sufficient to support the fifteen-year  ban  from

board  service  originally imposed by  the  superior  court.   We

therefore conclude that the lifetime ban from service on the Cape

Fox board should be reduced to fifteen years on remand.

     C.   The Superior Court Did Not Err in Not Making a Specific
          Finding Regarding Martinezs Unclean Hands Defense.
          
          Martinez  argues  that  the superior  court  failed  to

satisfy  the requirements of Civil Rule 52(a) because it did  not

make any specific findings on the defense of unclean hands in its

findings of fact and conclusions of law.

          We  have  held  that where a party properly  asserts  a

defense and presents evidence related to that defense, Rule 52(a)

requires the trial court to make specific findings regarding  the

defense.30  But Martinezs attorney conceded at oral argument that

he  did  not present evidence of Cape Foxs unclean hands  at  the

second trial and did not submit any evidence of this sort to  the

court prior to its decision on the requested equitable remedy  of

a  ban  from board service.  Martinezs memorandum on post-verdict

issues  asserts  that Cape Fox has unclean hands,  but  does  not

include  exhibits or other evidence supporting these  assertions.

Martinezs  attorney conceded at oral argument  that  he  did  not

request an evidentiary hearing to present evidence supporting the

unclean hands defense.  Because no evidence was presented to  the

superior  court regarding the unclean hands defense, the superior

court  was  not  required  to make a  specific  finding  on  this

defense.

     D.   Martinez  Is  Not  Entitled to Partial  Indemnification
          Under AS 10.06.490(c).
          
          Martinez argues that because the money judgment against

him  on  retrial was much smaller than the judgment in the  first

trial,  he  has partially prevailed and is therefore entitled  to

indemnification  under  AS  10.06.490(c).   He  argues  that  the

judgment  against him should have included a partial  offset  for

his defense expenses.

          Alaska Statute 10.06.490(c) describes the circumstances

in  which  a corporation must indemnify directors and others  for

legal expenses:

          To  the  extent  that  a  director,  officer,
          employee, or agent of a corporation has  been
          successful  on  the merits  or  otherwise  in
          defense  of an action or proceeding  referred
          to  in  (a)  or  (b) of this section,  or  in
          defense  of a claim, issue or matter  in  the
          action  or proceeding, the director, officer,
          employee,   or  agent  shall  be  indemnified
          against  expenses and attorney fees  actually
          and  reasonably  incurred in connection  with
          the defense.
          
Martinez is not entitled to indemnification of his expenses under

AS  10.06.490(c).  He was not partially successful in the defense

of  this  action; the jury found against Martinez on all  issues.

The  fact  that the jury in the second trial assessed  a  smaller

damage  award against Martinez than the jury in the  first  trial

does not render his defense partially successful for purposes  of

AS   10.06.490(c).   We  therefore  affirm  the  superior  courts

decision  not  to  grant  the offset and to  enter  judgment  for

$23,542.63 against Martinez.

V.   CONCLUSION

          We  hereby AFFIRM the judgment against Martinez, VACATE

the  order  barring  Martinez for life from  board  service,  and

REMAND to the superior court with instructions to enter an  order

barring Martinez from service on the Cape Fox board for a  period

of fifteen years.

_______________________________
     1     Shields v. Cape Fox Corp., 42 P.3d 1083, 1090  (Alaska
2002).

     2    Id. at 1092.

     3     The  jury  also  found  that  twenty-five  percent  of
responsibility  for negligence and ten percent of  responsibility
for  interference with the right to possess inventory  and  funds
was attributable to Cape Fox.

     4     Turner  v.  Alaska Communications Sys. Long  Distance,
Inc., 78 P.3d 264, 266 (Alaska 2003).

     5     Cf.  Nelson  v. State, 68 P.3d 402, 406  (Alaska  App.
2003) (noting that on matters involving challenges to jurors  the
normal standard of review is abuse of discretion because there is
generally  a  range of reasonable responses that  a  trial  judge
might make to a particular problem).

     6     In  the Matter of L.A.M., 727 P.2d 1057, 1059  (Alaska
1986).

     7    Miller v. Sears, 636 P.2d 1183, 1189 (Alaska 1981).

     8    AS 10.06.463 (emphasis added).

     9    Alaska Ctr. for the Envt v. State, 80 P.3d 231, 242-243
(Alaska 2003).

     10     Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d  1227,
1234 (Alaska 2003) (internal quotations omitted).

     11     Hermosillo v. Hermosillo, 962 P.2d 891,  894  (Alaska
1998).

     12    Davenport v. McGinnis, 522 P.2d 1140, 1144 n.15 (Alaska
1974).

     13     The  relevant  portion  of the  legislative  councils
sectional analysis states:

          Official Comment to ACC Section 10.06.463.
          
          REMOVAL OF DIRECTOR BY SUPERIOR COURT.
          
          SCOPE:  The primary recourse for shareholders
          dissatisfied  with  the  performance   of   a
          director  is to seek removal under sec.  460.
          However,  if  there  are insufficient  votes,
          sec.  463 specifies the serious grounds under
          which holders of at least ten percent of  the
          shares  of  any  class or a majority  of  the
          board  of  directors have  standing  to  seek
          removal in the superior court.
          
Sectional  Analysis of Proposed Code Revision Bills revising  the
Corporations  Code, House and Senate Joint Supp. No.  9  at  105,
1987 Senate-House Joint Journal Supplements.

     14    Model Bus. Corp. Act  8.09 cmt. (2002).

     15      See,  e.g.,  Philip  F.S.  Berg,  Unfit  to   Serve:
Permanently Barring People from Serving as Officers and Directors
of  Publicly  Traded Companies After the Sarbanes-Oxley  Act,  56
Vand. L. Rev. 1871, 1894 (2003).

     16     We do not decide whether the superior court may  also
bar  from  reelection a director who, knowing  that  a  complaint
under AS 10.06.463 is likely to be filed against him, leaves  the
board before the complaint is filed.

     17     See Shields, 42 P.3d at 1092; see also Alaska R. Civ.
P.  39(c) (noting that in actions not triable of right by a  jury
the court may use an advisory jury).

     18     Rule  52(a) states in pertinent part:  In all actions
tried upon the facts without a jury or with an advisory jury, the
court  shall  find the facts specially and state  separately  its
conclusions of law thereon . . . .

     19    Id.

     20    Id.

     21    See id. (because ban on future board service is a form
of  equitable  relief, jury verdict on this  question  is  merely
advisory);  see also State v. IAnson, 529 P.2d 188,  190  (Alaska
1974) (where an advisory jury is used, it is entirely within  the
trial courts discretion to accept or reject, in whole or in part,
the verdict of the advisory jury).

     22    597 P.2d 142, 145 (Alaska 1979).

     23     Alabama  v. Smith, 490 U.S. 794, 798 (1989)  (quoting
North Carolina v. Pearce, 395 U.S. 711, 726 (1969)); see also id.
at  802  (noting  that  the  Pearce  rule  has  been  limited  by
subsequent decisions but still applies where the sentencing judge
who  presides  at both trials can be expected to operate  in  the
context  of roughly the same sentencing considerations after  the
second trial as he does after the first).

     24    See Dan J. Sheehan Co. v. Occupational Safety & Health
Review  Commn,  520 F.2d 1036, 1040-41 (5th Cir. 1975)  (applying
Pearce  and  its  progeny  in a case involving  a  civil  penalty
assessed by the Secretary of Labor under the Occupational  Safety
and  Health Act); Bezar v. De Buono, 659 N.Y.S.2d 547, 549  (N.Y.
App.  Div.  1997)  (declining  to  apply  Pearce  in  civil  case
involving   suspension  of  physicians  license  by   Board   for
Professional  Medical  Conduct  because  the  second  board   was
composed  of  different individuals from  the  first);  Avery  v.
Rechter,  423  N.Y.S.2d 514, 516 (N.Y. App. Div. 1979)  (Although
the   cited  cases  dealing  with  retaliatory  motivation   [for
increased penalties following retrial] have all been criminal  in
nature,  the theory should apply to all interest[s] protected  by
the due process clause.).

     25    On his first appeal, Martinez argued that the fifteen-
year bar was not supported by the trial courts findings.  Because
we  decided  that  the superior courts findings  were  inadequate
under  Rule  52(a),  we  remanded for  further  findings  without
addressing whether the trial courts findings supported a fifteen-
year ban from service. See Shields, 42 P.3d at 1092.

     26    See Purcell v. Vogt, No. CV000175088, 2003 WL 21100656,
at  *4  (Conn. Super. Ct., Apr. 30, 2003) (unpublished  opinion);
Markovitz v. Markovitz, 8 A.2d 46, 48 (Pa. 1939).

     27     The  statute  provided that  a  court  may  prohibit,
conditionally  or unconditionally, and permanently  or  for  such
period of time as it shall determine a person who commits certain
types  of  securities fraud from acting as an officer or director
[of  a  public  company]  if  the  persons  conduct  demonstrates
substantial  unfitness to serve as an officer or  director.   See
SEC  v.  Patel,  61  F.3d 137, 140-41 (2d Cir.  1995).   In  2002
Congress changed the test from substantial unfitness to serve  to
unfitness to serve because it believed that courts were  applying
too  stringent a standard.  Sarbanes-Oxley Act of 2002,  Pub.  L.
No.  107-204,   305(a),  116  Stat. 745  (codified  at  scattered
sections  of  11,  15, 18, 28, and 29 U.S.C.); see  also  Michael
Dailey,   Comment,   Officer   and   Director   Bars:    Who   is
[Substantially] Unfit to Serve After Sarbanes-Oxley?, 40 Hous. L.
Rev.  837 (2003) (describing why Congress changed the wording  of
the test and the contours of the new test).

     28     See  Patel,  61 F.3d at 141; see also  SEC  v.  First
Pacific Bancorp, 142 F.3d 1186, 1193 (9th Cir. 1998).

     29    See Patel, 61 F.3d at 141(citing Jayne W. Barnard, When
is a Corporate Executive Substantially Unfit to Serve?, 70 N.C.L.
Rev. 1489, 1492-93 (1992)).

     30     See Graham v. Rockman, 504 P.2d 1351, 1354-55 (Alaska
1972)  (requirements  of Rule 52(a) not  met  where  trial  court
concluded that defendant had no defenses to liability but did not
make  specific findings on evidence presented regarding  asserted
defense of assumption of risk).