Matanuska Elec. Ass'n v. Rewire the Bd.

• Decision Date: 07 December 2001
• Docket Number: No. S-9506.,S-9506.
• Citation: 36 P.3d 685
• Parties: MATANUSKA ELECTRIC ASSOCIATION, INC., a nonprofit electric cooperative, and Wayne Carmony, in his capacity as General Manager, Appellants, v. REWIRE THE BOARD, Scott Sterling, and Edward C. Willis, Appellees.
• Court: Alaska Supreme Court

36 P.3d 685

MATANUSKA ELECTRIC ASSOCIATION, INC., a nonprofit electric cooperative, and Wayne Carmony, in his capacity as General Manager, Appellants, v. REWIRE THE BOARD, Scott Sterling, and Edward C. Willis, Appellees.

No. S-9506.

Supreme Court of Alaska.

December 7, 2001.

Stephen M. Ellis and Jeffrey P. Stark, Delaney, Wiles, Hayes, Gerety, Ellis & Young, Inc., Anchorage, for Appellants.

A. William Saupe and William S. Cummings, Ashburn & Mason, Anchorage, for Appellees.

Before: FABE, Chief Justice, MATTHEWS, BRYNER, and CARPENETI, Justices.

OPINION

BRYNER, Justice.

I. INTRODUCTION

Members of the rural electrical cooperative Matanuska Electric Association, Inc. (MEA), unhappy with their coop board's plans to acquire the assets of Chugach Electric Association, formed a group called Rewire the Board (Rewire) and forced a recall election of MEA directors. During ensuing litigation, the superior court held MEA in contempt for four violations of court orders forbidding attempts to influence the recall election results. At the conclusion of the case, the court awarded Rewire full reasonable attorney's fees as a prevailing public interest litigant. MEA appeals, challenging the attorney's fees award and the contempt judgments. We affirm the award of attorney's fees. We also affirm the superior court's judgment of contempt on two counts but reverse on the remaining two counts.

II. FACTS AND PROCEEDINGS

A. Background

The issues presented in this appeal require us to describe the history of the case in considerable detail. MEA is an electrical cooperative organized under Alaska Statutes 10.25 and governed by a board of directors. At an October 1998 board meeting, MEA's directors met in executive session to discuss a planning committee's proposal that MEA buy the assets of another public utility, Chugach Electric. The board approved the proposal and began negotiations with Chugach Electric that same day.

A group of MEA members calling themselves Rewire the Board submitted to MEA a proposed amendment to MEA's bylaws and a petition to recall all of MEA's directors. The recall petition alleged that the board members had failed to give proper notice of a board meeting and violated board policies and open meeting requirements. MEA and Rewire member Scott Sterling requested MEA's membership list, which he sought in order to verify the signatures on Rewire's recall petition. MEA denied Sterling's request for the membership list and rejected as untimely Rewire's proposals to amend MEA's bylaws.

B. Superior Court Proceedings

Rewire and two individual plaintiffs, Sterling and Edward Willis,¹ filed suit seeking declaratory and injunctive relief. Rewire moved for an order requiring MEA to obtain the services of a neutral accountant to verify the signatures on its recall petition, requiring MEA to share its member list with Rewire, and requiring MEA to accept as timely for voting at the next annual meeting Rewire's proposed bylaw amendment.

MEA opposed Rewire's motion, arguing that Rewire was merely seeking to advance the interests of the International Brotherhood of Electrical Workers (IBEW), that Rewire's recall petition and proposed bylaw amendment were invalid, and that Rewire did not have a legitimate need for MEA's membership list. MEA also filed a counterclaim seeking to have Rewire's recall petition declared invalid on grounds that it contained material misrepresentations and failed to state valid cause to remove directors.

Rewire amended its complaint to request an order requiring MEA to place its recall petition on the agenda at MEA's next annual meeting. It also sought an order appointing a special master to preside over the annual meeting and requiring MEA to place a recall vote on the agenda at the next annual meeting, notify members, permit a vote at the annual meeting, and allow Willis to inspect MEA's financial records relating to the Chugach Electric takeover.

The superior court ruled that the proposed bylaw amendment was timely, that it was not illegal as MEA claimed, and that it should be placed before MEA members at the annual meeting. The court also ruled that the open meeting violation charged in Rewire's recall petition was legally sufficient, that simultaneously accusing multiple directors of wrongdoing did not invalidate the recall petition, and that the mail-balloting provision in MEA's bylaws did not apply to recall elections. The court declined to enjoin MEA from expending funds to shape the results of the recall election but ordered it to provide its member list and financial records relating to the Chugach Electric takeover to Rewire. The court also ordered MEA to report the total number of valid signatures on Rewire's recall petition and, if the number of valid signatures was insufficient, to justify the rejection of any signatures alleged to be invalid.

MEA moved for partial reconsideration, insisting that it should not be required to disclose so many financial records and arguing that it had validated sufficient signatures and should not be required to continue counting. MEA's motion for reconsideration was denied.

MEA sought to depose Rewire to learn the identity of Rewire's members and financial backers. Rewire moved for an order quashing the deposition as premature under Alaska Civil Rule 26 and unlikely to yield relevant information. MEA conceded that the noticed deposition was premature under discovery rules, but requested expedited discovery. Rewire opposed MEA's request.

The superior court denied MEA's request for expedited discovery and issued an order quashing the notice of deposition. The order also clarified and confirmed the court's earlier ruling that mail balloting did not apply in recall elections. Rewire then moved for a hearing to air contentions that MEA had violated the superior court's prior order by failing to meet with Rewire to discuss how the recall election would be conducted, failing to supply a final tally of valid signatures, and failing to disclose financial records as ordered. MEA countered by moving for summary judgment, seeking to have Rewire's petitions declared invalid. Rewire cross-moved for summary judgment. The superior court denied MEA's summary judgment motion and granted Rewire's cross-motion.

C. Proceedings in This Court and Recall Election

MEA petitioned this court for review of the superior court's rulings. We granted limited review of the superior court's order requiring MEA to conduct a recall election, and we determined that under the MEA bylaws, MEA members were entitled to vote in the recall election by mail. Our order, issued one day before MEA's annual meeting, set forth procedures to govern the meeting and subsequent mail balloting. We then returned full supervisory authority over this case to the superior court.

The day after we issued our order, MEA placed an advertisement in the Anchorage Daily News that appeared to violate provisions in our order forbidding MEA from attempting to influence the results of the recall election. Sua sponte, we ordered MEA to show cause why it should not be held in contempt. After hearing argument, we found that MEA's advertisement had violated the order, but concluded that the violation was not wilful and declined to hold MEA in contempt.

MEA proceeded to hold its annual meeting and to conduct the recall election. In keeping with the procedures that this court had established, Rewire was given time at the meeting to present its charges against the directors, and the directors were given an opportunity to respond. MEA members then voted using mail ballots that included a summary of Rewire's charges and the directors' responses. After the deadline for returning mail ballots, MEA counted all ballots, reconvened the annual meeting, and announced the results of the recall election: all directors had retained their positions.

D. Post-Recall Proceedings

While mail balloting on the recall was in progress, MEA sought permission from the superior court to announce the results of regular coop elections that were concluded during the opening day of MEA's annual meeting. To protect against the possibility that announcing these election results might influence the ongoing mail ballot process, the superior court denied MEA's requests. Rewire subsequently complained of MEA activities that allegedly violated the spirit of the superior court's order barring public announcements by MEA. Based on these alleged violations, Rewire demanded that MEA be required to show cause why it should not be held in contempt. After conducting a hearing on Rewire's motion, the superior court found MEA guilty of four acts of contempt and fined MEA a total of $1,000.

Rewire later moved for attorney's fees encompassing all work related to the recall petition and election process. MEA opposed Rewire's motion. The superior court found Rewire to be the prevailing party in the litigation and ruled that the organization was a public interest litigant. Based on these findings the court awarded Rewire $91,243 as full reasonable attorney's fees.

MEA appeals. The sole issues on appeal are whether MEA should have been held in contempt and whether Rewire was entitled to its attorney's fees award.

III. DISCUSSION

A. Standards of Review

To determine whether Rewire was entitled to prevailing party status, we must first examine the superior court's ruling on the legal merits of the recall issue. We apply our independent judgment to determine whether the superior court erred in granting Rewire's cross-motion for summary judgment and declaring that Rewire's recall petitions were valid and required a membership vote.²

If we determine that the superior court's underlying rulings were correct, we then review for an abuse of discretion the court's determinations that Rewire was the prevailing party, that Rewire was a public interest litigant, and that actual attorney's fees of $91,243 incurred by Rewire were reasonable.³

On the issue...