ranes & shine, llc v. macdonald miller alaska, inc., alaska (2015)

7/25/2019 Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc., Alaska (2015)

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Notice: This opinion is subject to correction before publication in the PACIFICREPORTER.

Readers are requested to bring errors to the at tention of the Clerk of the Appel late Courts,

303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, em ail

[email protected].

THESUPREMECOURTOFTHESTATEOFALASKA

RANES&SHINE,LLC,

Appellant,

v.

MACDONALDMILLER

ALASKA,INC.,

Appellee.

_______________________________)

AppealfromtheSuperiorCourtoftheStateofAlaska,Third

JudicialDistrict,Anchorage,JohnSuddock,Judge.

Appearances:BrentR.Cole,LawOfficeofBrentR.Cole,

P.C.,Anchorage,forAppellant.

JasonJ.Ruedy,LawOffices

ofRoyce&Brain,Anchorage,forAppellee.

Before:

Fabe,ChiefJustice,Winfree,Stowers,Maassen,and

Bolger,Justices.

STOWERS,Justice.

I. INTRODUCTION

In2005GordonTimmerman,thesoleownerofMacDonaldMillerAlaska,

Inc.,agreedtoreleaseaclaimMacDonaldMillerhadagainstRanes&Shine,LLC,and

topayanadditional$18,000inexchangeforequipmentRanes&Shineclaimedtoown

free of any encumbrances. Five years later First National Bank Alaska contacted

Timmerman,assertingasecurityinterestintheequipmentandrequestingitsreturn.First

)

) SupremeCourtNo.S-15222

SuperiorCourtNo.3AN-10-10232CI

OPINION

No.7003May1,2015

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NationaleventuallyfiledthissuitagainstTimmermanin2010toobtainpossessionofthe

equipment.1

Timmermanfiledathird-partycomplaintagainstRanes&Shineandits

former managing member, Thomas Ranes, asserting breach of warranty of title,misrepresentation,unfairtradepractices,andcommonlawcontractclaims.Initsanswer,

Ranes & Shine alleged among its other contentions that the applicable statutes of

limitation barredTimmermans suit becauseFirstNationalspublicly filedUniform

CommercialCode(UCC)financingstatementshouldhaveplacedTimmermanoninquiry

noticeofFirstNationalssecurityinterestintheequipmentatthetimeoftheagreement

in2005.ThesuperiorcourtdisagreedandheldRanes&Shineliableforbreachof

contractandmisrepresentation,whilealsodismissingtheclaimsassertedagainstRanes

individually.Ranes&Shineappeals.

Weaffirmthesuperiorcourtsstatuteoflimitationsandattorneysfeesand

costsrulings,aswellasvariousproceduralrulingsforthereasonsdiscussedbelow. But

wereversethecourtsdecisiontodismissthemisrepresentationclaimthatTimmermans

company,MacDonaldMiller,hadassertedagainstRanesinhisindividualcapacityand

remandforfurtherproceedingsonthatissue.

II. FACTSANDPROCEEDINGS

A. Facts

ThomasRanes,KenEmbley,andTomEmbleyformedRanes&Shine,

LLCinOctober2001.Ranesowned50%ofthecompany,andtheEmbleyseachowned

25%ofthecompany.Raneshadcompletemanagerialauthority,andtheEmbleyswere

essentiallysilentpartners.

FirstNationalsclaimsarenotrelevanttothisappeal,andwedonotdiscuss

theminanydetail.

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In2002Ranes&ShineappliedforaloanfromFirstNationalBankAlaska.

Inconnectionwiththeloan,RanesandtheEmbleyssignedapromissorynote,abusiness

loan agreement, and a commercial security agreement to secure the loan. The

commercial security agreement gave First National a security interest in variouscategoriesofcollateral,includingRanes&Shinesequipment.OnOctober30,2002,

FirstNationalfiledaUCCfinancingstatementperfectingitssecurity interestin the

equipment. First National filed a continuation of that financing statement on

August7,2007.

In2003CirclePlumbing&Heating,acompanymajority-ownedbythe

Embleys,washiredtobuildRanes&Shinesfacility. CirclehiredMacDonaldMiller

Alaska,Inc.,acompanywhollyownedbyGordonTimmerman,toprovidemechanical

servicesforthenewbuilding.

MacDonaldMillerworkedontheprojectandbilledCircle,butwasnot

promptly paid. MacDonald Miller eventually filed a lien against Ranes & Shines

buildingforapproximately$92,000.ButMacDonaldMillerreleasedthelienafewhours

later,allegedlybecauseTomEmbleycontactedTimmermanaskinghimtoreleasethe

claimsoRanes&Shinecouldsecureadditionalfundingforthebuildingproject. Tom

Embley allegedly assured Timmerman he would be paid, and Circle later paid

MacDonaldMiller$60,000in2004.Thisleftaclaimedbalanceof$32,000outstanding.

Timmermancontinuedtopursuethedebtwithoutsuccessuntilhecontacted

Ranes&ShinedirectlyandspokewithRanes.InOctober2005TimmermanandRanes

came toan agreement: inexchangefor certainequipment,Timmermanexecuteda

releaseoftheremaining$32,000debtowedtoMacDonaldMillerandpaidanadditional

$18,000toRanes&Shine.

Inthecourseofreachingthisagreement,Ranesincorrectlyrepresentedto

TimmermanthatRanes&Shineownedcleartitletotheequipment.Timmermandidnot

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conductaUCCrecordsearch;helatertestifieditwasnothisstandardpracticetodoso

andhedidntevenknowwhatUCCstoodforpriortothislawsuit.

AfterTimmerman took possession of the equipment, he stored it ina

shippingcontainer.Thereitremaineduntilthesummerof2010whenFirstNationalcontacted him. First National explained it had filed a UCC financing statement

documentingitssecurityinterestintheequipmentseveralyearsbeforeTimmermans

agreementwithRanes&Shine.FirstNationalalsostatedthattheloansecuredbythe

equipmenthadgoneintodefault. FirstNationaldemandedthatTimmermanreturnthe

equipment,butTimmermanrefused.

B. Proceedings

FirstNationalbroughtsuitagainstTimmermanin2010seekingthereturn

oftheequipment.Timmermanansweredthecomplaintandassertedthird-partyclaims

againstRanesindividuallyandRanes&ShinebasedonRanessincorrectrepresentation

thatRanes&Shineownedtheequipmentwithoutanyencumbrances.Timmerman

assertedthefollowingthird-partyclaims: (1)breachofwarrantyoftitleundertheUCC;

(2)misrepresentation;and(3)deceptivetradepracticesunderAlaskasUnfairTrade

Practices and Consumer Protection Act (UTPA). First Nationals claims against

Timmerman were disposed of on summary judgment, leaving only Timmermans

third-partyclaims.

Ranes&ShinemovedforsummaryjudgmentonTimmermansclaims

based on the applicable statutes of limitation. Superior Court Judge John Suddock

grantedRanes&Shinesmotioninpart,rulingthatTimmermansbreachofwarranty

2claimwassubjecttotheUCCsstrictfour-yearlimitationsperiod andthatTimmerman

2 See AS45.02.725(a)-(b)(Anactionforbreachofacontractforsalemust

becommencedwithinfouryearsafterthecauseofactionhasaccrued....Acauseof

(continued...)

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failedtobringhisbreachofwarrantyclaimwithinthatperiod.Thesuperiorcourtdenied

Ranes & Shines motion with respect to the misrepresentation and UTPA claims,

concludingthatthereweregenuineissuesofmaterialfactregardingwhenTimmerman

wasputoninquirynotice.ThecourtdidnotaddressacommonlawcontractclaimTimmermanhadaddedthroughanamendedcomplaintfiledwhilethepartieswere

briefingthesummaryjudgmentmotion.3

Thesuperiorcourtheldatwo-daybenchtrialinMay2013toaddressthe

remainingclaims.ThecourtruledthatTimmermansmisrepresentation,UTPA,and

commonlawbreachofcontractclaimswerenotbarredbythestatutesoflimitation

becauseTimmermanwasnotoninquirynoticeuntilhewascontactedbyFirstNational

in2010.ThecourtalsoconcludedthatTimmermanhadprovenhismisrepresentation

andbreachofcontractclaims,butnothisUTPAclaim.

Thesuperiorcourtobserved,however,thatthelawsuithadbeeninaptly

filedasapersonallawsuitbyMr.Timmermanagainst[Ranes&Shine]whenallthe

evidenceisthathewasnegotiatingandsettlingandpurchasingthisequipmentasa

corporateofficerofMacDonaldMiller.Basedonthisfinding,andfurtherfindingthat

Ranes&Shinewouldsuffernoprejudice,thecourton itsowninitiativesubstituted

MacDonaldMillerastheplaintiff.

2(...continued)

action accrueswhen the breach occurs, regardless of the aggrieved partys lackof

knowledgeofthebreach.);see also Armour v. Alaska Power Auth.,765P.2d1372,

1375(Alaska1988)(holdingthatthefour-yearUCCstatuteoflimitationsisnottolled

underthecommonlawdiscoveryruleregardlessofapurchasersknowledge).3 TimmermanscontractclaimallegedthatRanes&Shinehadnotprovided

goodandvaluableconsideration,apparentlyduetotheseizureoftheequipment,and

thatRanes&Shinebreachedthedutyofgoodfaithandfairdealingbysellingequipment

thatRanes&Shinewasnotauthorizedtosell.

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MacDonald Miller prepared a final judgment for the superior courts

signature.TheproposedfinaljudgmentstatedthattheclaimsagainstRanesindividually

weredismissed.Ranes&Shineobjected,arguingthatthesuperiorcourtsoralfindings

hadnotdismissedtheindividualclaimsagainstRanes.Thesuperiorcourtsignedtheproposedfinaljudgmentwithoutspecifically

discussingitsdecisiontodismisstheclaimsagainstRanesindividually.Thecourt

awarded MacDonald Miller $50,329.37, plus interest, attorneys fees, and costs.

Ranes&Shineappeals.

III. STANDARDOFREVIEW

Determinations of which legal authorities apply in a case and

interpretationsofwhatthoselegalauthoritiesmeanarequestionsoflawsubjectto

denovoreview.4Whenapplyingthedenovostandardofreview,weapplyour

independent judgment . . . , adopting the rule of law most persuasive in light of

precedent,reason,andpolicy.5

Wereviewatrialcourtsfindingsoffactforclearerror.6Clearerrorexists

whenourreviewoftherecordleavesuswiththedefiniteandfirmconvictionthatthe

superiorcourthasmadeamistake. 7

4 ConocoPhillips Alaska, Inc. v. Williams Alaska Petrol., Inc.,322P.3d114,

122(Alaska2014)(footnotesomitted).

5 Id. (quoting Russell ex rel. J.N. v. Virg-In, 258 P.3d 795, 802

(Alaska2011))(internalquotationmarksomitted).

6 Gilbert M. v. State,139P.3d581,586(Alaska2006).

7 Id.(quotingD.M. v. State, Div. of Family & Youth Servs.,995P.2d205,

207-08(Alaska2000)).

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We review a trial courts decision to admit evidence, including the

testimonyofa witness, for abuseofdiscretion.8 A decision to permitor denyan

amendmenttothepleadingsisreviewedforabuseofdiscretion.9Wewillfindanabuse

ofdiscretionwhenthedecisiononreviewismanifestlyunreasonable.

10

IV. DISCUSSION

Ranes&Shineprimarilyarguesthatthesuperiorcourterredwhenitruled

thatthestatutesoflimitationdidnotbarMacDonaldMillersclaims.Ranes&Shine

alsoarguesthatthecourterredindismissingtheclaimsagainstRanesindividuallyand

awardingMacDonaldMillerattorneysfeesandcosts.Finally,Ranes&Shineraises

severalproceduralissues.Wegenerallyaffirmthesuperiorcourtsrulings,butwe

reverse and remand its dismissal of the misrepresentation claim against Ranes

individually.

A. MacDonald Millers Common Law Breach Of Contract And

Misrepresentation Claims Were Not Barred By The Statutes Of

Limitation.

MacDonaldMillerassertedthreeclaimsattrial:(1)misrepresentation;

(2)unfairtradepractices;and(3)breachofcontract.Onlythemisrepresentationand

breachofcontractclaimsareatissueinthisappeal.11

8 Getchell v. Lodge,65P.3d50,53,58(Alaska2003).

9 Miller v. Safeway, Inc.,102P.3d282,288(Alaska2004).

10 See Tufco, Inc. v. Pacific Envtl. Corp.,113P.3d668,671(Alaska2005).

11 The trial court dismissed MacDonald Millers UTPA claim, and

MacDonaldMillerhasnotappealedthatruling.

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A partymust bring amisrepresentation claim within twoyearsof the

accrualofhiscauseofaction12andabreachofcontractclaimwithinthreeyearsof

accrual.13 Generally, accrual ofa causeof action is establishedat the timeof the

injury.

14

Butthecommonlawdiscoveryruletollstherunningofthestatutoryperiod[w]hereanelementofacauseofactionisnotimmediatelyapparent.15Thediscovery

rulemitigate[s]theharshnessthatcanresultfromthe[accrual]rulespreclusionof

12 AS09.10.070(a).

13 AS09.10.053.But seeAS45.02.725(a)(four-yearstatuteoflimitations

applicabletobreachofacontractforsaleofgoods).Ranes&Shinearguesthatthe

contractbetweenTimmermanandRaneswasoneforthesaleofgoods,makingitsubjecttothefour-yearstatuteoflimitationsinAS45.02.725towhichthediscoveryruledoes

notapply.Armour v. Alaska Power Auth.,765P.2d1372,1375(Alaska1988).Butwe

concludethatRanes&Shinedidnotpreservethisargument.

MacDonaldMillerfirstasserteditscommonlawcontractclaimwhilethe

briefingon Ranes&Shines motion forsummaryjudgmentwaspending. Ranes&

ShinethusarguedfortheapplicationofAS45.02.725forthefirsttimeinitssummary

judgmentreplybrief.But thesuperiorcourtdidnot issue a rulingon that issue,and

Ranes&Shineneversoughtreconsiderationorfiledanewmotionseekingtobarthe

commonlawcontractclaim. Ranes&Shinealsodidnotaskthecourttoapplythefour-yearstatuteoflimitationsattrialevenafterthecourtspecificallyaskedthepartiesifit

neededtomakeanyadditionalrulings.Thus,Ranes&Shineasksthatwereviewan

orderthatwasneverproperlyrequestedandthatwasneverissued.Wedeclinetodoso.

See Gunderson v. Univ. of Alaska, Fairbanks,902P.2d323,327n.5(Alaska1995)

(Gunderson did not present this argument to the trial court . . . . Therefore it is

waived.);Alaska State Emps. Assn v. Alaska Public Emps. Assn,813P.2d669,671

n.6 (Alaska 1991) (As a matter of fairness, the trial court could not consider an

argumentraisedforthefirsttimeinareplybrief.).

14

Gefre v. Davis Wright Tremaine, LLP,306P.3d1264,1273(Alaska2013)(quotingCameron v. State,822P.2d1362,1365(Alaska1991))(internalquotation

marksomitted).

15 Id. at1274(alterationinoriginal)(quotingJohns Heating Serv. v. Lamb,

46P.3d1024,1031(Alaska2002))(internalquotationmarksomitted).

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claims where the injury provided insufficient notice of the cause of action to the

plaintiff.16

Indiscussingthediscoveryrule,wehavepreviouslyexplained:

[T]hestatuteoflimitationsdoesnotbegintorununtiltheclaimantdiscovers,orreasonablyshouldhavediscovered,the

existence ofall elements essential to the cause ofaction.

Thuswehavesaidtherelevantinquiryisthedatewhenthe

claimant reasonably should have known of the facts

supportinghercauseofaction.Welooktothedatewhena

reasonablepersonhasenoughinformationtoalertthatperson

thatheorshehasapotentialcauseofactionorshouldbegin[ ]aninquirytoprotecthisorherrights. 17

Thereareatleasttwodatesfromwhichthestatuteoflimitationscanbegintorun: (1)theactual-noticedate,and(2)theinquiry-noticedate.Theactual-noticedateisthedate

when[the]plaintiffreasonablyshouldhavediscoveredtheexistenceofallessential

elementsofthecauseofaction.18Theinquiry-noticedateisthedatewhentheplaintiff

hasinformationwhichissufficienttoalertareasonablepersontobeginaninquiryto

protecthisrights.19Theinquiry-noticedategenerallycontrolswhenacauseofaction

20accrues.

16 Id.(secondalterationinoriginal)(quoting Cameron,822P.2dat1365)

(internalquotationmarksomitted).

17 Id. at1275(alterationinoriginal)(quotingMine Safety Appliances Co. v.

Stiles,756P.2d288,291(Alaska1988)).

18 Id.(alterationinoriginal)(quotingJohns Heating Serv.,46P.3dat1031)

(internalquotationmarksomitted).

19 Id.(quotingJohns Heating Serv.,46P.3dat1031)(internalquotation

marksomitted).

20 Id.Wenotethatthereareexceptionstothisrulenotatissueinthiscase.

(continued...)

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Ranes&Shinechallengesthesuperiorcourtsstatuteoflimitationsrulings

ontwogrounds.First,Ranes&ShineassertsthatweshouldholdthatMacDonaldMiller

wasonnoticeofitsclaimsin2005becauseFirstNationalspubliclyfiledUCCfinancing

statementputMacDonaldMilleronconstructivenotice

21

ofthefactthattheequipmentwas encumbered, contrary to Raness representation. Whether a UCC financing

statementprovidesconstructivenoticeoftheelementsofaclaimforstatuteoflimitations

purposesisaquestionoflawthatwereviewdenovo.22

Second,Ranes&Shinearguesthatthefactsofthiscasedemonstratethat

MacDonaldMillerwasoninquirynoticeofitsclaimsin2005evenwithoutimputingthe

informationcontainedintheUCCfinancingstatementtoit.Determiningtheaccrual

dateisafact-intensiveinquiryconductedbythesuperiorcourt,andwereviewthe

courtsfindingsforclearerror. 23

1. UCCfinancingstatementsdonotprovideconstructivenoticeof

theelementsofaclaimforstatuteoflimitationspurposes.

Ranes&ShinearguesthatFirstNationalsUCCfinancingstatementgave

MacDonald Miller constructive notice of the fact that Ranes had misrepresented

20(...continued)

Forexample,iftheplaintiffmadeareasonableinquirybutfailedtodiscovertheessential

elementsofhiscauseofaction,theactual-noticedatemaycontrol.Cameron,822P.2d

at1367.

21 Constructivenoticeisinformationorknowledgeofafactimputedbylaw

to a person, although he or shemay not actually have it .. . . 58 AM. JUR.2D

Notice6(2015).

22

Matanuska Elec. Assn v. Chugach Elec. Assn, 152 P.3d 460, 465(Alaska2007)(reviewingquestionsoflawdenovo).

23 Gefre,306P.3dat1271(citingSengupta v. Wickwire,124P.3d748,752

(Alaska2005));Pedersen v. Zielski,822P.2d903,907(Alaska1991)(Applicationof

thediscoveryrule...isdependentonfactsthatareoftenunclear.).

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Ranes&Shinesabilitytopasscleartitletotheequipment.Ranes&Shinereasonsthat

thesuperiorcourtshouldhavechargedMacDonaldMillerwithnoticeofFirstNationals

securityinterestintheequipmentatthetimeofthe2005agreement. Thiswouldplace

theaccrualdatesometimeinOctober2005,andthestatutesoflimitationwouldbarMacDonaldMillersclaims.24ButwedeclinetoadoptRanes&Shinesconstructive

noticeargumentbecauseitisinconsistentwithourstatuteoflimitationsjurisprudence

andwouldbebadpublicpolicy.

a. We have implicitly rejected the constructive notice

positionRanes&Shineasksustoadopt.

Neitherpartyhascitedanystatuteoflimitationscaseswherewecharged

aplaintiffwithconstructivenoticeofpubliclyrecordedfactsabsentafindingthatthe

24 We note that the partieshave briefed this case as thoughMacDonald

Millersmisrepresentationandcommonlawcontractclaimsmusthaveaccruedatthe

sametime. Wehavetreatedtheirargumentsinthesamemannerbecauseitdoesnot

affecttheresultinthiscase.

ButourholdinginJarvill v. Porkys Equipment, Inc.suggeststhattheir

assumptionmaynotbecorrect.189P.3d335,339(Alaska2008).InJarvilltheplaintiffpurchasedaboatthatwasallegedlyconstructednegligently.Id. at336. Twoandahalf

yearsaftertheplaintifftookdeliveryoftheboat,theboatsank,andtheplaintiffsuedthe

builder.Id. at337. Weheldthateventhoughtheboatwasdefectivewhenitwassold,

theplaintiffdidnotsufferaninjurythatwouldsupporthisnegligenceandproductdefect

claimsuntiltheboatsank,and,therefore,thosecausesofactiondidnotaccrueuntilthe

boatsank.Id.at339-41.

Similarly,itcouldbearguedthatMacDonaldMillersmisrepresentation

actiondidnotaccrueuntilFirstNationaldemandedtheequipmentbereturnedbecause

MacDonaldMillerhadnotsuffereddamagesnecessarytosupportitsclaimuntilthatpoint. If thatwerethecase,MacDonaldMillersmisrepresentationclaimbut not

necessarilyitscontractclaimwouldbetimelyevenwithouttheoperationofthe

discoveryrule. ButwedeclinetoapplyJarvillherebecauseitwasnotraisedbeforeus

orthesuperiorcourt,anditsapplicationwouldnotchangeourultimateconclusions

regardingthetimelinessofMacDonaldMillersclaims.

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plaintiffwasalreadyon inquirynotice.25OurreviewhasidentifiedonlyoneAlaska

caseBauman v. Daywhereitwasarguedthatapartyshouldhavebeencharged

with knowledge of facts in a publicly recordeddocument for statute of limitations

purposeswithoutalreadybeingoninquirynotice.

26

InBauman theBaumanspurchasedapropertyin1984fromtheDaysafter

allegedlyaskingtheDaysaboutthepresenceofpermafrostonthepropertyandbeing

25 Whilewehaveheldthatapersonmaybechargedwithknowledgeof

informationinpubliclyavailabledocumentsinavarietyofcontexts,noneofthesecases

specifically considers that issue with respect to thestatuteof limitationswhere the

plaintiff was not already on inquiry notice. See, e.g.,Kenai Chrysler Ctr., Inc. v.Denison, 167 P.3d 1240, 1248 (Alaska 2007) (holding that a dealership was on

constructivenoticeofguardianshipbecauseofexistenceofguardianshiporder);Watega

v. Watega, 143P.3d658, 665(Alaska2006) (holding thatpurchasers ofdivorcing

coupleshomehadconstructivenoticeofwifesclaimtothepropertybecausewifehad

filedanoppositiontothesalewiththesuperiorcourtandpurchasersknewaboutthe

divorceandthehusbandsneedtoobtaincourtpermissionpriortosale);Methonen v.

Stone,941P.2d1248,1252(Alaska1997)(chargingapurchaserofrealpropertywith

noticeofinformationinpublicrecordswhereotherfactsknowntothepurchaserplaced

himoninquirynoticeofapotentialencumbrance); State v. Alaska Land Title Assn,

667P.2d 714, 725 (Alaska 1983) (holding that title insurers policy was triggered

becauseinsurerwasheldtobeonconstructivenoticeofapubliclandorderpublished

intheFederalRegister).Nothinginthisopiniontodayaffectstheseearlierholdings.

26 892 P.2d 817 (Alaska 1995). The theory of constructive notice has

appearedelsewhereinourstatuteoflimitationscases,butneverinthewayRanes&

Shineproposeshere.See, e.g.,Phillips v. Gieringer,108P.3d889,893(Alaska2005)

(discussingconstructivenoticeandtherelationbackdoctrine);Breck v. Moore,910P.2d

599, 604-05 (Alaska 1996) (holding that plaintiffs were on constructive notice of

informationknownorthatshouldhavebeenknowntotheplaintiffsattorney).But cf.Moore v. Allstate Ins. Co.,995P.2d231,239(Alaska2000)(holdinginthediscovery

rulecontextthatahomeownerwouldnotbechargedwithconstructivenoticeofher

claimthatherinsurerhadallegedlymisrepresentedthecoverageavailabletoherunder

theNationalFloodInsuranceProgramdespitethefactthatshecouldhaveresearchedthe

policyintheFederalRegister).

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toldthattherewasnone.27Buttherecordedsubdivisionplatshowedthepresenceof

permafrost-ladensoilsontheland.28

The Baumans built a house on the property, and in 1986 began

experiencingpermafrost-relatedproblems.

29

Theearlyproblemswerenotsignificant,andtheBaumansdismissedthemasnormalsettlementofanewhome. 30 By1988,

however, the problems were so significant that the Baumans stopped paying their

propertytaxesuntilthepropertywasreevaluatedtotake theapparentpermafrostinto

account.31

TheBaumansdidnotbringasuitagainsttheDaysuntil1992,alleging

breachofcontractamongotherclaims.32Atthetime,abreachofcontractactionwas

subjecttoasix-yearstatuteoflimitations.33 Onamotionforsummaryjudgment,the

superiorcourtfoundthatthecontractactionhadaccruedatthetimeofthesalein1984

andruledthattheBaumanscontractclaimswerebarred.34TheBaumansappealedand

27 Bauman,892P.2dat820.

28 Id.at822.

29 Id.at820.

30 Id.

31 Id.

32 Id.

33 See id.at827&n.16.Asnotedabove,acommonlawbreachofcontract

claimisnowsubjecttoathree-yearstatuteoflimitations. SeeAS09.10.053.

34 Bauman,892P.2dat822.

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wereversedinpart,holdingthatthestatuteoflimitationsontheircontractclaimdidnot

begintorununtiltheybeganexperiencingpermafrost-relatedproblems.35

ChiefJusticeMoore,writinginpartialdissent,concludedthatthelanguage

regardingthepresenceofpermafrostinthesubdivisionplatmeantthattheBaumanscouldhavediscoveredtheexistenceofpermafrostonthelandin1984.36 Hewouldhave

heldthattheBaumanshadconstructivenoticeofthepermafrostatthetimetheybought

thehousebecause(1)[i]tisnotunreasonabletoexpecttheBaumanstohaveexamined

thesubdivisionplat,giventhatthedeedoftrustsdescriptionspecificallyreferencedthat

plat,and(2)theBaumanswereallegedlyconcernedbeforepurchasingthepropertythat

itmightcontainpermafrost. 37

This court, however, implicitly dismissed this constructive notice

argument.38Instead,wereviewedthefactsinthelightmostfavorabletotheBaumans

andconcludedthattheBaumansdidnotdiscoverthepermafrostuntiltheybuiltonthe

propertyandproblemsbegantoarise.39NotingthattheBaumansallegedlybecame

awareofthepermafrostin1988,weheldthatthebreachofcontractactionwasfiled

withinthesix-yearstatuteoflimitationsperiodineffectatthetime. 40

Ranes&ShinesreasoningissimilartoChiefJusticeMooresdissenting

opinionandisnotsupportedbyourholdinginBauman.Ifwehadconstruedthe

35 Id.at828.

36 Id.at831(Moore,C.J.,dissenting).

37 Id.

38 Id.at828.

39 Id.

40 Id.

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informationinthesubdivisionplatasbeingsufficienttoputtheBaumansoninquiry

notice,wewouldhaveneededtodeterminewhethertheBaumansundertookaninquiry

andwhethertheinquirywasreasonable. 41OurnotdoingsointhefaceofChiefJustice

Moores dissent on this particular point demonstrates our implicit rejection of theargumentRanes&Shineadvanceshere.

b. Public policy weighs against holding that a

misrepresentationvictimisonconstructivenoticeofthe

informationinpubliclyrecordedfinancingstatementsfor

thepurposesofthestatuteoflimitationsanalysis.

AUCCfinancingstatementisintendedtoprovidenoticetotheworldofa

securedpartysinterestinspecificcollateral. 42Thenoticeprotectsthepartywhoobtains

thesecurityinterest,italsoprotectsthosewhoconsiderdealingwiththedebtorby

helpingapotentialcreditorunderstandwhereitwouldstandintheorderofpriority

amongothercreditorsandbyhelpingittakeappropriateactiontoprotectitsinterests.43

Butafinancingstatementisnotintendedtoshieldatortfeasorfromthe

consequencesofhismisrepresentations. Therecordinglawsestablishapriorityas

betweeninnocentclaimantstothesamepropertyorright;they are not intended to give

security to the perpetrators of fraud as against their victims.44Anyotherrulewould

41 See Cameron v. State,822P.2d1362,1367(Alaska1991)(discussingthe

thirdpartofthediscoveryruleanalysisasstatedinPedersen v. Zielski,822P.2d903,

908(Alaska1991)).

42 68AAM.JUR.2DSecured Transactions 216(2015).

43

Id.

44 Larabee v. Eichler,271S.W.3d542,547(Mo.2008)(enbanc)(emphasis

added)(quotingDreckshage v. Cmty. Fed. Sav. & Loan Assn,555S.W.2d314,319-20

(Mo. 1977) (en banc)). AlthoughLarabee involved a real estate transaction, we

concludethesamerationaleistrueforUCCfinancingstatements. See id.at544-45.

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rewardthepartythatconvincinglymisrepresentsthestatusofhistitlebyrelievinghim

ofliabilityoncethestatuteoflimitationshasrunwithoutanyindicationtohisvictimthat

thereisaneedtoundertakeadditionalinvestigation.Weseenoconvincingreasonto

adoptsucharule.Thepotentialcollateralconsequencesofextendingthenoticeafinancing

statement givesbeyond the realm of secured transactions also give us pause. For

example,ourcaselawestablishesthataplaintiffmustprovethathejustifiablyreliedon

adefendantsincorrectstatementstoprovemisrepresentation.45 IfweadoptedRanes&

Shinesbroadconstructive-noticeargument,itisunlikelythatanymisrepresentation

regardingownershipcouldbejustifiablyrelieduponwhen acontradictoryrecorded

document exists: the misrepresentations would always be belied by the publicly

recordeddocumentsofwhichtheplaintiffwouldbedeemedtohaveconstructivenotice.

Nothinginourcaselawsuggestssucharesult,andwedeclinetoendorseithere.

2. Thesuperiorcourtdidnotcommitclearerrorwhenitsetthe

inquiry-noticedate.

Thepartiesdonotdispute thatTimmermanandRanesagreedto settle

MacDonaldMillersoutstandingdebtinOctober2005.Noristhereanydisputethat

FirstNationalinitiallycontactedTimmermaninthesummerof2010.MacDonaldMiller

brought its third-party complaint inSeptember2010. Thesuperior court found that

MacDonaldMillerscausesofactiondidnotaccrueatthetimeofthe2005agreement

based primarily on Raness and Timmermans lack of commercial financing

sophisticationandRanessaffirmativerepresentationtoTimmermanthatRanes&Shine

ownedcleartitletotheequipment.Instead,thecourtfoundthatthestatutesoflimitation

begantorunwhenFirstNationalcontactedTimmerman.

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45 Reeves v. Alyeska Pipeline Serv. Co.,56P.3d660,670(Alaska2002).


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Ranes& Shine argues thatthe superiorcourt erredin finding that the

statutesoflimitationbegantorunuponFirstNationals2010contactwithTimmerman.

Ranes&ShineassertsthattheinformationknowntoMacDonaldMilleratthetimeof

the 2005 transaction put it on inquiry notice in October 2005, making its lawsuituntimely.46

We have reviewed the record in this appeal with Ranes &Shines

argumentsinmindandfindnoclearerror.TimmermanandRanesbothtestifiedthat

theybelievedRanes&Shineownedcleartitletotheequipment.TimmermanandRanes

alsobothtestifiedthattheydidnotknowaboutUCCfinancingstatementsuntilthiscase.

ThesuperiorcourtspecificallyfoundTimmermancredibleonthispoint,whilenoting

thatbothTimmermanandRaneslackedcommercialsophistication.

WhileTimmermanappears tohaveknown thata bankmayhavebeen

involvedinfinancingRanes&Shinesbuilding,Timmermanalsoclaimedhebelieved

thattheEmbleyshadputasubstantialamountoftheirownmoneyintotheproject. The

superiorcourtapparentlycreditedthistestimonybecauseitlaterexplicitlyreferredtothe

Embleys investment in Ranes & Shine as one explanation for why Timmerman

reasonablyreliedonRanessrepresentationthatRanes&Shineownedcleartitletothe

equipment.

Weconcludethatthesuperiorcourtdidnotcommitclearerrorinfinding

Timmermanwasnotoninquirynoticeatthetimeofthesale.Thesefactsandfindings

46 Ranes&Shinearguesthispointintwodifferentcontexts: (1)thedenial

ofitsmotionforsummaryjudgment;and(2)thesuperior courtsfindingsaftertrial. Weaddressonlythelatterhere.ThesuperiorcourtdeniedRanes&Shinesmotion,atleast

astothemisrepresentationclaim,becauseitfoundthereweregenuineissuesofmaterial

fact.Itthenheldatrial. Wewillnotreviewanorderdenyingsummaryjudgmentafter

therehasbeenasubsequenttrialonthemeritsofthefactsatissueinthesummary

judgmentproceedings.Larson v. Benediktsson,152P.3d1159,1170(Alaska2007).

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providesufficientsupportforthecourtsdecisioneveninthefaceofcontraryevidence.

Thus,weaffirmthecourtsfindingthatTimmermanwasnotoninquiryoractualnotice

untilcontactedbyFirstNational.BecauseMacDonaldMillerfileditsclaimsagainst

Ranes&Shinewithintwoyearsofthatcontact,itsclaimsweretimely.B. The Misrepresentation Claim Against Ranes In His Individual

CapacityShouldNotHaveBeenDismissed.

MacDonald Miller asserted its misrepresentation claim against both

Ranes&ShineandRanesinhisindividualcapacity. Whilethesuperiorcourtorally

ruledinMacDonaldMillersfavorandspecificallydiscussedRanes&Shinesliability,

itdidnotaddressRaness individualliability.That issue firstaroseaftertrialwhen

MacDonaldMillersubmittedaproposedfinaljudgmentincludinglanguagedismissing

the claim against Ranes individually. Ranes & Shine objected to this part of the

proposedfinaljudgment. DespiteRanes&Shinesspecificobjectiontothislanguage,

the superior court adopted the proposed final judgment as its order without any

discussionofwhyitdismissedtheclaimsagainstRanes.

Ranes & Shine argues that the superior court erred in dismissing the

misrepresentationclaimagainstRanes. Ranes&Shinearguesthatanagentmaybeheld

liable to a third-party for the agents negligence, and asserts that it was Raness

misrepresentationsthatgaverisetoMacDonaldMillersclaims.MacDonaldMiller

arguesthatRaneswasnotindividuallyliablebecauseRaneswasRanes&Shinesagent

actingonthecompanysbehalf.Theseargumentspresentquestionsoflawwhichwe

reviewdenovo.47

Matanuska Elec. Assn v. Chugach Elec. Assn,152P.3d460,465(Alaska

2007)(reviewingquestionsoflawdenovo).

-18- 7003

47


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Ourcaselawindicatesthatanagentsliabilitydependsonthetypeofclaim

asserted.48Thelawiswellestablishedthatintheeventofnegligencebyadisclosed

agentactingwithinthescopeofhisauthoritytheagentmaybeheldindividuallyliable

toathirdparty.

49

Butforbreachofcontractclaimsofficersofacorporationwillnotordinarilybeheldpersonallyliableforcontractstheymakeasagentsofthecorporation

iftheydisclosetheiragencyandtheexistenceofthecorporation.50Thus,anagentmay

beheldindividuallyliablefornegligencetheagentcommits,butnot,inthemajorityof

circumstances,forbreachofcontract.

The only claim MacDonald Miller asserted against Ranes on which

MacDonaldMillerprevailedwasitsmisrepresentationclaim.ItisundisputedthatRanes

wasthepersonwhomisrepresentedthestatusoftitletotheequipment,anditisthrough

RanessmisrepresentationthatRanes&Shinealsobecameliableformisrepresentation.

ThecaselawdiscussedabovecompelstheconclusionthatRaneswouldbeindividually

liablefortortiousactsheindividuallycommittedwhileactingasanagentforRanes&

Shinehethuscanbeheldindividuallyliableforthemisrepresentationhemade. An

agent,evenacorporateofficerordirector,isnotcloakedwithtortimmunitybecausehe

wasactinginthecourseandscopeofhisemploymentwhenhecommittedthetort.

48 WenotethatthebriefinginthiscaseassumesthatRaneswasactingas

Ranes&ShinesagentduringhisnegotiationswithTimmerman.

49 Austin v. Fulton Ins. Co., 498 P.2d 702, 704 (Alaska 1972); see

11FLETCHERCYCLOPEDIAOFTHE LAWOF CORPORATIONS1135(2014)(Itisthe

generalrulethatanindividualispersonallyliableforalltortstheindividualcommitted,

notwithstandingthepersonmayhaveactedasanagentorunderdirectionsofanother.);see also18BAM.JUR.2D Corporations1629(2015)(If...adirectororofficer

commitsorparticipatesinthecommissionofatort,whetherornotitisalsobyorforthe

corporation,heorsheisliabletoinjuredthirdpersons....).

50 Jensen v. Alaska Valuation Serv., Inc.,688P.2d161,162-63(Alaska1984).

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Therefore,weholditwaserrortodismissthemisrepresentationclaimassertedagainst

Ranesinhisindividualcapacity.

C. TheSuperiorCourtDidNotAbuseItsDiscretionWhenItAmended

ThePleadingsSuaSponte.

While issuing its oral decision, the superior court commented that it

believedTimmerman was the wrong plaintiff and that the real party in interest was

MacDonaldMiller.Findingthatthecasewastriedonthebasis[of]whathappenedto

MacDonaldMillerand...theappropriatetreatmentofthat,thecourtamendedthe

pleadingssuaspontetosubstituteMacDonaldMillerastheplaintiff.Thecourtfurther

found that therewasnoprejudice to Ranes &Shineas a resultoftheamendment.

Ranes&Shinearguesthatthisdecisionconstitutedanabuseofdiscretion.

Wedisagree.Atrialcourthasbroadpowertoconformthepleadingstothe

evidenceactually presented.51 Alaska Rule of Civil Procedure 15(b)provides that

[w]henissuesnotraisedbythepleadingsaretriedbyexpressorimpliedconsentofthe

parties,theyshallbetreatedinallrespectsasiftheyhadbeenraisedinthepleadings.52

NothinginCivilRule15(b)prohibitsthesuperiorcourtfromamendingthepleadings

sua sponte. Application of [Civil Rule 15(b)] is appropriate . . . when evidence

supportingtheamendmentwasofferedattrial...withtheopposingpartysexpressor

impliedconsent.... 53Indeterminingimpliedconsent,prejudicetothepartyopposing

amendmentisrelevant. 54

51 SeeAlaskaR.Civ.P.15(b).

52 Id.

53 Alderman v. Iditarod Props., Inc.,32P.3d373,396(Alaska2001).

54 Id. (citing6ACHARLESALLANWRIGHT,ARTHURR.MILLER&MARYKAY

KANE,FEDERALPRACTICEANDPROCEDURE1493(2ded.1990)).

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Reviewing the circumstances here, we find no abuse of discretion.55

TimmermantestifiedthathewasMacDonaldMillerssoleowner. Healsotestifiedthat

when heentered into the contract with Raneshewas representing himselfand his

company.PartoftheagreementheenteredintowithRanesinvolvedMacDonaldMillerforgivingtheremainingbalanceowedforworkMacDonaldMillerhaddoneonRanes&

Shinesbuilding.AlthoughTimmermanpaidtheadditional$18,000withapersonal

checkandnotacorporatecheck,hetestifiedthiswasonlyamatterofconvenience. We

also note that Ranes & Shine occasionally referred to MacDonald Miller as if

MacDonaldMillerwerethepartyassertingclaimsagainstitandthatRanes&Shines

defensedoesnotappeartohavebeenpredicatedonTimmermanbeinganimproper

plaintiff.

Basedontheevidencepresented,thewaythepartiestriedtheircase,and

thelackofprejudicetoRanes&Shine,weholdthatthesuperiorcourtdidnotabuseits

discretionwhenitsuasponteamendedthepleadingstosubstituteMacDonaldMilleras

thethird-partyplaintiff.

D. TheSuperiorCourtDidNotAbuseItsDiscretionWhenItPermitted

RanesToTestifyTelephonically.

Leadinguptothetrialtherewassignificantconfusionregardingwhether

andhowRaneswouldtestifybecausehewasinfederalcustodyoutsideofAlaska.

MacDonaldMillerhadindicateditintendedtodeposeRanestelephonically,butlater

askedfora60-daycontinuancetodeterminewhetherRaneswouldtestifyattrial. The

superiorcourtsuggesteddeposingRanesbutalsoofferedtohelpfacilitateRaness

appearanceattrial.

Amonthbeforetrialwastostart,MacDonaldMillerfiledawitnesslist

indicatingitintendedtohaveRanestestifytelephonically.Ranes&Shinefiledan

-21- 7003

55 Cf. id.at380(reviewingamendmentofpleadingsforabuseofdiscretion).


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objectiontoRanesappearingtelephonicallybasedonMacDonaldMillersfailureto

complywiththecivilrules.Onthefirstdayoftrial,thesuperiorcourtruleditwould

allowRanestotestifytelephonicallyandstatedthat,whilecounselforRanes&Shine

object[ed]thattheIsarentdottedandtheTsarentcrossed[,]...insubstanceratherthanform[Timmermansmotionwas]compliant.

Ranes&Shineappealsthatdecision,assertingthat(1)itwasprejudicedby

thesuperiorcourtsdecisiontopermitRanestotestifytelephonicallybecauseitwas

unabletoconfronthimwithexhibits;(2)Timmermanfiledthenoticetooclosetotrial;

and(3)itwasled...tobelievethatthepurposeofthesixty[-]daycontinuancein

January2013wastofacilitatethedepositionofRanes.Wereviewthesuperiorcourts

decisiontograntamotiontopermittelephonictestimonyforabuseofdiscretion.56And

wehavepreviouslynotedthatproceduralrules,suchasthoseprovidingfortelephonic

testimony,shouldbeinterpretedliberallyinordertoavoiddeterminationsbasedon

technicalities.57

WeholdthesuperiorcourtdidnotabuseitsdiscretioninpermittingRanes

totestifytelephonically.AlaskaRuleofCivilProcedure99(a)providesthatthecourt

mayallowawitnesstoparticipatetelephonicallyinanyhearingordepositionforgood

causeandintheabsenceofsubstantialprejudicetoopposingparties.Andinacase

presentingsimilarissues,wedeterminedthat itwasnotanabuseofdiscretion for the

superiorcourttoundertakeagood-causeanalysisthatconsideredthecost,time,and

inconvenienceoftransportingaprisonerforin-persontestimony. 58Weaffirmedthe

superiorcourtsfindingthatitwouldnotprejudicetheinmatewhowasapartyto

56 Silvers v. Silvers,999P.2d786,789(Alaska2000).

57 Rollins v. Leibold,512P.2d937,941n.8(Alaska1973).

58 Midgett v. Cook Inlet Pre-Trial Facility,53P.3d1105,1113(Alaska2002).

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participate telephonicallyat trial, as opposed to being physically present in court.59

Here,thesuperiorcourtmadeabriefgood-causefindingthatRaneswas

incarceratedoutofstate.Thecourtalsonotedthatitwouldworkwiththepartiesto

addressanyproblemsarisingoutofRanesstelephonicparticipation.OurreviewofRanesstestimonyrevealsthatRanes&Shineneverrequestedsuchhelporcomplained

ofbeingunabletoshowRanesanexhibit.IfRanes&Shinehadaskedforassistance,

webelievethecourtwouldhavetriedtoresolveanyissuesasithadpreviouslyoffered

todo.GiventhattherewasgoodcausetopermitRanestotestifytelephonicallyand

Ranes&Shinehasnotdemonstratedanyprejudice,weholdthatthecourtdidnotabuse

itsdiscretioninallowingRanestotestifytelephonically.

E. TheSuperiorCourtDidNotErrWhenItAwardedAttorneysFees

AndCostsToMacDonaldMiller.

Ranes&Shinealsoarguesthatthesuperiorcourtabuseditsdiscretionin

awarding MacDonaldMiller attorneys fees and costs because Timmerman not

MacDonaldMilleractuallyincurredthechargesinthiscase.Butanyattorneysfees

orcostsTimmermanincurredwereincurredforMacDonaldMillersbenefit,andthe

evidentunityofinterestsbetweenTimmermanandMacDonaldMillerthatrendered

MacDonaldMillerssubstitutionpropersimilarlysupportstheawardofattorneysfees

andcosts toMacDonaldMiller.60 Therefore,thesuperior courtdidnot errwhenit

awardedMacDonaldMillersattorneysfeesandcosts.61

59 Id.

60 See BP Pipelines (Alaska) Inc. v. State, Dept of Revenue,327P.3d185,

192(Alaska2014)([O]urcaselawhaslongmadeitclearthat,regardlessofhowpartiesareformallyarranged,feesandcostsmaybeawardedbasedonactualadversityof

interests.).

61 Ranes&Shinealsoappearstochallengethesuperiorcourtsdecisionto

(continued...)

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V. CONCLUSION

WeAFFIRMthesuperiorcourtinallrespectsexceptitsdecisiontodismiss

MacDonaldMillersmisrepresentationclaimagainstRanesinhisindividualcapacity.

We REVERSE the dismissal as to Ranes and REMAND for further proceedingsconsistentwiththisopinion.

61(...continued)

enhancethefeeaward.Butwedonotaddressthatargumentherebecauseitwasfirst

raisedinRanes&Shinesreplybrief.Sumner v. Eagle Nest Hotel,894P.2d628,632

(Alaska1995).

-24- 7003

ranes & shine, llc v. macdonald miller alaska, inc., alaska (2015)

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