Taylor v. Wells Fargo Home Mortgage ( 2013 )

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
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, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
SUSAN TAYLOR, )
) Supreme Court No. S-14211
Appellant, )
) Superior Court No. 3AN-04-04501 CI
v. )
) OPINION
WELLS FARGO HOME )
MORTGAGE and ROUTH ) No. 6782 - May 17, 2013
CRABTREE, P.C., )
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Craig Stowers, John Suddock,
and Gregory A. Miller, Judges.
Appearances: Yale H. Metzger, Law Offices of Yale H.
Metzger, Anchorage, for Appellant. George M. Cruickshank,
Routh Crabtree, APC, Anchorage, for Appellee Wells Fargo
Home Mortgage, Richard L. Crabtree, Routh Crabtree, APC,
Anchorage, for Appellee Routh Crabtree, P.C.
Before: Carpeneti, Chief Justice, Fabe and Winfree, Justices.
[Stowers, Justice, not participating.]
CARPENETI, Chief Justice.
I. INTRODUCTION
A woman purchased a home and fell behind on her mortgage payments.
Despite the bank having agreed to postpone a foreclosure sale, the bank proceeded with
the sale. After the woman threatened suit, the bank re-purchased the home and entered
into settlement negotiations with the woman; the bank promised to re-convey the
property to the woman so that she could proceed with a sale to a third party. The bank
subsequently refused to perform and the woman sued both the bank and the bank’s
counsel for breach of the settlement agreement and fraudulent inducement.
The superior court granted partial summary judgment to the woman on her
breach of contract claim, finding that a binding settlement contract had been formed
between the woman and the bank. The woman then filed for bankruptcy. The
bankruptcy trustee sold the property and the bankruptcy estate abandoned the present
state court claim, placing the remaining balance from the sale of the property into the
superior court registry.
The superior court held a bench trial on the remaining fraud claim and on
the parties’ respective damages. At the conclusion of the woman’s case, the court
granted a directed verdict to the bank and the bank’s counsel on the fraud claim. The
superior court awarded the bank the unpaid loan balance as well as the fair rental value
of the property for the woman’s post-foreclosure occupancy of the property, and awarded
the woman lost sale damages. The superior court also awarded the parties prejudgment
interest, and later awarded the bank and its counsel attorney’s fees.
The woman appeals the superior court’s final judgment. Because the bank
abandoned its claim for rental damages at trial, we reverse the superior court’s award of
rental damages and any accompanying award of prejudgment interest. Because any right
to recover fees for work performed on behalf of the dismissed defendants has been
waived, because it was error to award attorney’s fees to the bank’s counsel in responding
to the bankruptcy petition, and because the superior court did not properly calculate
attorney’s fees under Alaska Civil Rule 68, we remand to recalculate attorney’s fees. We
affirm the superior court in all other respects.
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II. FACTS AND PROCEEDINGS
A. Facts
Susan Taylor purchased a house in Anchorage in October 2002. Wells
Fargo Home Mortgage held the primary mortgage on the house, and Capital One Credit
Union held a second mortgage. Sometime around May 2003, Taylor fell behind on her
payments to Wells Fargo. Routh Crabtree, P.C.,1 which represented Wells Fargo
throughout the present case, initiated a nonjudicial foreclosure sale of the property on
behalf of Wells Fargo. A foreclosure sale was scheduled for January 6, 2004. Upon
learning of the foreclosure, Taylor listed the property for sale through a real estate agent,
Charles Stone, who located a buyer and secured an offer on the property. Stone
contacted Routh Crabtree to postpone the foreclosure sale. Despite Stone apparently
having reached agreement with Routh Crabtree to postpone the sale, the sale proceeded
as scheduled on January 6. After Taylor learned of the foreclosure sale, she contacted
1
Taylor disputed the naming of “Routh Crabtree” throughout the
proceedings. In her February 17, 2004 complaint, Taylor named “Routh Crabtree, P.C.”
as a defendant. At the time Taylor filed her initial complaint, “Routh Crabtree, P.C.” was
a business alias used by a professional corporation formally incorporated as “Stephen
Routh, P.C.” On April 22, 2004, “Stephen Routh, P.C.” formally changed its corporate
name to “Routh Crabtree, P.C.” On August 4, 2005, after Taylor moved to amend her
complaint pursuant to Alaska Civil Rule 15 to better represent the parties as they existed
at the time of the original dispute, the superior court added the following defendants to
the present case: “Stephen Routh, P.C. and Richard Crabtree, a partnership”; and
“Richard Crabtree, individually.” In 2009, the parties stipulated to dismiss “Stephen
Routh, P.C. and Richard Crabtree, a partnership,” as well as “Richard Crabtree,
individually.” In her limited non-opposition to the dismissal of these two parties, Taylor
stated that her “understanding of [the] stipulation was that . . . there would be no adverse
consequences to [Taylor] caused by the substitution, for example . . . the partnership
would not be entitled to any defense attorney’s fees.” Finally, on January 19, 2010, both
“Stephen Routh, P.C. and Richard Crabtree, a partnership,” as well as “Richard Crabtree,
individually,” were dismissed with prejudice. The present case therefore continued
solely as between Taylor, Wells Fargo, and “Routh Crabtree, P.C.”
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a local television station, which publicized the sale. At the time of the foreclosure sale,
Taylor owed Wells Fargo $199,588 as the balance on her loan.
Taylor threatened suit against Wells Fargo. On January 28, 2004, Richard
Ullstrom, an attorney at Routh Crabtree, sent a letter on behalf of Wells Fargo to
Taylor’s attorney. The letter, in pertinent part, stated:
Wells Fargo Home Mortgage has entered into an agreement
with the party who acquired the Taylor property at the
foreclosure sale, to refund the purchase price in return for a
deed of the property and a release of all claims. Wells Fargo
will then be in a position to return title to the property to Ms.
Taylor to allow her to close her sale of the property.
As a condition of doing so, Wells Fargo Home Mortgage will
of course require that Ms. Taylor execute a release of all
claims she might have in connection with the foreclosure and
foreclosure sale. If she is willing to do this, I anticipate that
we can have this matter wrapped up by the end of the week.
Please advise if she is willing to do so, and if so, I will draft
the necessary paperwork.
Taylor’s attorney, Yale Metzger, responded the next day. His letter, in pertinent part,
stated:
This will acknowledge receipt of Mr. Ullstrom’s facsimile
dated January 28, 2004, and the settlement offer contained
therein. Ms. Taylor has instructed me to communicate her
acceptance of Wells Fargo’s settlement offer. This letter
should be considered that acceptance. Please forward a draft
of the release you require Ms. Taylor to sign for my review.
On January 31, Ullstrom sent a draft of the release to Taylor. The last paragraph of the
draft release contained a confidentiality provision:
The terms and conditions of this Release and underlying
agreement shall be confidential. Except as provided above or
required by law, court order, the enforcement of the
provisions hereof, or as may be reasonably required by
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creditors, beneficiaries, bureaus, auditors, accountants or tax
consultants of the respective parties, or any regulatory or
governmental agency, the parties and their counsel shall
maintain in strict confidence and shall not disclose the
substance or contents of this Release to any third party
without the written consent of the parties herein.
On February 4, 2004, Metzger responded that “[t]he draft release conforms with the
agreement of the parties except for the last paragraph concerning confidentiality.”
Metzger struck the confidentiality provision and Taylor signed the release, thereby
tendering her performance under the terms of the alleged settlement agreement. Wells
Fargo thereafter refused to perform and maintained that it was not willing to settle
without the inclusion of a confidentiality provision.
On February 20, 2004, the buyer at the foreclosure sale quitclaimed all his
interest in the property to Wells Fargo.
B. Proceedings
In February 2004, Taylor filed suit against Wells Fargo and Routh Crabtree,
P.C.2 Taylor asserted two claims relevant to this appeal: (1) the letters exchanged
between Taylor and Wells Fargo created a binding settlement contract, which Wells
Fargo breached when it refused to perform; and (2) Wells Fargo, through its agent,
Routh Crabtree, fraudulently induced Taylor into accepting a settlement offer that it
would not perform unless Taylor agreed to an added confidentiality provision. Three
days later Taylor filed a lis pendens on the property.
Wells Fargo counterclaimed and sought the following relief: (1) that
Taylor’s claim be dismissed with prejudice; (2) that Wells Fargo be awarded judgment
2
Taylor’s complaint also named two other parties: (1) Larry Rhymer, the
purchaser at the foreclosure sale; and (2) Land Title Company of Alaska. Neither
Rhymer nor Land Title Company of Alaska are relevant to this appeal. Rhymer was
dismissed in September 2004. Land Title Company of Alaska settled pre-bankruptcy.
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for Taylor’s use and occupancy of the property beginning February 20, 2004, the date
on which it gained possession of the property from the buyer at the foreclosure sale;3 (3)
that Wells Fargo be decreed owner of the property; and (4) that Wells Fargo be awarded
attorney’s fees and costs. Routh Crabtree responded and requested the following relief:
(1) that Taylor’s claim be dismissed with prejudice; and (2) that Routh Crabtree be
awarded attorney’s fees and costs.
In December 2004, Superior Court Judge Craig Stowers granted partial
summary judgment in Taylor’s favor on the breach of contract question. The court
determined that Wells Fargo made an offer to settle with Taylor in its January 28, 2004
letter, which did not include a confidentiality provision. The court held that Taylor
accepted this offer in her January 29, 2004 letter. Based on this finding, the court
ordered specific performance. The superior court additionally stated that “[t]he court
also intends to exercise its equitable authority to require [Taylor] to pay defendant for
the fair value of her occupancy of the premises from the date that she stopped paying
until the date that the premises is tendered back to [Wells Fargo].”
On October 15, 2005, Taylor filed for relief under Chapter 7 of the U.S.
Bankruptcy Code. In accordance with 11 U.S.C. § 362,4 the proceedings in the present
case were stayed pending the outcome of the bankruptcy proceedings. During the
bankruptcy proceedings, the bankruptcy trustee unsuccessfully attempted to facilitate a
settlement agreement between Taylor and Wells Fargo. In February 2006, the
3
Taylor retained occupancy of the property post-foreclosure. In its
November 9, 2010 Findings of Fact, Conclusions of Law, and Order, the superior court
determined that, although Taylor vacated the premises in May 2004, Wells Fargo was
not notified of her leaving until December 2004.
4
Section 362 is the automatic stay provisions of the U.S. Bankruptcy Code.
See 11 U.S.C. § 362 (2006).
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bankruptcy court granted Taylor a discharge in bankruptcy.5 In 2007, the trustee
persuaded Taylor to release the lis pendens and obtained the consent of the parties to sell
the property. After also obtaining the bankruptcy court’s approval, the trustee sold the
property for $298,000.
In January 2008, the trustee filed a motion under 11 U.S.C. § 554 6 to
approve the abandonment of the bankruptcy estate’s interest in the present case and in
approximately $240,000 in funds remaining from the sale proceeds of the property. The
trustee noted that the interests of Taylor and Wells Fargo in the funds should “attach . . .
as the Superior Court may determine. . . . But what those interests are will have to be
determined by the Superior Court in the action Susan Taylor filed against Wells Fargo
pre-petition.” The trustee also filed a companion motion under 11 U.S.C. §§ 503 7 and
506(c)8 “to recover his costs and expenses and compensation, and the fees and expenses
of his attorney, from the proceeds of the sale of real property in this case . . . .” In this
5
The formal notice of Taylor’s discharge does not appear in the record.
6
Section 554(a) provides for abandonment of “any property of the estate that
is burdensome to the estate or that is of inconsequential value and benefit to the estate.”
11 U.S.C. § 554 (2006).
7
Section 503 provides for the payment of administrative expenses in
bankruptcy proceedings. See 11 U.S.C. § 503 (2006).
8
Section 506(c) provides:
The trustee may recover from property securing an allowed
secured claim the reasonable, necessary costs and expenses
of preserving, or disposing of, such property to the extent of
any benefit to the holder of such claim, including the
payment of all ad valorem property taxes with respect to the
property.
11 U.S.C. § 506(c) (2006).
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companion motion, the trustee reiterated his intention to “let [Taylor and Wells Fargo]
fight over the Funds.” In February 2008, the bankruptcy court approved the trustee’s
request to abandon the remainder of the funds to the superior court’s registry account
“with the interests of Wells Fargo and Susan Taylor to attach to those funds as their
interests may be determined.”
In December 2008, Wells Fargo and Routh Crabtree made an offer of
judgment to Taylor under Alaska Rule of Civil Procedure 68 and AS 09.30.065.9 They
offered $23,264.60 to be paid to Taylor from the court registry, with the remaining funds
paid to Wells Fargo. This offer was made “in full and final resolution of all claims and
counterclaims brought, or which could have been brought, by each and every party . . .
inclusive of all principal, interest, applicable penalties, costs, attorney’s fees, and/or relief
to which any party may be entitled.” Taylor did not accept this offer.
In March 2010, Superior Court Judge John Suddock held a bench trial on
the remaining issues.10 The parties each presented evidence regarding damages, and
Taylor presented evidence regarding her fraud claim. Wells Fargo also abandoned its
claim for rental damages for Taylor’s post-foreclosure occupancy of the property. In
support of her fraud claim, Taylor relied on Wells Fargo’s admission during discovery
that “there was never a time when the confidentiality clause was not considered a part
9
Both Alaska R. Civ. P. 68(a) and AS 09.30.065(a) provide that:
At any time more than 10 days before the trial begins, either
the party making a claim or the party defending against a
claim may serve upon the adverse party an offer to allow
judgment to be entered in complete satisfaction of the claim
for the money or property or to the effect specified in the
offer, with costs then accrued.
10
After the superior court’s entry of partial summary judgment in Taylor’s
favor in 2004, Judge Suddock replaced Judge Stowers as the judge presiding in this case.
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of any agreement with [Taylor].” During trial, Erin Hirzel Roesch, an employee of Wells
Fargo, testified that, prior to the time of the disputed settlement agreement, Wells Fargo
had a policy in place that all settlement agreements would contain confidentiality
provisions. Moreover, Roesch testified that this was not the first matter in which Routh
Crabtree had represented Wells Fargo. But Roesch also testified that Wells Fargo only
would have communicated its policy regarding confidentiality to Routh Crabtree “in a
general sense as a requirement,” and that Wells Fargo would not have reviewed Routh
Crabtree’s January 28, 2004 letter to Taylor before it was sent.
At the close of Taylor’s case at trial, Wells Fargo and Routh Crabtree
moved for a directed verdict on Taylor’s fraud claim. The superior court found “that no
reasonable Court or jury could find that there was fraudulent intent or damage flowing
from justifiable reliance on something that turned out to be a misrepresentation because
there was no misrepresentation. There was an offer and acceptance. There was a
settlement. The settlement holds.” On this basis the superior court granted the motion
for a directed verdict. Finally, during closing argument at trial, Taylor for the first time
argued that Wells Fargo’s failure to produce a written deed of trust note violated the
statute of frauds and precluded Wells Fargo from recovering the unpaid loan balance.
In November 2010, the superior court entered its Findings of Fact,
Conclusions of Law, and Order, in which it primarily considered the parties’ damages.
The court first found that Taylor vacated the property in May 2004, that Wells Fargo
received effective notice of her departure in December 2004, and that Wells Fargo
repossessed the home on or about December 15, 2004. The court also made a number
of findings regarding the calculation of Taylor’s damages, including that: (1) it was
reasonable to set the fair rental value of the property at $1,500 per month; (2) Taylor had
successfully negotiated her second deed of trust on the property to $6,000; (3) it was
reasonable to set the brokerage commission for Taylor’s sale of the property at six
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percent; (4) Taylor’s estimated costs of sale of the property were one percent; and (5)
Wells Fargo’s claim of $5,732 for damages to the property were unsupported by the
evidence.
The superior court then concluded that: (1) but for Wells Fargo’s breach,
Taylor would have netted $15,287 from the sale of the property to a third party; (2)
Taylor was not entitled to emotional distress damages or consequential damages; and
(3) Taylor was liable for occupancy of the property post-foreclosure at a total cost of
$17,250. The court also awarded Wells Fargo $199,588, the balance of its deed of trust
at the time of foreclosure. The court awarded Taylor $15,287 in lost sale damages
against Wells Fargo. Taylor recovered nothing against Routh Crabtree. In a later
Amended Final Judgment, the superior court awarded Wells Fargo $52,843 in
prejudgment interest on the deed of trust, and $3,973 in prejudgment interest on the
rental value. The court awarded Taylor $4,047 in prejudgment interest.
In February 2011, Taylor filed a motion for attorney’s fees under Alaska
Civil Rule 82. In her motion, Taylor asserted that “[t]he main issue in the captioned case
was whether Wells Fargo . . . and Routh Crabtree . . . breached the settlement agreement
with Susan Taylor in early 2004 by refusing to perform according thereto.” On the same
day, Wells Fargo filed a motion for attorney’s fees in which it asserted that, because
Taylor’s final recovery against Wells Fargo was more than ten percent less favorable
than Wells Fargo and Routh Crabtree’s December 2008 Rule 68 Offer of Judgment, it
was the prevailing party. Also on February 17, 2011, Routh Crabtree filed a motion for
attorney’s fees in which it asserted that it was entitled to enhanced attorney’s fees on two
alternative grounds: (1) that the relief awarded Taylor was substantially less than the
Rule 68 Offer of Judgment; and (2) that Taylor engaged in vexatious, bad faith conduct.
In May 2011, the superior court entered its order on attorney’s fees. The
court first sua sponte reconsidered its decision to award prejudgment interest to Wells
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Fargo, at least as far as this issue related to the court’s award of attorney’s fees.11 The
court made two distinct observations regarding its award of prejudgment interest to
Wells Fargo. First, the court concluded that it “erred when it charged Ms. Taylor
prejudgment interest both on the unpaid $17,[250] in rent and the unpaid loan for 2004.”
Second, the court concluded that it erred in awarding Wells Fargo prejudgment interest
on the unpaid loan, since Wells Fargo had “slept on its rights.” The superior court then
found that Taylor’s fraud claim constituted the main issue in the case, and thus Wells
Fargo and Routh Crabtree, as the prevailing parties on that issue, were entitled to
attorney’s fees under Civil Rule 82. The court also determined that Wells Fargo was a
prevailing party under Civil Rule 68(c), finding that Taylor’s equity recovery, offset by
Wells Fargo’s rental recovery, was substantially less than Wells Fargo’s offer of
judgment. The court then concluded that, although it considered Taylor’s fraud claim
to have been unreasonable, the claim was not vexatious. The court awarded Routh
Crabtree 60% of its attorney’s fees that had accrued since Taylor had filed for
bankruptcy, or $15,165. The court awarded Wells Fargo $29,868 in attorney’s fees.
All of the parties then moved for reconsideration of the superior court’s
order regarding attorney’s fees. In an August 24, 2011 order, the superior court declined
to modify its prior award of attorney’s fees, but the court struck the paragraph stating that
Wells Fargo had “slept on its rights.”12
Taylor appeals the superior court’s final judgment.
11
The superior court noted that, because Taylor had already appealed the
court’s decision, the court lacked jurisdiction to alter the judgment itself. Thus, the
superior court’s discussion of prejudgment interest affected only the court’s award of
attorney’s fees.
12
Due to a potential conflict of interest, Judge Suddock recused himself in
June 2011. Superior Court Judge Gregory A. Miller ruled on the parties’ reconsideration
requests.
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III. STANDARD OF REVIEW
“We apply our independent judgment to the interpretation of Alaska
statutes and will interpret statutes ‘according to reason, practicality, and common sense,
taking into account the plain meaning and purpose of the law as well as the intent of the
drafters.’ ”13 We review de novo the grant of a directed verdict.14
“We exercise our independent judgment in reviewing the superior court’s
interpretation of Alaska Civil Rule 68.”15 “We review a trial court’s prevailing party
determination [under Alaska Civil Rule 82] for abuse of discretion. We will reverse a
prevailing party determination only if it is arbitrary, capricious, manifestly unreasonable,
or improperly motivated.”16
IV. DISCUSSION
A. It Was Error To Award Wells Fargo Damages For Taylor’s Post-
Foreclosure Occupancy Of The Property.
The superior court awarded Wells Fargo the fair rental value of the property
for Taylor’s post-foreclosure occupancy of the house. “Wells Fargo’s breach,” the court
concluded, “did not entitle [Taylor] to live in the house without compensation to the
13
In re Tracy C., 249 P.3d 1085, 1089 (Alaska 2011) (internal citation
omitted) (quoting Native Vill. of Elim v. State, 990 P.2d 1, 5 (Alaska 1999)).
14
Cameron v. Chang-Craft, 251 P.3d 1008, 1018 (Alaska 2011) (citing
L.D.G., Inc. v. Brown, 211 P.3d 1110, 1117 (Alaska 2009)).
15
Progressive Corp. v. Peter ex rel. Peter, 195 P.3d 1083, 1087 n.7 (Alaska
2007) (citing Cook Schuhmann & Groseclose, Inc. v. Brown & Root, Inc., 116 P.3d 592,
597 (Alaska 2005)).
16
Taylor v. Moutrie-Pelham, 246 P.3d 927, 928-29 (Alaska 2011) (citing
Fernandes v. Portwine, 56 P.3d 1, 5 (Alaska 2002); Tobeluk v. Lind, 589 P.2d 873, 878
(Alaska 1979)); see also Progressive Corp., 195 P.3d at 1092 (“Determining who is the
prevailing party is committed to the broad discretion of the trial court.”).
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bank. Nor was [Taylor] entitled to occupy the house during the early months of litigation
before surreptitiously abandoning it.” The court noted that “[t]here was no testimony
about the fair-rental value of the house,” but based on Taylor’s description of the
property the court found it “reasonable to ascribe a fair rental value of $1,500 per month,
somewhat less than . . . Taylor’s monthly mortgage payment.” Based on Taylor’s having
retained occupancy of the property for 11.5 months after the foreclosure sale, the court
awarded Wells Fargo $17,250 from the funds held in the court registry.
Taylor argues that it was error for the superior court to award Wells Fargo
the fair rental value for Taylor’s post-foreclosure occupancy of the property because
“there was no testimony about the fair-rental value [of the property].” She also contends
that Wells Fargo’s failure to introduce any evidence regarding the fair rental value of the
property indicated that Wells Fargo had abandoned its claim during trial. Wells Fargo
admits that it did not request rental damages, but contends that the superior court
nonetheless was justified in awarding such damages.17
We agree with Taylor. Despite the superior court’s 2004 partial summary
judgment order, which stated that the court would award rental damages against Taylor,
rental damages should not have been assessed after Wells Fargo abandoned this claim.
Moreover, we agree with Taylor that there was insufficient evidence regarding the rental
value of the property. Thus, we reverse the superior court’s decision on this issue.
17
Wells Fargo also contends that this issue is moot. Generally, “[a] claim is
moot where a decision on the issue is no longer relevant to resolving the litigation, or
where it has lost its character as a ‘present, live controversy,’ that is, where a party
bringing the action would not be entitled to any relief even if he or she prevailed.” Clark
v. State, Dep’t of Corr., 156 P.3d 384, 387 (Alaska 2007) (quoting Municipality of
Anchorage v. Baxley, 946 P.2d 894, 899 (Alaska App. 1997)) (citing Maynard v. State
Farm Mut. Auto. Ins. Co., 902 P.2d 1328, 1329 n.2 (Alaska 1995)). But this issue
remains a present, live controversy on appeal, the resolution of which is relevant to the
total damages amount assessed against Taylor.
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B. It Was Not Error To Award Wells Fargo Funds From The Sale
Proceeds Of The Property Even Though Wells Fargo Failed To
Produce A Deed Of Trust Note Pursuant To Alaska Statute 09.25.010
Because Taylor Voluntarily Admitted The Existence Of The Deed Of
Trust Note.
In its November 9, 2010 Findings of Fact, Conclusions of Law, and Order,
the superior court concluded that Wells Fargo was entitled to the unpaid loan balance at
the time of foreclosure, which was valued at $199,588. Taylor disputes this award on
appeal.
In particular, Taylor contends that Wells Fargo’s failure to produce a
written deed of trust note violated Alaska’s statute of frauds, codified at AS 09.25.010.18
18
AS 09.25.010 provides in pertinent part:
(a) In the following cases and under the following conditions
an agreement, promise, or undertaking is unenforceable
unless it or some note or memorandum of it is in writing and
subscribed by the party charged or by an agent of that party:
(1) an agreement that by its terms is not to be
performed within a year from the making of it;
....
(6) an agreement for leasing for a longer period than
one year, or for the sale of real property, or of any
interest in real property, or to charge or encumber real
property;
....
(b) No estate or interest in real property, other than a lease for
a term not exceeding one year, nor any trust or power
concerning the property may be created, transferred, or
declared, otherwise than by operation of law, or by a
conveyance or other instrument in writing subscribed by the
party creating, transferring, or declaring it or by that party’s
(continued...)
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She asserts that the superior court’s “November 9, 2010 Findings of Fact, Conclusions
of Law, and Order completely fail[ed] to address the fact that Wells Fargo failed to offer
or have admitted a deed of trust note upon which its entire claim is based.”
Wells Fargo responds that Taylor never disputed Wells Fargo’s entitlement
to the amount owed on the deed of trust note throughout six years of litigation, including
while the matter was in bankruptcy, until she asserted her statute of frauds defense at
closing arguments at trial in March 2010. Wells Fargo therefore contends that she may
not raise this issue on appeal. Moreover, Wells Fargo argues that Taylor confirmed
under direct examination at trial that she understood the property to be subject to the
deed of trust note. Finally, Wells Fargo argues that, in any event, this issue is irrelevant,
as any possible claim by Taylor was rendered moot when the property was sold during
the bankruptcy proceedings.
Alaska Statute 09.25.020 provides that “[a] contract, promise, or agreement
that is subject to [the statute of frauds], that does not satisfy the requirements [of the
statute], but that is otherwise valid is enforceable if . . . (4) the party against whom
enforcement is sought admits, voluntarily or involuntarily, in pleadings or at any other
stage of this or any other action or proceeding the making of an agreement . . . .”
Taylor’s February 17, 2004 complaint contained the following allegations,
which recognized the making of an agreement with Wells Fargo:
7. In connection with the purchase of the above property,
Susan Taylor executed a deed of trust and [d]eed of trust note
as the Trustor, naming Land Title Company of Alaska as the
Trustee and Residential Mortgage as the Beneficiary.
18
(...continued)
agent under written authority and executed with the
formalities that are required by law. . . .
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8. Upon information and belief, the beneficial interest in the
above deed of trust was transferred by assignment to Wells
Fargo Home Mortgage on or about October 22, 2002.
....
12. Upon learning of [Wells Fargo’s] nonjudicial
foreclosure, the Plaintiff listed the above property for sale
through a real estate agent named Charles Stone on or about
November 20, 2003. . . .
13. Charles Stone knew at the time of the listing that the
seller was in default on her deed of trust note with Wells
Fargo and that the property was in a nonjudicial foreclosure.
....
16. Mr. Stone secured an offer on Ms. Taylor’s property on
December 10, 2003 for an amount in excess of the amount
necessary to cure the default with Wells Fargo. . . .
Further, Taylor also confirmed at trial under direct examination that she recognized that
Wells Fargo held a deed of trust note on the property:
Q Okay. When – when Wells Fargo made you the
settlement offer in January where they – what – what
did you understand the terms of that offer to be?
A The terms of the offer is if I sign this paper by – and I
agree to that paper, then I’ll have the house by the
week’s – week’s end. That’s what I understood.
Q Okay. So you – did you understand that they were
going to get the house back from Mr. Rhymer?
A Yeah.
Q And that they were going to return the house to you.
A Return the house to me.
Q And was it going to be subject to the original deed of
trust?
A I’m not sure on the deed of trust, but I know – all I
know, they was going to return the house back to me
so we can go through with the original sale . . . . .
Q All right. And then . . .
A . . . of the house
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Q All right. And then did you understand that Wells
Fargo would be paid what they were owed on the
house . . .
A Yeah. Yeah.
Q . . . from the proceeds of the sale?
A Yes.
Because Taylor voluntarily admitted, both in pleadings and during direct examination,
the making of an agreement with Wells Fargo, we reject Taylor’s statute of frauds
argument.
C. It Was Not Error To Enter A Directed Verdict On Taylor’s
Fraudulent Inducement Claim.
At the close of Taylor’s case at trial, Wells Fargo and Routh Crabtree
moved for a directed verdict on Taylor’s fraud claim. The superior court found “that no
reasonable Court or jury could find that there was fraudulent intent or damage flowing
from justifiable reliance on something that turned out to be a misrepresentation because
there was no misrepresentation. There was an offer and acceptance. There was a
settlement. The settlement holds.” On this basis the superior court granted the motion
for a directed verdict on the issue of fraud.
Taylor argues that it was error for the superior court to grant Wells Fargo
and Routh Crabtree’s motion for a directed verdict on Taylor’s fraudulent inducement
claim because fair-minded, reasonable jurors exercising reasonable judgment could have
found that Wells Fargo and Routh Crabtree fraudulently induced Taylor to enter into the
settlement agreement. In particular, she contends that “when [Wells Fargo and Routh
Crabtree] made their settlement offer, they knew that unless Susan Taylor agreed to ‘sit
down and . . . come up with a final agreement’ . . . containing additional terms, they
would never perform according to the terms of the offer Ms. Taylor accepted.”
In its response, Wells Fargo argues that Taylor has failed to produce any
specific evidence that Wells Fargo and Routh Crabtree created a scheme to induce Taylor
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to enter into the settlement agreement, and it asserts that Routh Crabtree decided to
include a confidentiality clause when it drafted the proposed release. Routh Crabtree
also asserts that any error made by the superior court in dismissing Taylor’s fraud claim
at the conclusion of her case was harmless, as there is “no reason to think that the trial
court’s decision would have been any different if it were delayed until the trial was
concluded.”
The legal test in reviewing a directed verdict “is whether the evidence, and
all reasonable inferences which may be drawn from the evidence, viewed in the light
most favorable to the non-moving party, permits room for diversity of opinion among
reasonable jurors.”19 We have stated that “such motions should be scrutinized under a
principle of minimum intrusion into the right to jury trial guaranteed under the Alaska
Constitution . . . . If there is any doubt, questions of fact should be submitted to the
jury.”20
We have held that “[t]he elements of fraudulent misrepresentation are (1)
misrepresentation of fact or intention, (2) made fraudulently, (3) for the purpose or with
the expectation of inducing another to act in reliance; and (4) justifiable reliance by the
recipient, (5) causing loss.”21 We have also noted that “[a] representation is fraudulent
19
Cameron v. Chang-Craft, 251 P.3d 1008, 1017 (Alaska 2011) (quoting City
of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130 (Alaska 1983)) (internal
quotation marks omitted).
20
Id. at 1018 (quoting City of Delta Junction, 670 P.2d at 1130) (internal
quotation marks omitted).
21
Asher v. Alkan Shelter, LLC, 212 P.3d 772, 782 (Alaska 2009) (footnote
omitted) (citing Lightle v. State, Real Estate Comm’n, 146 P.3d 980, 983 (Alaska 2006)),
abrogated on other grounds by Shaffer v. Bellows, 260 P.3d 1064 (Alaska 2011); see
also RESTATEMENT (SECOND ) OF TORTS § 525 (1977).
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if the maker knows it is untrue. A statement can be literally true and still be a fraudulent
misrepresentation if the maker knows the statement is materially misleading.”22
In support of her fraud claim, Taylor relied on Wells Fargo’s admission
during discovery that “there was never a time when the confidentiality clause was not
considered a part of any agreement with [Taylor] . . . .” During trial, Erin Hirzel Roesch,
a Wells Fargo employee testified that, prior to the time of the disputed settlement
agreement, Wells Fargo had a policy in place that all settlement agreements would
contain confidentiality provisions. Moreover, Roesch testified that this was not the first
matter in which Routh Crabtree had represented Wells Fargo. Taylor relied on this
evidence to assert that Wells Fargo and Routh Crabtree fraudulently induced Taylor to
enter into a settlement agreement with which they knew they would not comply. But
Roesch also testified that Wells Fargo would have communicated its policy regarding
confidentiality to Routh Crabtree only “in a general sense as a requirement,” and that
Wells Fargo would not have reviewed Routh Crabtree’s January 28, 2004 letter to Taylor
before it was sent. This testimony was not controverted by Taylor.
We conclude that the superior court did not err in granting the directed
verdict on Taylor’s fraud claim. Although Wells Fargo had a policy regarding
confidentiality provisions in place at the time of the disputed settlement agreement,
Taylor has failed to produce specific evidence regarding the particular events in question,
and she did not controvert Roesch’s testimony that Wells Fargo would not have reviewed
the settlement offer before it was sent. Based on the evidence presented, reasonable
jurors could not disagree that Wells Fargo and Routh Crabtree did not make a fraudulent
misrepresentation of fact or intention to Taylor. We therefore affirm the superior court’s
grant of a directed verdict.
22
Id. at 782 (citing Lightle, 146 P.3d at 986).
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D. Taylor Waived Any Argument Regarding The Superior Court’s
Award Of Prejudgment Interest To Wells Fargo.
In its February 2011 Amended Final Judgment, the superior court awarded
$199,588 to Wells Fargo on the deed of trust note and included prejudgment interest
dating from January 15, 2004. Taylor did not object to this award. But after Wells Fargo
sought attorney’s fees under Alaska Civil Rules 68 and 82, based partially on the
prejudgment interest award, the superior court sua sponte reconsidered for the purposes
of awarding attorney’s fees whether it erred in awarding prejudgment interest on the
unpaid loan balance. First, the superior court concluded that “the court erred when it
charged . . . Taylor prejudgment interest both on the unpaid $17,[250] in rent and the
unpaid loan for 2004.” Second, the court concluded that it “improvidently awarded
Wells Fargo seven years of prejudgment interest on its loan.” Despite these conclusions,
the court held that it had no power to revise its judgment because the filing of this appeal
deprived the court of jurisdiction in the matter.
Taylor argues that it was error for the superior court to award “Wells Fargo
both prejudgment interest and rent,” asserting that such error “amounted to a double
recovery for Wells Fargo.” Taylor requests that we recognize and correct the superior
court’s errors. Wells Fargo responds that it was entitled to prejudgment interest on the
amount owed under the deed of trust note from January 15, 2004, through the date of
final judgment, because of its inability to use the funds throughout that time period.
Generally, “a party may not raise an issue for the first time on appeal.”23
Alaska Civil Rule 78(a) provides that “counsel for the successful party to an action or
proceeding shall prepare in writing and file and serve on each of the other parties
23
Mullins v. Oates, 179 P.3d 930, 941 n.31 (Alaska 2008) (quoting Brandon
v. Corr. Corp. of Am., 28 P.3d 269, 280 (Alaska 2001)) (internal quotation marks
omitted).
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proposed findings of fact, conclusions of law, judgments and orders.” Civil Rule 78(b)
provides that “[w]ithin 5 days after service of any of the documents mentioned in
paragraph (a), a party may file and serve a written detailed statement of objections to any
such document and the reasons therefor.”
Although Taylor could have objected to the superior court’s entry of
prejudgment interest, she failed to dispute the award of interest until the superior court
sua sponte raised the issue in its order regarding attorney’s fees. Moreover, Taylor’s
motion for reconsideration of the superior court’s Amended Final Judgment recognized
the court’s award of prejudgment interest and alleged that the only error that the superior
court committed in regards to interest was that it applied the wrong interest rate. There
is no indication in the record that Taylor opposed the award of prejudgment interest until
the superior court sua sponte raised the issue in May 2011. Because Taylor failed to
object to Wells Fargo’s proposed entry of prejudgment interest, we conclude she waived
her right to object to the calculation of prejudgment interest on appeal.24 But we also
note that, due to our reversal of the superior court’s award of rental damages, any award
24
Cf. Rowley v. Amrhein, 883 N.Y.S.2d 214, 215 (N.Y. App. Div. 2009)
(“Defendant’s challenge to the judgment . . . is not preserved for appellate review since
there is no record that defendant raised any objection to plaintiff’s proposed judgment
. . . .”). We further note that, even had Taylor properly objected to the award of
prejudgment interest before the superior court, Taylor’s brief on appeal insufficiently
argues this issue. We have held that “where a point is given only a cursory statement in
the argument portion of a brief, the point will not be considered on appeal.” Adamson
v. Univ. of Alaska, 819 P.2d 886, 889 n.3 (Alaska 1991) (citing State v. O’Neill
Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980); Fairview Dev., Inc. v. City of
Fairbanks, 475 P.2d 35, 36 (Alaska 1970), cert. denied, 402 U.S. 901 (1971)). Taylor’s
brief merely references the fact that the superior court sua sponte questioned its entry of
prejudgment interest and then suggests that we correct this issue in the course of the
present appeal. Her suggestion is not accompanied by argument or citation to any legal
authority, and accordingly would be considered to have been waived.
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of prejudgment interest to Wells Fargo in relation to the award of rental damages must
be vacated.
E. The Superior Court Did Not Properly Determine Whether Wells
Fargo Was The Prevailing Party Under Alaska Civil Rule 68.
In its May 18, 2011 order, the superior court concluded that Wells Fargo
was the prevailing party for two independent reasons: (1) “Taylor’s home equity
recovery, offset by Wells Fargo’s back-rental recovery, was substantially less than Wells
Fargo[’s] offer of judgment”; and (2) Wells Fargo prevailed on the fraud issue, which
was the main issue in the case.
Taylor argues that the superior court abused its discretion when it
determined that Wells Fargo was the prevailing party for purposes of Civil Rule 82
attorney’s fees. Taylor contends that “[t]he main issue in the . . . case was whether Wells
Fargo, though its agent Routh Crabtree, breached the settlement agreement with . . .
Taylor in early 2004 by refusing to perform according thereto.” Wells Fargo responds
that it is the prevailing party as to Taylor and that Taylor’s argument regarding prevailing
party status “has been consistently rejected based upon the facts of the case.”
As an initial matter, we note that the superior court did not properly
determine whether Wells Fargo was the prevailing party under Civil Rule 68. Wells
Fargo’s December 12, 2008 Rule 68 Offer of Judgment was made “in full and final
resolution of all claims and counterclaims brought, or which could have been brought,
by each and every party . . . inclusive of all principal, interest, applicable penalties, costs,
attorney’s fees, and/or relief to which any party may be entitled.” Regarding Rule 68
offers of judgment made “inclusive of all principal, interest, applicable penalties, costs,
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attorney’s fees, and/or relief to which any party may be entitled,” our ruling in
Farnsworth v. Steiner25 is instructive:
Since the ultimate . . . award reflects compensation for an
injury as of the day of its occurrence, interest to the date the
offer is made must be added to the jury award before a valid
comparison of the two figures can be made. If . . . the offer
of judgment specifically includes costs rather than simply an
offer to pay reasonable costs in addition to the fixed amount
contained in the offer of judgment then costs accrued up to
the date of the offer must also be added to the amount
awarded . . . if the two figures are to be compared
meaningfully. . . . [C]alculation of this figure is
straightforward:
The proper mathematical formula for the
computation of a judgment under Rule 68
would appear as follows:
J = (V + PI) + (AF + C),
for which
J = Judgment for computation under Rule 68 to
determine whether the Offer of Judgment had
been exceeded;
V = Jury verdict;
PI = Prejudgment interest accrued prior to the
Offer of Judgment;
AF = Attorney’s fees incurred by the offeree
prior to the Offer of Judgment.
C = Costs incurred by the offeree prior to the
Offer of Judgment.[26]
We therefore remand to the superior court for proper calculation under our
holding in Farnsworth.
25
601 P.2d 266 (Alaska 1979).
26
Id. at 269 n.4.
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F. The Superior Court Did Not Abuse Its Discretion In Determining That
Routh Crabtree Was The Prevailing Party For Purposes Of Awarding
Attorney’s Fees.
In its May 18, 2011 order, the superior court concluded that Routh Crabtree
was the prevailing party as to Taylor. The court also found that Taylor’s fraud claim as
against Routh Crabtree was “unreasonable” and therefore awarded enhanced attorney’s
fees under Alaska Civil Rule 82(b)(3). The court then awarded Routh Crabtree 60% of
its attorney’s fees.
Taylor argues that she should be considered the prevailing party as to Routh
Crabtree. Taylor’s argument is based on her assertion that Routh Crabtree, as Wells
Fargo’s agent, acted negligently and therefore should be liable for its conduct on behalf
of Wells Fargo, its principal. Taylor concludes that “since Wells Fargo is liable to Susan
Taylor [with respect to the breached settlement agreement], its agent Routh Crabtree is
as well.” Based on her argument that the breach of contract claim was the main issue in
the case, Taylor concludes that she should also be awarded attorney’s fees against Routh
Crabtree.
Routh Crabtree responds that, contrary to Taylor’s assertion, it was not
found to be a party to the breached settlement agreement. Citing the Restatement
(Second) of Agency § 32827 and Jensen v. Alaska Valvation Service, Inc.,28 Routh
Crabtree contends that “[t]he agent of a competent, disclosed principal does not become
a party to a transaction made [on] behalf of his principal.” Thus, Routh Crabtree
concludes it was not liable for Wells Fargo’s breach of the settlement agreement and
27
Section 328 provides that “[a]n agent, by making a contract only on behalf
of a competent disclosed or partially disclosed principal whom he has power so to bind,
does not thereby become liable for its nonperformance.” RESTATEMENT (SECOND ) OF
A GENCY § 328 (1958).
28
688 P.2d 161 (Alaska 1984).
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therefore Taylor could not be a prevailing party as against Routh Crabtree on this issue.
Moreover, Routh Crabtree also contends that it is entitled to attorney’s fees under Alaska
Civil Rule 68(c), as it participated in a joint offer of judgment that Taylor rejected, and
Taylor subsequently recovered nothing against Routh Crabtree. Based on these
arguments, Routh Crabtree argues that the superior court was correct in awarding it
attorney’s fees against Taylor.
Routh Crabtree is correct. While the superior court concluded that Wells
Fargo had breached the settlement contract, there is no indication in the record that the
superior court found Routh Crabtree also liable for Wells Fargo’s non-performance, and
the superior court’s final judgment awarded no damages against Routh Crabtree.
Moreover, Routh Crabtree is correct that, absent an agreement between it and Taylor, or
a finding that it acted negligently toward Taylor, Routh Crabtree was not liable for Wells
Fargo’s non-performance.29 We can find no indication in the record that Routh Crabtree
either agreed to be liable on the contract or committed a tort against Taylor.
Accordingly, Routh Crabtree was not liable for Wells Fargo’s subsequent non­
performance. Routh Crabtree was the prevailing party and entitled to attorney’s fees as
against Taylor.
29
Generally, a disclosed agent is not a party to a contract unless the agent and
third party otherwise agree. The rule cited by Routh Crabtree from the Restatement
(Second) of Agency, see supra n.27, is reflected in the Restatement (Third) of Agency,
which provides that “[w]hen an agent acting with actual or apparent authority makes a
contract on behalf of a disclosed principal, (1) the principal and the third party are parties
to the contract; and (2) the agent is not a party to the contract unless the agent and third
party agree otherwise.” RESTATEMENT (THIRD ) OF A GENCY § 6.01 (2006). Accordingly,
an agent generally is not liable for the principal’s subsequent non-performance on the
contract. Alternatively, the Restatement (Third) of Agency also provides that “[a]n agent
is subject to liability to a third party harmed by the agent’s tortious conduct.”
RESTATEMENT (THIRD ) OF A GENCY § 7.01 (2006).
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G. Any Right To Recover Fees For Work Performed On Behalf Of The
Dismissed Defendants Has Been Waived.
“Stephen Routh, PC and Richard Crabtree, a Partnership” and “Richard
Crabtree, individually” were dismissed by way of a Rule 54(b) judgment in January
2010. Taylor argues that any right to seek attorney’s fees for work performed on their
behalf has been waived. We agree.
Any attorney’s fees for work on behalf of the dismissed defendants should
have been requested within ten days of distribution of the final judgment that dismissed
those defendants.30 No timely request was made. Thus, any right to collect those fees
has been waived. Upon remand, the superior court shall not award attorney’s fees for
work on behalf of the dismissed defendants.
H. It Was Error To Award Routh Crabtree Attorney’s Fees For Work
Performed in Taylor’s Bankruptcy Case.
The superior court’s February 2011 Amended Final Judgment specified that
Routh Crabtree “shall recover from and have judgment from the funds in the court
registry and against Susan Taylor.” When the court later entered its May 18, 2011 order
on attorney’s fees, it did not modify this language. Thus, Routh Crabtree’s attorney’s
fees were enforceable against Taylor personally.
Taylor contends that, on account of her discharge in bankruptcy, it was
error for the superior court to award Routh Crabtree attorney’s fees against her
personally. Routh Crabtree responds that, because it sought attorney’s fees only for the
period of time after Taylor filed her bankruptcy petition, any award of fees should be
enforceable against Taylor personally.
30
Alaska Civ. R. 82(c) (stating that motions for attorney’s fees must be filed
within ten days of distribution of final judgment).
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We have held that attorney’s fees incurred in bankruptcy proceedings must
be sought in the bankruptcy court.31 Thus, it was error for the superior court to award
fees incurred by Routh Crabtree in responding to Taylor’s bankruptcy petition. Upon
remand, the superior court shall not award attorney’s fees for work in Taylor’s
bankruptcy case.
I. It Was Error To Award Routh Crabtree Attorney’s Fees Based On
The Time It Spent Seeking Penalties Against Taylor’s Attorney.
On February 17, 2011, Routh Crabtree moved for Rule 11 sanctions against
Yale Metzger, Taylor’s attorney, which the superior court ultimately denied. Routh
Crabtree’s motion for attorney’s fees, also filed on February 17, contained an itemized
list of time spent by Routh Crabtree in defense of the claims brought by Taylor. This
itemized list also included time spent seeking sanctions against Metzger, and there is no
indication in the record that the superior court excluded this time in its ultimate
calculation of attorney’s fees. Because Routh Crabtree should not receive attorney’s fees
based on the time it spent seeking sanctions against Metzger, we direct the superior court
on remand to remove those attorney’s fees awarded based on the time Routh Crabtree
spent seeking penalties against Metzger.
31
Rockstad v. Erikson, 113 P.3d 1215, 1225 (Alaska 2005) (“[I]t was the sole
province of the bankruptcy court, and not the superior court or this court, to award
attorney’s fees to Erikson for his efforts in responding to Rockstad’s bankruptcy
petition.”).
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V. CONCLUSION
Because Wells Fargo abandoned its claim for rental damages at trial, we
REVERSE the superior court’s award to Wells Fargo of rental damages for Taylor’s
post-foreclosure occupancy of the property. Accordingly, any award of prejudgment
interest to Wells Fargo in relation to the superior court’s award of rental damages is
vacated. Because the superior court did not apply Farnsworth to calculate whether Wells
Fargo was a prevailing party under Rule 68, we REMAND for further calculation. As
part of the remand, the superior court is directed to remove attorney’s fees awarded to
Routh Crabtree for work performed on behalf of the dismissed defendants, attorney’s
fees awarded to Routh Crabtree for work performed in Taylor’s bankruptcy case, and
attorney’s fees awarded to Routh Crabtree that were based on the time Routh Crabtree
spent seeking penalties against Yale Metzger. We AFFIRM the superior court’s decision
in all other respects.
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