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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Cook Schuhmann & Groseclose, Inc. v. Brown & Root, Inc. (06/18/2004) sp-5817

This has been WITHDRAWN - see Opinion # 5921

Cook Schuhmann & Groseclose, Inc. v. Brown & Root, Inc. (06/18/2004) sp-5817

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA


COOK SCHUHMANN &         )
GROSECLOSE, INC.,             )    Supreme Court No. S-10922
                              )
             Appellant,            )    Superior Court No. 4FA-02-
1216 CI
                              )
     v.                       )    O P I N I O N
                              )
BROWN & ROOT, INC.,      )    [No. 5817 - June 18, 2004]
                              )
             Appellee.             )
                              )



          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, Richard D. Savell, Judge.

          Appearances:   Robert B.  Groseclose,  Jo  A.
          Kuchle,  and Peter M. LeBlanc, Cook Schuhmann
          & Groseclose, Inc., Fairbanks, for Appellant.
          James  D. DeWitt and Aisha Tinker Bray, Guess
          & Rudd P.C., Fairbanks, for Appellee.

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

          EASTAUGH, Justice.

I.   INTRODUCTION

          The beneficiary of a second deed of trust contends that

a nonjudicial foreclosure sale on the first deed of trust was not

fair  and reasonable and violated the controlling statutes.   The

trustee  halted the sale and postponed it for four hours to  give

two  prospective bidders time to obtain cash or cashiers  checks.

Because  this procedure was not unfair or unreasonable under  the

circumstances presented here, we affirm the summary judgment  for

Brown & Root, Inc., whose offset bid was the only bid received at

the  reconvened  sale auction.  We also affirm the  Alaska  Civil

Rule  68  award of attorneys fees to Brown & Root.  Its offer  of

judgment  offering to reconduct the foreclosure sale was  neither

premature  (even though it was made before the parties  exchanged

Alaska Civil Rule 26 disclosures) nor ambiguous.

II.  FACTS AND PROCEEDINGS

          Michelle Lisper and Linda Jean Ross held two parcels of

real  property  in  Fairbanks subject to a first  deed  of  trust

issued  February 7, 1994 in favor of Brown & Root.  The  deed  of

trust  secured an obligation to make a payment of $200,000,  plus

interest,  on  or before April 1, 1998.  Yukon Title  Agency  was

named as trustee.1  In 1995 Lisper and Ross granted a second deed

of  trust to appellant, Cook Schuhmann & Groseclose, Inc. (Cook),

to  secure  an  indebtedness of $25,000.   Both  deeds  of  trust

provided for sale of the property upon default to the highest and

best  bidder  for  cash  in lawful money of  the  United  States,

payable at time of sale.

          When Lisper and Ross failed to make the payments due on

the  first  deed  of trust, Brown & Root executed a  Beneficiarys

Declaration  of  Default and instructed Yukon Title  to  initiate

foreclosure.  The sale was noticed for January 14,  2002, but was

continued  at the beneficiarys request to March 28,  2002  at  10

a.m.   The  Notice of Default and Sale stated that  the  property

would be sold for cash or cashiers check to the highest bidder at

public  auction.   The  notice  stated  the  sum  owing  on   the

obligation, but not the amount of the anticipated offset bid.

          On   March  28,  2002  Catherine  Floerchinger,   vice-

president  of  Yukon Title, went to the Rabinowitz Courthouse  to

conduct  the foreclosure sale.  Cooks representative, Jo  Kuchle,

was among those present.  Floerchinger asked if anyone planned to

bid  at  the  sale.  Terry Stahlman indicated a  desire  to  bid.

Floerchinger  took him aside and reviewed his funds to  ascertain

whether  he  had  sufficient  funds  to  exceed  Brown  &   Roots

          anticipated offset bid of $302,957.  Because Stahlman only had a

cashiers  check for $300,000, Floerchinger told him  he  was  not

qualified to bid at the sale.

          Floerchinger began the foreclosure sale and entered the

beneficiarys offset bid.  When she asked if there were any  other

bidders,  Cliff  Everts attempted to bid $305,000.   Floerchinger

asked why he had not identified himself earlier; Everts responded

that  he  was  hard  of  hearing  and  had  not  heard  her  ask.

Floerchinger  took  him  aside  to  determine  whether   he   had

sufficient funds to bid.  He had no cash or certified funds,  but

told Floerchinger that he could obtain the money from his banker.

          Having determined that no qualified bidders, apart from

the  beneficiary,  were present, but that two  potential  bidders

might  become  qualified, Floerchinger decided  to  postpone  the

sale.  She informed the group that the sale was postponed until 2

p.m.  that  day.  Following Floerchingers announcement,  Stahlman

told  the  group that he would have bid up to $350,000.   Shortly

thereafter  Stahlman  and  Everts discussed  whether  they  would

attend the postponed sale.  Stahlman told Everts that if Brown  &

Root  obtained  title  to the property, it would  strip  off  the

junior  liens,  at  which  time one of them  could  purchase  the

property for less money.

          At  2  p.m. Floerchinger returned to the courthouse  to

hold   the   sale.   Stahlman  and  Everts  were   not   present.

Floerchinger  submitted Brown & Roots offset bid.   No  one  else

bid, so Floerchinger sold the property to the beneficiary for the

offset  bid.  Yukon Title issued a trustees deed to Brown &  Root

on April 9, 2002.

          Cook  filed a superior court complaint against Brown  &

Root  on  May 21, 2002.  It alleged that Brown & Root  failed  to

conduct a commercially reasonable sale, violated AS 34.20.080(e),

and  tortiously interfered with Cooks second deed of trust.   The

complaint requested that the court place an equitable lien on the

property,  set aside the sale, enter a judgment against  Brown  &

Root  for the amount of Cooks junior lien ($25,000 plus statutory

interest), enter a judgment against Brown & Root for all economic

and  noneconomic damages and for attorneys fees  and  costs,  and

provide  such  additional relief as the  court  deemed  just  and

equitable.

          Brown & Root served a Rule 68 offer of judgment on Cook

on  July  9,  2002.   Among other things, the offer  of  judgment

offered  to  re-conduct the foreclosure sale  and  to  cover  the

expense  of  the notice and sale.  On September 5, 2002  Brown  &

Root moved for summary judgment.  The superior court granted  the

motion.   Citing Rule 68(b)(1), Brown & Root then  moved  for  an

award  of  seventy-five  percent  of  its  attorneys  fees.   The

superior court awarded fees in the amount Brown & Root requested.

The court entered final judgment on January 23, 2003.

          Cook appeals.

III. DISCUSSION

     A.   Whether the Nonjudicial Deed of Trust Foreclosure  Sale
          Must Be Set Aside as Unfair or Unreasonable
          
          1.   Standard of review

          A  grant of summary judgment is reviewed de novo.2   We

review  the  facts  presented in a light most  favorable  to  the

non-movant  to determine whether any genuine issues  of  material

fact  exist and whether the movant is entitled to judgment  as  a

matter of law.3

          2.   Whether the nonjudicial deed of trust foreclosure sale was
               unfair or unreasonable
               
          Cook  argues that Brown & Root violated Alaska  law  in

conducting a nonjudicial deed of trust foreclosure sale that  was

unfair and unreasonable.  It reasons that the notice of sale  was

deficient  because  it  failed  to  reveal  the  amount  of   the

anticipated  offset  bid.  It also argues  that  the  notice  was

deficient  because it failed to warn potential bidders  that  the

trustee  would regard any bidder without enough cash or  a  large

enough cashiers check to match the trustees bid as unqualified to

bid  on  the  property.   Finally, it asserts  that  the  trustee

          violated Alaska law by postponing the sale after it had started.

          We  have stated our reluctance to set aside foreclosure

sales  except in the most unusual circumstances.4  Even when  the

sale  fails to comply with the statutory provisions, we will  set

it aside only in cases that reach unjust extremes.5

          The  statutory  conditions were met here.   Alaska  law

does  not require the trustee to give prospective bidders  notice

of  the amount of the anticipated offset bid or inform them  that

the  trustee may require them to demonstrate their ability to pay

their  bids  in  cash or cashiers checks at  the  time  of  sale.

Alaska  law  only requires that the trustee record  a  notice  of

default that specifies the name of the trustor, the book and page

where  the  trust deed is recorded, a description  of  the  trust

property,  a statement that a breach of the obligation for  which

the  deed  of trust is security has occurred, the nature  of  the

breach, the sum of the obligation, the election by the trustee to

sell  the  property, and the date, time, and place of the  sale.6

The  statute requires notice of the amount of the obligation;  it

does  not require notice of the amount of the anticipated  offset

bid.7   Nor  does it require notice that the trustee may  require

bidders  to demonstrate their ability to satisfy the sale terms.8

Cook  conceded  at oral argument on appeal that  nothing  in  the

statute precluded the procedure followed here.

          No  Alaska  statutes or cases specify  a  procedure  by

which  the  trustee  must  conduct a  foreclosure  sale.   Alaska

Statute  34.20.080 only requires that the procedure  comply  with

the terms and conditions of the deed of trust.  Here the deed  of

trust  required the buyer to pay cash at the time  of  sale.   It

stated:  Trustee . . . shall sell said property . . .  at  public

auction, to the highest and best bidder for cash in lawful  money

of  the United States, payable at time of sale.  Per the deed  of

trust,  the trustee was to provide written notice of the  default

and  the sale.  The notice of default announced that the property

would be sold for cash or cashiers check to the highest bidder at

          public auction.

          We  next  consider whether the procedure followed  here

inherently  rendered the sale unfair and unreasonable,  requiring

that  we set it aside.  Potential bidders with advance notice  of

the amount of the beneficiarys proposed offset bid might well  be

better  able to bid successfully at the auction.  But we are  not

convinced that the failure of a notice to state the amount of the

anticipated  offset  bid prevents potential bidders  from  either

independently calculating that amount or asking the  trustee  how

to calculate it.

          We  also  agree  that giving advance  notice  that  the

trustee  will  require cash or a cash equivalent at  the  auction

would potentially benefit those who, like Cook, hold junior deeds

of   trust.9   Holders  of  junior  deeds  of  trust  would  also

potentially  benefit from a procedure that would allow  at  least

some appropriate grace period between receipt of the high bid and

payment of the required cash or cashiers check.

          But  it is not necessary to decide in this case whether

a  notice  that  fails to inform bidders that  the  trustee  will

require   immediate  payment  in  cash  or  a   cash   equivalent

necessarily renders the foreclosure sale unfair and unreasonable.

Nor  is it necessary to decide whether a foreclosure sale becomes

unfair  and  unreasonable if the trustee  declines  to  give  the

apparent high bidder a brief grace period in which to secure  the

required cash or cashiers check.   We do not have to decide those

questions   because  the  postponement  (the   third   procedural

deficiency alleged by Cook) actually remedied any other  possible

procedural  deficiencies.  Neither AS 34.20.070 nor the  deed  of

trust  precluded  the trustee from postponing the  sale  when  it

appeared that both prospective bidders other than the beneficiary

had insufficient cash (or its equivalent) to consummate a sale at

the scheduled time.  The deed of trust gave the trustee authority

to  postpone the sale.  By giving two prospective bidders  actual

knowledge of the amount of the offset bid and the need  for  cash

          or its equivalent, postponement provided some of the advance

notice Cook advocates.

          Also,  neither Stahlman nor Everts was prepared to  pay

in  cash  or by cashiers check at the close of the 10 a.m.  sale.

Postponement  therefore gave them an opportunity  to  cure  their

inability  to  consummate a sale if one  of  them  was  the  high

bidder;   postponement  potentially  allowed   them   to   submit

qualifying  bids.   As it turned out, they apparently  conferred,

chose  not  to bid against each other, and elected not to  return

when  the trustee reconvened the auction at 2 p.m.  But Cook  has

directed  us  to  no evidence that Brown & Root  or  the  trustee

procured  their  absence  or colluded  with  them,  or  otherwise

behaved  in  a  way  that  was intended to  disfavor  Cook.   The

postponement  potentially benefitted Cook.  Had  the  sale  taken

place at 10 a.m., the only qualifying bid would have been Brown &

Roots  offset  bid; a sale that morning as scheduled  would  have

therefore inevitably erased Cooks second deed of trust.

          Brown  &  Root also argues that Cook failed to preserve

any objection to the procedure or postponement.  Given our ruling

on the merits of these issues, we do not need to consider whether

Cook waived or preserved the issue.

     B.   Whether Brown & Root Made a Valid Offer of Judgment  by
          Offering To Reconduct the Foreclosure Sale
          
          1.   Standard of review

          The interpretation of Rule 68 is a question of law that

[this court] review[s] de novo, adopting the rule of law that  is

most persuasive in light of precedent, policy and reason. 10   We

review  awards  of  costs  and  attorneys  fees   for  abuse   of

discretion,  which  exists if an award is arbitrary,  capricious,

manifestly unreasonable, or improperly motivated.11

          2.   Validity of the offer

          Cook  challenges the superior courts award of  Rule  68

attorneys fees to Brown & Root.  Rule 68 provides in part:

          (b)   If the judgment finally rendered by the
          court is at least 5 percent less favorable to
          the  offeree than the offer . . . the offeree
          .  .  .  shall pay all costs as allowed under
          the  Civil  Rules  and shall  pay  reasonable
          actual  attorney fees incurred by the offeror
          from the date the offer was made as follows:
               (1)   if  the offer was served no  later
               than 60 days after both parties made the
               disclosures required by Civil  Rule  26,
               the  offeree shall pay 75 percent of the
               offerors   reasonable  actual   attorney
               fees.
               
On  January  3,  2003  the superior court awarded  Brown  &  Root

seventy-five  percent of its attorneys fees, in  accordance  with

Rule 68(b)(1).  Cook challenges the award on several grounds.

          Cook  first argues that the offer was untimely  because

it  was  made before  the parties exchanged Alaska Civil Rule  26

disclosures.   Cook reads Rule 68 to apply only  to  offers  made

after Rule 26 disclosures are exchanged because, it reasons, this

ensures  that  the  parties  possess  sufficient  information  to

evaluate  the  offer.  Brown & Root argues that its offer,  which

was served before Rule 26 disclosures were due, was not premature

under Rule 68(b)(1).

          Because Rule 68 does not preclude pre-disclosure offers

of  judgment, the offer of judgment here was timely.  Rule 68 has

the  purpose  of encouraging settlements and avoiding  protracted

litigation.12   If an offer is served no later  than  sixty  days

after Rule 26 disclosures are made, the offeror recovers seventy-

five percent of its attorney fees.13  If the offer is served after

the  sixty-day  deadline but more than ninety days before  trial,

the  offeror  recovers  fifty percent of its  attorney  fees;  it

recovers  thirty percent if the offer is served  ninety  days  or

less  but  more than ten days before trial.14  The rule therefore

penalizes parties for delay.  But it does not say when in a civil

action  a party may first make an offer of judgment.  Rather,  it

states  only  when  a party may last make an offer  of  judgment:

either  party may make an offer [a]t any time more than  10  days

before  the trial begins.15  Because Brown & Root made its  offer

before the sixty-day deadline contemplated by subpart (b)(1), its

offer  was  timely for purposes of awarding fees at the  enhanced

          rate.16

          Cook  next contends that the offer was ambiguous.  Cook

argues, among other things, that the offer was invalid because it

failed  to state a definite sum.  We conclude that the offer  was

valid.   It unambiguously described exactly what relief  Brown  &

Root  would provide if the offer were accepted.  Although we held

in  Farr  v.  Stepp that [a]n offer of judgment  must  specify  a

definite sum and must be unconditional, our real concern in  that

case  related  to  the specificity of the offer rather  than  its

communication of a monetary amount.17  Rule 68 permits offers that

allow  judgment  for  the  money or property  or  to  the  effect

specified  in  the offer.18  Nonmonetary offers of  judgment  are

valid  under  the  rule  so  long as  they  are  unambiguous  and

unconditional.

          We  recognize that this result could potentially  raise

at  least one additional question with respect to attorneys  fees

awards:  how  are  courts  to quantify  a  nonmonetary  offer  in

determining whether it was five percent more favorable  than  the

judgment?  We need not address that issue here, however,  because

it was not squarely raised by Cook on appeal.  Moreover, we think

there  is no question that the judgment for Brown & Root was  far

less favorable to Cook than the offer of judgment.

IV.  CONCLUSION

          For these reasons we AFFIRM the judgment below.

_______________________________
     1     The  company is also identified in the record as Yukon
Title Company.

     2    Crosby v. Hummell, 63 P.3d 1022, 1027 (Alaska 2003).

     3    Id.

     4    McHugh v. Church, 583 P.2d 210, 216 (Alaska 1978).

     5     Rosenberg  v. Smidt, 727 P.2d 778, 783 (Alaska  1986);
see  also McHugh, 583 P.2d at 216; Semlek v. Natl Bank of Alaska,
458 P.2d 1003, 1006 (Alaska 1969).

     6    AS 34.20.070(b) states:

          Not  less than 30 days after the default  and
          not  less  than three months before the  sale
          the trustee shall record in the office of the
          recorder  of the recording district in  which
          the  trust  property is located a  notice  of
          default  setting  out (1)  the  name  of  the
          trustor,  (2)  the book and  page  where  the
          trust deed is recorded, (3) a description  of
          the  trust  property, including the propertys
          street  address if there is a street  address
          for  the  property, (4) a  statement  that  a
          breach  of the obligation for which the  deed
          of  trust is security has occurred,  (5)  the
          nature  of the breach, (6) the sum  owing  on
          the  obligation,  (7)  the  election  by  the
          trustee  to sell the property to satisfy  the
          obligation, and (8) the date, time, and place
          of  the  sale.  An inaccuracy in  the  street
          address may not be used to set aside  a  sale
          if  the legal description is correct.  At any
          time  before  the  sale, if the  default  has
          arisen  by failure to make payments  required
          by  the trust deed, the default may be  cured
          by  payment of the sum in default other  than
          the principal which would not then be due  if
          no  default had occurred, plus attorney  fees
          or  court  costs  actually  incurred  by  the
          trustee  due  to the default.  If  under  the
          same  trust deed notice of default under this
          subsection  has  been recorded  two  or  more
          times  previously  and the default  has  been
          cured under this subsection, the trustee  may
          elect  to  refuse  payment and  continue  the
          sale.
          
     7     Id.  The amount of the offset bid is the sum owing  on
the  obligation  as of the time of publication  of  notice,  plus
interest,  costs,  and  expenses, including reasonable  attorneys
fees, incurred by the beneficiary until the time of sale.

     8    Id.

     9     The  parties  dispute whether the deed  of  trust  and
notice  of  default provided such notice.  Cook argues  that  the
term  time of sale did not necessarily refer to the auction.   We
do  not  read  the  deed  of trust and the  notice  to  encourage
prospective  bidders to think that they would not be required  to
pay cash at the auction.

     10     Mackie v. Chizmar, 965 P.2d 1202, 1204 (Alaska  1998)
(quoting Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska 1996)).

     11    Kellis v. Crites, 20 P.3d 1112, 1113 (Alaska 2001).

     12    Fernandes v. Portwine, 56 P.3d 1, 8 (Alaska 2002).

     13    Alaska R. Civ. P. 68(b)(1).

     14    Alaska R. Civ. P. 68(b)(2)-(3).

     15    Alaska R. Civ. P. 68(a) (emphasis added).

     16     See  Farr  v.  Stepp, 788 P.2d 35, 37  (Alaska  1990)
(holding  that Rule 68 does not preclude making offer of judgment
while motion to amend pleading is pending).

     17    Id.

     18    Alaska R. Civ. P. 68(a) (emphasis added).