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Rush v. State, Department of Natural Resources (09/17/2004) sp-5831
Rush v. State, Department of Natural Resources (09/17/2004) sp-5831
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
EVELYN RUSH, )
) Supreme Court No. S-10926
Appellant, )
) Superior Court No.
v. ) 3AN-01-10235 CI
)
STATE OF ALASKA, ) O P I N I O N
DEPARTMENT OF NATURAL )
RESOURCES, PAT POURCHOT, ) [No. 5831 - September 17, 2004]
Commissioner, )
)
Appellee. )
)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sen K. Tan, Judge.
Appearances: Geoffrey Y. Parker, Law Office
of Geoffrey Y. Parker, Anchorage, for
Appellant. John T. Baker, Assistant Attorney
General, Anchorage, and Gregg D. Renkes,
Attorney General, Juneau, for Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
Mat-Su Resource Conservation and Development, a non-
profit corporation, owns the buildings that make up the Big Lake
Hatchery and leases from the state the land under those
buildings. The Alaska Department of Natural Resources plans to
auction the land. It intends to run the auction according to the
terms of AS 38.05.090 as that statute read when the corporation
took on the lease, which will require any buyer of the land to
also purchase the buildings from the corporation. The statute
has since been amended. The appellant, Evelyn Rush, argues that
the auction and the disposition of the buildings must follow the
current version of the statute, but the state claims that doing
so would unlawfully give the statute retroactive effect. We hold
that applying the current statute would have an impermissible
retroactive effect on property rights.
II. FACTS AND PROCEEDINGS
A. Factual History
The ten-acre parcel, home to the Big Lake Hatchery,
lies on Meadow Creek in the Matanuska-Susitna Borough. In 1975
the Department of Natural Resources (DNR) leased the parcel to
the Alaska Department of Fish and Game (ADF&G) under a twenty-
year lease so that ADF&G could start a fish hatchery. The lease
incorporated some, but not all, of the provisions of AS
38.05.090, a statute governing the disposition of improvements
upon the termination of a lease of state land. In 1993 ADF&G
stopped operating the hatchery, which by that time consisted of
several buildings on about ten acres, and assigned the lease to
the Matanuska-Susitna Borough (the Borough). The Borough and Mat-
Su Resource Conservation and Development (RC&D), a non-profit
corporation, agreed that RC&D would provide a caretaker for the
site.
The Borough accepted the assignment from ADF&G on April
26, 1994; DNR approved the transaction a month later. Also on
April 26, 1994, the state transferred the buildings on the site
to the Borough. Under the transfer agreement, the Borough could
not convey an interest in the buildings for two years, after
which it would automatically gain unconditional title. Also on
that day, RC&D and the Borough extended their caretaker
agreement, granting RC&D the right to manage and conduct its own
business in and from the hatchery, and the Borough and DNR
extended the term of the lease to 2015. In 1996 the Borough
assigned the lease to RC&D, with DNRs approval.
In 1998 confusion arose over who owned the buildings.
The president of RC&D wrote to the Borough manager, claiming that
the buildings were included with the lease assignment because the
various April 26, 1994 agreements consolidated the buildings and
land into one package. The letter offered no documentation for
this understanding of the transactions. A DNR staffer
acknowledged the confusion over ownership but did not resolve it.
In 1999 RC&D applied to purchase the land. DNR found
that selling the parcel at auction would be in the best interest
of the state, a prerequisite to the sale under AS 38.05.035(e).
DNRs decision announced that [i]f Mat-Su RC&D is not the highest
bidder for the land, the highest bidder must pay Mat-Su RC&D for
the appraised value of the structures. This directive, as more
fully described below, corresponds to the requirements of AS
38.05.090 as it stood before its amendment in 1997. Evelyn Rush,
a neighbor of the hatchery site, appealed the decision to the
Commissioner of DNR, challenging RC&Ds ownership of the
buildings. The Commissioner remanded the case to DNR staff for a
determination of who owned the buildings. In response, on
February 15, 2000, the Borough passed an ordinance convey[ing]
the buildings, structures, and equipment on the Big Lake Hatchery
to RC&D. DNR then found that RC&D owned the buildings and
otherwise affirmed its previous decision. The Commissioner
affirmed the staff decision. Rush then appealed to the superior
court.
B. Procedural History
On appeal to the superior court, Rush challenged DNRs
decision, advancing several different reasons to support her
contention that the sale would not be in the best interests of
the state. The claims relevant to this appeal argue that the
terms that DNR set out for the auction are arbitrary. Rush
claimed that requiring a bidder to pay Mat-Su RC&D the appraised
value of the buildings is unlawful under the version of AS
38.05.090 currently in force. The superior court held that the
department correctly applied the former version of the statute
because the 1997 amendments affect[] substantive rights and [are]
not merely procedural. The trial court affirmed DNR in all other
respects, but Rush appeals only her claim that the current
version of AS 38.05.090 should apply.
III. DISCUSSION
A. Standard of Review
On appeal from an administrative agency, we substitute
our judgment for that of the agency on questions which do not
implicate agency expertise.1 This appeal presents a pure
question of law that requires no such expertise.
B. Rush Did Not Waive Her Claim that the Auction of the
Hatchery Land Should Follow the Present Version of AS
38.05.090.
Two distinct questions arise in cases concerning the
retroactive application of statutes. First, may the statute be
applied retroactively? Second, would applying the statute in
this case be retroactive? In this case, the answer to the first
question is beyond dispute. Alaska law holds that [n]o statute
is retrospective unless expressly declared therein,2 and there is
no such declaration for the amended AS 38.05.090.3 The second
question, whether applying the current version of the statute
would have a retroactive effect, engages us here. If it would be
retroactive, then it may not be applied.
The state claims that Rush raised the issue of
retroactivity for the first time in her reply brief before the
superior court and therefore waived her claim. While the state
is correct that Rush used the term retroactive for the first time
in her superior court reply brief, this does not constitute a
waiver of any claim because Rush is not claiming that any law
should be applied retroactively. The heart of her position is
that the termination of a lease of state land ought to be
governed by the law in effect at the time of the termination;
that the previous version imposed different requirements is not
raised in her claim. It was the states response that raised the
issue of retroactivity, saying that it could not lawfully apply
the current statute to this lease because doing so would give the
statute retroactive effect.
Rushs counter-argument, raised in her reply brief
below, is that applying the current statute to this lease will
not give it retroactive effect. This is the first point in the
litigation at which Rush had any need to refer to retroactivity.
When this courts case law discusses when the court will or will
not consider new arguments, we mean entirely new legal theories.4
Rushs reference to retroactivity in her reply brief below was not
a new theory. It was an appropriate reply to the States
argument, supporting her basic argument that the current AS
38.05.090 should apply to this lease termination. Furthermore,
she does not change that line of attack on appeal. Her basic
claim has been the same all along: The current version of the
statute should be applied. Rush has not waived her claim.
C. Applying the Current Version of AS 38.05.090 Would Have
an Impermissible Retroactive Effect on Transactions
Conducted Under the Former Version.
Alaska Statute 38.05.090 governs the disposition of
improvements placed on state land by lessees of the land. In
1997 the legislature changed the statute in a number of ways.5
Two of the changes are relevant here. First, the former statute
required removal of improvements owned by a lessee, so long as
removal would not damage the land.6 The current statute also
requires removal and provides that lessees must return the land
to good and marketable condition.7 Under the former statute,
improvements or chattels whose value exceeded $10,000 could be
sold at public auction if not removed, with the proceeds going to
the lessee.8 Most importantly, any subsequent purchaser of the
land was required to purchase improvements that had become
fixtures of the land, with the proceeds also going to the former
lessee.9 Under the current statute, any property left on the
leasehold, whether a fixture or not, becomes the property of the
state and the lessee receives no compensation,10 unless they are
[p]rivate residential improvements.11 The current version also
includes stronger restoration requirements than the former
statute, which could become important later in the life of this
parcel12 but are not implicated directly by the DNR decision from
which Rush appeals.
As described above, the question in this case is
whether the current version of AS 38.05.090 would have a
retroactive effect if applied to the termination of RC&Ds lease.
If it would, the statute may not be applied. [A] statute will be
considered retroactive insofar as it gives to pre-enactment
conduct a different legal effect from that which it would have
had without passage of the statute. 13 A statute creates this
different legal effect if it would impair rights a party had when
he acted, increase a partys liability for past conduct, or impose
new duties with respect to transactions already completed.14
Under the former statute, when a lessee acquired
fixtures by purchasing or building them, among the property
rights he gained was the right to force any buyer of the state
land to purchase the fixtures. Under the new statute, that
property right no longer exists. The record is not clear as to
whether RC&D acquired the buildings under the old law when it
accepted the assignment of the lease or under the new law when
the Borough passed its ordinance conveying them. The timing of
the acquisition does not matter to the outcome of the case,
however, because under either scenario, applying the new law
would alter the consequences of a transaction conducted under the
former version and therefore have a retroactive effect.
The former statute was in effect in 1996 when RC&D
accepted assignment of the lease. If RC&D acquired the buildings
at that time, then it had the right to force their purchase upon
sale of the land. Applying the new law would take away that
right, thus altering the legal effect of its acquisition.
Alternatively, RC&D may have only acquired the buildings as a
result of the 2000 Borough ordinance, after the law changed. But
the Borough acquired the hatchery fixtures from ADF&G in 1994,
under the old statute, and therefore its property rights in the
buildings included the right to force their sale. At the same
time, the Borough gained the right to transfer everything it
owned the buildings and all of its property rights it had in
them. The ability to transfer all rights is a basic aspect of
property: A property right consists not merely in its ownership
and possession, but in the unrestricted right of . . . disposal.15
This principle is most commonly encountered in the law
of zoning. A landowner may have a grandfathered right to use his
property in a way that current zoning would not allow because he
had put the land to that nonconforming use before it was barred.16
When the owner sells the land, the purchaser takes the
grandfathered right to continue the nonconforming use.17
Similarly, here the right to force a sale of the
fixtures was part of what the Borough gave RC&D when it
transferred the buildings via the 2000 Borough ordinance.
Applying the new statute would deny RC&D that right and thus
diminish the Boroughs right to transfer all that it held, a right
that it gained when it acquired the buildings from ADF&G in 1994.
This would change the legal effect of the 1994 transaction, the
mark of a retroactive application.
IV. CONCLUSION
Because the current version of AS 38.05.090 may not be
applied retroactively and because applying it to the sale of this
parcel would have a retroactive effect regardless of when RC&D
acquired the buildings, we AFFIRM the decision of the superior
court.
_______________________________
1 Earth Res. Co. of Alaska v. State, Dept of Revenue, 665
P.2d 960, 964-65 (Alaska 1983).
2 AS 01.10.090.
3 The only express declaration of retroactivity at all
connected to AS 38.05.090 applies to a different part of the Act
that amended the statute. Ch. 91, 44, SLA 1997.
4 See, e.g., Krossa v. All Alaskan Seafoods, Inc., 37
P.3d 411, 418-19 (Alaska 2001) (rejecting as an impermissible new
argument the plaintiffs claim that contract was void because he
entered it under duress, where his arguments below all sought
enforcement of the contract as he interpreted it).
5 Ch. 91, 21, SLA 1997. The pre-1997 version of AS
38.05.090 provided in relevant part:
Removal or reversion of improvements
upon termination of leases. (a) Improvements
owned by a lessee on state land shall, within
60 days after the termination of the lease,
be removed by the lessee if removal will not
cause injury or damage to the land. The
director may extend the time for removing
improvements in cases where hardship is
proven. The retiring lessee or permittee
may, with the consent of the director, sell
improvements to the succeeding lessee or
permittee.
(b) If improvements or chattels, or
both, having an appraised value exceeding
$10,000 as determined by the director are not
removed within the time allowed, the
improvements or chattels or both shall, upon
notice to the lessee, be sold at public sale
under the direction of the director. The
proceeds of sale inure to the lessee who
placed the improvements or chattels on the
land after paying to the state all rents due
and expenses incurred in making the sale. If
there are no other bidders at the sale, the
director may bid in the name of the state.
The bid money shall be taken from the fund to
which the land belongs and the fund shall
receive all money or other value subsequently
derived from the sale or leasing of the
improvements or chattels. The state acquires
all the rights that any other purchaser could
acquire by reason of the purchase.
(c) If improvements or chattels, or
both, having an appraised value of $10,000 or
less, as determined by the director, are not
removed within the time allowed, they revert
to the state and absolute title vests in the
state. The preference right lesseees of
grazing or forest land may follow the
provisions for removal of improvements upon
termination of the lease as authorized in the
cancelled federal lease or permit.
(d) Improvements of the lessee which
have become fixtures of the land shall be
purchased by the subsequent purchaser or
lessee of the land if the improvements were
authorized in the former lease or by permit
from the director. Upon the termination of a
lease, and at additional times which may be
necessary, the value of the authorized
fixtures remaining on the land shall be set
by agreement between the former lessee and
the director or, if agreement cannot be
reached, by an independent appraisal made at
cost to the former lessee.
The current version of AS 38.05.090 provides in relevant part:
(a) Unless otherwise agreed to in
writing by the commissioner, a lessee shall
remove from a former leasehold
(1) all personal property, including
above-ground tanks, transportable buildings,
equipment, machinery, tools, and other goods,
not belonging to the state, within 30 days
after termination of the lease; and
(2) all buildings and fixtures,
including gravel pads, and below-ground
tanks, foundations, and slabs, not belonging
to the state, within 60 days after
termination of the lease.
(b) Unless otherwise agreed to in
writing by the commissioner, the lessee shall
restore the leasehold to a good and
marketable condition, acceptable to the
commissioner, within 120 days after
termination of the lease.
(c) If the lessee does not remove
personal property, buildings, and fixtures as
required within the time specified under (a)
of this section, title to the personal
property, buildings, and fixtures that remain
automatically vests in the state unless the
commissioner elects to remove and dispose of
the remaining personal property, buildings,
and fixtures of the lessee. The commissioner
may assess upon the lessee the cost of
removing and disposing of personal property,
buildings, and fixtures remaining upon the
land.
(d) If the lessee does not restore the
land within the time period specified under
(b) of this section, the commissioner may
have the land restored and assess the costs
upon the lessee.
(e) As part of a lease agreement, and
in order to protect the public interest, the
commissioner may require terms for removal or
reversion of improvements additional to those
specified in (a) (d) of this section.
6 Former AS 38.05.090(a).
7 AS 38.05.090(a), (b).
8 Former AS 38.05.090(b).
9 Id. at (d).
10 AS 38.05.090(c).
11 Id. at (f).
12 Id. at (d), (e). Neither party makes any argument
concerning the effect of these provisions on the retroactivity of
the statute as a whole.
13 Eastwind, Inc. v. State, 951 P.2d 844, 847 (Alaska
1997) (quoting Norton v. Alcoholic Beverage Control Bd., 695 P.2d
1090, 1093 (Alaska 1985)).
14 Landgraf v. USI Film Prods., Inc., 511 U.S. 244, 245,
280 (1994).
15 OConnor v. City of Moscow, 202 P.2d 401, 404 (Idaho
1949).
16 See 1 Kenneth H. Young, Andersons American Law of
Zoning 6.0-6.06 (4th ed. 1996).
17 See 8A McQuillins Municipal Corporations 25.183.50 (3d
ed. 2003).
