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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 (07/08/2005) sp-5921

Cook Schuhmann & Groseclose, Inc v Brown & Root (07/08/2005) sp-5921

     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. ) OPINION ON REHEARING
)
BROWN & ROOT, INC., ) [No. 5921 - July 8, 2005]
)
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.
          BRYNER, Chief Justice, dissenting in part.

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 filed a petition for rehearing after we issued our
original opinion of June 18, 2004.  Cooks petition argued for the
first  time that the history of the legislation which amended  AS
09.30.065 and which was the basis for our 1997 amendment of  Rule
68  supports  Cooks  view that Rule 68(b)(1) does  not  apply  to
offers of judgment made before Rule 26 disclosures are exchanged.17
We asked Brown & Root to respond to the petition.
          Cooks  petition  argued that comments of Representative
Porter,  the  bills  sponsor, support its interpretation  of  the
meaning  of  the  proposed  amendment.   On  February  21,  1997,
Representative  Porter  made  these  comments  before  the  House
Judiciary Committee:
          [O]ffers  of judgment are, after a  case  has
          been filed, one party or the other can make a
          formal  offer to settle the case.   And  what
          were  trying  to do is to inspire  reasonable
          offers  and  reasonable assessment  of  those
          offers   and   taking  them   if   they   are
          reasonable,   consequently  eliminating   the
          costs of the process up to and including  the
          trial,  which is a cost to both  parties  and
          the state and everybody else.
          
               . . . .

          If  that  offer was made real early, then  it
          would  be  real  expensive  to  you  if  that
          happened,  and a little bit less  if  it  was
          made  later and a little bit less if  it  was
          made later.
          
               . . . .

          Consequently,  what were saying  is  that  if
          this  offer is made within a short period  of
          time,  from  the ability that you would  have
          after  a  case is filed to get discovery,  so
          you  kind of know where youre at, if a  short
          period of time after that the offer is  made,
          60  days after that, and you dont accept  it,
          and  when you finally go to trial, the  offer
          is  within 5 percent of  less than  what  you
          would have settled for, youve got to pay  all
          reasonable  actual attorneys fees and  costs,
          from  the  time the offer was made until  the
          judgment was entered.  This is an inducement.
          
               . . . .

          If  the offer is made later than that 60 days
          after  discovery, it goes down to 75 percent.
          If  made  just really a short time,  30  days
          before trial or something, then it goes  down
          to  50 percent.  Obviously, it is intended to
          make  people, as early on as possible, assess
          their  positions  and make reasonable  offers
          and have them accepted.
          
Representative  Porters comments seem to  reflect  an  assumption
that  a  knowledgeable offer could be made after the  disclosures
required  by  Civil Rule 26(a).  But his words do  not  expressly
suggest  that  he  intended  that  any  earlier  offer  would  be
premature and therefore invalid, the issue that is now before us.
The  text  of  the  rule, the identical text  of  the  underlying
statute,  and Representative Porters comments do not convince  us
that  offers  made  before the parties have  made  their  initial
disclosures  are premature, and therefore ineffective.   Such  an
interpretation,  moreover, would mean  that  no  offer  could  be
effective under either AS 09.30.065(a)(1) or (2) (and thus, under
Rule   68(b)(1)  or  (2))  unless  both  parties  had  made   the
disclosures required by the civil rules.  This would mean that  a
party  failing to make the required disclosure could purposefully
or  unintentionally interfere with the offer  process.   Further,
such an interpretation would conflict with the first sentence  of
Rule  68(a), which permits offers to be made [a]t any  time  more
than 10 days before the trial begins.
          Consequently, we hold on rehearing that the  offer  was
not premature and that it was not invalid even though it was made
before the parties made Rule 26 disclosures.18
          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.19  Rule 68 permits offers that
allow  judgment  for  the  money or property  or  to  the  effect
specified  in  the offer.20  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.
BRYNER, Chief Justice, dissenting in part.
          I  disagree  with the courts conclusion  that  Brown  &
Roots offer of judgment exposed Cook to an enhanced award of fees
under Civil Rule 68(b).
          Civil  Rule 68(b) strives to encourage prudent  efforts
toward  early settlements by defining three time frames in  which
refusing an offer of judgment will be deemed unreasonable and can
trigger  penalties.  The first time frame, set out  in  paragraph
(b)(1), is at issue here:
               (b)  If the judgment finally rendered by
          the   court  is  at  least  5  percent   less
          favorable to the offeree than the offer,  or,
          if there are multiple defendants, at least 10
          percent  less  favorable to the offeree  than
          the  offer,  the offeree, whether  the  party
          making  the  claim or defending  against  the
          claim,  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[.][1]
          
Rejecting an offer during this time frame can result in requiring
the  offeree to pay seventy-five percent of the offerors ultimate
fees.   But the wording of paragraph (b)(1) is ambiguous  because
it  leaves  the  exact period encompassed within  this  provision
unclear.
          At  least  two  readings  are  plausible.   First,  the
provision  can reasonably be read to define a period that  begins
upon  the filing of initial disclosures  after both parties  made
the disclosures  and that ends no more than sixty days later   no
later than 60 days after.  Alternatively, the provision might  be
read  as  describing  a period with no real beginning   in  other
words, as allowing offers under paragraph (b)(1) to be served  as
early  as  the  parties please, but no later than 60  days  after
their  initial  disclosures.  Todays opinion chooses  the  latter
meaning;  but in doing so, it ignores the provisions history,  as
well  as its purpose, and offers no sound reason to support  this
choice.
          The  opinion  begins  by recognizing  yet  disregarding
strong  legislative history that favors the  first  meaning.   On
February  21, 1997, House Bill (H.B.) 58s sponsor, Representative
Brian Porter, described to the House Judiciary Committee how Rule
68(b)(1)  was intended to work.  Representative Porter said  that
the  provision would allow attorneys fees to be awarded only when
offers of judgment are made after the parties get discovery:
               Consequently, what were saying  is  that
          if  this offer is made within a short  period
          of time, from the ability that you would have
               after a case is filed to get discovery, so
          you  kind of know where youre at, if a  short
          period of time after that the offer is  made,
          60  days after that, and you dont accept  it,
          and  when you finally go to trial, the  offer
          is  within 5 percent of  less than  what  you
          would have settled for, youve got to pay  all
          reasonable  actual attorneys fees and  costs,
          from  the  time the offer was made until  the
          judgment was entered.[2]
          
          Addressing  the same committee again three days  later,
Representative Porter cemented this point:
               [T]he provision in the offer of judgment
          is  aimed  right  after  discovery  has  been
          accomplished so that a person has a feel  for
          how  the case is, one way or the other.   The
          offer  of  judgments section comes into  play
          and will certainly induce early settlement.[3
          ]
          
          The  opinion  dismisses these statements of legislative
intent,  observing that Representative Porters  comments  do  not
convince  us that offers made before the parties have made  their
initial disclosures are premature.4  This observation misses  the
point.     Alaskas    sliding-scale   approach    to    statutory
interpretation  does  not require a definitive  statement  before
legislative history can be used as an aid in construing ambiguous
language.  And reliable expressions of legislative intent  should
not  be  ignored  when they are useful aids in  determining  what
ambiguous   language   means.    Here,   Representative   Porters
description  of  H.B.  58s  intended meaning  seems  particularly
useful  because  it comports with his description  of  the  bills
basic purpose: to encourage early settlement by penalizing unwise
decisions  made  after  a party has been fully  informed   or  as
Representative Porter put it, after the party has a feel for  how
the case is.
          Although  it  rejects  this  meaning,  todays   opinion
advances  no sound reason for concluding that a partys uninformed
decision   to   decline  an  early  offer  of   judgment   should
presumptively  be  deemed unreasonable, and therefore  penalized,
when  the  uninformed guess turns out to be wrong.  The  opinions
interpretation of Rule 68(b) seems to run counter  to  the  rules
goal  of  encouraging  reasonable action.   A  rule  that  pushes
parties  toward uninformed choice encourages unreasonable  action
and simply invites abuse.
          In defense of its interpretation, the opinion points to
two  problems  that,  in  the  courts  view,  weigh  against  the
interpretation favored by legislative history and policy.  First,
the  opinion reasons, if  Rule 68(b)(1) were construed  literally
to  require  that  both  parties make their original  disclosures
before  penalties could attach for rejecting an offer,  then  the
purposes of the rule could be subverted, because a party  failing
to   make   the   required  disclosure  could   purposefully   or
          unintentionally interfere with the offer process by failing to
make  an  initial  disclosure.5 But this  reasoning  describes  a
problem  that  will  never arise.  A party  facing  an  offer  of
judgment from an opponent that has made a timely disclosure could
never  assert  its own breach of the deadline as  an  excuse  for
rejecting the offer, since the offerees failure to disclose would
never  impair  its ability to make an informed  decision.   Civil
Rule  94 allows flexibility to depart from the strict terms of  a
rule  in  the  interest of justice.  In this  situation,  a  non-
complying offeree could hardly claim that the interest of justice
would  be  advanced by allowing its own breach  to  prevent  Rule
68(b) from applying.
          Second,  the  opinion  reasons,  Rule  68(a)  militates
against  Representative  Porters  interpretation  of  Rule  68(b)
because  such  an interpretation would conflict  with  the  first
sentence of Rule 68(a), which permits offers to be made [a]t  any
time  more  than  10 days before the trial begins.  6   But  this
argument   overlooks   the  two  distinct  purposes   served   by
subsections 68(a) and 68(b).
          In   contrast  to  subsection  68(b),  which  penalizes
unreasonable  responses to offers of judgment, subsection  68(a),
simply defines the basic framework for a valid and binding  offer
of judgment: it allows either party to make an offer at any time,
requires  the offer to remain open ten days, specifies  what  the
opposing  party  needs to do to accept it, and describes  how  to
convert  the  accepted offer into a judgment.7  Nothing  in  this
subsection  implies  that  any  penalty  necessarily   will,   or
routinely should, flow from rejecting an offer; it merely  adopts
a uniform, enforceable, and generally applicable early settlement
process   a framework that is useful and necessary regardless  of
whether  penalties are imposed for unreasonably rejecting  offers
of  judgment.  Hence no conflict exists between subsections 68(a)
and  (b): the fact that subsection 68(b) prescribes sanctions for
a limited universe of unreasonably rejected offers has no bearing
on  the  validity  or  utility  of subsection  68(a)s  procedures
enabling parties to make and accept offers at any time.
          In  keeping with H.B. 58s intended meaning and purpose,
then,  I  would  interpret  subsection  68(b)(1)s  provisions  as
triggering  penalties  only after both parties  have  made  their
initial   disclosures   (or  after  the  deadline   for   initial
disclosures has expired).  As to all other issues, I join in  the
courts opinion.
_______________________________
     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    Because Cook advances this legislative history argument
for  the first time in its petition for rehearing, Appellate Rule
506(a)  would  normally call for its rejection  as  a  basis  for
rehearing.   Watts v. Seward Sch. Bd., 423 P.2d 678, 679  (Alaska
1967) (interpreting Supreme Court Rule 35, predecessor to current
Appellate  Rule 506(a)).  But we choose to consider the  argument
because  the Rule 68(b)(1) prematurity issue may recur.  Further,
the  issue  does not require us to consider disputed  facts,  and
presents  only  a  question  of law  which  can  be  resolved  by
consideration  of  the  words  of  the  underlying  statute,  its
legislative  history,  and the text of  the  corresponding  Civil
Rule.

     18     The court nonetheless asks the Standing Committee  on
Civil  Rules  to  consider whether Civil  Rule  68(b)  should  be
amended  to clarify the offer of judgment procedure, to  consider
whether it is appropriate to preclude enhanced fee awards  as  to
successful offers of judgment made before the parties  have  made
their Rule 26(a) disclosures, and to consider the application  of
Rule  68  to cases, such as small claims cases, in which no  Rule
26(a) disclosures are required.

     19    Farr v. Stepp, 788 P.2d 35, 37 (Alaska 1990).

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

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

2     H.  Jud.  Comm.  notes,  20th Leg.,  1st  Sess.  (Feb.  21,
1997) (emphasis added).

     3     H.  Jud.  Comm. notes, 20th Leg., 1st Sess. (Feb.  24,
1997)  (emphasis added).  The same intent was echoed by the bills
sponsor  in  its  senate  version,  Senator  Robin  Taylor,   who
described  it to the Senate Judiciary Committee as requiring  the
party  who fails to accept an offer of judgment, after a  certain
date,  to pay actual attorneys fees . . . .  S. Jud. Comm. notes,
20th Leg., 1st Sess. (Mar. 12, 1997) (emphasis added).

     4    Slip Op. at 13.

     5    Slip Op. at 13.

     6    Slip Op. at 13.

     7    Civil Rule 68(a) provides:

               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.   The  offer
          may  not  be  revoked in the  10  day  period
          following service of the offer.  If within 10
          days  after service of the offer the  adverse
          party serves written notice that the offer is
          accepted,  either  party may  then  file  the
          offer and notice of acceptance together  with
          proof  of service, and the clerk shall  enter
          judgment.   An offer not accepted  within  10
          days is considered withdrawn, and evidence of
          the  offer  is  not admissible  except  in  a
          proceeding to determine costs.  The fact that
          an  offer  is made but not accepted does  not
          preclude a subsequent offer.