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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Southern Alaska Carpenters Health and Security Trust Fund v. Jones (03/07/2008) sp-6237

Southern Alaska Carpenters Health and Security Trust Fund v. Jones (03/07/2008) sp-6237, 177 P3d 844

     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,


FUND, ) S- 11360/11379/11380
Appellant/Cross-Appellee, ) Superior Court No. 3AN-99-7380 CI
v. ) O P I N I O N
SARA JONES and JUSTIN JONES and) No. 6237 March 7, 2008
Appellees/Cross-Appellants. )
          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, John Suddock, Judge.

          Appearances:   Bradley D.  Owens,  Thomas  A.
          Ballantine, Jermain, Dunnagan & Owens,  P.C.,
          Anchorage,    for   Appellant/Cross-Appellee.
          William  Grant Callow, Law Offices of William
          Grant Callow, Anchorage, for Appellees/Cross-
          Appellants  Sara and Justin Jones.   Mary  L.
          Pate,  Eide, Gingras & Pate, P.C., Anchorage,
          for      Appellee/Cross-Appellant     Janssen
          Contracting Company, Inc.

          Before:   Matthews, Eastaugh, and  Carpeneti,
          Justices.  [Fabe, Chief Justice, and  Bryner,
          Justice, not participating.]

          MATTHEWS, Justice.

          An  employee  was  told by his employer  and  a  union-
sponsored trust that he would be covered by health insurance, but
their representations turned out to be false.  The superior court
found   the   employer  and  the  trust  liable   for   negligent
misrepresentation  and  awarded compensatory  damages,  including
damages for emotional distress.  The main questions presented  in
this  appeal  are whether the claim is preempted by  the  Federal
Employee  Retirement  Income Security Act  (ERISA)  of  1974  and
whether  the  award of emotional distress damages was  justified.
We find no error on either point, and affirm.
     A.   The  Southern  Alaska  Carpenters Health  and  Security
          Trust Fund
          The  Southern  Alaska  Carpenters Health  and  Security
Trust  Fund  (Trust) is a trust established to  provide  employee
benefits,  including health insurance, to the members of  certain
labor organizations.  It is governed by a trust agreement and  is
administered  by a board of trustees (Trustees).   At  the  times
relevant to this case, Carol Patton was the administrator of  the
Trust, and Charlene Renz was her assistant.
          Under  the trust agreement, the Trust provides benefits
to  the  members  of  three local carpenters unions  and  to  the
members of other labor organizations that the Trustees designate.
The  Trust  may  also provide benefits to the nonunion  staff  of
employers  that  have collective bargaining agreements  with  the
designated  labor  organizations.   But  such  coverage  is  only
provided if an employer enters into a special agreement with  the
Trust that provides for such coverage.
          In  1991  the  Trust merged with the Alaska Bricklayers
Health  and  Welfare  Trust.  Under  the  terms  of  the  merger,
employers  and  labor  organizations  who  prior  to  1991   were
participants in the bricklayers trust became participants in  the
Trust.   At the time relevant to this case the administrator  for
the bricklayers trust was Betty ODell.
     B.   Janssen Contracting Co., Inc.
          Janssen   Contracting   Co.,  Inc.   (Janssen)   is   a
construction business controlled by George Janssen.  Janssen is a
party  to  a collective bargaining agreement with the bricklayers
union  and  made regular contributions to the Trust on behalf  of
its  union  employees.   Donna Freitas  was  the  bookkeeper  for
          Each  month Janssen contributed to the Trust on  behalf
of  its  union  member employees.  The amount was  based  on  the
number  of hours that each union member worked for Janssen during
the month in question.  To make the monthly contribution, Freitas
would  prepare a monthly remittance report, containing the  names
and   hours  worked  of  the  employees  for  whom  Janssen  made
contributions.   Freitas would submit the report  to  the  Trusts
bank  along with a check.  The bank would deposit Janssens checks
and  send copies of the transaction and the remittance report  to
the  Trust.   When Freitas had questions, she would request  help
from ODell of the merged bricklayers trust.
          At  the Trust, Renz would receive the report.  From the
report,  Renz would prepare a list of employees who were eligible
for  coverage  and  send the eligibility lists to  Administrative
Services,  Inc.,  the business that the Trust  hired  to  process
contributions and pay them to plan providers.  Shirley Pellitteri
was  the  employee at Administrative Services assigned to receive
eligibility  lists  and transmit them with corresponding  premium
payments to plan providers.
          In  the late 1980s, Janssen began to make contributions
to  the  bricklayers  trust on behalf of its nonunion  employees.
After   the   merger,  the  Trust  continued  to   accept   these
contributions.  But Janssen and the Trust did not  enter  into  a
special agreement that included nonunion employees.  This failure
gave rise to the present case.
     C.   Justin and Sara Jones
          In  1997 Janssen offered a job to Justin Jones.  At the
time,  Justin  was  working for a company  that  provided  health
insurance  to  him  and his wife Sara.  Justins  employment  with
Janssen  was  to  be as a project engineer, a nonunion  position.
Janssen  promised to provide him with a health care plan  through
the  Trust.   In  April 1997 Justin accepted  the  position  with
          There  was  a gap between the time when Justins  former
employer  would  no  longer  provide  the  Joneses  with   health
insurance  and  when  the  Trust health  insurance  would  become
effective.  Freitas told Justin that Janssen would not be able to
provide health insurance to the Joneses for Justins first  ninety
days  of  employment.  To fill this gap, Justin  purchased  COBRA
insurance.   Justin  was particularly concerned  about  insurance
coverage because Sara was pregnant.
          Justin  began to work for Janssen in May 1997.   Within
weeks of beginning employment, Justin asked Freitas when coverage
would  begin and was assured by Freitas that this would occur  on
September 1, 1997.  Between this initial inquiry and late  August
1997, Freitas confirmed for Justin on a number of occasions  that
coverage would begin on September 1.  To verify that this was  so
Freitas  called  the Trust and would speak to  either  Patton  or
Renz,  who assured Freitas that the Joneses coverage would indeed
begin on September 1.
          In  late August 1997, however, the Joneses learned that
Janssens promised coverage would not begin until October 1, 1997.
Around  this time, Justin had again asked Freitas to confirm  the
September  1 start date.  Freitas called the Trust and, according
to  Justins testimony, spoke to Patton, who told Freitas that the
insurance would begin October 1, 1997.
          In  mid-September 1997 Janssen began  its  attempts  to
make  contributions to the Trust on the Joneses behalf.   Freitas
called  ODell  to  find  out how to make such  contributions  for
Justin.   Following  ODells instructions,  Freitas  prepared  and
submitted  a monthly remittance report that reported  Justin  had
worked 100 hours for each of the last three months.
          The  Trust  received  and processed  this  report.   In
accordance  with  the  normal  practice  for  monthly  remittance
reports,  Renz  entered Justins reported hours  into  the  Trusts
computer records.  Renz testified that while she found it  a  bit
unusual for Janssen to report hours for three separate months  in
one  monthly remittance report, it was not so extraordinary  that
she thought much of it.
          In  contrast, Patton took notice.  Evidently 100  hours
per  month is the minimum time required for coverage.  The report
of the exact minimums for three months running raised a red flare
for  her,  and  she suspected that something was  amiss.   Patton
ordered  an  audit  of Janssens books and records.   Pending  the
audit  a  freeze was ordered on any claims for medical  insurance
that  the  Joneses might submit. Neither Patton nor  anyone  else
from the Trust communicated these problems to the Joneses.
          Meanwhile,  Sara, concerned, but unaware of the  freeze
on  the  Joneses insurance, inquired whether the insurance  would
cover  her  pregnancy.  Sara first called Freitas, who  confirmed
that  the  insurance would begin on October 1, but did  not  know
whether  the  insurance would cover Saras pregnancy.   Sara  then
called  Patton.  Although Patton knew that the Trust  had  frozen
the  Joneses  insurance, she did not mention this.  Instead,  she
confirmed  to Sara that the insurance would begin on  October  1.
However,  Patton  too  did not know whether the  insurance  would
cover  Saras pregnancy, so Patton referred Sara to Pellitteri  of
Administrative Services.  Pellitteri confirmed that  the  Joneses
insurance  would begin on October 1 and that the insurance  would
cover Saras pregnancy.
          In  early  October 1997, after receiving  confirmations
from  Janssen, the Trust, and Administrative Services that  their
health  insurance would begin on October 1, the Joneses  canceled
their COBRA coverage.
     D.   The Joneses Medical Insurance Claim
          On  November 4, 1997, Sara gave birth to a son,  Tyler.
Tyler  was born with Down syndrome and other problems.  Sara  was
confined  to the hospital for several days following  the  birth.
Within  a  week  of  the birth, Justin sent to  the  Trust  forms
notifying  the  Trust  that it would need to  add  Tyler  to  the
Joneses health insurance.
          Soon after Tylers birth, the Joneses began to learn  of
problems  with  their  health insurance coverage.   The  hospital
began  to  question  the Joneses about it.   Also,  Freitas  told
Justin  that  the  Trust had called Janssen with questions  about
Tylers condition.
          In  February the Joneses signed up Tyler for  TEFRA,  a
state  insurance  plan  under which the  state  paid  for  Tylers
expenses.   From  November 4, 1997, to May 31, 1999,  TEFRA  paid
nearly $60,000 of Tylers expenses.
          The  Trust  moved  slowly to resolve  the  question  of
whether  it  would provide health insurance to the  Joneses.   In
February  Patton  sent Sara a letter stating  that  there  was  a
problem with coverage.  This was followed by a letter in late May
of  1998 that formally disclaimed coverage.  The letter explained
that  under the trust agreement and federal law, the Trust  could
not  provide  health insurance to a nonunion employee  without  a
special  agreement.  The letter also apologized for the delay  in
making  this determination, blaming the delay on Janssens failure
to  cooperate  with  an  audit.  At this  point  the  Trust  also
terminated  the  participation in  the  plan  of  Janssens  other
nonunion employees.
          In August 2000 the Federal Department of Labor sent the
Trust a letter of admonishment.  The department faulted the Trust
for  providing  benefits  to Janssens nonunion  staff  without  a
special  agreement  in  violation of the  trust  agreement.   The
department  stated  that this constituted a violation  of  ERISA.
However, the department concluded that it would not pursue  legal
action  since  the  Trust had taken measures to  prevent  similar
occurrences in the future.
     E.   Proceedings
          In  June 1999 the Joneses filed a complaint in superior
court against Janssen and the Trustees  for misrepresenting  that
the  Joneses  were  covered by health insurance.  At  this  point
Justin was no longer an employee of Janssen.
          The  Trustees, with Janssens consent, removed the  suit
to  the  United States District Court for the District of Alaska.
They  alleged that ERISA preempted the Joneses state  law  claims
and provided the district court with subject matter jurisdiction.
The  Joneses  moved  to remand the case to  the  superior  court.
United  States District Court Judge John K. Sedwick granted  this
motion.   Judge  Sedwick issued a written  opinion,  portions  of
which we refer to later in this opinion.
          On  remand,  the  Joneses filed an  amended  complaint,
adding  several  defendants, including the Trust.   The  Trustees
moved  for  summary judgment on the ground that  section  514  of
ERISA  preempted the Joneses claims.  They also filed a  separate
motion for summary judgment claiming that the factual basis for a
misrepresentation claim was lacking.  The Joneses filed a  cross-
motion   for  summary  judgment  on  their  claim  of   negligent
misrepresentation  against  the  Trustees.   The  superior  court
granted  summary  judgment  for the Joneses  on  their  negligent
misrepresentation claim against the Trustees and denied all other
summary judgment motions.
          The  case was then tried to the court without  a  jury.
The  court  concluded  that  Janssen  was  liable  for  negligent
misrepresentation and reaffirmed its summary judgment  conclusion
that    the    Trustees   were   also   liable   for    negligent
misrepresentation.  The  court awarded  the  Joneses  $86,081.58.
This  award  consisted of $56,081.58 in net  medical  costs1  and
$30,000  in damages for emotional distress.  The court  allocated
seventy-five percent of the fault for the Joneses losses  to  the
Trustees  and twenty-five percent to Janssen.  The court reasoned
that  the Trustees were akin to an insurance company and  Janssen
was a lay consumer; the Trustees were thus better positioned than
Janssen   to  discover  and  remedy  the  absence  of  a  special
agreement.  The court also awarded attorneys fees against Janssen
and   the   Trustees   based  on  their  respective   shares   of
          Janssen,  the Joneses, and the Trust now  appeal.   The
following  questions are presented:  (1) whether section  514  of
ERISA  preempted  the Joneses state law claims; (2)  whether  the
court  erred  by  awarding damages for emotional  distress;   (3)
whether  the court erred by holding Janssen liable for  negligent
misrepresentation;   (4)  whether  the   court   erred   in   its
apportionment of liability; (5) whether the award of  $30,000  in
emotional  distress damages  $15,000 for each of the Joneses   is
          inadequate; and (6) whether the superior court abused its
discretion by declining to award punitive damages.
     A.   The Trust Has Standing To Appeal.
          The   superior  court  awarded  damages   against   the
Trustees.   However,  the Trust  not the Trustees   now  appeals.
The  Joneses argue that the Trust has no standing to appeal since
the superior court did not award damages against the Trust.
          We  disagree.  No individual Trustees were made parties
to  this  suit  and no argument was presented that  the  Trustees
constituted a legal entity separate from the Trust.  The  Joneses
cross-motion  for  summary  judgment  and  supporting  memorandum
referred  to the Trustees and the Trust together.  When  speaking
to  the  acts of the Trust employees, the memorandum referred  to
the  Defendant Trusts/Trustees, through their employees and  made
no  effort to distinguish whether the employees were employed  by
the Trustees or the Trust.  The superior courts decision is based
on   the assumption that the Trustees and the Trust are the  same
entity.   As  no  persuasive argument to the  contrary  has  been
presented, we proceed on the same assumption.
     B.   Section 514 of ERISA Does Not Preempt the Joneses State
          Law Claims.
          The  Trust is an employee benefit fund regulated by the
Federal  Employee Retirement Income Security Act  (ERISA).2   The
Trustees   argue   that   the  Joneses   claims   for   negligent
misrepresentation are preempted by section 514 of ERISA.3
          Section  514  of  ERISA contains an express  preemption
section  stating that (a) . . . the provisions of this subchapter
.  .  .  shall supersede any and all State laws insofar  as  they
.  .  .  relate  to any employee benefit plan.   State  laws  are
defined   broadly   to  include  all  laws,   decisions,   rules,
regulations, or other State action having the effect of  laws  of
any  State.4  The question presented therefore is whether Alaskas
common law right of recovery for negligent misrepresentation  is,
in the context of this case, related to the Trust Fund within the
meaning of section 514.  If it is, it is superceded.5
          Another section of ERISA, section 502, also gives  rise
to  a  type  of  preemption.  Section 502 permits a  participant,
beneficiary, or fiduciary to bring a civil action to enforce plan
provisions  or  provisions of ERISA6  or  to  enjoin  acts  which
violate  plan  provisions  or provisions  of  ERISA.7   It  vests
exclusive jurisdiction to hear such claims in the federal courts,
except  for  claims of participants or beneficiaries  to  recover
          Judge  Sedwick remanded this case to the superior court
based  on lack of jurisdiction under section 502.  Judge  Sedwick
reasoned that because the Joneses had not pled a federal cause of
action,  removal would only be appropriate if there was  complete
preemption.   Complete  preemption, Judge Sedwick  wrote,  occurs
only  if ERISA preempts the applicable state law [a reference  to
section  514 preemption] and the claimant is within the scope  of
ERISAs  civil enforcement provision, 29 U.S.C.  1132(a)  [section
502].   Since  Judge  Sedwick found the latter  condition  to  be
          lacking, he had no occasion to rule on whether preemption by
supersession  under section 514 would apply.  In concluding  that
complete  preemption  did not exist, Judge Sedwick  relied  on  a
Ninth  Circuit case, The Meadows v. Employers Health  Insurance,9
that  held  that the other prong of the complete preemption  test
supersession of state law  was not satisfied.  We quote  part  of
Judge Sedwicks discussion concerning The Meadows:
               In   The  Meadows  v.  Employers  Health
          Insurance, the Ninth Circuit determined  that
          a third-party health care providers state law
          claims pled against a health care insurer and
          alleging   causes  of  action  for  negligent
          misrepresentation, estoppel,  and  breach  of
          contract  were not preempted  by  ERISA.   In
          that  case,  the  third-party  provider   was
          trying  to  recover the costs it incurred  in
          treating a patient for substance abuse.   The
          third-party  providers claims were  based  on
          repeated  representations by the health  care
          insurer  that the patient was covered  by  an
          ERISA     plan.      Relying     on     those
          representations,  the  provider  treated  the
          patient.  The insurer subsequently denied the
          providers   claims  because,  in  fact,   the
          patient  was  not covered by the  plan.   The
          Ninth  Circuit reasoned that the  third-party
          providers state law claims did not relate  to
          an ERISA plan because neither the third-party
          provider  nor the patient had any  connection
          to  an  ERISA plan at the time of  treatment.
          (Citations omitted.)
          The   Ninth   Circuits  decision  in  The  Meadows   is
representative of a number of cases where courts have  held  that
negligent misrepresentation claims against ERISA entities may  be
maintained.   Often  such cases involve third-party  health  care
providers  who have relied on misrepresentations as  to  coverage
made  by ERISA insurers.10  But misrepresentation claims asserted
by   employees  have  also  been  allowed,  especially  when  the
employees are not plan participants or beneficiaries.11
          One  such  case  that  in some respects  resembles  the
present  case is Smith v. Texas Childrens Hospital.12  Smith,  an
employee   of  another  hospital,  was  induced  by   a   related
corporation   to  work  for  Texas  Childrens  Hospital.    Texas
Childrens  promised  that  Smiths existing  long-term  disability
benefits would be duplicated at Texas Childrens.13  This  promise
turned  out  to  be untrue, as Smith discovered when  she  became
disabled.   She  sued  Texas Childrens for fraudulent  inducement
based  on  its misrepresentation of coverage.14  Texas  Childrens
removed  the  case to federal court and asserted  an  affirmative
defense  based on section 514 of ERISA.  The district court  held
that  her claim was not preempted by ERISA and remanded the  case
to  state  court.15  On appeal the Fifth Circuit also  held  that
Smiths  misrepresentation-based claim was not  preempted.16   The
          court noted that Smiths claim would be preempted if she were
claiming  entitlement  to benefits under  Texas  Childrens  ERISA
plan.17   But since her claim was for benefits that she  gave  up
based  on  Texas Childrens misrepresentation, her claim could  be
               We  are  persuaded that ERISA preemption
          would  not  apply  to such  a  claim.   Smith
          alleges   that,  because  she   relied   upon
          misrepresentations  by Texas  Childrens,  she
          lost a quantifiable stream of income that she
          would now be receiving had she never left St.
          Lukes.  Such a claim escapes ERISA preemption
          because  it does not necessarily depend  upon
          the   scope  of  Smiths  rights  under  Texas
          Childrens ERISA plan.  For example, if  Texas
          Childrens  did  not have any  benefits  plan,
          ERISA  would not apply, leaving Smith with  a
          non-preempted claim based upon  the  benefits
          relinquished.  That Texas Childrens has  such
          an  ERISA  plan does not alter the nature  of
          her claim, which is based upon benefits given
          up  for  purposes  of ERISA preemption.   The
          ultimate    question   of   Texas   Childrens
          liability for fraudulently inducing Smith  to
          leave  St. Lukes turns not on the quantum  of
          benefits available at Texas Childrens, but on
          the  question whether Texas Childrens  misled
          Smith  when  it told her that she would  keep
          what she had.[18]
          Based  primarily  on the case law permitting  negligent
misrepresentation  claims against ERISA  entities  of  which  The
Meadows and Texas Childrens are representative, we conclude  that
there  is no ERISA preemption in this case.  We must rely heavily
on  case  law  because  as the United States  Supreme  Court  has
recognized,  the  relate  to  language  of  section  514  is  not
especially helpful in determining the outer limits of preemption:
          The   governing  text  of  ERISA  is  clearly
          expansive.   Section   514(a)    marks    for
          pre-emption  all state laws insofar  as  they
          .  .  .  relate to any employee benefit  plan
          covered  by  ERISA, and one might be  excused
          for  wondering, at first blush,  whether  the
          words  of limitation (insofar as they .  .  .
          relate) do much limiting.  If relate to  were
          taken  to  extend to the furthest stretch  of
          its  indeterminacy, then  for  all  practical
          purposes  pre-emption  would  never  run  its
          course,  for [r]eally, universally, relations
          stop  nowhere[.]  But that, of course,  would
          be  to read Congresss words of limitation  as
          mere   sham,  and  to  read  the  presumption
          against  pre-emption out of the law  whenever
          Congress   speaks   to   the   matter    with
          generality.  That said, we have to  recognize
          that our prior attempt to construe the phrase
          relate  to does not give us much help drawing
          the line here.[19]
          Even  though  the  reach  of  section  514s  relate  to
language  is  not  ascertainable from the text  of  the  statute,
decisions  interpreting  section  514   are  generally  clear  in
holding certain recurring fact patterns to be within the scope of
the  section.   For  example, state laws that refer  to  employee
benefit  plans  and affect their administration are  preempted.20
The  same  is true of state law claims that involve the right  to
receive benefits under the terms of an ERISA plan or require  the
interpretation of an ERISA plan.21
          Beyond these categories generalizations as to the scope
of  section 514 are problematic.  Some state laws affect employee
benefit  plans in too tenuous, remote or peripheral a  matter  to
warrant  a finding that the law relates to the plan.22  Moreover,
the  Supreme Court has held that lawsuits against ERISA plans for
run-of-the-mill state-law claims are not preempted by section 514
of ERISA.23  But whether a particular relationship is too tenuous
or  a  suit involves a run-of-the-mill state-law claim  is  often
difficult to say.  In the two cases we decided under section  514
we were faced with these difficulties.
          In   Alaska  State  Council  of  Carpenters  v.  United
Brotherhood of Carpenters & Joiners of America, Local  1281,  the
issue  was  whether state law governing how organizations  select
their  board  members would apply to the question  of  whether  a
trustee of an ERISA organization had been properly replaced.24  We
held  that  there  was  no  ERISA  preemption,  noting  that  the
applicable  state  law  in question  contract  law  and  the  law
governing  the  functioning  of organizations   was  an  area  of
traditional  state  regulation that  Congress  probably  did  not
intend  to  supersede:  If the organizations which appoint  ERISA
trustees  are not subject to state law on matters not covered  by
ERISA,  they are, for the most part, not subject to  any  law  at
          Eight  years  after  our Local  1281  decision  we  had
another occasion to interpret section 514.  In Andrews v.  Alaska
Operating  Engineers-Employers  Training  Trust  Fund,  a   trust
employee claimed that he had been discharged to prevent him  from
reporting  the misuse of trust funds by a trustee.26   We  agreed
that  preemption of this claim was appropriate,  noting:   Courts
addressing  ERISA preemption in this context have uniformly  held
that  state  law  retaliatory discharge and whistleblower  claims
based  on  alleged violations of public policy  relate  to  ERISA
plans  and are thus preempted.27  We also held that the employees
claim  was  preempted under section 502(a) of ERISA because  that
section  provided a remedy for the employee:  In addition,  ERISA
provides  the exclusive remedy for the wrong alleged by  Andrews.
As  a fiduciary, Andrews is authorized under [section] 502(a)  to
bring  a civil action in federal district court to enforce ERISAs
retaliatory discharge provision.28
          This  case  does not fall within the fact  patterns  of
          claims that are categorically preempted under section 514.  The
common  law of misrepresentation is a law of general application;
it  does not entail any elements that make what might be regarded
as  a  specific reference to employee benefit plans.29   Further,
this  case does not involve a claim for benefits under  an  ERISA
plan  or  require the interpretation of a plan.30  As  one  court
stated in an analogous situation, [t]he existence of the Plan  is
not  a critical factor to establishing liability because the same
causes  of  action would exist if the Plan had  never  come  into
existence or was merely a fraudulent scheme.31
          Not   only   does   this  case  not  fit   within   the
categorically barred fact patterns suggested by the case  law,  a
number of other factors point to nonpreemption.  The Joneses  are
not  participants or beneficiaries of an ERISA plan and  as  such
have  no claim under ERISA.32  Preemption in this case would deny
the  Joneses  any  remedy  for  the harm  that  they  suffered.33
Finally,   and   relatedly,   the   common   law   of   negligent
misrepresentation is an area of traditional state concern.34  Each
of  these  factors  points,  albeit not  conclusively,  toward  a
conclusion  that this case should not be considered preempted  by
section 514.
          Based  on  the  reasons stated above and the  foregoing
authorities  we  conclude that section  514  of  ERISA  does  not
preempt the Joneses claims.
     C.   Were Damages for Emotional Distress Justified?
          The  other main issue presented by this case is whether
the $30,000 award to the Joneses for their emotional distress was
legally and factually justified.
          The  trial  court in this case ruled that  the  Joneses
suffered  severe emotional distress between the  time  of  Tylers
birth  and  the  time that the state agreed  to  pay  for  Tylers
medical  bills.  The court awarded Justin and Sara  $15,000  each
for the emotional distress they experienced during this period.35
          Janssen  challenges  this award, arguing  that  it  was
legally unjustified because in the absence of physical injury  no
award  for the negligent infliction of emotional distress can  be
made  unless  the  defendant  has  a  pre-existing  duty  to  the
plaintiff  which,  if  breached,  would  foreseeably  result   in
emotional harm to the plaintiff.  Such a duty is absent  in  this
case,  according  to  Janssen,  because  its  run  of  the   mill
employment  agreement with Justin does not fit  the  pre-existing
duty requirement.
          The  Trust  makes a similar argument. It contends  that
the  pre-existing  duty that is required for  emotional  distress
damages  must  be  based  on  either a contractual  or  fiduciary
relationship,  neither of which existed between the  Joneses  and
the  Trust.   The  Trust also argues that  the  Joneses  did  not
present  evidence  of  emotional distress that  was  sufficiently
severe to justify an award of emotional distress damages.
          The  Joneses respond by arguing that misrepresentations
concerning health insurance can with ready foreseeability lead to
emotional   distress.   They  also  contend  that  the  emotional
distress they suffered was severe.
          The  seminal case on damages for emotional distress  in
          the absence of physical injury in Alaska is Chizmar v. Mackie.36
The  plaintiff  in Chizmar was misdiagnosed by her  physician  as
having  AIDS.  The physician reported this misdiagnosis not  only
to  the plaintiff but to her husband, without authorization  from
the plaintiff.37  Plaintiff brought a claim against her physician
for  emotional  distress damages.38  At trial the superior  court
directed  a  verdict against the plaintiff on such damages  since
the  plaintiff did not suffer physical injury.39  On  appeal,  we
reversed  holding that when a defendant stands in a  pre-existing
relationship  with  the  plaintiff and a  breach  of  the  duties
arising  from  this  relationship  would  foreseeably  result  in
emotional harm to the plaintiff, an accompanying physical  injury
is  not  a prerequisite for the recovery of damages for emotional
          In  Chizmar we referred to an earlier case, Hancock  v.
Northcutt,41  in which we held that a plaintiff may  not  recover
damages for negligently caused emotional distress arising out  of
the  negligent performance of a contract to build  a  house.   We
stated  in  Chizmar in explanation of our immediate  holding  and
with reference to Hancock:
               We  do  not believe that the traditional
          tort  principle  of foreseeability,  standing
          alone,  properly  defines  the  scope  of   a
          defendants duty in an action for damages  for
          negligently  inflicted  emotional   distress.
          See  Hancock,  808 P.2d at  258.   Rather  we
          believe  that a plaintiffs right  to  recover
          emotional  damages caused by mere  negligence
          should  be  limited to those cases where  the
          defendant  owes the plaintiff  a  preexisting
          duty.   In  Hancock,  we  recognized  that  a
          plaintiff  may  recover  emotional   distress
          damages  in certain cases where a contractual
          relationship exists between the parties.  Id.
          at  258.   In  holding that the  contract  at
          issue  in Hancock did not imply such a  duty,
          we observed:
               In our view, breach of  a
               house        construction
               contract      is      not
               especially   likely    to
               result     in     serious
               emotional    disturbance.
               Such contracts are not so
               highly personal and laden
               with emotion as contracts
               where  emotional  damages
               have    typically    been
               allowed to stand on their
               own.   Examples  of   the
               latter  include contracts
               to  marry,  to conduct  a
               funeral, to sell a sealed
               casket,   to  conduct   a
               cesarean    birth,     to
               surgically   rebuild    a
               nose, to provide promised
               maternity  coverage,   to
               provide medical services,
               and  to  keep a  daughter
               informed  of her  mothers
          Id.  at  258-59 (footnotes omitted) (emphasis
          added).   Under Hancock, whenever a defendant
          stands   in   a   contractual  or   fiduciary
          relationship  with  the  plaintiff  and   the
          nature  of this relationship imposes  on  the
          defendant a duty to refrain from conduct that
          would foreseeably result in emotional harm to
          the   plaintiff,  the  plaintiff   need   not
          establish  a  physical  injury  in  order  to
          recover  for  the  negligent  infliction   of
          emotional distress.
               A  growing number of jurisdictions  have
          adopted this approach.[42]
          Based  on  the above language, it is apparent  that  an
undertaking  to provide medical services, particularly  one  that
provides coverage to a pregnant woman, qualifies as just the sort
of  emotionally  laden promise which, if not fulfilled,  properly
may give rise to emotional distress damages.  The requirement  of
foreseeability established in Chizmar is therefore satisfied.
          In  the  case  of Janssen, the pre-existing contractual
relationship  requirement of Chizmar is also  met.   Janssen  was
Justins  employer.  Providing health insurance was  an  important
part  of the employment contract, and Janssens misrepresentations
concerning  coverage caused the Joneses to cancel their  existing
          The  Trust  likewise made a negligent misrepresentation
concerning medical coverage and did so specifically with  respect
to coverage for Saras pregnancy.  Thus the foreseeability element
of  the Chizmar test was met.  But there is considerable doubt as
to  whether the pre-existing duty requirement of Chizmar was also
satisfied with respect to the Trust.  All parties believed, for a
time,  that there was a contractual relationship between  Janssen
and  the  Trust under which the Trust would provide coverage  for
the  Joneses.  If this belief, in fact, had been true,  the  pre-
existing duty requirement could have been satisfied.  But, as  we
now know, this was not the case.
          Nonetheless,   we  think  that  because  both   Chizmar
requirements were satisfied as to the claim against Janssen,  the
award against the Trust must be allowed to stand.  The Trust,  as
the trial court found, not only made negligent misrepresentations
on its own, it also bore a heavy responsibility for the negligent
misrepresentations  made by Janssen.  It would  be  anomalous  to
hold  that  the  Trust   the  party  most  responsible  for   the
          misrepresentations  is not responsible for emotional distress
damages   while  holding  the  less  responsible  party   Janssen
liable.   If  the claim against the Trust for emotional  distress
damages  was  found wanting because of failure to meet  the  pre-
existing  duty requirement, this holding would mean that  Janssen
would  have  to pay the full amount of the damages.  This  result
would be unjust to Janssen.
          In part, the requirement of a pre-existing relationship
was imposed as a screening device in an effort to separate worthy
claims  for emotional damages from unworthy ones.43  That purpose
is served by focusing on the relationship between the Joneses and
Janssen.   The  bona  fides of the Joneses claims  are  not  made
stronger  by  requiring the Joneses also to have  a  pre-existing
relationship with the Trust.  Indeed, if the Trust had  not  been
sued  by  the  Joneses  or joined by Janssen  in  an  action  for
equitable  apportionment under Alaska Civil Rule  14(c),  Janssen
would  have  borne  full responsibility for the  whole  award  of
emotional distress damages to the Joneses.
          Both  Janssen and the Trust also argue that the Joneses
damages  were  not sufficiently severe to give rise to  emotional
distress  damages.   This decision is ultimately  a  question  of
fact.  The trial judge explicitly addressed it, finding that both
Joneses experienced severe emotional distress.  In our view  this
finding is not clearly erroneous.44
          For  the  above reasons we believe that  the  award  of
emotional distress damages of $15,000 for each of the Joneses was
legally and factually justified.
     D.   The  Superior  Court Did Not Err when  Holding  Janssen
          Liable to the Joneses for Negligent Misrepresentation.
          The  tort of negligent misrepresentation comprises four
elements.45  First, the tortfeasor must have made a statement  in
the  course of business, employment, or some other enterprise  in
which he had a pecuniary interest.46  Second, the statement  must
have been false when the tortfeasor made it.47  Third, the victim
must have justifiably relied upon the statement to his detriment.48
Fourth,  the  tortfeasor must have failed to exercise  reasonable
care when making the statement.49
          The   superior   court  held  that  Janssens   repeated
assertions to the Joneses that it would provide them with  health
insurance  through  the  Trust constituted  actionable  negligent
misrepresentations.  Janssen claims that this holding was  error.
It  concedes  that  its conduct satisfied  the  first  and  third
elements   of   the  test  of  negligent  misrepresentation   but
challenges  the courts conclusion that its conduct satisfied  the
second  and  fourth  elements.  With respect to  these  elements,
Janssen  argues that its statements were neither false  nor  made
without  due  care because it reasonably believed that  it  would
provide  the  Joneses with health insurance.  Janssen  emphasizes
that  it had successfully provided other nonunion employees  with
coverage through the Trust.
          Whether  Janssens  communications to the  Joneses  were
false  and negligent are questions of fact which we review  under
the clearly erroneous standard.50
          With  respect to whether the representations  that  the
Joneses  would  be  provided with health  insurance  were  false,
Janssen  argues that the statements were true when made.  Janssen
contends  that  only  the unexpected decision  by  the  Trust  to
disqualify  the  Joneses  (and Janssens other  office  employees)
resulted  in  their lack of coverage.  Janssen  argues  that  its
statements  were analogous to the statements made  in  Bubbel  v.
Wien  Air  Alaska, Inc.51  There the employer hired Bubbel  as  a
replacement   pilot  during  a  labor  dispute.    The   employer
represented to him that it intended to fight the striking  pilots
successfully  and  replacement pilots  were  going  to  be  hired
permanently.52  Bubbel sued the employer for breach  of  contract
and  misrepresentation.  The breach of contract  claim  was  held
superseded by a subsequent collective bargaining agreement  under
the  provisions  of  federal labor law.53  With  respect  to  the
misrepresentation claim, we held that the employers statement  as
to  the permanency of Bubbels employment was true when made   the
employer intended Bubbel to be a permanent employee.  It was only
later  that  the  employers position  was  changed  when  it  was
pressured  by  the  presidential emergency board  to  settle  the
strike.54  Thus the tort of negligent misrepresentation  had  not
been established.
          The  superior court considered Janssens true when  made
argument and rejected it:
          Janssen   told  Justin  Jones  that   as   an
          employee,  he  would  have  health  insurance
          coverage.   That  representation  was  untrue
          because   there   was  no  health   insurance
          coverage   for  Justin  Jones   through   his
          employment  with Janssen at the time  he  was
          hired or at any time thereafter.  Hence,  the
          second element is satisfied here.
We see no problem with this reasoning, and thus conclude that the
false information element has been satisfied.
          Janssen  also argues that the evidence was insufficient
to  establish the fourth element  failure to exercise  reasonable
care in obtaining or communicating the information.  The superior
court  noted  that  Janssen had a duty to exercise  due  care  in
obtaining  and maintaining health insurance coverage,  and  found
that  by  taking a casual hands off approach on insurance matters
Janssen had failed to satisfy this duty. Specifically, the  court
found  that  it was imprudent of Janssen to continue to  rely  on
ODell  of  the  bricklayers  trust  after  the  merger  with  the
carpenters  trust.   The court also found that Janssens  attorney
advised  George Janssen that the Trust health plan would have  to
include all nonunion office employees rather than just some.  The
court  found that a reasonably prudent employer in Janssens shoes
presented  with  this  information would have  taken  affirmative
action  to  determine just what the SACTF health  plan  required.
Some  inquiry  was  necessary and Janssen made  none  whatsoever.
Finally,  the  court found that the lack of written documentation
concerning coverage was an indication of careless conduct:
          In addition, it is noteworthy that there is a
          complete  lack  of  written documentation  of
          communications between Janssen and the Health
          Insurance program or members of the Trusts or
          written  documentation  as  to  whose   [sic]
          covered by the insurance plan, when they  are
          covered and how they are covered.  One  would
          expect  a  prudent employer to  have  written
          documentation    concerning    matters     of
          importance dealing with insurance.
Based on these findings the court concluded
          that  Janssen did fail to exercise reasonable
          care   or   competence   in   obtaining    or
          communicating   the  information   concerning
          health  care insurance.  In other words,  had
          Janssen  exercised  reasonable  care  in  the
          area,  it is more likely than not that Justin
          Jones would never have been told that he  had
          health  insurance  coverage  through  Janssen
          As noted, whether Janssen failed to exercise reasonable
care or competence in determining whether its representations  to
the  Joneses  concerning  their health  insurance  coverage  were
correct was a question of fact.  Although Janssens position  that
it reasonably relied on Trust representations and practices is  a
sympathetic one, the trial court found that Janssen  also  had  a
responsibility to take affirmative action to determine the nature
and  extent of the health care coverage that it believed  it  was
providing  for its nonunion employees.  Since we do  not  have  a
definite  and  firm  conviction that the court  was  mistaken  in
making this determination, it must be affirmed.
     E.   The Superior Court Did Not Err in Apportioning Seventy-
          Five Percent of the Damages to the Trustees and Twenty-
          Five Percent to Janssen.
          The superior court apportioned seventy-five percent  of
the fault for the Joneses damages to the Trustees and twenty-five
percent to Janssen.  Although the trial court observed that there
is  a  tie as to causation, and a tie as to the mundane  ways  in
which these two entities dropped the ball, it justified placing a
greater percentage of fault on the Trustees as follows:
          Janssen  is  a construction company,  and  as
          such  is  more  akin to a lay consumer.   The
          Trustees  are  de  facto in the  business  of
          selling  insurance, and are more akin  to  an
          insurance  company.   An  insurance   company
          holds  itself out to have special  competence
          in  insurance  matters,  and  a  construction
          company does not.
          The  Trust  and  Janssen  each challenge  the  superior
courts  allocation  of fault.  Each claims that  a  higher  share
should have been allocated to the other.
          Whether  a  trial  court  has properly  determined  the
percentage  of  fault  of the actors in a  tort  claim  under  AS
09.17.080  is  a  question of fact, reviewed  under  the  clearly
erroneous  standard.  In our view the allocation was not  clearly
erroneous.   As  the superior court found, the Trust  was  better
placed  than  Janssen  to  determine  whether  Justin  Jones  was
eligible  for  coverage.  Further, the Trusts  act  of  accepting
premiums  on  behalf  of nonunion employees  of  Janssen  without
protest  until learning of the possibility of a very  substantial
claim  based  on  Tyler Joness condition is a logical  basis  for
ascribing greater fault to the Trust.  The same may be  said  for
Pattons  confirmation  to  Sara Jones that  the  Trust  would  be
providing  the Joneses with coverage at a time when  Patton  knew
that  a  freeze  had been placed on any claims the Joneses  might
          Janssen  argues that it should be liable  at  most  for
only ten percent of the Joneses damages based on its reliance  on
the  Trusts assurances and the Trusts past practices of accepting
premiums  for  nonunion employees and paying  their  health  care
claims.  While we agree that apportioning a smaller share of  the
overall   liability  to  Janssen  would  not  have  been  clearly
erroneous, we are also unable to conclude that imposing a twenty-
five percent share exceeded reasonable limits.
          For  the  above  reasons the judgment of  the  superior
court is AFFIRMED.55
     1     The court found that medical costs for Tyler from  his
birth until May 31, 1999, were $57,729.86, and medical costs  for
Sara for the same period were $4,021.72.  The court deducted from
the  total of these amounts $5,670 which represented the $315 per
month  cost  of COBRA coverage for the eighteen-month  period  in
question that the Joneses would have paid.

     2    29 U.S.C.  1001-1461.

     3    29 U.S.C.  1144(a).

     4    29 U.S.C.  1144(c)(1).

     5     In Ingersoll-Rand Co. v. McClendon, 498 U.S. 133,  142
(1990),  the  United States Supreme Court described  the  purpose
underlying section 514(a):

          Section  514(a) was intended to  ensure  that
          plans and plan sponsors would be subject to a
          uniform body of benefits law; the goal was to
          minimize  the  administrative  and  financial
          burden    of   complying   with   conflicting
          directives among States or between States and
          the   Federal  Government.   Otherwise,   the
          inefficiencies  created  could  work  to  the
          detriment of plan beneficiaries.
     6    29 U.S.C.  1139(a)(3)(B)(ii).

     7    29 U.S.C.  1139(a)(3)(A).

     8    29 U.S.C.  1139(e)

     9    47 F.3d 1006 (9th Cir. 1995).

     10    See in addition to The Meadows, 47 F.3d 1006, Lordmann
Enters.,  Inc.  v. Equicor, Inc., 32 F.3d 1529, 1532  (11th  Cir.
1994) (ERISA does not preempt a third-party health care providers
negligent   misrepresentation  claim  against   an   ERISA   plan
administrator.); Hospice of Metro Denver, Inc.  v.  Group  Health
Ins.  of  Oklahoma,  Inc., 944 F.2d 752,  756  (10th  Cir.  1991)
(allowing    third-party   state   law    action    based    upon
misrepresentation  by  insurance carrier);  Meml  Hosp.  Sys.  v.
Northbrook  Life  Ins. Co., 904 F.2d 236,  250  (5th  Cir.  1990)
(third-party  health  care  provider  seeking  damages  from   an
insurance  company for negligent misrepresentations not preempted
by  ERISA); Alliance Health of Santa Teresa, Inc. v. Natl  Presto
Indus.,  Inc., 113 P.3d 360, 363-64 (N.M. App. 2005) (third-party
healthcare  provider  suit for breach  of  contract,  fraud,  and
promissory  estoppel  not preempted).   There  is  also  contrary
authority.   According  to  one  commentator,  the  leading  case
finding  preemption  of misrepresentation of coverage  causes  of
action is Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d  1272
(6th  Cir.  1991).  This case is said to represent  the  minority
view.   Scott  C.  Walton, Note, ERISA Preemption of  Third-Party
Provider   Claims:   A  Coherent  Misrepresentation  of  Coverage
Exception, 88 Iowa L. Rev. 969, 983 (2003).

     11     See  in addition to Smith v. Texas Childrens Hospital
discussed in the text immediately following this note, Hobson  v.
Robinson, 75 Fed. Appx. 949 (5th Cir. 2003) (unpublished)  (claim
of  employee  against  agent  and  plan  provider  for  negligent
misrepresentation of coverage not preempted); Wilson v. Zoellner,
114   F.3d   713,  718  (8th  Cir.  1997)  (employees  suit   for
misrepresentation of coverage against agent of insurance  company
not  preempted  by ERISA even though insurance company  could  be
liable  for  the agents misrepresentation:  If Prudential  incurs
any liability as a result of this suit, it will do so only as the
employer of a tortfeasor, and not as a plan fiduciary.); Smith v.
Cohen  Benefit Group, Inc., 851 F. Supp. 210, 213 (M.D.N.C. 1993)
(negligent  misrepresentation claim by employee  not  preempted);
Martin v. Pate, 749  F. Supp. 242, 246 (S.D. Ala. 1990), affd sub
nom.  Martin v. Contl Investors, 934 F.2d 1265 (11th  Cir.  1991)
(fraud-in-inducement  claim  by  non-beneficiary  against   group
health insurer not preempted).

     12    84 F.3d 152 (5th Cir. 1996).

     13    Id. at 153.

     14    Id. at 154.

     15    Id.

     16    Id. at 155.

     17    Id.

     18    Id. at 155-56.

     19     New York State Conference of Blue Cross & Blue Shield
Plans  v.  Travelers Ins. Co., 514 U.S. 645, 655 (1995) (citation

     20     Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138-39

     21    See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987).

     22     Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100  n.21

     23     Mackey v. Lanier Collection Agency & Serv., Inc., 486
U.S.  825,  833  (1988) (state law claims such  as  unpaid  rent,
failure  to  pay creditors, or even torts committed by  an  ERISA
plan . . . are not pre-empted).

     24    727 P.2d 306 (Alaska 1986).

     25    Id. at 310.

     26    871 P.2d 1142 (Alaska 1994).

     27    Id. at 1144-45.

     28    Id. at 1147 (citation omitted).

     29     See  Ingersoll,  498 U.S. at 139 (suggesting  limited
scope  of  ERISA  preemption when dealing with  laws  of  general

     30     The claim on which the judgment under review is based
is  for benefits that the Joneses would have received under their
existing   health  insurance  had  they  not  been   induced   by
misrepresentations  concerning  new  coverage  to  give  up   the
existing insurance.  See supra note 1.

     31     Smith v. Cohen Benefit Group, Inc., 851 F. Supp. 210,
213 (M.D.N.C. 1993).

     32     See Harris v. Provident Life & Accident Ins. Co.,  26
F.3d  930,  933 (9th Cir.1994)  (non-participant in  ERISA  lacks
standing to claim an injury under ERISA); see also The Meadows v.
Employers  Health  Ins.,  47  F.3d 1006,  1009  (9th  Cir.  1995)
(finding  the fact that employees did not have ties to  an  ERISA
plan as relevant to showing claim did not relate to ERISA plan).

     33    See Hospice of Metro Denver, Inc. v. Group Health Ins.
of  Oklahoma,  Inc.,  944 F.2d 752, 755 (10th   Cir.  1991)  (for
entity  that is not a participant or a beneficiary . . . lack  of
alternate  remedies in the event of preemption  is  deserving  of
consideration); see also Meml Hosp. Sys. v. Northbrook Life  Ins.
Co.,  904 F.2d 236, 248 n.16 (5th Cir. 1990) (noting that [o]ther
courts  have  reasoned that a lack of available  remedies  is  an
important  consideration in determining if  Congress  intended  a
particular  state  law  to be preempted in a  particular  factual
situation and citing cases).

     34     See,  e.g., Associated Builders & Contractors  of  S.
California,  Inc. v. Nunn, 356 F.3d 979, 984-85 (9th  Cir.  2004)
(Congress did not intend ERISA to preempt regulation in areas  of
traditional  state  concern).  See  generally  Karen  A.  Jordan,
Travelers  Insurance:  New Support for the Argument  to  Restrain
ERISA  Pre-emption, 13 Yale J. Reg. 255, 305 (1996) (state common
law  claims should be accorded a weighty presumption against pre-
emption  because they are within the domain of traditional  state

     35     The  court  stated concerning its award of  emotional
distress damages:

          The  Joneses also seek a recover[y]  for  the
          emotional  distress  they  experienced  as  a
          result  of  the  defendants  conduct.   Under
          Alaska  law, the plaintiffs can recover  only
          if   there  is   proof  of  severe  emotional
          distress.  The unique facts of this case  are
          compelling.    The  evidence  reflects   that
          despite  their  young age, the  Joneses  were
          extremely   careful  about  securing   health
          insurance to cover the birth of their  child.
          On  the  eve  of Tylers birth, there  was  no
          reason for the Joneses to be concerned  about
          the  childs health or the fact that there was
          adequate  coverage for what might lay  ahead.
          Of  course, Tylers birth was complicated  and
          expensive.   He  had  digestive   and   heart
          problems initially and later proved  to  have
          Down  Syndrome.  Tylers severe medical  needs
          were unanticipated and no doubt shocking  and
          disturbing to his parents.  Without question,
          even  if all of their medical bills had  been
          paid,  the  plaintiffs would have experienced
          great  anxiety and distress as  a  result  of
          Tylers  birth.   But while the  Joneses  were
          dealing with this extremely tragic situation,
          they    learned   that   their    expectation
          concerning  health insurance  was  misplaced.
          This  young couple of modest means had reason
          to  fear  that  they would  be  saddled  with
          enormous medical bills that should have  been
          covered by insurance.  The court finds  by  a
          preponderance of the evidence  that  in  this
          situation,   a   reasonable   person    would
          experience severe emotional distress  and  in
          this  particular case Sara and  Justin  Jones
          did  experience  severe  emotional  distress.
          Fortunately, in February, 1998, Sara  learned
          that the State of Alaska would be able to pay
          Tylers    medical   bills   and   this    was
          subsequently  accomplished.   Had  this   not
          occurred, the plaintiffs harm would have been
          extraordinary.   The court therefore  focuses
          on  the  period  between the time  of  Tylers
          birth  and the time the State agreed  to  pay
          his  medical bills.  And this of course is  a
          relatively  brief  time  so  recognizing  the
          severe emotional distress experienced by  the
          plaintiffs and the relatively brief time that
          they  would have experienced that, the  court
          award[s] each of the plaintiffs $15,000.
     36    896 P.2d 196 (Alaska 1995).

     37    Id. at 199-200.

     38    Id. at 200.

     39    Id.

     40    Id. at 213.

     41    808 P.2d 251 (Alaska 1991).

     42     Chizmar,  896  P.2d at 203 (footnote omitted)  (first
emphasis added).

     43    See id. at 202.

     44     There  was evidence that the distress experienced  by
Sara  caused  her to cease lactating in addition to  causing  her
loss  of sleep and dietary problems.  Both Joneses testified that
the  lack  of coverage and related financial issues was  a  major
contributing  factor  to  their  eventual  divorce.   Sara   also
testified  that the lack of coverage resulted in incessant  calls
from  creditors  and ultimately forced her to file  for  personal

          The  clearly erroneous standard of review governs  this
and  the other questions of fact involved in this appeal.   Under
this  standard,  [w]e  review . . . factual  findings  for  clear
error.  We will find clear error only if, after a thorough review
of  the record, we come to a definite and firm conviction that  a
mistake  has  been  made.  Afognak Joint Venture  v.  Old  Harbor
Native   Corp.,  151  P.3d  451,  456  (Alaska  2007)  (citations

     45     Bubbel  v. Wien Air Alaska, Inc., 682 P.2d  374,  380
(Alaska 1984).

     46    Id.

     47    Id.

     48    Id.

     49    Id.

     50    See supra note 44.

     51    682 P.2d at 381.

     52    Id. at 376.

     53    Id.

     54    Id. at 381.

     55     The  Joneses  raise  two  issues  that  we  determine
summarily.   They  claim that $15,000 each in emotional  distress
damages  to  Justin and Sara Jones is inadequate as a  matter  of
law.   We conclude that the award is not clearly inadequate based
on  the facts and circumstances of the case.  See supra note  44.
The Joneses also argue that they are entitled to punitive damages
as  a  matter  of  law against the Trust and  Janssen.   Punitive
damages  may  only  be  awarded  based  on  proof  by  clear  and
convincing  evidence of outrageous conduct, including  acts  done
with  malice  or bad motives, or conduct that evidences  reckless
indifference to the interests of another.  AS 09.17.020(b).  Here
the  trial  courts conclusions that Janssen and  the  Trust  were
liable only for negligent misrepresentation precludes an award of
punitive damages.  In our judgment the record would not support a
determination  of  more  culpable  reckless  conduct  as  against
Janssen.   While  the record might support such  a  determination
against the Trust, the courts conclusion that the Trust was  only
negligent is not clearly erroneous.

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