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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Wasser & Winters Company v. Ritchie Bros. Auctioneers (America), Inc. (05/23/2008) sp-6270

Wasser & Winters Company v. Ritchie Bros. Auctioneers (America), Inc. (05/23/2008) sp-6270, 185 P3d 73

     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


WASSER & WINTERS COMPANY, )
) Supreme Court Nos. S- 12581/12611
Appellant/Cross-Appellee, )
) Superior Court No. 3AN-04-9230 CI
v. )
) O P I N I O N
RITCHIE BROS. AUCTIONEERS )
(AMERICA), INC., ) No. 6270 May 23, 2008
)
Appellee/Cross-Appellant. )
)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances:    Patrick   G.   Gilmore    and
          Christopher  J. Slottee, Atkinson,  Conway  &
          Gagnon, Anchorage, for Appellant.  Michael A.
          Grisham,  Dorsey  & Whitney, LLP,  Anchorage,
          for Appellee.

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

          EASTAUGH, Justice.
I.   INTRODUCTION
          A  creditor  authorized  an auctioneer  to  sell  seven
pieces  of  equipment  in  which the  creditor  held  a  security
interest, and agreed to release its interest upon payment of  net
proceeds  not  to exceed the entire amount of debt  owed  to  the
creditor  and subject to the payoff of a known senior lien.   The
creditor  and auctioneer disagree about whether net proceeds  was
to  include  the  proceeds from the sale of all  of  the  debtors
equipment  or  only the equipment in which the  creditor  held  a
security  interest.  They also disagree on which party bears  the
risk  of  mistake due to the discovery of additional liens  after
the  release  of  the  creditors interest.   The  superior  court
concluded that net proceeds was limited to the items in which the
creditor  held  a collateral interest, reformed the  contract  to
reflect  payoff of all senior lien holders before payoff  to  the
creditor,   and  granted  summary  judgment  to  the  auctioneer.
Because  we determine that the superior court correctly  declined
to assign the risk of mistake to the auctioneer and therefore did
not err in reforming the contract, we affirm the grant of summary
judgment.   We  remand for further proceedings  relating  to  the
prevailing partys paralegal fees.
II.  FACTS AND PROCEEDINGS
          Wasser  &  Winters, Inc. made loans to Ben  A.  Thomas,
Inc.,  a logging company.  Thomass debt to Wasser was secured  by
liens on seven pieces of Thomass equipment.  In early 2004 Thomas
hired  Ritchie Bros. Auctioneer, an auctioneer of used industrial
equipment,  to sell some of its equipment.  The auction  contract
made Thomas responsible for identifying the creditors holding  an
interest  in  the  equipment to be auctioned.  Thomas  identified
KeyBank National and Wasser as its creditors.
          Ritchie then informed Wasser that Ritchie was arranging
a sale of the equipment securing the Thomas obligations.  Ritchie
wanted to auction the equipment free of any liens.  Ritchie  sent
Wasser a release form (Release #1) asking for Wassers consent and
requested  payoff  figures for Wassers liens.   Release  #1  gave
Wasser  three options: disclaim any interest in the equipment  or
its proceeds; accept the net proceeds earned from the auction; or
accept  payment  of  a  fixed amount.   Ron  Berg,  Wassers  vice
president,  returned Release #1 by fax on March  1,  2004.   Berg
chose  the fixed amount option and set the proposed payoff figure
as $331,078.55, the amount of Thomass total debt to Wasser.
          On  March  29, 2004, Ritchie employees held an internal
telephone   conference  to  discuss  the  Thomas  auction.    The
conference  included Karl Werner, regional manager  for  Ritchies
Northwest Division.  He was responsible for approving or  denying
Wassers   request.    During   the   conversation   the   Ritchie
representatives  identified liens held by  Wasser,  KeyBank,  and
HSBC.  Werner compared the value of the equipment to Thomass debt
and would not agree to the payoff proposed in Release #1.
          Werner telephoned Wassers Berg to discuss the terms  of
Wassers  proposed  release.  During the call, Berg  asked  Werner
whether  there were any IRS liens against the equipment.   Werner
put  Berg  on  hold  and asked John Meese of Ritchies  Settlement
Department if Meese was positive there were no other liens; Meese
stated  [t]hats correct.  Werner later testified that he informed
Berg  there were no other liens.  Werner apparently did not  tell
Berg  about  the HSBC lien because it was specific to  pieces  of
Thomass  equipment  in  which Wasser  did  not  hold  a  security
interest.
          This  March 29 conversation between Berg and Werner  is
at  the  center  of this lawsuit.  According to  Wasser,  Ritchie
agreed  to pay Wasser up to approximately $331,000 from  the  net
proceeds  of  the  entire Thomas auction after discharge  of  the
KeyBank  lien.   Thomass auction equipment consisted  of  thirty-
eight items in total; Wasser held a security interest in seven of
those items.  Wasser contends that the parties agreed that Wasser
would receive net proceeds from sale of all thirty-eight items of
Thomass  equipment and without consideration of the HSBC lien  or
any  lien other than the KeyBank lien.  But Ritchie asserts  that
Werner  and  Berg agreed that Wasser would receive only  the  net
proceeds from the sale of the items of equipment in which  Wasser
held  a  security  interest, and then only after  Thomass  senior
creditors were paid.
          Ritchie prepared a new release form, Release #2,  based
on  the  March 29 conversation with Berg.  Release #2  lists  the
seven pieces of Thomass equipment in which Wasser held a security
interest  and  states  that Wasser accepts NET  PROCEEDS  not  to
exceed  $331,078.55 after KeyBank National payoff.  Ritchie  sent
Release #2 to Wasser and Wasser signed it without modification on
March 29.
          Ritchie held the auction on March 30, 2004.  The Thomas
auction  was  part of Ritchies quarterly regional  auction  which
included  over  3,000  lots and generated gross  sales  exceeding
twenty-three  million  dollars.   The  sale  of  all  of  Thomass
equipment resulted in gross revenue of $961,550 and net  proceeds
of $607,064.77.  The sale of the seven items in which Wasser held
a  security  interest yielded gross revenue of $174,000  and  net
proceeds of $127,063.88.
          Meese  informed  Wassers Berg on April 9  that  Ritchie
would  pay  Wasser  $331,000 on April 21.  On  April  19  Ritchie
issued  a  check payable to Wasser in the amount of  $331,078.55.
Before  sending  the  check, Ritchie discovered  various  loggers
pension  trusts  that  were  claiming  a  priority  interest   in
approximately  $450,000 of the proceeds of the  sale  of  all  of
Thomass  auctioned equipment.  The equipment was also  encumbered
by  tax  liens in favor of the IRS and the Kodiak Island Borough.
After  discovering  the additional liens Ritchie  held  the  sale
proceeds  in a trust account.  Ritchie withheld the Wasser  check
and eventually cancelled it.
          On July 2 Thomas was forced into involuntary bankruptcy
proceedings  by  the loggers pension trusts.   Ritchie  filed  an
interpleader complaint in bankruptcy court and deposited the  net
proceeds   $607,064.77  from the entire Thomas auction  into  the
court registry.  The loggers pension trust liens were subordinate
to  Wassers  lien, but the IRS and the Kodiak Island Borough  tax
liens  had higher priority than the unsecured portion of  Wassers
liens.   The tax liens reduced Wassers proceeds from sale of  the
seven  pieces of equipment and consumed the excess proceeds  from
sale  of  the  other  Thomas  equipment.   Wasser  agreed  to   a
stipulated  resolution  of  the  creditors  entitlement  to   the
interpleader  funds and received $85,954.36 in net proceeds  from
the  seven items in which it held a collateral interest.  On July
22   Wasser   sued   Ritchie,  asserting  breach   of   contract,
misrepresentation, promissory estoppel, and conversion.   Ritchie
removed the case to United States District Court for the District
of Alaska, which referred the case to bankruptcy court.
          In  2005  Ritchie  moved for summary  judgment  in  the
bankruptcy  court.   After  determining  that  a  mutual  mistake
existed  and that it was more reasonable to have Wasser bear  the
risk  of  the  parties  mistake,  the  bankruptcy  court  granted
Ritchies  motion and dismissed Wassers lawsuit.   The  bankruptcy
court later vacated its grant of summary judgment, noting that it
did not have jurisdiction over Wassers complaint because it was a
state-law contract dispute.  The district court then remanded the
case to the superior court.
          Ritchie  moved  for summary judgment  in  the  superior
court.  That court concluded that net proceeds was limited to the
items  in  which Wasser held a collateral interest, reformed  the
contract to reflect payoff of all senior lien holders before  the
payoff  to Wasser, and granted summary judgment to Ritchie.   The
court  awarded  Ritchie  attorneys and  paralegal  fees  totaling
$24,048.
          Wasser  appeals the grant of summary judgment,  arguing
that the contractual term net proceeds includes proceeds from the
entire  Thomas  auction,  and that the superior  court  erred  in
allocating the risk of mistake to Wasser and therefore  erred  in
reforming  the  contract.   Both parties  appeal  the  awards  of
attorneys fees and paralegal fees.
III. DISCUSSION
     A.   Standard of Review
          We  review grants of summary judgment de novo,  drawing
all  reasonable factual inferences in favor of, and  viewing  the
facts  in the light most favorable to the non-prevailing  party.1
A  grant of summary judgment will be affirmed when there  are  no
genuine  issues  of  material fact and the  prevailing  party  is
entitled  to  judgment as a matter of law.2  Summary judgment  is
.  .  . improper in contractual disputes when the evidence before
the superior court establishes a factual dispute as to the intent
of the contracting parties. 3
          Because  the  extrinsic evidence is not in dispute,  we
are  not confined to the clearly erroneous standard in our review
of  the superior courts decision to grant summary judgment on the
basis  of its interpretation of a contract.4  In a case  such  as
this,  interpretation of a contract is treated in the same manner
as a question of law.5
          We review a superior courts award of attorneys fees for
abuse  of  discretion  and will uphold  an  award  unless  it  is
manifestly unreasonable.6
     B.   Reformation
          Wasser  appeals the grant of summary judgment,  arguing
that  net  proceeds  includes proceeds  from  the  entire  Thomas
auction  and  that  the  superior court erred  in  reforming  the
contract.   We  turn first to the reformation  issue  because  it
turns out to be controlling in this case.
          Reformation  is an equitable remedy by  which  a  court
alters  the  terms  of a written instrument to make  the  writing
conform with the meaning that the parties agreed upon.7  We  have
previously  listed the circumstances under which reformation  may
be appropriate:
          (1)  mutual  mistake of  fact  in  which  the
          [contract], as written, does not  conform  to
          the prior agreement of the parties; (2) fraud
          by  one party which causes the other party to
          be under a mistaken belief as to the contents
          of  the  [contract]; (3) duress by one  party
          which  deprives the other party of  any  true
          freedom of choice; (4) unilateral mistake  by
          one   party  and  fraudulent  or  inequitable
          conduct by the other party, especially  where
          the  latter party knew of the others  mistake
          and  kept  silent; and (5) mistake of  law  .
          . . .[8]
          
          The  superior  court determined that a  mutual  mistake
existed  because neither party was aware of the additional  liens
at  the time of contract formation.  The court therefore reformed
the  contract  to  require that all senior lien holders  be  paid
before  Wasser.   The court stated that the reformation  comports
with  Wassers interest in the property.  Since Wasser would  have
been  subject  to the senior lienholders, Wasser  cannot  recover
more  than  it  has  already received from  the  distribution  of
proceeds in the bankruptcy court.
          Wasser argues that reformation was not available  as  a
matter of law because the written contract accurately conforms to
the  parties agreement and that Ritchie bore the risk of  mistake
because it informed Wasser that no additional liens existed.
          1.   The   superior  court  correctly  determined   the
               existence of mutual mistake.
               
          We  use a three-part test to determine whether there is
a  mutual mistake of fact.9  To satisfy the test the party urging
reform  must show: (1) the mistake relates to a basic  assumption
on  which  the contract was made, (2) the mistake has a  material
effect on the agreed exchange of performances, and (3) the  party
seeking relief does not bear the risk of the mistake.10
          Wasser  first  argues that there was no mutual  mistake
and  that  therefore  reformation was not available  because  the
written agreement accurately conveyed the parties oral agreement.11
A court may only reform a contract if the words of the writing do
not correctly express the meaning that the parties agreed upon.12
Wasser essentially argues that the discovery of additional  liens
was  irrelevant  to  the parties agreement  because  the  parties
intended  Wasser to be paid after KeyBanks payoff  regardless  of
whether additional liens were later discovered.  In effect Wasser
asserts that Ritchie did not satisfy the second prong because the
discovery of the additional liens did not have a material  effect
on the parties agreed-upon performances.
          We  disagree.  It is undisputed that neither party  was
aware  of  the  additional senior lien holders when  the  parties
entered into Release #2.  Both parties believed that KeyBank  was
the  only senior lien holder on the seven pieces of equipment  in
which Wasser held a security interest and this belief was a basic
assumption of the agreement.  The presence of the additional lien
holders materially altered the agreement because it significantly
reduced the net proceeds from the Thomas auction.
          2.   Ritchie did not bear the risk of mistake.
               
          Wasser also argues that Ritchie did not meet the  third
requirement of the mutual mistake test because Ritchie, the party
seeking  reformation,  bore the risk  of  mistake.   In  response
Ritchie argues that it did not assume the risk of mistake because
it did not guarantee the lien search.
          Wasser is correct that a party which bears the risk  of
mistake cannot satisfy the mutual mistake test.13  There are three
acknowledged bases for allocating risk of mistake.14
          First,  one  bears the risk of mistake if the  contract
allocates  that risk to her.15  This basis is inapplicable  here.
Release  #2  is silent about whether Wasser or Ritchie  bore  the
risk  of additional liens.  The RitchieThomas Contract to Auction
authorizing Ritchie to auction Thomass equipment required  Thomas
to  accurately  identify all lien holders.  It also  states  that
[Thomas]  authorizes  [Ritchie] to carry out  title  searches  in
respect  of the Equipment at the expense of [Thomas], but  in  no
case  shall  [Ritchie] have a duty to conduct, nor be responsible
for  the results of any such title search.  Therefore Ritchie did
not  assume  the  risk  based on its contracts  with  Wasser  and
Thomas.
          Second,  [a]  party bears the risk of  a  mistake  when
.  . . he is aware, at the time the contract is made, that he has
only  limited  knowledge with respect to the facts to  which  the
mistake relates but treats his limited knowledge as sufficient.16
This  is  sometimes  referred to as conscious ignorance.17   This
basis  is  inapplicable here because neither party had reason  to
believe that its knowledge might be insufficient.
          Finally,  if a contract does not allocate the  risk  of
mistake  and  neither  party  bears the  risk  due  to  conscious
ignorance, [a] party bears the risk of a mistake when . .  .  the
risk  is allocated to him by the court on the ground that  it  is
reasonable  in the circumstances to do so.18  Wasser argues  that
Ritchie should bear the risk of mistake because Ritchie conducted
the  lien  search and drafted the contract. Ritchie  argues  that
Wasser  should  bear the risk of mistake because  Wasser  was  on
constructive  notice  of  all recorded liens  and  had  financial
incentive to determine the existence of other liens.
          When  allocating  risk among parties,  the  court  will
consider  the purposes of the parties and will have  recourse  to
its   own   general  knowledge  of  human  behavior  in   bargain
transactions.19   [A] court has broad discretion  in  determining
when  to  deny relief to a mistaken contracting party  under  the
theory that a party bore the risk of the mistake.20  The superior
court  was  not asked, and did not explicitly state, which  party
bore  the risk of mistake.  But because the court determined that
there  was mutual mistake and reformed the contract in  favor  of
Ritchie, the court impliedly determined that Wasser bore the risk
of mistake.
          Wasser  cites  our  decision in  Fairbanks  North  Star
Borough v. Tundra Tours, Inc.21 to argue that the risk of mistake
should  have been assigned to Ritchie because it is allocated  to
the  party  who could have discovered the mistake, but  did  not.
          But there is no indication that Ritchie was the only party that
could have discovered the liens.  Wasser asserts that Ritchie had
a  sophisticated  lien  search program that  was  unavailable  to
Wasser.   Assuming that statement is true, there is no indication
that  Wasser did not have the capability of discovering the liens
itself,  nor  is  there any indication that  performing  its  own
search would have been so expensive or otherwise infeasible  that
relying  on  the Ritchie search was commercially  necessary.   As
Ritchie  points out, Wasser is a sophisticated company  that  had
indisputably  performed  lien searches  prior  to  releasing  its
interest in Thomass equipment.
          Wassers reply brief asserts that [t]here is no evidence
in the record that the undiscovered liens were recorded.  Indeed,
the  record  suggests that those liens were  not  recorded.   But
assuming  they  were not recorded, this does not mean  that  upon
inquiry  Wasser could not have learned about the tax  liens.   At
the  very  least,  Wasser could have asked Thomas  whether  liens
existed.
          Wasser had particular reason to investigate whether its
collateral  was  encumbered by additional liens.   In  late  2003
Thomas defaulted on its loan to Wasser, and Berg admitted that he
was  in  constant  communication or frequent  communication  with
Thomas  after the default.  Wasser therefore knew Thomas  was  in
financial trouble.
          Furthermore,  we  are persuaded by  Ritchies  assertion
that  it was reasonable to allocate the risk to Wasser given  the
relative interests of the parties.  As a secured creditor, Wasser
had  a direct financial interest in the equipment itself.  As  an
auctioneer,  Ritchies  only interest in  the  equipment  was  the
commission   the  auction  would  generate.   Thomass   debt   of
$331,078.55 to Wasser was secured by liens on the seven pieces of
equipment, whereas Ritchies commission on the sale of those seven
items was less than $16,000.  The amount available for payoff  to
creditors  included  the total proceeds less  the  auction  costs
including  Ritchies commission.  Ritchie would receive  the  same
commission  without regard to whether the parties  were  mistaken
about additional lien holders; Ritchies interest in accurate lien
information was therefore markedly lower than Wassers.   Accurate
lien  information  would  determine where  Wasser  stood  in  the
hierarchy  of lenders; this information was of relatively  little
importance to Ritchie, but of great importance to Wasser.
          Because  of  the  relative  disparity  in  the  parties
interests  in the consequences of undiscovered senior  liens,  it
seems  appropriate for Wasser to bear the risk of  mistake.   The
only  theoretical basis for allocating risk to Ritchie  would  be
Ritchies telephonic representation to Wasser that there  were  no
IRS  liens.  This argument is bolstered by the fact that Ritchies
assertion  was given to Wasser only one day before  the  auction.
But  given Wassers paramount interest in whether there were other
senior  lien  holders, and given the consequences  to  Wasser  if
Ritchie was wrong, Ritchies innocent misrepresentation should not
cause  the  risk  of  mistake to be reallocated  from  Wasser  to
Ritchie.   Both  of these sophisticated parties must  have  known
that  IRS  liens or other senior liens would reduce the  proceeds
available  to  satisfy  Wasser and that  Wassers  interest  would
inevitably be subordinate.
          Moreover,  allocating the risk of  mistake  to  Ritchie
would  expose  Ritchie  to liability far exceeding  its  possible
interest,  whereas placing the risk of mistake  on  Wasser  would
give  Wasser essentially what it would have received had it known
about  the other liens.  There is no reason to think that  Wasser
could  have arranged an auction on terms that would have defeated
the tax liens; there is therefore no reason to think Wasser would
have  been in a better position had it been fully informed  about
the  liens.   In  other words, imposing the risk  of  mistake  on
Ritchie  would  have  exposed  it  to  consequences  far  out  of
proportion  to  those Wasser faced whether or not  it  was  fully
informed.
          Wasser, citing Old Harbor Native Corp. v. Afognak Joint
Venture,22  argues that allocation of the risk of  mistake  is  a
question  of  fact, the evidence of which must  be  construed  in
Wassers  favor.  But Old Harbor Native Corp. does  not  establish
that the allocation of risk of mistake is a question of fact.  In
that  case,  we  did not allocate the risk of mistake  to  either
party.23   We  determined that the evidence, when viewed  in  the
light most favorable to the non-prevailing party below, supported
the  contention  that  the  parties made  a  mutual  mistake  and
therefore  concluded that the superior court erred in  dismissing
the mutual mistake claim.24
          As  Ritchie notes, it was simply an auctioneer, and was
not acting as a title company for Wasser. . . . Ritchie Bros. was
neither  the buyer nor seller of Thomass equipment,  and  had  no
interest  in  the  items; as the auctioneer,  Ritchie  Bros.  was
simply  an  agent  for  the seller.  As  Ritchie  argues,  it  is
counterintuitive to think that the risk of mistake ought to be on
the auctioneer under these circumstances.  Wasser has provided no
case  authority  that would overcome that intuitive  notion,  and
Wasser  produced  no evidence to justify a finding  that  Ritchie
bore the burden of risk of mistake.  We consequently allocate the
risk of mistake to Wasser as a matter of law.25
          3.   Ritchies  innocent misrepresentation did  not  cut
               off the possibility of reformation.
               
          Wasser  additionally  argues that Ritchie  assumed  the
risk  that its representation that there were no additional liens
was  not  accurate and that Ritchies misrepresentation terminated
the availability of reformation.
          Alaska  law states that a party has  a duty to  provide
accurate information once one undertakes to speak.26  But a party
has  no right to rely on another partys representations if  doing
so would be so negligent as to amount to a failure to act in good
faith  and  in  accordance  with  reasonable  standards  of  fair
dealing.  27   In  rejecting  Wassers separate  misrepresentation
claim,28  the  superior court stated that Wasser could  not  have
justifiably relied on Ritchie statements that there were no other
liens  because Wasser itself should have investigated what  liens
existed.
          Wasser  argues that whether it was justified in relying
upon  the  statement, and therefore whether Ritchie  assumed  the
risk of mistake by making the statement, is an issue of fact that
precludes the grant of summary judgment.  Wasser is correct  that
whether  reliance is justified is ordinarily a question  of  fact
material to a misrepresentation claim.29  But if reasonable minds
could reach but one conclusion the issue may be determined  as  a
matter of law.30  The three cases31 Wasser cites note that whether
one  party  justifiably  relied  upon  another  is  ordinarily  a
question  of fact, but none supports Wassers contention  that  it
was reasonably justified in relying upon Ritchie.
          In  Industrial Commercial Electric Inc. v.  McLees,  we
stated that [w]hether reliance is justified in a given case seems
to  us more likely to turn on the course of dealings between  the
parties  before  and during the dispute.32  Berg  testified  that
Wasser had several items auctioned by Ritchie prior to the Thomas
auction,  but he did not recall that any of the previous auctions
was  conducted  consistent with Wassers  proposed  interpretation
here  that  the parties intended to allow full payoff  to  Wasser
regardless of whether senior liens existed.  Wasser has not shown
that  the  parties  prior dealings or their dealings  during  the
Thomas auction could support a finding that Wassers reliance  was
justified.   In  Ambassador Insurance Co. v.  Kenneth  I.  Tobey,
Inc.,  we  held that because misrepresentations were made  by  an
authorized  agent  that  had apparent  authority,  the  issue  of
whether reliance was justified precluded summary judgment.33  But
that  case is distinguishable because even though Ritchie was  an
agent  of Thomas, it was an unrelated, third-party agent  and  as
such  Ritchie  was  not making an authoritative  statement  about
Thomass equipment.  In Anchorage Chrysler Center, Inc. v. Daimler
Chrysler Corp., we determined that the superior court did not err
in  finding,  after trial, that the plaintiffs reliance  upon  an
email was unjustified because the email was so hedged.34
          Wasser  asserts  that  [a]uctioneers  have  no  special
license  to  make  misrepresentations,  even  if  negligently  or
innocently,  regarding the status of property they  are  selling.
Wasser had every right to rely on Ritchie . . . .  Ritchie is not
          a title company.  And although Wasser is not a purchaser or owner
of  auctioned equipment, it is significant that Ritchie does  not
guarantee clear title even to its auction purchasers and that its
Contract   to  Auction  specifically  disclaims  any  duties   or
liabilities regarding any title search.  Ritchie is an auctioneer
involved  in  the  business of appraising and valuing  equipment.
Wasser admits that Ritchie would not guarantee a payoff based  on
Ritchies valuation.  Wasser could not reasonably rely on Ritchies
title  search  knowing that Ritchie is not a title company,  when
Wasser  knew  that  Ritchie was even unwilling to  guarantee  its
valuation estimates, an area in which Wasser asserts that Ritchie
is an expert.
          We   determine  that  Wassers  proffered  evidence   is
insufficient  to support a finding that Wasser was  justified  in
relying  upon Ritchies misrepresentation.  We therefore  conclude
that  the  undisputed  evidence regarding  the  parties  relative
interests establishes that Wassers reliance was unjustified as  a
matter  of  law; there is consequently no genuine issue  of  fact
whether   Ritchie  assumed  the  risk  of  loss  based   on   its
misrepresentation.
          Wasser similarly argues that Ritchies misrepresentation
terminated  the availability of reformation.  In support,  Wasser
cites  Hercules Machinery Corp. v. McElwee Bros.,  in  which  the
court  refused to reform a contract entered into after one  party
relied upon the misrepresentation of another.35  In that case,  a
construction   company   sent  a  detailed   inquiry   with   job
specifications  to  an equipment supplier and asked  whether  the
suppliers  pile  driver could adequately  perform  the  job;  the
seller  answered affirmatively.36  The court held that the seller
bore  the risk that the pile driver would fail to meet the buyers
specifications  and  refused to rescind the contract  for  mutual
mistake  because  of  the sellers affirmative  representations.37
Even though a buyer of sophisticated equipment supplying detailed
specifications  may rely on the assertions of  a  seller,  Wasser
could  not, for the reasons discussed above, reasonably  rely  on
Ritchies   assertions.    Ritchies   innocent   misrepresentation
therefore did not cut off the possibility of reformation.
          4.   Ritchie   proved  mutual  mistake  by  clear   and
               convincing evidence.
               
          A  party urging reformation must establish the elements
of reformation by clear and convincing evidence.38  Wasser argues
that  Ritchie  failed to meet this high burden of proof  for  the
extraordinary   relief  of  reformation.   In   support,   Wasser
reiterates  the arguments discussed above.  It argues that  there
was  a question of fact as to whether the parties intended to pay
senior  lien  holders before paying Wasser.  It also argues  that
the mistake was the result of Ritchies inaccurate lien search and
that  the  burden  of additional liens should therefore  fall  on
Ritchie.
          The  superior  court did not state in its  opinion  the
standard of proof it applied to Ritchies reformation argument.  A
superior court does not need to explicitly state the standard  of
proof  it is applying if there is no dispute about the applicable
          standard.39  We will normally assume that the superior court has
applied the correct standard.40
          There  is  no indication the superior court applied  an
incorrect  standard.  The superior court noted that  [r]escission
is another remedy available when the defense of mutual mistake is
argued.   A party seeking to rescind a contract on the  basis  of
mutual  mistake must show by clear and convincing  evidence  that
the  agreement  should be set aside.  Because the superior  court
correctly acknowledged that mutual mistake must be shown by clear
and  convincing  evidence in the context of  rescission,  because
Wasser  asserted  below  that the clear and  convincing  standard
applied  to reformation, and because Ritchie never asserted  that
any  other standard applied to reformation, we conclude that  the
superior  court understood that mutual mistake must be  shown  by
clear  and  convincing evidence in the context of reformation  as
well.   From  this  we  can  safely  assume  the  superior  court
recognized  and  applied  the correct standard.   Therefore,  the
superior court did not err in granting reformation.
          Wasser  additionally  argues that  the  superior  court
erred  in  determining that net proceeds was limited to  sale  of
those  items of Thomass equipment in which Wasser held a security
interest.   Because  we  hold  that  the  contract  was  properly
reformed,   there  are  no  proceeds  from  the  other  equipment
available to pay Wasser; we therefore do not need to address this
issue.
     C.   Attorneys Fees
          Ritchie asked the superior court for an enhanced  award
of  attorneys fees under Alaska Civil Rule 82.  Wasser  partially
opposed  the  motion,  arguing that  Ritchie  did  not  establish
grounds for enhancement and that Ritchie improperly included fees
for  paralegal  work.   The  superior  court  declined  to  award
enhanced fees but awarded Ritchie $24,048 under Alaska Civil Rule
68.   The  fees subject to the Rule 68 offer of judgment  totaled
$32,064,  including  paralegal  fees  of  $2,164.   Because   the
superior court awarded Ritchie seventy-five percent of the  total
fees  Ritchie  had incurred, Ritchie was awarded  paralegal  fees
totaling $1,623.
          Wasser appeals the paralegal fees award.  Rule 82(b)(2)
provides that [t]he actual fees shall include fees for legal work
customarily  performed by an attorney but which was delegated  to
and performed by an investigator, paralegal or law clerk.  Wasser
argues  that  Ritchie  included  fees  for  paralegal  work   not
customarily performed by an attorney.  Ritchie argues that Wasser
waived  this  objection by not referring the  superior  court  to
specific time entries.  But Wasser did object to the inclusion of
paralegal fees by arguing below that Ritchie has made no  showing
that  the  work  performed by these individuals  was  of  a  type
customarily performed by an attorney, and a cursory review of the
narrative establishes that it was not.41  Accordingly, we  remand
this  part  of  the case with directions that the superior  court
determine  what portion of this work may be included in  the  fee
award under the standard expressed in Rule 82(b)(2).42
          Ritchie  cross-appeals the superior  courts  denial  of
Ritchies request for enhanced fees.43  Rule 82(b)(3) provides that
          [t]he court may vary an attorneys fee award calculated under
subparagraph  (b)(1) or (2) of this rule  if  .  .  .  the  court
determines  a  variation is warranted.  To  determine  whether  a
variation  is  warranted  we consider factors  that  include  the
complexity of the litigation and the reasonableness of the claims
and defenses pursued by each side.44  Ritchie argues that the fee
award should be remanded with instructions to depart upward  from
the  Rule  82  schedule  because  Wassers  claims  were  patently
unreasonable and its litigation strategy significantly  increased
the complexity of the case.
          Ritchie  argues  that Wasser could not have  reasonably
believed it was entitled to net proceeds from the sale of all  of
Thomass  equipment regardless of the existence of any  additional
liens.   Ritchie also asserts that Wasser refused to clarify  the
legal  basis  for its claims to give the illusion  of  unresolved
issues  of fact and law.  But although Wassers interpretation  of
the  contract  may  appear commercially implausible,  it  is  not
patently  unreasonable,  nor  does  Wassers  litigation  strategy
appear to have made the litigation unduly complex.45  The superior
court  believe[d]  any further enhancement is not  warranted  and
nothing  in  the  record  indicates that  the  court  abused  its
discretion by declining to award enhanced fees.
III. CONCLUSION
          For these reasons, we REMAND for reconsideration of the
paralegal fees award, but otherwise AFFIRM the judgment below.
_______________________________
     1     Estate of Polushkin ex rel. Polushkin v. Maw, 170 P.3d
162,  166  (Alaska  2007); Alaska Constr. Equip.,  Inc.  v.  Star
Trucking, Inc., 128 P.3d 164, 167 (Alaska 2006).

     2     Alaska  Constr. Equip., Inc., 128 P.3d at 167  (citing
Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005)).

     3     Rockstad,  113 P.3d at 1219 (quoting K & K  Recycling,
Inc. v. Alaska Gold Co., 80 P.3d 702, 712 (Alaska 2003)).

     4     Norton  v.  Herron, 677 P.2d 877,  880  (Alaska  1984)
(noting  that  extrinsic evidence  consisting of  affidavits  and
depositions   merely  restated  parties  conflicting   litigation
positions).

     5    Id.

     6    Laidlaw Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d
1018,  1038  (Alaska 2005); Parker v. Tomera, 89  P.3d  761,  765
(Alaska 2004).

     7    Restatement (Second) of Contracts  155 cmt. a (1981).

     8    Adams v. Adams, 89 P.3d 743, 752 (Alaska 2004) (quoting
Voss v. Brooks, 907 P.2d 465, 468 (Alaska 1995)).

     9     Old  Harbor Native Corp. v. Afognak Joint Venture,  30
P.3d  101,  108  (Alaska 2001) (determining that whether  parties
made mutual mistake regarding settlement agreement raised genuine
issue of material fact, precluding grant of summary judgment).

     10     Id. (quoting Stormont v. Astoria Ltd., 889 P.2d 1059,
1061 (Alaska 1995)).

     11     In  a  footnote  to its opening  brief,  Wasser  also
contends that Wasser continues to assert that the Superior  Court
erred  in determining that Ritchie had not waived the defense  of
mutual mistake.  Because Wasser devotes only a single sentence to
this  argument,  we  consider it waived.  Bodkin  v.  Cook  Inlet
Region,  Inc.,  __ P.3d __, Op. No. 6246 at 8 (Alaska,  April  4,
2008);  Petersen v. Mut. Life Ins. Co., 803 P.2d 406, 410 (Alaska
1990)  (Where a point is not given more than a cursory  statement
in  the  argument  portion of a brief,  the  point  will  not  be
considered on appeal.).

     12    Arthur L. Corbin, 7 Corbin on Contracts  28.45, at 281
(2002).

     13     Restatement (Second) of Contracts  152(1);  see  Mat-
Su/Blackard/  Stephan  & Sons v. State, 647  P.2d  1101,  1104-05
(Alaska   1982)   (refusing   to  find   mutual   mistake   after
unanticipated  supply  cost increase because  contract  expressly
allocated burden of providing materials to contractor).

     14    Restatement (Second) of Contracts  154.

     15    Dickerson v. Williams, 956 P.2d 458, 466 (Alaska 1998);
see Restatement (Second) of Contracts  154(a).

     16    Restatement (Second) of Contracts  154(b).

     17    Id.  154 cmt. c.

     18    Id.  154(c).

     19    Id.  154 cmt. d.

     20    77 Am. Jur. 3d Proof of Facts  18, at 217 (2004).

     21     Fairbanks N. Star Borough v. Tundra Tours, Inc.,  719
P.2d  1020,  1033  (Alaska  1986) (holding  that  because  school
district  received  detailed billing statements  and  paid  total
billed amount superior court reasonably allocated risk of mistake
to  school district based on contract that was ambiguous  whether
sign-off and sign-on times were compensable).

     22     Old Harbor Native Corp. v. Afognak Joint Venture,  30
P.3d 101 (Alaska 2001).

     23    Id. at 108.

     24    Id. at 109.

     25     See  Zontelli & Sons, Inc. v. City of  Nashwauk,  373
N.W.2d 744, 752 (Minn. 1985) (holding that mutual mistake existed
after  allocating risk of unanticipated circumstances on city  as
matter  of  law  because contractor had right to  rely  on  citys
specifications in making bid).

     26     Barber  v.  Natl Bank of Alaska, 815  P.2d  857,  862
(Alaska  1991)  (quoting Bevins v. Ballard,  655  P.2d  757,  760
(Alaska 1982)) (knowing or negligent misrepresentation cases).

     27    Cousineau v. Walker, 613 P.2d 608, 614-15 (Alaska 1980)
(citing  Restatement (Second) of Contracts  314,  cmt.  b  (Tent.
Draft no. 11, 1976)).

     28      In   the   superior   court,   Wasser   asserted   a
misrepresentation  claim against Ritchie as an alternative  cause
of  action.   Wasser has not pursued its direct misrepresentation
claim  on appeal but nonetheless argues that Ritchie assumed  the
risk of mistake through its misrepresentation.

     29     Anchorage  Chrysler Ctr., Inc.  v.  Daimler  Chrysler
Corp., 129 P.3d 905, 914-15 (Alaska 2006), states:

          Although  some  courts appear  to  hold  that
          determinations  as  to whether  reliance  was
          justified  can be a question of law  reviewed
          de  novo, our own precedents suggest that  it
          is a question of fact, and it seems that most
          jurisdictions that have addressed  the  issue
          say it is either a purely factual issue or  a
          mixed  question  of  law  and  fact,  to   be
          reviewed for clear error in either event.
          
     30     Id.  at  914-15; accord Barnes v. Cornerstone  Invs.,
Inc.,  773  P.2d  884,  886-87 (Wash. App.  1989)  (holding  that
appellants  did not create triable issue of fact with regards  to
justifiable reliance because submitted affidavits did  not  place
any facts at issue); see also Vigortone Ag Prods., Inc. v. PM  Ag
Prods.,  Inc.,  217 F. Supp. 2d 858, 865 (N.D.  Ill.  2001)  (The
issue  of justifiable reliance is a question of fact, but it  can
be decided on summary judgment when no reasonable jury could find
that  it  was  reasonable  for  a  plaintiff  to  rely  upon  the
defendants statements.); Keenan v. Allan, 889 F. Supp. 1320, 1386
(E.D.  Wash.  1995)  (stating that justifiable  reliance  can  be
decided on summary judgment if reasonable minds would reach  only
one conclusion).

     31     Anchorage  Chrysler Ctr., Inc.  v.  Daimler  Chrysler
Corp., 129 P.3d 905 (Alaska 2006); Indus. Commercial Elec.,  Inc.
v.  McLees,  101 P.3d 593 (Alaska 2004); Ambassador Ins.  Co.  v.
Kenneth I. Tobey, Inc., 618 P.2d 572 (Alaska 1980).

     32    Indus. Commercial Elec., Inc. v. McLees, 101 P.3d 593,
601 (Alaska 2004).

     33    Ambassador Ins. Co. v. Kenneth I. Tobey, Inc., 618 P.2d
572, 574 (Alaska 1980).

     34     Anchorage  Chrysler Ctr., Inc.  v.  Daimler  Chrysler
Corp., 129 P.3d 905, 914-15 (Alaska 2006).

     35    Hercules Mach. Corp. v. McElwee Bros., 2002 WL 31015598
(E.D. La. 2002).

     36    Id. at *4.

     37    Id. at *9.

     38    Adams v. Adams, 89 P.3d 743, 752 (Alaska 2004).

     39     Anchorage Police & Fire Ret. Sys. v. Gallion, 65 P.3d
876, 883 (Alaska 2003).

     40    Id.

     41    On appeal, Wasser points to entries describing the work
as  [c]ompil[ing] and mark[ing] trial exhibits and  [p]repar[ing]
key documents binder.

     42    See Nielson v. Benton, 903 P.2d 1049, 1054 n.8 (Alaska
1995) (remanding attorneys fee award and directing superior court
to review paralegal work charged and determine what portion could
be included in fee award).

     43     Although Ritchie is not barred from seeking  enhanced
fees  under Rule 82, if it were to receive enhanced Rule 82  fees
exceeding  the  Rule  68  fees that were  awarded,  it  would  be
precluded from receiving the Rule 68 fees; if, on the other hand,
enhanced fees were awarded that did not exceed Ritchies  Rule  68
award, Ritchie would be barred from collecting the enhanced  Rule
82  fees because attorneys fees cannot be awarded under both Rule
68  and  Rule 82.  See Ellison v. Steam Fitters Union Local  375,
118 P.3d 1070, 1078 (Alaska 2005).

     44    Alaska R. Civ. P. 82(b)(2)(A), (F).

     45     Cf. Cole v. Bartels, 4 P.3d 956, 959-61 (Alaska 2000)
(affirming   superior  courts  award  of  enhanced   fees   after
determining   that  appellant  had  pursued  inconsistent   legal
positions  and  joined third-party defendants on  claims  lacking
factual support).

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