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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Jarvill v. Porky's Equipment, Inc. (08/01/2008) sp-6294
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 firstname.lastname@example.org. THE SUPREME COURT OF THE STATE OF ALASKA
|GARY L. JARVILL,||)|
|) Supreme Court Nos. S- 12457/12527|
|Cross-Appellee,||) Superior Court No. 1SI-04-00220 CI|
|v.||) O P I N I O N|
|PORKYS EQUIPMENT, INC., and||) No. 6294 August 1, 2008|
|NORMAN T. HAAG, a/k/a TODD||)|
Appeal from the Superior Court of the State of Alaska, First Judicial District, Sitka, Larry C. Zervos, Judge. Appearances: Brian E. Hanson, Pearson & Hanson LLC, Sitka, for Appellant/Cross- Appellee. Robert S. Spitzfaden, Gruening & Spitzfaden, APC, Juneau, for Appellees/Cross- Appellants. Before: Fabe, Chief Justice, Matthews, Carpeneti, and Winfree, Justices. [Eastaugh, Justice, not participating.] FABE, Chief Justice. I. INTRODUCTION Gary Jarvill alleges that a design defect in the boat he purchased from Porkys Equipment, Inc. caused it to sink in its harbor slip less than three years after purchase. Jarvill appeals the superior courts ruling that the statute of limitations bars his product defect and negligence claims. Because the evidence fails to support the trial courts finding that Jarvills cause of action accrued and the statute of limitations began to run before the boat sank, we reverse the trial courts dismissal on statute of limitations grounds. We affirm the trial courts holding that Porkys employee, Todd Haag, acted as the companys agent in contracting to construct the boat for Jarvill, and the trial courts admission of evidence from Jarvills marine surveyor regarding the boats allegedly defective design and construction. II. FACTS AND PROCEEDINGS A. Facts Gary Jarvill teaches high school and runs a charter fishing business during his summer vacations. In the fall of 1999 he began looking for a new boat. Jarvill desired an aluminum Packman style boat of the type built by the Munson Company of Burlington, Washington. The Munson Company, however, could not make delivery quickly enough, and Jarvill looked elsewhere. Jarvills son, an employee of Porkys, told him that the company had recently built a boat using a Munson design. Jarvill went to Porkys and spoke with Todd Haag, a foreman for Porkys. Haag explained that he had the rights to build two Munson design boats in exchange for work that his crew had done on a Munson boat. Haag had completed one of the boats for Porkys president, Brian Bickar, and Haag showed it to Jarvill. Haag and Jarvill discussed a list of specifications that Jarvill had written, and Haag told Jarvill that he could sell him a Munson design boat, on which he had already begun construction. In November 1999 Haag and Jarvill agreed that for $90,000 Haag would build a boat meeting Jarvills specifications. To finalize the agreement, Jarvill wrote a check out to Todd Haag for $7,000. In order to secure financing, Jarvill retained Jim Steffen, a boat surveyor, to verify the boats value as collateral. Steffen surveyed the boat three times during its construction and once after construction was complete. Steffen also performed a damage report after the boat, christened the Sea- J, sank on January 5, 2003. Steffen maintains that, from the beginning, he expressed concern that the 3/16" gauge aluminum sheeting on the Sea-Js hull was too thin. He testified that during his first survey he discussed this concern with Haag. This led Steffen to note in his first report, that [t]hough the hull shell plating is light for a vessel of this size, the framing schedule has been tightened up in order to provide what appears to be adequate stiffness. Steffen repeated this language in his second report. But as construction on the boat proceeded, it did not include the internal stiffening work that Steffen thought to be necessary. In his third report, Steffen wrote that the hull plating is considered adequate for structural appearances given the presence of external hull stiffeners. Steffen testified that, before writing this report, he told Jarvill and Haag that he thought the boat would need external stiffeners because of the thin plating. Haag declined to mount external stiffeners on the boats frame, reasoning that he had adequately welded the hull for stiffness and that external stiffeners would rob the performance of the hull. When Steffen conducted a final in-water survey of the boat, he verified that the hull plating was adequate for judicious use given the presence of external hull stiffeners. Steffen testified that he knew, however, that Haag had not installed any external hull stiffeners on the boat. During the night of January 5, 2003, about two and a half years after its delivery, the Sea-J sank in its harbor slip. Mr. Steffen surveyed the damage and determined that stress fractures on the bottom of the hull had caused the boat to sink. Steffen detected no evidence of an impact in the affected area, and concluded that the [c]racks are due to light shell plate thickness and marginal internal framing, fatigued by stresses encountered during normal vessel operations. On January 30, 2003, Jarvill sent Porkys president Brian Bickar notice that the cause of the recent damage to the vessel Sea-J which sank at the dock has been attributed to a manufacturing defect. A few days later, Bickar wrote back on behalf of Porkys to explain that Todd Boats, rather than Porkys, had constructed the boat, and that Porkys only provided the location for the boat to be built in. Bickar thus suggested that Jarvill contact Todd Haag. He also offered to mail Jarvill a copy of the original survey done by Jim Steffen. B. Proceedings On November 17, 2004, Jarvill filed suit in superior court against Porkys and Haag, claiming product defect, negligence, breach of implied warranty, unfair trade or business practices, and breach of contract. After motion practice, claims of product defect, negligence, and unfair trade practices remained. Starting on February 7, 2006, Superior Court Judge Larry C. Zervos held a bench trial. After Jarvill presented his case, Porkys moved under Alaska Civil Rule 41(b) to dismiss all counts, arguing that the statute of limitations barred the product defect and negligence claims and that Jarvill failed to prove an unfair trade practices violation. The superior court denied Porkys motion, reasoning that Jarvill did not know about the defective hull plating on the boat until it sank. Just before closing arguments, however, Porkys asked the court to reconsider its ruling on the Rule 41(b) motion. In the motion for reconsideration, the company presented the theory that Steffens knowledge of the defective hull should be imputed to Jarvill because Steffen had inspected the boat as Jarvills agent. Because Steffen was aware that Haag had not installed external stiffeners or taken any other measures to compensate for the thin hull plating, Porkys argued, he had notice of the boats alleged defect. The court agreed, and after considering additional briefing on the agency relationship between Jarvill and Steffen, it reversed its prior ruling and held that the statute of limitations barred Jarvills negligence and product defect claims.1 Although the superior court did not reach the merits of Jarvills tort claims, it found that Mr. Steffen knew that the boat was defective on June 10, 2000 when he inspected it just before the boat was turned over to Mr. Jarvill for his use. Therefore, according to the trial court, the two-year limitations period on Jarvills tort claims2 expired before the Sea-J sank on January 5, 2003. Specifically, the trial court held that at the time of Steffens third inspection of the Sea-J he had information sufficient to alert a reasonable person to begin an inquiry to protect his rights.3 The trial court reasoned that Steffen knew that the boat was defective then, and that the boats eventual sinking was directly related to the defect and negligent construction. The trial court concluded that [a]lthough Mr. Jarvills harm on June 10, 2000 was not as great then as it would be when the boat sank, his agent had all the information available then to bring a suit on the theories he eventually raised in this case. Jarvill appeals. III. STANDARD OF REVIEW We uphold a superior courts factual findings unless they are clearly erroneous, meaning that our review of the record leaves us with a definite and firm conviction that a mistake has been made.4 In reviewing a lower courts application of law to undisputed facts, we apply our independent judgment.5 We review the trial courts admission of opinion testimony under the abuse of discretion standard.6 IV. DISCUSSION A. The Superior Court Erred in Holding that the Statute of Limitations Barred Jarvills Tort Claims. Jarvill had to file his tort claims of negligence and product defect within the two-year statute of limitations provided in AS 09.10.070.7 Jarvills boat sank on January 5, 2003, and he filed suit on November 17, 2004. Under the two-year limitations statute, Jarvills claim is timely unless it accrued before November 17, 2002.8 Jarvill maintains that his claims did not accrue until the Sea-J sank on January 5, 2003. Porkys defends the superior courts determination that Steffens inspection of the boat on June 10, 2000 triggered the limitations period. But because the record indicates that Jarvills tort claims did not accrue until the boat sank, we reverse. Steffen claimed at trial that he suspected early on that Haag was using inappropriately thin sheet metal on the hull. Steffen testified that he expressed this concern to Jarvill and possibly to Haag after he performed his April 2000 survey. Haag reassured Jarvill about the hull, telling him that the external stiffeners proposed by Steffen were unnecessary and would rob the performance of the hull. In his next report in June 2000, Steffen wrote that [h]ull plating, considered light for a vessel of this size, is considered adequate for structural appearances given the presence of external hull stiffeners. Steffen declined to make an express recommendation in the report that Haag install external stiffeners, even though he knew that Haag had not done so. In a subsequent survey report, after the boat was in the water, Steffen again concluded that the hull plating was considered adequate for judicious use given the presence of hull stiffeners. The superior court determined that Mr. Steffen did not report a defect that should have been reported. It went on to reason: Mr. Steffen knew about the problems with the boat on June 10, 2000, and he knew it was defective then. The cause of the boats eventual sinking was directly related to the defect and negligent construction. Although Mr. Jarvills harm on June 10, 2000 was not as great then as it would be when the boat sank, his agent had all the information available then to bring a suit on the theories he eventually raised in this case. Therefore, the superior court concluded, the statute of limitations barred Jarvills claims. We disagree. We have previously observed that the ordinary operation of the statute of limitations looks to the date on which the plaintiff incurs injury.9 We have applied this rule literally to bar any action initiated more than two years after the plaintiff or his insured property was tortiously damaged.10 And we have also employed the discovery rule to toll the statute of limitations until the claimant discovers, or reasonably should have discovered, the existence of all elements essential to the cause of action.11 But the discovery rule only extends the statute of limitations; it does not shorten it. The superior court chose June 10, 2000 as the date of Jarvills injury for the purposes of his negligence and product defect claims. This marked the date of Jim Steffens third survey of the Sea-J, shortly after Haag completed construction and before the boat had entered the water. But while Steffens survey on that date may have triggered the limitations period for a breach of contract claim, we cannot agree that the underlying injury alleged in Jarvills product defect and negligence claims occurred at the time of delivery. Jarvills complaint alleged that the Sea-J failed to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner. More specifically, it claimed that the boat failed to perform when the hull bottom surface cracked causing the boat to sink. Nothing in the record suggests that the cracks caused by the boats alleged defect, or any other performance failures, manifested themselves prior to the date that the Sea-J sank. To the contrary, the Sea-J performed as Haag promised, and any tortious injury to Jarvill remained a matter of speculation. At the end of the boats first summer in the water, Jarvill collided with a log. Worried that the collision may have damaged the hull, Jarvill took the boat to Haag for an inspection. Haag repaired a dent in the hull. He filled the boat with water to check for leaks. He detected no signs of inadequacy in the Sea-Js hull plating, and he reported that the Sea-J didnt have any apparent leaks, and that he had fixed the dent. Jarvill further testified that he took the boat out frequently, but that he never had any indication that the Sea-J was taking on water. He testified that he took his family out in the Sea-J over the Christmas holiday immediately prior to the boats sinking on January 5 and that the Sea-J operated without any sign of malfunctioning then. Porkys intimates that Jarvill might have acted earlier to save the boat from sinking on the night it went down. But the company does not allege that Jarvill should have discovered the stress fractures developing on the hull or any other such performance failure during his operation of the boat in the weeks and months preceding its submersion. Porkys instead argues that Jarvill suffered the injury of receiving a defective boat, and that his agent, Steffen, had notice of that injury. Porkys argues that the discovery rule governs Jarvills claim, quoting our decision in Johns Heating Service v. Lamb:12 Injury often occurs simultaneously with the corresponding act of negligence that causes it. However, when the injury is not apparent at the time of the negligent act, the discovery rule applies.13 Porkys contends that Jarvill reasonably should have discovered14 all of the elements essential to his negligence and products liability claims, including harm. According to Porkys, Jarvills harm, as of June 2000, was the boat was not serviceable which could be remedied by incurring the cost to add external stiffeners. Porkys reliance on Johns Heating Service is misplaced. In that case, homeowners, the Lambs, sued Johns Heating Service for its alleged negligent failure to repair their furnace or to warn them that it was leaking dangerous carbon monoxide fumes into their home.15 Johns Heating Service argued that the statute of limitations should bar the Lambs suit because they filed it over two years after the company conducted its service call.16 The trial court rejected the statute of limitations defense. We remanded, however, for a determination whether the Lambs knew or should have known that they were being exposed to carbon monoxide as early as [the date of the service call].17 We reasoned that summary judgment on the statute of limitations question was not appropriate because Johns Heating Service had presented evidence that the Lambs associated the malfunctioning furnace with headaches that they had been suffering, that after the service call the furnace continued to blow soot through the house, and that a fuel smell persisted in the house.18 Porkys attempts to draw a parallel between this evidence and Steffens misgivings about the thin sheet metal on the Sea-Js hull. But such an analogy overlooks a more basic distinction between the cases. Unlike the Lambs, Jarvill was not harmed by the alleged tortious action in this case until long after he had completed his purchase. The essence of Porkys argument then is that Jarvills cause of action accrued before all of its essential elements had ripened. But our previous decisions do not suggest such a rule. Although we have not decided a case precisely like this one, we have held that the limitations period in AS 09.10.070 ordinarily begins to run on the date on which the plaintiff incurs injury.19 For example, in Austin v. Fulton Insurance Co.,20 we held that claims against an insurer for negligence in not issuing a policy covering earthquake loss did not ripen until the quake had struck. Therefore, the plaintiff had two years from the time of the earthquake to file under AS 09.10.070.21 More generally, we have held that [s]tatutes of limitations prescribing a relatively short period of time, as AS 09.10.070 does, should be construed narrowly.22 And we have recognized that while the defense of the statute of limitations is a legitimate one, it is not generally favored by the courts.23 Nothing in these cases suggests the peculiar rule that Porkys would have us apply to product defect and negligence claims. The case law from other jurisdictions further persuades us that Porkys argument must fail. That jurisprudence makes clear that for a product defect claim like Jarvills, the statute [of limitations] starts to run and the cause of action accrues when the injury or damage is suffered and not at some earlier time of sale, delivery, construction, installation, etc.24 This follows from the very nature of the plaintiffs claim, because if no damage resulted from defendants negligence, then there would be no right of action.25 Porkys argues that Jarvill did suffer damages following Steffens June 2000 inspection, in the form of receiving a boat that was not serviceable. But that argument conflates the analysis of Jarvills tort claims with that of contract claims that were resolved by the parties motion practice. The date of Steffens June 10, 2000 inspection marks little more than Jarvills acceptance of the boats delivery. Adopting that event as the trigger for AS 09.10.070 would lead us to the anomalous and grossly unfair result of the statute being held to have run and the bar becoming completed even before the hapless plaintiff suffered injury or damage.26 Thus, the superior court erred in determining that the statute of limitations for Jarvills tort claims began to run at the time of Steffens June 10, 2000 survey. Haag addressed Steffens concerns, assuring Jarvill that the Sea-J did not need external hull stiffeners, which would merely rob the performance of the hull. Jarvill proceeded to operate the Sea-J for two and a half years without any sign of malfunctioning. He did not bring suit against Haag or Porkys during that time because he had suffered no harm, at least none that was reasonably discoverable. Because the record does not support Porkys statute of limitations defense, we remand for the superior court to decide Jarvills negligence and product defect claims on the merits. We next turn to the superior courts determination that any liability attaching to Haag for his construction of the Sea-J should extend to Porkys. B. The Superior Court Did Not Err in Finding that Haag Acted as Porkys Agent and Bound Porkys to the Contract with Jarvill. Porkys challenges the superior courts ruling that Haag acted as the companys agent when he built Jarvills boat on Porkys business premises. Porkys maintains that Todd Haag contracted with Jarvill independently to build his boat, and that Haag acted with neither actual nor apparent authority to bind Porkys. Therefore, the company argues, it had no duty to Jarvill that might serve as the basis for Jarvills tort claims. The record, however, supports the superior courts determination that Haag had at least apparent authority to bind Porkys. In Cummins, Inc. v. Nelson,27 we observed three considerations in evaluating apparent agency: (1) the manifestations of the principal to the third party; (2) reliance on the principals manifestations by the third party; and (3) the reasonableness of the third partys interpretation of the principals manifestations and the reasonableness of the third partys reliance.28 Here, the superior court found that Porkys purchased the materials, records about the boat were kept at Porkys, Porkys employees worked on the boat, the boat was built in its shop, Porkys hoped to make a profit from the boat and Porkys billed Mr. Jarvill for extra work not covered by the original price. These and other undisputed facts adequately support the superior courts finding that Porkys manifestations led Jarvill to believe that Haag was acting as the companys agent, and that Jarvill reasonably relied on those manifestations. In Cummins, we held that a principals manifestations may be directly communicated to the third party or may come through signs, advertising, authorization of an agent to claim that he is authorized, or continuous employment of the agent.29 In Cummins, boat owners sued the manufacturer and local installer of an engine for damages arising out of its failure.30 The boat owners had initially called the manufacturer, which had provided them with the phone number of the local installer.31 We upheld a jury award based on apparent authority, noting that we usually reserve for the trier of fact to decide whether a reasonable person in the position of the third party would believe that the agent had the authority or the right to do a particular act.32 Here, the principal directly employed the agent it seeks to disclaim. Jarvill testified that he believed that he had contracted with Porkys, rather than Todd Boats or any other independent company. And this belief seems reasonable given that Jarvill first discussed the boat with Haag at the Porkys warehouse, where Haag built the boat with the help of other Porkys employees. Porkys points out that Steffens marine surveys list Todd Boats as the boat builder and that Haag indicated to Steffen that he was the boat builder of record. Moreover, Jarvill authorized loan disbursements directly to Haag for the boat, whereas when he had previously purchased services and supplies from Porkys,33 he paid the company directly rather than any individual employee. Finally, Porkys argues that because Jarvill only discussed the boat contract with Haag, not with Porkys executives Brian and Oliver Bickar, he cannot claim to have reasonably relied on the companys manifestations of an agency relationship. But these factors do not persuade us that the court committed clear error in finding that Jarvill reasonably relied on Porkys manifestations that Haag was authorized to act on its behalf. In short, the undisputed facts, including Haags use of Porkys facilities and his employment with Porkys, lead us to affirm the superior courts ruling that Haag had at least apparent authority. We therefore turn to Porkys contention that the superior court erroneously admitted expert testimony from Jim Steffen regarding the Sea-Js alleged negligent design and construction. C. The Superior Court Did Not Err in Admitting Testimony from Steffen that the Boat Was Negligently Constructed. The superior court never resolved Jarvills negligence and product defect claims on their merits. Nevertheless, in disposing of Jarvills unfair trade practices claims, the superior court remarked that Mr. Haag built a defective boat and his use of thin hull plating without more stiffening was negligent. Although this dicta did not affect the outcome below given the trial courts dismissal of Jarvills claims on statute of limitations grounds, it indicates that the court relied on Steffens testimony that Haag negligently constructed the Sea-J. In its cross-appeal, Porkys argues that the trial court incorrectly admitted that testimony. We disagree. Porkys argues that the court erred in admitting expert testimony from Steffen on the boats negligent construction because Steffen admitted he was not a naval architect. Steffen testified that the Sea-J was negligently constructed and defective. Days after this testimony, Porkys raised an objection, seeking to clarify that Steffens testimony represented his lay opinions and not expert opinions because he is qualified for condition, valuation and cause, but not for construction or design. The superior court agreed that it let that in as lay opinion. As Porkys itself points out, the superior court knew that Steffen was not qualified as an expert in construction or design of boats. The superior court ruled that Steffen had the expertise in damage and repair and causation and evaluation and condition. And these issues go to the condition. The only thing that where he gets into . . . boat design is where I found that he was not an expert. Porkys argues that the court lacked any expert testimony for its finding that Haag built a defective boat and was negligent, because the only other witness to testify on the design and construction of the Jarvill boat was Todd Haag, who denied any negligence. While Steffen was not qualified as a naval architect, who could address whether the boat was negligently designed, he was able to provide opinion testimony within his expertise in the area of marine evaluation and condition, as well as damage and causation issues concerning boats. Steffens damages report detailed the likely cause of the boats sinking. He had also voiced his concerns during the construction phase about the boats hull sheeting. This evidence was admissible to support Jarvills claim that Haag built a defective boat. And the superior court did not have to rely on Steffens opinion as an expert in construction or design to conclude that Haag negligently used thin hull plating without additional stiffening. In conclusion, Steffens testimony was admissible and may be considered by the superior court in analyzing the merits of Jarvills tort claims on remand. V. CONCLUSION We REVERSE the superior courts dismissal of Jarvills claims as time barred. We AFFIRM the superior courts findings that Haag acted as Porkys agent and its admission of Steffens testimony that Haag negligently constructed the boat. We REMAND for a determination of Jarvills negligence and product defect claims on the merits. _______________________________ 1 The court dismissed Jarvills unfair trade practices claim on the merits. Jarvill does not appeal that ruling. 2 See AS 09.10.070. 3 Waage v. Cutter Biological Div. of Miles Labs., Inc., 926 P.2d 1145, 1148 (Alaska 1996). 4 Johns Heating Serv. v. Lamb, 129 P.3d 919, 922 (Alaska 2006). 5 Id. 6 See Schymanski v. Conventz, 674 P.2d 281, 286-87 (Alaska 1983). 7 Specifically, AS 09.10.070(a) provides: Except as otherwise provided by law, a person may not bring an action . . . (2) for personal injury or death, or injury to the rights of another not arising on contract and not specifically provided otherwise . . . unless the action is commenced within two years of the accrual of the cause of action. 8 See, e.g., Sopko v. Dowell Schlumberger, Inc., 21 P.3d 1265, 1270 (Alaska 2001). 9 Russell v. Municipality of Anchorage, 743 P.2d 372, 375 (Alaska 1987) (quotations omitted). 10 Gudenau & Co. v. Sweeney Ins., Inc., 736 P.2d 763, 766 (Alaska 1987). 11 Id. 12 46 P.3d 1024 (Alaska 2002). 13 Id. at 1031 n.14. 14 Mine Safety Appliances Co. v. Stiles, 756 P.2d 288, 291 (Alaska 1988). 15 46 P.3d at 1028-29. 16 Id. at 1031-32. 17 Id. at 1032-33. 18 Id. 19 Gudenau, 736 P.2d at 766. 20 444 P.2d 536 (Alaska 1968). 21 Id. at 538-40. 22 Goodman v. Fairbanks N. Star Borough Sch. Dist., 39 P.3d 1118, 1120 (Alaska 2001). 23 Safeco Ins. Co. of Am. v. Honeywell, Inc., 639 P.2d 996, 1001 (Alaska 1981). 24 1A Stuart M. Speiser, et al., The American Law of Torts 5:35, at 380-81 (1983); see also Hunter v. Sch. Dist. of Gale- Ettrick-Trempealeau: It is the fact and date of injury that sets in force and operation the factors that create and establish the basis for a claim of damages. It is true that, without an act of negligence, no claim for damages based on negligence can arise. It is likewise true that, without the result of injury, no claim for damages based on negligence can be asserted, or at least successfully asserted. Both the act of negligence and the fact of resultant injury must take place before cause of action founded on negligence can be said to have accrued. 293 N.W.2d 515, 519 (Wis. 1980) (quotations and emphases omitted). 25 West Am. Ins. Co. v. Sal E. Lobianco & Son Co., 370 N.E.2d 804, 807 (Ill. 1977). 26 1A Speiser, et al., supra note 24, 5:35, at 381. 27 115 P.3d 536 (Alaska 2005). 28 Id. at 542. 29 Id. 30 Id. at 539-40. 31 Id. 32 Id. at 544. 33 Jarvill had previously purchased a chain saw from Porkys and paid for welding work on a boat trailer hitch and a pickup truck bumper.
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