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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Erkins v. Alaska Trust, LLC, Bank of New York Trust Co., N.A. (10/21/2011) sp-6611

Erkins v. Alaska Trust, LLC, Bank of New York Trust Co., N.A. (10/21/2011) sp-6611

        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, email 
        corrections@appellate.courts.state.ak.us. 

                THE SUPREME COURT OF THE STATE OF ALASKA 

GREGORY T. ERKINS,                            ) 
                                              )       Supreme Court No. S-13680 
               Appellant,                     ) 
                                              )       Superior Court No.     3AN-08-09144 CI 
        v.                                    ) 
                                              )      O P I N I O N 
ALASKA TRUSTEE, LLC, BANK                      ) 
OF NEW YORK TRUST COMPANY,) 
N.A., and JP MORGAN CHASE                      ) 
BANK, N.A.,                                   ) 
                                              )       No. 6611 - October 21, 2011 
               Appellees.                     ) 
                                              ) 

               Appeal from the Superior Court of the State of Alaska, Third 
               Judicial District, Anchorage, John Suddock, Judge. 

               Appearances:       Gregory      T.  Erkins,   Anchorage,     pro   se, 
               Appellant.     Richard N. Ullstrom, Routh Crabtree Olsen, PS, 
               Anchorage, for Appellees. 

               Before:  Carpeneti, Chief Justice, Fabe, Winfree, Christen, 
               and Stowers, Justices. 

               STOWERS, Justice. 

----------------------- Page 2-----------------------

I.      INTRODUCTION 

                In 2004 and 2005, while allegedly bedridden and taking prescription pain 

medication, Gregory Erkins took out two successive loans on his house.                  The proceeds 

of the second, larger loan were used in part to pay off the first.           Erkins made payments 

on the second loan on schedule for approximately two years.                   In early 2007, Erkins 

ceased making regular payments and this loan fell into default.  His house was listed for 

foreclosure sale.     Also, at some point between February 2005 and November 2007, the 

loan    was   assigned    from    Ameriquest     Mortgage      Company      (Ameriquest),      the  loan 

originator, to appellee Bank of New York Trust Company, N.A. (Bank of New York). 

                Acting   pro   se,   Erkins   filed   suit   in   the   superior   court   on   July   17,   2008 

against Alaska Trustee, LLC, Bank of New York (the current holder of the loan), and JP 

Morgan      Chase    Bank,    N.A.   (JP   Morgan)     (a  party  apparently     unconnected      to  the 

proceedings   except   in   that   Bank   of   New   York   was   listed   as   its   successor). Erkins 

disputed the terms of the second loan, and argued fraud as well as lack of contractual 

capacity at the time of its origination. 

                Several months after Erkins filed his complaint, as a trial date was about to 

be set, counsel for the defendants presented Erkins with a forbearance agreement from 

Wilshire Credit Corporation, the servicer of the loan and not a party to the lawsuit.  This 

agreement contemplated postponing the foreclosure sale in exchange for $2,000 monthly 

payments.      Erkins   executed   this   agreement.     Allegedly   unbeknownst   to   Erkins,   the 

agreement also contained a waiver of claims broad enough to cover Erkins's claims 

against the defendants. Nine months later, the defendants moved for summary judgment, 

arguing that this waiver of claims functioned as a settlement and released all of Erkins's 

claims in this suit.    The superior court granted summary judgment to the defendants, 

finding no genuine issue of material fact barring judgment that they were not liable for 

                                                  -2-                                             6611
 

----------------------- Page 3-----------------------

any   tort   of   Ameriquest,   and   that   Erkins   had   released   his   claims   in   the   forbearance 

agreement.     This appeal followed. 

                We   AFFIRM   that   portion   of   the   superior   court's   decision   finding   that 

defendants could not be held liable for the alleged torts of Ameriquest, the originating 

lender.    But we REVERSE that portion of the superior court's order concluding that 

Erkins     released   his  claims   against    the  defendants     by  entering    into  a  forbearance 

agreement because a genuine issue of material fact exists as to whether the inclusion of 

the waiver of claims provision in the forbearance agreement constituted constructive 

fraud. 

II.     FACTS AND PROCEEDINGS 

                Gregory   T.   Erkins   has   been   a   licensed   real   estate   broker   and   agent   in 

Alaska since 1984.       In 2000, Erkins was injured in an automobile accident and began 

taking Actiq, a narcotic analgesic. 

                In October 2004, Erkins acquired title to a house in Anchorage.  Through 

Ameriquest, Erkins also obtained an $80,000 loan secured by the property.                     This loan 

carried a 7% interest rate for a 30-year term, and monthly payments of $531.  After fees 

and closing costs and the payment of certain debts, Erkins received $59,615.80 in cash. 

The $80,000 deed of trust was recorded on October 29, 2004. 

                Erkins negotiated the terms of this loan and signed the paperwork from his 

home; he was "unable to drive because of pain medication." 

                Approximately four months later, on February 19, 2005, Erkins obtained 

a   second   loan   on   the   property,   also   from   Ameriquest,   this   time   in   the   amount   of 

$142,477. An agent again visited Erkins at home due to his "medical condition."  Erkins 

claims    he   was   told  that  "the   payment    would     remain    the  same   as  the   first  loan," 

approximately $500 per month. 

                                                   -3-                                             6611
 

----------------------- Page 4-----------------------

                The second loan in fact carried an adjustable interest rate with an initial 

monthly payment of $962.30, a 7.15% initial interest rate, and the same term of 30 

       1 
years.    The proceeds of this loan were used to cover its closing costs ($4,967.68) and 

to   pay   off  the   first  loan  ($80,075.51);     the   balance    was   paid   in  cash   to  Erkins 

($57,433.81).     The deed of trust for the second loan was recorded on March 4, 2005. 

                Erkins made payments on the second loan in full and on time from the first 

scheduled payment in April 2005 through August 2005, when servicing of the loan was 

transferred from Ameriquest to Wilshire Credit Corporation.  Erkins also made several 

$500 prepayments of principal during this initial period.                Erkins continued to make 

regular payments through January 2007, at which point payments became more sporadic 

and ultimately ceased entirely in August 2007.2 

                Ameriquest at some point assigned the second loan and deed of trust to the 

Bank of New York as successor to JP Morgan.  It appears that this assignment may have 

occurred as early as February 28, 2005 - within ten days of the origination of the loan 

and before the first monthly payment was due.3 

        1       The record does not specify the term of this loan, but a loan repayment 

calculation reveals the term to be 30 years. 

        2       Erkins's January 2007 payment was reversed on January 12, and thereafter 

no   payments   posted   for   approximately   three   months.       On   April   16,   2007,   a   single 
payment   in   the   amount   of   $4,017.54   posted   to   the   account.    Thereafter,   payments 
resumed on a monthly basis until August 2007, when another payment was reversed and 
the record ends.     Erkins filed suit nearly a year later, on July 17, 2008. 

        3       The   parties   are   unclear   as   to   precisely   when   this   assignment   occurred. 

Appellees contend that the assignment occurred "at a time when payments on the loan 
were current."     The "Assignment of Deed of Trust" from Ameriquest to Bank of New 
York as successor to JP Morgan is dated February 28, 2005, only ten days after the loan 
was originated. But Ameriquest continued to service the loan through August 2005.  The 
                                                                                         (continued...) 

                                                   -4-                                             6611
 

----------------------- Page 5-----------------------

                After the second loan fell into delinquency, foreclosure proceedings were 

initiated and a foreclosure sale of the property was set for September 10, 2008. 

                On July 17, 2008, Erkins filed suit pro se against Alaska Trustee, LLC, 

Bank of New York, and JP Morgan in the superior court, alleging twelve causes of action 

chiefly related to fraud and misrepresentation. 

                The     September       2008     foreclosure      sale    was     postponed.4     On 

October 20, 2008, Erkins emailed defendants' counsel to propose a settlement, which 

was ultimately rejected.5     On October 31 defendants' counsel presented Erkins with a 

proposed      forbearance    agreement.      The    agreement     stated   that  it  was   "between 

Borrower(s) and Wilshire as servicer for the owner of the Loan,"                and provided that 

Wilshire would stay pending foreclosure proceedings from December 1, 2008, until 

April 1, 2009, if Erkins:     (1) executed and returned the agreement; (2) paid $2,000 by 

cashier's check by December 1, and $2,000 per month thereafter through April 1; and 

(3) kept the property insured and continued to pay property taxes. 

                In the four-page forbearance agreement, a paragraph titled "RELEASE OF 

CLAIMS" provided that the borrower 

               jointly   and   severally,   knowingly   and   voluntarily   releases, 
                discharges, and covenants not to sue, Wilshire, any owner of 
                the   Loan,   and  any   of   their  predecessors,   successors   and 

        3(...continued) 

assignment was not recorded until November 29, 2007, nearly three years later. 

        4       The    record   omits   explicit  mention     of  these  postponements,      but   the 

foreclosure sale is listed throughout the record as upcoming on a series of future dates. 

        5       Defendants' counsel delayed considerably passing on Erkins's settlement 

offer to his clients.   Erkins's October 20, 2008 offer was not presented to defendants 
until January 21, 2009, and Erkins was informed of their rejection of it by a letter dated 
February 2, 2009. 

                                                 -5-                                           6611
 

----------------------- Page 6-----------------------

                 assigns   .   .   .   from   any   and   all   claims,   demands,   liabilities, 
                 defenses, setoffs, counterclaims, actions, and causes of action 
                 of whatsoever kind or nature, whether known or unknown, 
                 whether legal or equitable, which he or she has, or may assert 
                 as of and through the date of this Agreement against any of 
                 the Released Parties directly or indirectly, or in any manner 
                 connected with any event, circumstance, action or failure to 
                 act, of any sort or type, which was related or connected in 
                 any    manner,     directly   or  indirectly,    to  the   Loan    or  any 
                 collateral securing the Loan. 

                 Erkins signed the forbearance agreement and returned it with a cashier's 

check for $2,000 on November 14, 2008. 

                 Four     days    after    Erkins    returned     the   forbearance       agreement,      on 

November 18, 2008, the court issued an initial pretrial order. A five-day trial was set for 

November   16,   2009.       On   December   8,   2008,   defendants'   counsel   wrote   to   Erkins 

pointing out that Erkins had waived his claims through the forbearance agreement; on 

December 31, Erkins replied, denying the effect of the release provision and emphasizing 

his intent to proceed to trial. 

                 On    May     19,  2009,    Erkins   moved      to  stay  the   foreclosure    sale   (then 

scheduled for June 15, 2009) until after the November 16 trial.  He argued that he signed 

the forbearance agreement chiefly "to provide time to negotiate a settlement," and when 

this did not occur, he "was forced to file [for] bankruptcy." 

                 On June 23, 2009, the superior court denied Erkins's motion to stay the 

foreclosure   sale.     The   court   stated   that   Erkins   had   not   shown   that   he   would   suffer 

irreparable harm if the property were sold, and that Erkins "fail[ed] to demonstrate a 

legal   basis   for   imposing   vicarious   liability   on   the   banks,   one   of   which   apparently 

purchased the notes," and thus failed to show a probability of success on the merits. 

                                                    -6-                                               6611
 

----------------------- Page 7-----------------------

                Defendants moved for summary judgment on August 24, 2009, arguing that 

Erkins had waived his claims through the forbearance agreement,6 that his claims were 

barred by the statute of limitations, that Erkins effectively ratified the second contract by 

making payments on the loan for two years, that he received the benefit of both loans, 

that he did not act within a reasonable time to correct any alleged mistake, and that he 

was not entitled to rescission of the contract. 

                In   opposition,   Erkins   argued   that   the   forbearance   agreement   was   not   a 

settlement, and in any case was between Erkins and Wilshire only.  He did not respond 

to the majority of the defendants' grounds for summary judgment. 

                The superior court granted the defendants' motion for summary judgment 

on September 15, 2009, finding no genuine issue of material fact "that defendants [were] 

not liable for any tort of Ameriquest," and that Erkins "released his claims in [paragraph] 

10 of the forbearance agreement." 

                Erkins filed a motion for reconsideration, which was denied.               The court 

issued its final judgment on February 17, 2010.           Erkins appeals. 

III.    DISCUSSION 

        A.      Standard Of Review 

                We review a "grant of a summary judgment motion de novo, affirming if 

the record presents no genuine issue of material fact and if the movant is entitled to 

        6       At    oral  argument     on   appeal,    appellees    explicitly   characterized     the 

forbearance agreement with Erkins as a "settlement agreement," and confirmed that 
"from the appellees' point of view," the purpose of the forbearance agreement in this 
case was "to resolve the entire litigation."        Appellees conceded, however, that nothing 
in   the   record   directly   supported   its   characterization   as   a   settlement   as   opposed   to   a 
forbearance agreement, and that it was "simply presented to Erkins . . . as a forbearance 
agreement." 

                                                  -7-                                            6611
 

----------------------- Page 8-----------------------

judgment   as   a   matter   of   law.   All   reasonable   inferences   are   drawn   in   favor   of   the 

nonmovant in this examination."7 

                "We will set aside a superior court's factual determination only upon a 

finding of clear error."8   A factual determination "is clearly erroneous if it is unsupported 

by the record, or we are left with 'a definite and firm conviction . . . that a mistake has 

been made.' "9 

                The interpretation of an agreement between two parties is a question of law 

to which we apply our independent judgment.10 

                Additionally, we "apply a more lenient standard" to Erkins because he is 

a pro se litigant (as he has been throughout this proceeding).11 

        B.	     The   Superior   Court       Did   Not   Err   In  Ruling   That   There   Was No 
                Genuine Issue Of Material Fact Barring Judgment That Defendants 
                Could     Not    Be   Held   Liable    For   The    Torts   Of   Ameriquest,      The 
                Originating Lender. 

                Erkins's complaint alleged various torts associated with the origination of 

the two Ameriquest loans, yet named only Alaska Trustee, Bank of New York, and JP 

        7       Beegan v. State, Dep't. of Transp. & Pub. Facilities, 195 P.3d 134, 138 

(Alaska 2008) (citing Matanuska Elec. Ass'n v. Chugach Elec. Ass'n, 152 P.3d 460, 465 
(Alaska 2007)). 

        8       Commercial Recycling Ctr., Ltd. v. Hobbs Indus., Inc., 228 P.3d 93, 98 

(Alaska 2010) (citing Moffitt v. Moffitt, 813 P.2d 674, 676 (Alaska 1991)). 

        9	      Id. (quoting Money v. Money, 852 P.2d 1158, 1161 (Alaska 1993)). 

        10      Hixson v. Sarkesian, 66 P.3d 753, 757 (Alaska 2003) (citing Flannery v. 

Flannery, 950 P.2d 126, 129 (Alaska 1998)). 

        11      See, e.g., Pieper v. Musarra, 956 P.2d 444, 446 (Alaska 1998) (citing Smith 

v. Sampson, 816 P.2d 902, 906 (Alaska 1991); Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 
 1987)). 

                                                  -8-	                                          6611
 

----------------------- Page 9-----------------------

Morgan as defendants.        Because no defendant was directly involved in those original 

loan negotiations - which were carried out by an entity called Mortgage Information 

Services on behalf of Ameriquest - liability, if any, would need to attach vicariously. 

The appellees contend that "Erkins never provided any evidence to link Appellees to 

[these] actions," and that there is "no basis upon which liability could be imputed to 

Appellees." 

                Bank of New York purchased Erkins's note from Ameriquest.                    It is not 

evident from the record that either Ameriquest or Mortgage Information Services was 

ever an agent, employee, or independent contractor of any appellee, nor is it apparent 

how any other theory of vicarious liability would link their behavior to any party to this 

lawsuit.   Given these undisputed facts, liability cannot attach to the defendants for the 

earlier, allegedly tortious actions of Ameriquest or Mortgage Information Services during 

the origination process of the loans.        Thus, the superior court did not err by ruling that 

there   was   no   genuine   issue   of   material   fact   that   the   defendants   could   not   be   held 

vicariously liable for any torts of the loan originators.  As such, many of Erkins's claims 

against the defendants - those that sound in tort and concern the origination of the loan 

- were correctly dismissed.12         We therefore affirm this portion of the superior court's 

grant of summary judgment. 

        C.	     It   Was   Error   To   Grant   Complete   Summary   Judgment   Because   A 
                Genuine Issue Of Material Fact Exists As To Whether Including A 
                "Settlement" Provision In The Forbearance Agreement In This Case 
                Constituted Constructive Fraud. 

        12      These include Erkins's allegations of fraud, fraud in the inducement, and 

"scheme or [a]rtifice to [d]efraud," all of which implicate either Ameriquest or Mortgage 
Information Services as the primary tortfeasor. 

                                                  -9-	                                             6611 

----------------------- Page 10-----------------------

                 In   their   motion   for   summary   judgment,   defendants   argued   that   Erkins 

waived his claims through the forbearance agreement.  In opposition, Erkins argued that 

the forbearance agreement was not a settlement.               In their reply, defendants argued that 

the forbearance agreement was a "settlement" of Erkins's claims.                   At oral argument on 

appeal,     defendants     maintained      that  the  forbearance      agreement     was    a  "settlement 

agreement" the       stated purpose of which "was to resolve the entire litigation." 

                 Erkins' argument is that the defendants "with inten[t] to defraud gave Mr. 

Erkins   a   forbearance   agreement   which   he   later   found   out   to   be   in   the   guise   of   a 

settlement agreement,"13 but that the defendants "never stated [this] until a request for 

summary   judgment   was   filed."   (emphasis   added).            Erkins   also   alleged   fraud   in   his 

opposition       to   defendants'      motion     for    summary       judgment,      and    also    in   his 

December 31, 2008 letter to the appellees.14 

                 In light of Erkins's pro se status,15 we construe these arguments to allege 

constructive      fraud.   Constructive       fraud   is  "a  breach    of   a  duty,  which     while   not 

        13       Erkins     presumably      means    a  settlement     agreement      in  the  guise   of   a 

forbearance agreement. 

        14       In this letter, Erkins stated "I totally disagree with your assertion   that I 

'. . . waived all claims against the owners . . . .' In fact I view it asfurther evidence of the 
unfair dealing and bad faith that permeates this loan . . . .   I did not offer to dismiss the 
case, I only offered to pay $2,000 a month during this time and your clients agreed to 
forbearance until April 2009." (emphasis added). 

        15       Even absent this deference, this court can consider issues not explicitly 

raised in the trial court "if the issue is '1) not dependent on any new or controverted 
facts; 2) closely related to the appellant's trial court arguments; and 3) could have been 
gleaned from the pleadings,' or if failure to address the issue would propagate 'plain 
error.' "  Sea Lion Corp. v. Air Logistics of Alaska, Inc., 787 P.2d 109, 115 (Alaska 
1990)   (quoting State   v.   Nw.   Const.,   Inc.,   741   P.2d   235,   239   (Alaska   1987)).       The 
constructive fraud issue meets this tripart standard. 

                                                    -10-                                              6611
 

----------------------- Page 11-----------------------

intentionally deceptive or actually dishonest, 'the law declares fraudulent because of its 

tendency   to   deceive   others.'   "16   It   "exists   in   cases   in   which   conduct,   although   not 

actually   fraudulent,   ought   to   be   so   treated[]   -   that   is,   in   which   such   conduct   is   a 

constructive . . . fraud, having all the actual consequences and all the legal effects of 

actual fraud."17 

                 Although      there   is  generally     "little  probative    value    to  be   found    in 

self-serving testimony by parties concerning their subjective intent upon entering into 

a contract,"18 we have declined to enforce terms surreptitiously added to agreements.  In 

Pierce v. Pierce, a divorce case, the husband's attorney added a new clause to the draft 

agreement following completed settlement negotiations.19                   This agreement was then 

signed without attention to the new term.20         When the wife challenged the resulting order, 

the trial court issued an amended order deleting the contested term, and we affirmed.21 

In Adams v. Adams, one party inserted a purchase option into a paragraph titled "Right 

        16      Adams v. Adams, 89 P.3d 743, 750 (Alaska 2004) (quoting Knight v. Day, 

36 S.W.3d 300, 303 (Ark. 2001)). 

        17      Id. at 750 (quoting In re Arbuckle's Estate, 220 P.2d 950, 954-55 (Cal. 

App. 1950)) (internal quotation marks omitted). 

        18       Sykes v. Melba   Creek Mining, Inc., 952 P.2d 1164, 1170 n.12 (Alaska 

1998) (citingPeterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981);Day v. A & G Const. 
Co., 528 P.2d 440, 444 (Alaska 1974)). 

        19       949 P.2d 498, 499 (Alaska 1997). 

        20      Id. 

        21      Id. at 501. 

                                                   -11-                                              6611
 

----------------------- Page 12-----------------------

of First Refusal" in a commercial lease without explicitly notifying the other party.22  The 

lessee "chang[ed] a material condition of the lease without [the lessor's] consent or 

knowledge"23       when he miscaptioned the relevant paragraph and failed to flag changes 

that had been made to the lease.24          We found constructive fraud "because of the strong 

deceptive tendency of such conduct."25 

                 Appellees asserted at oral argument that Erkins had "plenty of time" to read 

the   agreement   before   he   returned   it.    But   if   the   agreement   is   found   to   have   been 

misleading, this argument is unpersuasive.  In Adams, we found the same assumption - 

namely, that the lessor would read the final version of the lease before signing it - to 

be insufficient to avoid a finding of constructive fraud: 

                 it  is  not  a  sufficient   excuse    for  one   party   to  say   that  it 
                 believed that the other party would review a final document 
                 and notice an unannounced change. Making unannounced 
                 changes,     as  Pierce   teaches,     is  inherently    deceptive     and 
                 wrongful.[26] 

        22       89 P.3d 743, 746, 749 (Alaska 2004). 

        23       Id. at 747. 

        24       Id. at 750. 

        25       Id. at 744. 

        26       Id.   at   750.  We   note   that   even   if   there   was   misrepresentation,   because 

Erkins "had a reasonable opportunity to read the [provision] before he signed it, his 
apparent assent . . . was effective, and the [agreement] was voidable rather than void." 
Id. at 751.    For Erkins to lose his power to avoid a voidable agreement, "a finding of 
actual    knowledge       of  the  misrepresentation,       rather   than   reason    to  know     of  it,  is 
necessary." Id. 

                                                    -12-                                              6611
 

----------------------- Page 13-----------------------

                 Viewing the evidence in the light most favorable to Erkins, the non-moving 

party, we observe that the forbearance agreement between Erkins and a non-party27  - 

the   chief   stated   purpose   of   which   was   to   postpone   foreclosure   of   Erkins's   home   in 

exchange for interim monthly payments of $2,000 - contained broad waiver and release 

language that was not highlighted as a central feature of the agreement.  The release of 

claims, ultimately the agreement's most powerful feature, was omitted entirely from the 

section titled "AGREEMENT," which spans numbered paragraphs one through nine and 

sets forth the apparent material terms of the bargain.             Neither the release of claims nor 

its dramatic effect on the ongoing litigation was mentioned in paragraphs one through 

nine   of   the   agreement   (or   in   its   cover   letter,   which   was   prepared   by   the   attorney 

representing the defendants).   Moreover, Erkins argues, the agreement does not contain 

any of the terms one might expect a settlement to contain:   it does not name the lawsuit 

or the parties involved, does not address attorney's fees, and does not discuss dismissal 

of any individual claims.  Yet on appeal, appellees nonetheless explicitly characterized 

this   as   a   "settlement   agreement"   whose   stated   purpose   "was   to   resolve   the   entire 

litigation." 

                Adams   suggests   that   material   contract   provisions   should   be   fairly   and 

candidly described.28   As in Adams, it can be argued that there is no indication - not 

even a suggestion - in either the cover letter or the forbearance agreement that the 

        27       The    agreement      is  between     Erkins   and    Wilshire    Credit   Corporation. 

Although the cover letter specified that Wilshire was "servicer for Bank of New York 
Trust Company," the defendants were not parties to the agreement and are not expressly 
named in the release, and Wilshire is not a party to this proceeding. 

        28       89 P.3d 743. 

                                                   -13-                                              6611
 

----------------------- Page 14-----------------------

agreement would be used to effect a "settlement" of all of Erkins's claims against Alaska 

Trustee, Bank of New York, and JP Morgan.               The cover letter provides in full: 

                Enclosed are two copies of a proposed forbearance agreement 
                between yourself and Wilshire as servicer for Bank of New 
                York Trust Company.         Please review it and if the terms are 
                satisfactory, sign and return both copies to Wilshire, along 
                with   your   initial   payment   of   $2000.   Please   note   that   the 
                deadline      for   receipt    of   the   signed     agreements      and 
                downpayment by Wilshire is December 1.               If you choose to 
                send the agreements and payment via my office, they must be 
                returned to me enough in advance of that date to assure their 
                receipt by Wilshire before December 1. 

                The forbearance agreement states that it is between Erkins as borrower and 

Wilshire as servicer of the loan. Nowhere in the forbearance agreement are Bank of New 

York or JP Morgan named or referenced. Nowhere in the agreement is the superior court 

case named or referenced.         Nowhere does the agreement expressly mention Erkins's 

claims   against   Alaska   Trustee,   Bank   of   New   York,   or   JP   Morgan.      And   the   word 

"settlement" does not appear in the agreement.             Viewing the evidence and reasonable 

inferences to be drawn from it in the light most favorable to Erkins, the apparent purpose 

of the forbearance agreement is to allow Erkins to pay Wilshire so that "Wilshire will 

refrain from initiating foreclosure proceedings" on the loan. 

                Notwithstanding all of the above, defendants argued to the superior court 

and on appeal to this court that the forbearance agreement was a settlement agreement 

and a settlement of Erkins's claims. 

                Unlike   in Adams,   the   title   of   the   actual   paragraph   purporting   to   waive 

Erkins's claims - "Release of Claims" - was not misleading.                  But the document was 

titled and referred to as a forbearance agreement, both within the document itself and in 

the cover letter that accompanied it, and the omission of any mention of a settlement 

                                                  -14-                                            6611
 

----------------------- Page 15-----------------------

clause from the introductory paragraphs, cover letter, or summary of salient points in the 

agreement itself renders this situation comparable to Adams . 

                 Appellees conceded at oral argument that nothing in the record supports the 

characterization of this agreement as a settlement agreement as opposed to a forbearance 

agreement,   and   that   the   document   was   "simply   presented   to   Mr.   Erkins   .   .   .   as   a 

forbearance agreement." Erkins also did not ratify this provision of the agreement: when 

told by the appellees that he had allegedly waived his claims, Erkins promptly denied the 

effect of the release provision29 and emphasized his intent to proceed to trial. 

                 In sum, appellees ask that we affirm summary judgment in this case based 

on the forbearance agreement presented to Erkins, a pro se litigant - an agreement that 

bears none of the hallmarks of a settlement agreement, and that Erkins claims he did not 

understand or intend to act as such. The inclusion of a broad waiver of claims effectively 

transformed this agreement from a simple forbearance agreement into a settlement sub 

silentio of Erkins's lawsuit.       Under Adams, the appellees "had the obligation to bring 

the . . . change to [Erkins's] attention"30  if they intended the waiver to act as a settlement 

agreement. 

                 There is a genuine issue of material fact whether constructive fraud exists 

with   respect   to   the   inclusion   of   purported   "settlement   language"   in   the   forbearance 

agreement.      Though the parties did not explicitly advance this issue, Erkins's pro se 

opposition to defendants' motion for summary judgment stated:  "What the defendants 

        29       Erkins    asserts   that  he   was   never    told  the   agreement     was    a  "global 

settlement"   and   would   have   rejected   such   a   thing   had   he   known   because   he   was 
"working with the court to schedule trial" when he signed it. 

        30      Adams, 89 P.3d at 750 (quotingPierce v. Pierce, 949 P.2d 498, 500 (Alaska 

1997)). 

                                                   -15-                                              6611
 

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are trying to do is the same thing their predecessors did: misrepresent.              The agreement 

was a Forbearance Agreement not a Settlement Agreement.   They cannot guise one into 

another."    When granting summary judgment, the trial court has a duty to consider the 

full record and the "entire setting of the case" to ensure no triable issues of material fact 

exist, and in so doing must look beyond issues presented in the parties' motions.31              Given 

the circumstances surrounding the forbearance agreement, Erkins's pro se status, and the 

arguments      advanced     by  the   parties,  we   conclude    that  Erkins    asserted   a  claim   of 

constructive fraud regarding the forbearance agreement.  We also conclude that there is 

a genuine issue of material fact regarding the parties' intent as to the purpose and effect 

of the release of claims. 

                We hold that this genuine issue of material fact precludes the award of 

complete summary judgment in this case, and we therefore reverse the superior court's 

decision.   On remand, the superior court should examine the forbearance agreement in 

light   of   a  theory   of  constructive     fraud,   as  well   as  in  light  of   the  doctrine    of 

unconscionability.32 

        31      See Prentzel v. State, Dep't. of Pub. Safety, 169 P.3d 573, 582 (Alaska 

2007) (quotingJennings v. State, 566 P.2d 1304, 1310 (Alaska 1977)) (internal quotation 
marks omitted). 

        32      Other genuine issues of material fact may preclude summary judgment. 

Erkins argues contractual incapacity with respect to the two loans, claiming that he was 
bedridden and under the influence of potent pain medication at both signings.                       The 
entities that originated the loans - Ameriquest and Mortgage Information Services - 
are not parties to   this   proceeding.     But even without resorting to vicarious liability, 
Erkins can assert an incapacity defense against enforcement of the note.                 The superior 
court on remand will need to consider whether there is merit to Erkins's incapacity 
defense. 
                Erkins also asserts that the note was past due at the time of its assignment 
                                                                                        (continued...) 

                                                  -16-                                            6611
 

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        E.      Summary Judgment Is Not Affirmed On Other Grounds. 

                The appellees suggest several other grounds on which to affirm the grant 

of summary judgment, among these that Erkins's claims are barred by Alaska statutes 

of limitations, citing AS 09.10.070 and .053.            Alaska Statute 09.10.070 provides that 

actions   for   torts   must   generally   be   brought   within   two   years,   while   AS   09.10.053 

provides for a three-year statute of limitations for contract claims.             Appellees contend 

that because Erkins executed the two Ameriquest loan agreements in October 2004 and 

February 2005 yet did not file his complaint until July 2008, all of his claims are barred. 

        32(...continued) 

to Bank of New York, and therefore that the bank is not a holder in due course.                   Under 
the Uniform Commercial Code doctrine of holder in due course, the bona fide purchaser 
of a note is shielded from most liability by taking the instrument free of all claims and 
personal defenses.  See U.C.C.  3-302 (2002) (codified in Alaska at AS 45.03.302) and 
U.C.C.  3-305 (2002) (codified in Alaska at AS 45.03.305).  A holder in due course is 
insulated from disputes arising between the original parties to the note, except some that 
concern     fraud,   capacity,   infancy,    or  duress.  See  AS     45.03.305(b)     (providing     that 
although a holder in due course is insulated from many defenses, its right to "enforce the 
obligation of a party to pay the instrument is subject to defenses of the obligor stated in 
[AS 45.03.305(a)(1)]," which lists infancy, lack of capacity, duress, fraud, illegality, and 
discharge in insolvency).       AS 45.03.302(a)(2)(F) provides that one cannot be a holder 
in   due   course   if   one   takes   with   "notice   that   any  party   has   a   defense   or   claim   in 
recoupment described in AS 45.03.305(a)," a section that lists "lack of legal capacity" 
and "fraud."     An owner also is a holder in due course only if he takes "without notice 
that the instrument is overdue or has been dishonored."  AS 45.03.302(a)(2)(C).  Thus, 
to   qualify   as   a   holder   in   due   course,   appellee   Bank   of   New   York   must   have   taken 
Erkins's note without knowledge of his incapacity or fraud defenses, and before the note 
was overdue or in default. 
                The superior court did not address these issues.            The record is unclear as 
to precisely when the assignment took place, and whether the loan was current at the 
time of assignment. See supra note 3.            The loan was apparently in default by August 
2007 at the latest, and the assignment was not recorded until November 29, 2007 - 
although appellees state that the loan may have been transferred well before that time. 

                                                  -17-                                             6611
 

----------------------- Page 18-----------------------

For this to be correct, the statute of limitations would have had to begin running at the 

time Erkins executed the second loan, or shortly thereafter. 

                Determining when a cause of action accrues "ordinarily presents a question 

of fact that must be resolved at an evidentiary hearing,"33 and "[r]esolution of the issue 

on    summary      judgment      is  appropriate    only    if  the  superior    court   has   before    it 

uncontroverted facts regarding when the statute of limitations began running."34  Under 

the discovery rule, "a cause of action accrues when a reasonable person has enough 

information to alert that person that he or she has a potential cause of action or should 

begin an inquiry to protect his or her rights."35       Erkins's alleged incapacity at the time of 

origination of both loans may influence the time when the statute of limitations began to 

run.   The superior court did not make a finding on this issue. 

                On the record before us, there are not uncontroverted facts supporting a 

conclusion that the statutes of limitations bar Erkins's claims, and affirming summary 

judgment on these independent grounds is inappropriate. 

                Appellees   also   contend   that   Erkins's   claims   are   barred   by   ratification 

because Erkins did not disaffirm the loans for a period of roughly two years after their 

        33      See   Egner   v.   Talbot's,   Inc.,   214   P.3d   272,   278   (Alaska   2009)   (citing 

Domke v. Alyeska Pipeline Serv. Co., 137 P.3d 295, 303 n.19 (Alaska 2006); Williams 
v. Williams, 129 P.3d 428, 431 (Alaska 2006); Palmer v. Borg-Warner Corp., 818 P.2d 
632, 634 (Alaska 1990)). 

        34      Id .   (citing John's   Heating   Serv.   v.   Lamb,   46   P.3d   1024,   1033   (Alaska 

2002)). 

        35      Id. (citation omitted, internal quotation marks omitted); see also Roach v. 

Caudle, 954 P.2d 1039, 1041 (Alaska 1998) ("Under the discovery rule a cause of action 
accrues 'when a person discovers, or reasonably should have discovered, the existence 
of all elements essential to the cause of action.' ") (quoting Cameron v. State, 822 P.2d 
 1362, 1366 (Alaska 1991)). 

                                                  -18-                                             6611
 

----------------------- Page 19-----------------------

execution, during which time he received the benefit of the loans in the form of lump 

sum payouts, and also made regular payments.          But, as with the statute of limitations 

issue, if Erkins suffered incapacity from the effects of medication during the origination 

period and thereafter, his subsequent actions may not constitute ratification until such 

time as he no longer was incapacitated.36       Again, because the superior court made no 

findings on Erkins's incapacity claims, on the record before us we are unable to conclude 

that there is no genuine issue of material fact that Erkins ratified the loans. 

IV.    CONCLUSION 

               We AFFIRM that portion of the superior court's decision finding that there 

was no genuine issue of material fact barring judgment that appellees could not be held 

liable for the alleged torts of the originating lender.  We REVERSE that portion of the 

court's decision that Erkins released his claims against the appellees by entering into a 

forbearance agreement because a genuine issue of material fact exists as to whether the 

inclusion of the waiver of claims provision in the forbearance agreement constituted 

constructive fraud.  We REMAND for further proceedings consistent with this opinion. 

       36      See,   e.g.,   RESTATEMENT   (SECOND)  OF   CONTRACTS          16   cmt.   c   (1981) 

("Where a contract is voidable on the ground of intoxication, the rules as to ratification 
and avoidance are much the same as in cases of misrepresentation.  On becoming sober, 
the   intoxicated   person  must   act  promptly   to  disaffirm   and  must   offer  to  restore 
consideration received.") (internal reference omitted). 

                                              -19-                                          6611 
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