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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Albrecht v. Alaska Trustee, LLC (10/19/2012) sp-6718

Albrecht v. Alaska Trustee, LLC (10/19/2012) sp-6718

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER . 

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DIANA P. ALBRECHT,                              ) 

                                                )       Supreme Court No. S-14317 

                        Appellant,              ) 

                                                )       Superior Court No. 3AN-10-07430 CI 

        v.                                      ) 

                                                )       O P I N I O N 

ALASKA TRUSTEE, LLC,                            ) 

                                                )      No. 6718 - October 19, 2012 

                        Appellee.               ) 


                Appeal from the Superior Court of the State of Alaska, Third 

                Judicial District, Anchorage, Andrew Guidi, Judge. 

                Appearances:      James J. Davis, Jr., Goriune Dudukgian, and 

                Ryan     Fortson,   Northern     Justice  Project,   Anchorage,      for 

                Appellant. Jennifer Stuart Henderson, Farley & Graves, P.C., 

                Anchorage, for Appellee. 

                Before:      Carpeneti,     Chief   Justice,   Fabe,   Winfree,     and 

                Stowers, Justices. 

                FABE, Justice. 


                Diana Albrecht brought a class-action lawsuit against Alaska Trustee, LLC, 

on behalf of a group of Alaska homeowners who had faced foreclosure on their homes. 

Alaska   Trustee,   acting   as   foreclosure   trustee,   had   provided   Albrecht   and   the   other 

homeowners   reinstatement   quotes   that   included   the   costs   of   foreclosure.     Albrecht 

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maintained that the inclusion of foreclosure costs in her reinstatement quote violated her 

right to cure under a former version of AS 34.20.070(b), the non-judicial foreclosure 

statute, which provided that a homeowner's "default may be cured by payment of the 

sum in default other than the principal that would not then   be due if no default had 

occurred, plus attorney fees or court costs actually incurred by the trustee due to the 

default."    According   to   Albrecht,   Alaska   Trustee's   inclusion   of   foreclosure   costs   in 

addition to "attorney's fees or court costs" constituted a violation of not only the non- 

judicial foreclosure statute but also Alaska's Unfair Trade Practices Act (UTPA). 

                The superior court concluded that Albrecht lacked standing to sue and 

denied her motion for class certification.        The superior court further ruled that Alaska 

Trustee's   practice   of   including    various   fees   and  charges   as   foreclosure   costs   was 

permitted   under   the   statute.  The   superior   court   awarded   attorney's   fees   to   Alaska 

Trustee as the prevailing party, enhancing those fees under AS 45.50.537(b) on the 

ground that Albrecht's claims were frivolous. Because the inclusion of foreclosure costs 

in a reinstatement quote does not violate AS 34.20.070, we affirm the superior court in 

most respects. But because Albrecht's claims were not frivolous and attorney's fees may 

not be awarded under Rule 82 for time spent litigating the structure of a class action, we 

remand for recalculation of fees awarded. 


        A.      Facts 

                Diana Albrecht executed a deed of trust to secure the balance due on the 

promissory note to her home.  Albrecht subsequently defaulted on her promissory note 

and deed of trust, and on February 6, 2010, Alaska Trustee was authorized to foreclose. 

Albrecht   requested   a   reinstatement   quote   on   March   31,   2010,   and   Alaska   Trustee 

provided it two days later.       Because Albrecht had missed 11 monthly payments, she 

owed a total of $23,734.59 of back payments on her mortgage.   Alaska Trustee included 

                                                  -2-                                           6718

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additional charges in her reinstatement quote, including:  (1) late charges of $1,050.27; 

(2) a property inspection charge of $10.50; (3) expenses for a broker's price opinion for 

$190; (4) title costs of $256.78; and (5) Alaska Trustee's fees and costs for enforcing the 

lender's rights. These foreclosure costs totaled $2,385.16, raising Albrecht's total to cure 

to $25,705.38.1 

        B.      Proceedings 

                On May 13, 2010, Albrecht filed a class-action complaint for declaratory 

and   injunctive   relief   and   damages.    Her   complaint   alleged   that   Alaska   Trustee   was 

systematically violating AS 34.20.070(b) by including in its reinstatement quotes costs 

in   addition   to   the   sum   in   default,   attorney's   fees,   and   court   costs. Albrecht   further 

alleged that the inclusion of these additional fees violated the UTPA.                 Alaska Trustee 

responded with a denial that its inclusion of foreclosure fees violated AS 34.20.070(b). 

                Albrecht moved for a temporary restraining order to stop the sale of her 

home.    Alaska Trustee agreed to cancel Albrecht's foreclosure sale until further order 

from   the   trial   court.  Albrecht   then   moved   for   certification   of   a   class   consisting   of 

homeowners   who   had   received   reinstatement   quotes   that   included   foreclosure   costs 

incurred by Alaska Trustee. 

                Alaska Trustee served Albrecht with a revised reinstatement quote that 

omitted all of the disputed foreclosure costs.          Albrecht moved for summary judgment 

arguing that Alaska Trustee's inclusion of foreclosure fees in her initial reinstatement 

quote violated her right to cure under AS 34.20.070(b).              Alaska Trustee filed a motion 

for summary judgment, maintaining that it was in compliance with AS 34.20.070(b) 

because the charged foreclosure costs were payable under Albrecht's deed of trust. 

        1       Albrecht continues to live in her home.  Alaska Trustee agreed to postpone 

Albrecht's      foreclosure    sale  and   on   February     22,  2011,    canceled    the  foreclosure 


                                                   -3-                                               6718 

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                 Albrecht's deed of trust outlines four conditions necessary for Albrecht to 

cure her default, including the conditions that the borrower: 

                 (a)     pays Lender all sums which then would be due under 

                 this Security Instrument and the Note as if no acceleration 

                 had occurred; [and] 

                 . . . . 

                 (c)     pays all expenses incurred in enforcing this Security 

                 Instrument,       including,     but    not   limited     to,   reasonable 

                 attorneys' fees, property inspection and valuation fees, and 

                 other fees incurred for the purpose of protecting Lender's 

                 interest    in   the  Property     and    rights   under    this   Security 


        2        The Deed of Trust states in relevant part: 

                 Borrower's        Right    to   Reinstate     After    Acceleration.       If 

                 Borrower meets certain conditions, Borrower shall have the 

                 right    to   have    enforcement       of   the   Security    Instrument 

                 discontinued at any time prior to the earliest of : (a) five days 

                 before   sale   of   the   Property   pursuant   to   any   power   of   sale 

                 contained in this Security Instrument; (b) such other period 

                 as   Applicable      Law    might    specify    for  the  termination      of 

                 Borrower's   right   to   reinstate;   or   (c)   entry   of   a   judgment 

                 enforcing this Security Instrument. Those conditions are that 

                 Borrower: (a) pays Lender all sums which then would be due 

                 under     this   Security    Instrument      and    the  Note    as   if  no 

                 acceleration had occurred; (b) cures any default of any other 

                 covenants or agreements; (c) pays all expenses incurred in 

                 enforcing this Security Instrument, including, but not limited 

                 to,   reasonable      attorneys'     fees,  property     inspection      and 

                 valuation   fees,   and   other   fees   incurred   for   the   purpose   of 

                 protecting Lender's interest in the Property and rights under 

                 this Security Instrument; and (d) takes such action as Lender 

                 may reasonably require to assure that Lender's interest in the 

                 Property      and   rights   under    this  Security    Instrument,      and 


                                                     -4-                                                6718

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Alaska Trustee also argued that because it had removed the challenged foreclosure costs 

from Albrecht's reinstatement quote, and because Albrecht had failed to pay the revised 

reinstatement quote, Albrecht lacked standing. 

              Albrecht filed a motion for leave to amend her complaint to add a new class 

representative, Sharon Mason, who also had received a reinstatement quote that included 

foreclosure fees, and who had paid these reinstatement fees in full.     The superior court 

granted Alaska Trustee's motion for summary judgment ruling that Albrecht lacked 

standing to sue, denying Albrecht's motion to amend for class certification, and deciding 

that Alaska Trustee had not violated AS 34.20.070 or the UTPA. 

              Alaska    Trustee   sought  an  award   of  enhanced   attorney's  fees,  which 

Albrecht opposed. The superior court awarded Alaska Trustee enhanced fees of $10,000 

on the basis that Albrecht's claims were frivolous.3 

              Albrecht appeals both the grant of summary judgment and the award of 

attorney's fees. 


              Borrower's     obligation   to  pay  the  sums  secured   by  this 

              Security Instrument, shall continue unchanged.   Lender may 

              require   that  Borrower    pay  such  reinstatement   sums   and 

              expenses in one or more of the following forms, as selected 

              by Lender:    (a) cash; (b) money order; (c) certified check, 

              bank check, treasurer's check or cashier's check, provided 

              any such check is drawn upon an institution whose deposits 

              are insured by a federal agency, instrumentality or entity; or 

              (d)  Electronic    Funds   Transfer.   Upon    reinstatement   by 

              Borrower, this Security Instrument and obligations secured 

              hereby shall remain fully effective as if no acceleration had 

              occurred.   However, this right to reinstate shall not apply in 

              the case of acceleration under Section 18. 

       3      Under Alaska Civil Rule 82 Alaska Trustee would have been entitled to 

$8,377.25.  The superior court awarded an additional $1,622.75. 

                                             -5-                                        6718

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                 We review the superior court's  summary judgment decision on a de novo 

basis.4   We apply our independent judgment to the interpretation of a statute and will 

"adopt the rule of law that is most persuasive in light of precedent, reason, and policy."5 


A denial of a motion to amend a complaint is reviewed for abuse of discretion,  and will 

only be reversed when we are "left with a definite and firm conviction, after reviewing 

the whole record, that the trial court erred."7         A denial of class certification is reviewed 

for an abuse of discretion.8      If the denial of class certification is based upon a legal error, 

the decision is reviewed de novo.9          The award of attorney's fees is          reviewed for abuse 

of discretion,10 but the correctness of the trial court's legal analysis in support of the 

award is reviewed de novo.11 

        4        Schug v. Moore, 233 P.3d 1114, 1116 (Alaska 2010). 

        5       Municipality   of   Anchorage   v.   Suzuki ,   41   P.3d   147,   150   (Alaska   2002) 

(citations omitted). 

        6       Betz v. Chena Hot Springs Grp. , 742 P.2d 1346, 1348 (Alaska 1987). 

        7       Id. 

        8       Bartek v. State, Dep't of Natural Res. , 31 P.3d 100, 101 (Alaska 2001). 

        9        Shook v. Alyeska Pipeline Serv. Co., 51 P.3d 935, 937 (Alaska 2002). 

        10       Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610, 613 (Alaska 2010). 

        11      Id. 

                                                    -6-                                              6718

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        A.	     The Inclusion Of Foreclosure Fees In A Reinstatement Quote Does Not 

                Violate AS 34.20.070(b). 

                In Kuretich v. Alaska Trustee, LLC ,12 we recently held that foreclosure fees 

may be included in reinstatement quotes under the former version of AS 34.20.070(b).13 

In that case, Kuretich claimed, as Albrecht does, that AS 34.20.070(b) bars foreclosure 

fees because those fees are not contemplated by AS 34.20.070(b).  But as we previously 

held in Hagberg v. Alaska National Bank ,14 the purpose of AS 34.20.070 is to "codify 

a   form   of   relief   from   forfeiture   which   courts   have   often   exercised"   at   equity.15 In 

Kuretich , we clarified that relief from forfeiture by reinstatement places the lender and 

borrower   in   the   "position   .   .   .   they   were   before   default."16 We   observed that   only 

through the inclusion of foreclosure fees in the reinstatement amount would the parties 

be in "their status quo prior to default."17      Thus, we concluded that reinstatement quotes 

properly include foreclosure fees under AS 34.20.070(b). 

        12      ____   P.3d   ____,   Op.   No.   6707,   2012   WL   4039803   (Alaska,   Sept.   14, 


        13      In April 2010, AS 34.20.070(b) was amended to include foreclosure costs. 

It now reads:     "the default may be cured . . . by payment of the sum then in default . . . 

and attorney and other foreclosure fees and costs." 

        14      585 P.2d 559 (Alaska 1978). 

        15      Id. at 562. 

        16      Kuretich , ___ P.3d ___, Op. No. 6707 at 5, 2012 WL 4039803, at *2. 

        17      Id. (quoting the superior court). 

                                                  -7-	                                            6718

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                We    further   observed    that   the  deed  of  trust  governs   the  lender's   and 

borrower's     rights   upon   foreclosure.18   In  Kuretich ,   the   deed   of   trust   "specifically 

delineate[d] the reinstatement amount as including costs of foreclosure not limited to 

attorney fees."19   Thus, "costs incident to foreclosure were properly included within the 

sum in default" by the "express terms of the deed."20           Here, under the section entitled 

"Borrower's       Right   to  Reinstate   After   Acceleration"     Albrecht's    deed   defines   the 

reinstatement amount.       Under the express terms of Albrecht's deed, she may reinstate 

only if she "pays all expenses incurred in enforcing th[e] Security Instrument, including, 

but not limited to, reasonable attorneys' fees, property inspection and valuation fees, and 

other fees incurred for the purpose of protecting Lender's interest in the Property and 

rights under this Security Instrument." 

                Because AS 34.20.070(b) provides for foreclosure costs in the reinstatement 

amount,   and   because   Albrecht's   deed   expressly   includes   foreclosure   costs,   Alaska 

Trustee did not violate AS 34.20.070(b) or the UTPA.   We therefore affirm the superior 

court's decision granting summary judgment in favor of Alaska Trustee and denying 

Albrecht's motions to amend her complaint and for class certification. 

        B.	     It   Was   An   Abuse   Of   Discretion   To   Award   Additional   Fees   Under 

                AS 45.50.537(b). 

                As the prevailing party, Alaska Trustee sought attorney's fees under Civil 

Rule 82(b)(2),21  requesting 20% of its total fees of $41,030.20, or $8,206, plus $171 in 

        18      Id. 

        19      Id. (quoting the superior court). 

        20      Id. 

        21      Civil Rule 82(b)(2) states in part: 


                                                 -8-                                              6718 

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fees and costs under Rule 79.   In addition, Alaska Trustee argued that under the UTPA 

it was entitled to enhanced attorney's fees because Albrecht's claims were frivolous. 

Under the UTPA, "[u]nless the action is found to be frivolous, in an action brought by 

a private person . . . a prevailing defendant shall be awarded attorney fees and costs as 

provided by court rule.       If the action is found to be frivolous, the attorney fees to be 

awarded      to  the  defendant    shall   be  full  reasonable    attorney    fees  at  the  prevailing 

reasonable   rate."22    A   frivolous   action   is   one   that   is   "(1)   not   reasonably   based   on 

evidence   or   on   existing   law   or   a   reasonable   extension,   modification,   or   reversal   of 

existing law; or (2) brought to harass the defendant or to cause unnecessary delay or 

needless expense."23 

                The superior court granted Alaska Trustee's request for enhanced attorney's 

fees and found that Albrecht's action under the UTPA was "frivolous, in that the facts 

admitted by [Albrecht] supported no legal claim under the Act and ultimately provided 

[Albrecht] no standing for legal action."  The superior court also concluded that Alaska 

Trustee was "forced to participate in extensive litigation over legal questions that did not 

ultimately impact [Albrecht]." The court awarded $10,000 in attorney's fees, rather than 

the $8,377.25 presumptive amount under Rules 79 and 82(b). 

                Albrecht challenges this award on three grounds.             She argues that Alaska 

Trustee is not in fact the prevailing party and that all attorney's fees should be stricken, 


                In cases in which the prevailing party recovers no money 

                judgment, the court shall award the prevailing party . . . in a 

                case resolved without trial 20 percent of its actual attorney's 

                fees which were necessarily incurred. 

        22      AS 45.50.537(b). 

        23      AS 45.50.537(e). 

                                                   -9-                                             6718

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that her claims were not frivolous, and that attorney's fees may not be awarded for time 

spent litigating the structure of a class action. 

               Albrecht contends that Alaska Trustee is not the prevailing party because, 

despite Alaska Trustee's success on   the merits, the main   issue in   this case was   the 

preservation of Albrecht's right to   her house, and she "remains in her home today." 

Albrecht    relies  on Currington      v.  Johnson,24  in  which   we   held  that  "right  to  the 

conveyance of the property in dispute was the 'main issue' of the litigation."25   But the 

superior court did not err in concluding the main issue litigated in this class action was 

whether Alaska Trustee's inclusion of foreclosure fees in Albrecht's reinstatement quote 

was valid under AS 34.20.070, and whether this in turn violated the UTPA. Albrecht did 

not prevail on these claims, and it was therefore not an abuse of discretion to designate 

Alaska Trustee as the prevailing party and award it attorney's fees. 

               Albrecht also argues that the superior court abused its discretion in finding 

that her claims were frivolous.  We agree.        At the time of Albrecht's case, two superior 

court judges had concluded that foreclosure fees were not included in AS 

Thus, Albrecht's claims were "reasonably based on evidence or on existing law or a 

reasonable extension, modification, or reversal of existing law."27       Alaska Trustee failed 

        24     685 P.2d 73 (Alaska 1984). 

        25     Id. at 83. 

        26     See Bachmeier v. Alaska Trustee, No. 3AN-09-08695 CI (Alaska Super., 

June 14, 2010) (Order on Cross-Motions for Summary Judgment) (holding fees and costs 

incurred in the processing of the foreclosure are not included under AS 34.20.070(b)); 

Collins v. Cash Alaska II, LLC, No. 3AN-09-12552 CI (Alaska Super., July 12, 2010) 

(Order    On   Motion    for  Summary     Judgment)    (holding   AS   34.20.070(b)     cannot   be 

expanded to include foreclosure fees). 

        27     AS 45.50.537(e). 

                                               -10-                                          6718

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to demonstrate that Albrecht's claims were brought for the purpose of harassment or 

resulted in unnecessary delay or needless expense.28  Because Albrecht's claims were not 

frivolous, enhanced attorney's fees were not warranted. 

                Finally, Albrecht argues that attorney's fees may not be awarded for time 

Alaska Trustee spent litigating class certification, Albrecht's standing to sue as a class 

representative, or the addition of Mason as a named party.             In Monzingo v. Alaska Air 

Group, we held that although class representatives are not exempt from paying attorney's 

fees under Rule 82, "a named plaintiff should not ordinarily be held liable for attorney's 

fees that fall beyond the scope of litigating the merits of his claim."29             Efforts by the 

prevailing party to fight class certification or otherwise litigate the structure of a class 

action are motivated by a desire to discourage claims by others, and warrant a downward 

variance   in   attorney's   fees   under   Rule   82(b)(3)(J).30 Alaska   Trustee   estimates   that 

$9,243 worth of its hours were spent fighting class certification.31           Whatever the actual 

number, the value of these hours should be removed from the value of "actual attorney's 

fees" before calculating the proper award under Rule 82(b)(2). 

                Alaska Trustee argues that Albrecht must prove that she was not being paid 

to litigate on behalf of the class before a downward variance in the Rule 82 award is 

appropriate.    But, as we held in Monzingo , this is a determination to be made by the 

        28      Id. 

        29      112 P.3d 655, 668 (Alaska 2005). 

        30      Id. 

        31      This estimate does not seem to include the value of time spent by Routh 

Crabtree Olsen litigating class-action matters before Farley & Graves was substituted as 

counsel for Alaska Trustee. 

                                                 -11-                                           6718

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superior   court   on   remand.32   We   therefore   remand   the   case   to   the   superior   court   to 

determine the value of time Alaska Trustee spent solely litigating the structure of the 

class   action   and   whether    Albrecht    had   any  financial   incentive    to  act  as  a  class 

representative, and to enter an award under Rule 82(b) accordingly. 


                We AFFIRM the superior court's grant of Alaska Trustee's motion for 

summary   judgment   and   denial   of   Albrecht's   motions.      We   REVERSE   the   superior 

court's decision that Albrecht's claims were frivolous and REMAND for modification 

of the attorney's fee award consistent with this opinion and Civil Rules 79 and 82(b). 

        32      Monzingo , 112 P.3d at 668 n.80. 

                                                 -12-                                             6718 

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