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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Miller v. State, Depot. Of Environmental Conservation (7/24/2015) sp-7021

Miller v. State, Depot. Of Environmental Conservation (7/24/2015) sp-7021

         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@akcourts.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



GRANT MILLER and WHITING                                    )  

HARBOR AQUAFARM LLC,                                        )    Supreme Court No. S-15370  

                                                            )  

                            Appellants,                     )    Superior Court No. 1SI-11-00138 CI  

                                                            )  

         v.                                                 )    O P I N I O N  

                                                            )  

STATE OF ALASKA, DEPARTMENT    )                                 No. 7021 - July 24, 2015  

OF ENVIRONMENTAL                            )  

CONSERVATION,                                               )  

                                                            )  

                            Appellee.                       )  

                                                            )  



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

                                                                     

                   Judicial District, Sitka, David V. George, Judge.  



                  Appearances:  Teka K. Lamade, Sitka, for Appellants.  David  

                   T. Jones, Senior Assistant Attorney General, Anchorage, and  

                                          

                   Craig W. Richards, Attorney General, Juneau, for  Appellee.  



                   Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                        

                   Bolger, Justices.  



                   BOLGER, Justice.  



I.       INTRODUCTION  



                  An oyster farmer closed his farm after dozens of people became sick from  



eating his oysters.  He sued a state agency, alleging that the agency negligently informed  

                                                                             

                                                           



him  that  the  site  of  his  farm  was  suitable  for  shellfish  farming.    The  superior  court  



granted       summary         judgment        for    the    agency,       concluding         that    the    farmer's  


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

misrepresentation claim was barred by state sovereign immunity. The farmer argues that                



the agency's sovereign immunity defense was inapplicable because his complaint alleged  



a  claim  of  negligence,  not  negligent  misrepresentation.    But  the  allegations  in  the  



farmer's complaint supported only a negligent misrepresentation claim.  We affirm.  



II.       FACTS AND PROCEEDINGS  



                                        

                     In 1996 the Department of Environmental Conservation (the Department)  



                                                                                           

approved an area in Whiting Harbor for shellfish farming.  In 2000 Grant Miller applied  



                                                                                           

for  a  permit  to  operate  an  oyster  farm  in  that  area,  and  the  Department  granted  his  



                          

application.  In 2009 dozens of people became sick after eating oysters from Miller's  



oyster farm, and Miller shut down the farm.  



                                                                                                                               

                     In 2011 Miller filed a complaint against the Department, alleging that it had  



                                

conducted its 1996 studies in a negligent manner and "held out Whiting Harbor as an  



approved  site  for  oyster  farming."    He  further  alleged  that  he  had  relied  on  the  



                                                                                                                

Department's approval of the site for shellfish farming when he sought and obtained a  



                          

permit, and that his reliance was a proximate cause of his oyster farm's failure.  Miller  



                                                                                                        

later amended his complaint to add the City of Sitka as a defendant, add Whiting Harbor  



                                                                            

Aquafarm LLC (his business) as a plaintiff, and allege that the Department was aware  



of the presence of the invasive species tunicate in the area at the time it granted his  



permit.  



                                                                                                     

                     The  Department  moved  for  summary  judgment,  arguing  that  Miller's  



                                                                

amended complaint alleged only a single claim, misrepresentation, which was barred by  

                                        1  Miller opposed this motion, arguing that his claim was one  

state sovereign immunity.                                                               



of  negligence,  not  misrepresentation.    The  superior  court  granted  the  Department's  



summary judgment motion.  



          1          See AS 09.50.250(3).  



                                                                 -2-                                                              7021  


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

                   Miller appeals.  



III.      STANDARD OF REVIEW  



                   "We review rulings on motions for summary judgment de novo.  When  



                                                                                                         

applying  the  de  novo  standard  of  review,  we  apply  our  independent  judgment  to  



                                                                                   

questions of law, adopting the rule of law most persuasive in light of precedent, reason,  

and policy."2  



IV.      DISCUSSION  



                   In  accordance  with  article  II,  section  21  of  the  Alaska  Constitution,  



AS 09.50.250  allows "[a] person or corporation having a . . . tort claim against the state  

                                                                                



[to] bring an action against the state . . . ."  This waiver of state sovereign immunity is  



                                                                                 

not unlimited, and AS 09.50.250(3) explicitly states that "an action may not be brought  



                             

if  the  claim  .  .  .  arises  out  of  .  .  .  misrepresentation."    The  tort  of  negligent  



misrepresentation has four essential elements:  



                   (1) the party accused of misrepresentation must have made  

                   the  statement  in  the  course  of  his  business,  profession  or  

                   employment;   (2)   the   representation   must   supply   "false  

                   information";         (3)   the    plaintiff     must      show      "justifiable  

                                                                             

                   reliance" on the false information; and (4) the accused party  

                                                                           

                   must have failed "to exercise reasonable care or competence  

                                                                                        [3] 

                   in obtaining or communicating the information."  



                   Miller's  allegations  against  the  Department,  in  both  his  original  and  

                                                                                                        



amended complaints, constitute a straightforward claim of negligent misrepresentation.  

                                                 



First, Miller alleged that the Department "held out Whiting Harbor as an approved site  

                                                                                                    



         2         Bush      v.   Elkins ,     342     P.3d     1245,      1251      (Alaska       2015)      (quoting  



ConocoPhillips  Alaska,  Inc.  v.  Williams  Alaska  Petroleum,  Inc.,  322  P.3d  114,  122  

(Alaska 2014)) (internal quotation marks omitted).  



         3         Willard  v.  Khotol  Servs.  Corp.,  171  P.3d  108,  118-19  (Alaska  2007)  



(quoting RESTATEMENT (SECOND) OF TORTS  552(1) (1977)).  



                                                           -3-                                                     7021
  


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

                                  

for oyster farming" as part of its "duty to conduct [suitability] studies in compliance with  



                        

the State's . . . policies and procedures."  Second, he alleged that the State's assurance  



                                                                                                           

of the site's suitability for oyster farming was false.  Third, he alleged that he "actually  



                                                                                

and reasonably relied" on this assurance. And fourth, he alleged that the Department was  



                                                                      

negligent in conducting its suitability studies.  Under AS 09.50.250(3), the Department  



is immune from liability for this alleged misrepresentation.  



                    Miller argues that he subsequently introduced, in an affidavit supporting his  



                                     

opposition to summary judgment, evidence of material facts that demonstrate that his  



claim was one of negligence, not negligent misrepresentation.  Namely, he claims that  



he submitted evidence demonstrating that the Department "remained involved with on- 



           

going inspections aimed at establishing a duty of care with regard to public health[,] . .  



                                                                                           

. fail[ed] to . . . enforce the terms of the [nearby] Wastewater Treatment Plant's permit[,]  



. . . [and] failed to respond appropriately in light of its knowledge of flow rates at the  



[Treatment Plant] and its ability to regulate that flow."  Miller claims these negligent acts  



"placed an unreasonable risk not only on Mr. Miller, but on the public generally."  



                    But we do not need to decide whether this evidence would support an  



                                                                                                

independent negligence claim, because neither Miller's original nor amended complaint  



                                                                                                    

made  allegations  encompassing  this  evidence.    The  only  injury  Miller  claimed  was  



                                                                                    

detrimental reliance on the Department's assurance that the site was suitable for shellfish  



                                                

farming.  This reliance was an element of Miller's misrepresentation claim; it did not  



                                                               -4-                                                        7021
  


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

                                                               4  

                                                                                                            

support an independent negligence claim.   And Miller never amended his complaint to  



allege an injury other than detrimental reliance.  



                    Finally,  Miller  cites  several  federal  cases  where  courts  have  allowed  



negligence          claims       against        government           agencies         to    proceed         "even       though  



                                                                              5  

misrepresentations   [were]   collaterally   involved."       But   in   each   of   these   cases,  



                                                                                                                 

government officials acted, or failed to act, in ways that caused injuries to the plaintiffs  



that were separate and apart from any misrepresentation.  



                                   

                    In Block v. Neal a government official visited a construction site three times  



                                                                                                               6  

and wrote inspection reports that failed to indicate defects in the project.   The district  



                                                     7 

                                                                                                       

court originally dismissed the case,  but the Sixth Circuit reversed, concluding that the  



                                                                                    8 

                                                                                                         

Federal Tort Claims Act's misrepresentation exception  did not bar the homeowner's  



         9                                                         10                                                           

                                                                                                 

claim.   The U.S. Supreme Court affirmed.                              Reasoning that the official "may have  



          4         See JBP  Acquisitions,  LP  v.   U.S. ex              rel. FDIC, 224 F.3d 1260, 1264 (11th  



Cir. 2000) ("The test in applying the misrepresentation exception   [to the Tort Claims  

Act] is whether the essence o                f t  he claim involves the government's failure to use due  

care in obtaining and communicating information.  The exception covers actions for  

negligence  when  the  basis  for  the  negligence  action  is  an  underlying  claim  for  

                                   

misrepresentation." (citations omitted)).  



          5  

                                     

                    See Block v. Neal, 460 U.S. 289 (1983); Nat'l Carriers, Inc. v. United  

States, 755 F.2d 675 (8th Cir. 1985);  Guild v. United States, 685 F.2d 324 (9th Cir.  

1982).  



          6         460 U.S. at 292.  



          7         Id.  



          8         28 U.S.C.  2680(h) (2012).  



          9         460 U.S. at 293-94.  



          10        Id . at 294.  



                                                               -5-                                                         7021
  


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

                                                                  

                                                                                         

undertaken both to supervise construction of [the] house and to provide [the homeowner]  



                                                                                                                   

information   regarding   the   progress   of   construction,"   the   Court   held   that   the  



                                                                                                   

misrepresentation  exception  would  not  bar  a  claim  stemming  from  the  official's  

negligence in supervising the project.11  



                                                                                        

                    In National Carriers, Inc. v. United States a government meat inspector  



                 

undertook the tasks of identifying and separating exposed and unexposed meat at an  

                                                                                  12  He also informed the salvage  

accident site, but he negligently performed these duties.                             



                                                                                             13  

crew that the exposed and unexposed meat was "all the same."                                     Although the district  

                                                                        



court  concluded  that  the  misrepresentation  exception  shielded  the  government  from  



                                                                                                                        

liability, the Eighth Circuit reversed, holding that the inspector "acted negligently [in his  

inspection and separation duties], in a manner distinct from his misrepresentations."14  



                    And in Guild v. United States a federal agency "surveyed possible [dam]  



sites,  performed  foundation  analyses,  .  .  .  prepared  a  topographic  survey,  .  .  .  



recommended a site for [a] dam and reservoir, . . . design[ed] . . . the dam and reservoir[,]  

                                                                            15  After the dam failed due to faulty  

                                                                                          

and prepared construction plans and specifications." 



design, the district court granted summary judgment for the government, concluding that  

                                                                              



                                                                       16  

the misrepresentation exception barred the suit.                           The Ninth Circuit reversed, holding  



          11        Id. at 298-99.   The  homeowner  did not  allege  negligent misrepresentation.  



Id.  



          12        755 F.2d 675, 675-77 (8th Cir. 1985).  



          13        Id. at 676 (internal quotation marks omitted).  



          14        Id. at 677.  



          15        685 F.2d 324, 324 (9th Cir. 1982).  



          16        Id. at 325.  



                                                              -6-                                                           7021  


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

that "[d]esigning the dam and reservoir was an operational task and the [g]overnment  

performed it negligently.  Any communication of misinformation was collateral."17  



                 In  contrast  to  these  cases,  Miller's  misrepresentation  claim  was  not  



                                                                                                 

collateral to an independent claim of negligence - it was the only claim he alleged in  



                     

his complaint.  Because the Department is immune from liability for misrepresentation,  



the superior court's summary judgment ruling was appropriate.  



V.       CONCLUSION  



                 We AFFIRM the judgment of the superior court.  



         17      Id. at 326.  



                                                       -7-                                                   7021  

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