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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Cox v. Estate of Steve Cooper (9/14/2018) sp-7290

Cox v. Estate of Steve Cooper (9/14/2018) sp-7290

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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                                       



WILLIAM  C.  COX,                                                     )  

                                                                      )     Supreme  Court  No.  S-16570  

                                 Appellant,                           )  

                                                                                                                                       

                                                                      )     Superior Court No. 3AN-15-10101 CI  

           v.                                                         )  

                                                                                                 

                                                                      )     O P I N I O N  

                                                      

ESTATE OF STEVE COOPER and                                            )  

                      

DOROTHY COOPER,                                                                                                          

                                                                      )     No. 7290 - September 14, 2018  

                                                                      )  

                                 Appellees.                           )  

                                                                      )  



                                                                                                               

                                   

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

                                                                                                      

                      Judicial District, Anchorage, William F. Morse, Judge.  



                                                                                                            

                      Appearances:  Clayton H. Walker, Jr., and James L. Gaines,  

                                                                                                               

                      Alaska Law Offices, Inc., Anchorage, for Appellant.  Chris  

                                                                                                     

                      D. Gronning, Bankston Gronning O'Hara, P.C., Anchorage,  

                            

                      for Appellees.  



                                                                                                           

                      Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,  

                                           

                      and Carney, Justices.  



                                                      

                      STOWERS, Chief Justice.  



I.         INTRODUCTION  



                                                                                                                                

                      This   case   concerns   the   interpretation   of   Alaska's   usury   statute,  



                                  

AS 45.45.010.  The question on appeal is whether the statute provides for a maximum  



                                                                                                                                

interest rate on contract or loan commitments in which the principal amount exceeds  



                                                                                                         

$25,000.  William C. Cox argues that the statute provides for a maximum interest rate  


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

of 10.5% on all loans in which the principal exceeds $25,000.                                                               The Estate of Steve         



                                                                                                        1  

Cooper and            Dorothy Cooper (collectively"theCoopers")                                                                                     

                                                                                                          arguethat parties may contract  



                                                                                                                                                   

for any interest rate if the principal of the contract or loan commitment exceeds $25,000.  



                                                                                                                                                            

                         The superior court initially agreed with Cox that loans over $25,000 had  



                                                                                                                                                            

a maximum legal interest rate of 10.5%, but the Coopers moved for reconsideration and  



                                                                                                                                                            

provided the court with statutory history. This statutory history convinced the court that  



                                                                                                                                                    

the Coopers were correct and that AS 45.45.010 did not limit the interest rate for contract  



                                                                               

or loan commitments over $25,000.  Cox appeals.  



                                                                                                                                                  

                         Cox also challenges the superior court's decision to consider statutory  



                                                                                                                                                      

history when ruling on the Coopers' motion for reconsideration and the superior court's  



                                                                                                                                                          

decision to grant the Coopers reasonable attorney's fees under Alaska Civil Rule 82.  



                                                                                                           

                         We affirm the superior court's ruling in all respects.  



                                         

II.          FACTS AND PROCEEDINGS  



             A.          Facts  



                                                                                                                                                    

                         The material facts in this case are undisputed. In October 2008 the Coopers  



                                                                                                                                                            

loaned Cox $325,000. Cox executed a deed of trust note with a 20% annual interest rate  



                                                                                                                                                          

to be repaid by April 2009. He provided his house as security for the note. In June 2010  



                                                                                                                                                           

the Coopers lowered the interest rate to 8% and extended the term to April 2011. In July  



                                                                                                                                                       

2015 the trustee gave notice of default and sale and foreclosure, providing for a public  



                                                                                                                                                 

sale in October 2015.  According to the notice, Cox owed a principal sum of $315,500  



                                                                                                                                                              

plus  interest  accrued  under  the  20%  rate  of  $98,450.72  and  under  the  8%  rate  of  



$46,909.19.  



             1           Steve Cooper died after the complaint in this case was filed.                                                     We use "the     



Coopers" to refer to both Steve and Dorothy Cooper and the Estate of Steve Cooper and                                                                       

Dorothy Cooper.   



                                                                               -2-                                                                       7290
  


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

             B.           Proceedings  



                          ThreedaysbeforetheforeclosuresalewasscheduledCox filedacomplaint,  

                                                                                                                                                  



alleging  that  the  20%  interest  rate  was  usurious  under  AS  45.45.010  and  seeking  

                                                                                                                                                       

                                                                                                                                 2  The next day Cox  

forfeiture of the remaining interest owed pursuant to AS 45.45.040.                                                                                            

                                                                                                             

recorded a notice of lis pendens, and the trustee postponed the sale.3  

                                                                                                                          



                          The Coopers moved to dismiss, and Cox moved for summary judgment.  

                                                                                                                                                                        



The  superior  court  ruled  in  favor  of  Cox  on  the  usury  issue,  concluding  that  the  

                                                                                                                                                                



maximum legal interest rate on loans over $25,000 was 10.5%.   The court therefore  

                                                                                                                                                     



denied the Coopers' motion to dismiss and granted Cox's motion for summary judgment  

                                                                                                                                                     



with respect to the usury issue.  

                                                 



                          The  Coopers  sought  reconsideration  of  the  court's  decision.                                                                They  

                                                                                                                                                           



contended that the superior court had misapplied AS 45.45.010 and our decisions in  

                                                                                                                                                                   



                                                                 4                                                 5  

Riley v. Northern Commercial Co.                                    and Rockstad v. Erikson,  as well as overlooking the  

                                                                                                                                                                 



legislative history and the longstanding practice of the lending industry. They explained  

                                                                                                                                                     



             2            Cox also         requested acredit                 for doubletheinterest paid under AS 45.45.030,                                             



which provides that a person may "recover from the person receiving [usurious interest]                                                                

double the amount of the interest received or collected."                                                     The superior court ruled that   

Cox was not entitled to recovery under this statute because he had not paid all of the                                                                           

interest he owed under the allegedly usurious rate.                                                Cox does not appeal this ruling.                 



             3            Cox filed an amended complaint in January 2016, adding two claims. First,  

                                                                                                                                                              

he claimed that the trustee demanded an excessive amount of money to cure the alleged  

                                                                                                                                                         

default in violation of AS 34.20.070(b).   The sole basis for this claim was that the  

                                                                                                                                                                

amount owed was excessive because it was calculated with a usurious interest rate. This  

                                                                                                                                                               

claim, therefore, turned on Cox's usury claim.   Cox does not mention this claim on  

                                                                                                                                                                  

appeal.            Second,  Cox  claimed  that  the  statute  of  limitations  had  run,  but  he  later  

                                                                                                                                                             

abandoned this claim.  

                               



             4            648 P.2d 961 (Alaska 1982).  

                                                                     



             5            113 P.3d 1215 (Alaska 2005).  

                                                                        



                                                                                 -3-                                                                         7290
  


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

                                                                                                                        

that "[i]n all candor, [the court's] decision was completely unexpected."  The Coopers  



                                                                                                                           

asserted that "[t]he significance of [the] Court's decision to the lending industry [could  



                                                                                                                            

not] be overstated" because "[i]t mean[t], among other things, that all existing loans  



                                                                                                                      

made in Alaska . . . where the loan exceeded $25,000 and the interest rate exceeded  



                                                                                                                               

10.5% [were] usurious."  They also said that "the legislative history presented to [the  



                                                                                                                          

court]  ha[d]  been  incomplete,  and  in  some  cases  distorted"  and  that  they  "ha[d]  



                                                                                   

undertaken a more complete review of the legislative history."  



                                                                                                                     

                    In support of their motion, the Coopers filed an affidavit of a real-estate  



                                                                                                                                      

appraiser as to lending industry practice, 143 pages of photocopies of former statutes,  



                                                                                                                             

and a listing and graph of federal fund rates dating back to 1954.  The superior court  



                                                               

invited Cox to respond and the Coopers to reply to that response.  In its order inviting  



                                                                                                                            

further briefing the court explained that it would "consider the new material about  



                                                                                                                           

legislative  history"  but  would  "not  consider  the  new  evidence  or  argument  about  



                

Alaska's lending market."  Cox responded to the Coopers' motion for reconsideration  



                                                                                                                                 

and  attached  one  interest-rate  graph.                     The  Coopers  replied,  attaching  59  pages  of  



               

statutory history.  



                                                                                                                       

                    The superior court granted the motion for reconsideration. It first reiterated  



                                                                                                                                

that "while it would consider . . . new material about legislative history, it would not  



                                                                                                                                  

consider the proffered new evidence or argument about Alaska's lending market."  It  



                                                                                                                             

then explained that the Coopers' presentation of the statutory history convinced the court  



                                                                                                                                 

that they were correct and that the statute applies only where there is no rate set by  



                                                                                                                               

contract or the loan does not exceed $25,000.  It also noted that dicta in our case law  



                                                                                                                        

supported this result.  The Coopers then moved for summary judgment and the superior  



                            

court granted the motion.  



                                                                                                                             

                    The Coopers moved for an award of attorney's fees under Alaska Civil  



                                                                                                                                   

Rule 82.   Cox opposed, characterizing the Coopers' request for attorney's fees as a  



                                                                -4-                                                         7290
  


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

request for a deficiency judgment.                                            He argued that the Coopers had elected to sell the                                                      



home   through   a   non-judicial   foreclosure   sale   and   that   AS   34.20.070,   the   statute  

                                                                                                                                                                             6   Since  

 authorizing non-judicial foreclosure sales, allows for recovery of attorney's fees.                                                                                             



 a separate statute allowed for recovery of attorney's fees, Cox argued Rule 82 did not  

                                                                                                                                                                                      



 apply.            The  Coopers  replied,  clarifying  that  they  were  not  requesting  a  deficiency  

                                                                                                                                                                      



judgment, that they were only requesting attorney's fees incurred during their defense  

                                                         



 ofCox's lawsuit,and that they were not requesting attorney'sfeesincurred inconducting  

                                                                                                                                                                      

the foreclosure.  The superior court awarded the Coopers attorney's fees.7  

                                                                                                                                                      



 III.          STANDARD OF REVIEW  

                                                        



                              "The interpretation of a statute is alegal question which we review de novo.  

                                                                                                                                                                                               



 'We interpret . . . Alaska law according to reason, practicality, and common sense, taking  

                                                                                                                                                                                



 into account the plain meaning and purpose of the law as well as the intent of the  

                                                                                                                                                                                      

 drafters.' "8  

                      



               6             AS 34.20.070(b) ("[I]f the default has arisen by failure to make payments                                                                  



required   by   the   trust   deed,   the   default   may   be   cured   and   sale   under   this   section  

terminated by payment of the sum then in default, other than the principal that would not                                                                                              

then be due if no default had occurred, and attorney and other foreclosure fees and costs                                                                                          

 actually incurred by the beneficiary and trustee due to the default.").                                                        



               7              The Coopers requested an enhanced attorney's fees award under Rule  

                                                                                                                                                                                  

 82(b)(3).  Cox opposed this request. Cox also argued that the Coopers were not entitled  

                                                                                                                                                                             

to the amount of fees the Coopers requested and that Cox was a public interest litigant.  

                                                                                                                                                                                               

 The superior court did not grant the requested enhancement; it awarded attorney's fees  

                                                                                                                                                                                     

pursuant to the schedule in Rule 82(b)(2) on the amount of fees the Coopers requested.  

                                                                                                                                                                                               

 With regard to attorney's fees, Cox appeals only the legal question whether attorney's  

                                                                                                                                                                       

 fees could be awarded under Rule 82.  He does not appeal the amount of attorney's fees  

                                                                                                                                                                                     

 awarded.  



               8             In re Estate of Baker, 386 P.3d 1228, 1231 (Alaska 2016) (omission in
  

                                                                                                                                                                                         

 original) (first citing Jimerson v. Tetlin Native Corp., 144 P.3d 470, 472 (Alaska 2006);
  

                                                                                                                                                                               

                                                                                                                                                                (continued...)
  



                                                                                            -5-                                                                                   7290
  


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

                      We review the decision to grant a motion for reconsideration for abuse of                                                



                  9  

discretion.                                                                                                                                

                      "An abuse of discretion exists if we are 'left with  a  definite and firm  



                                                                                                                            10  

                                                                                                                           

conviction on the whole record that the trial judge has made a mistake.' " 



                                                                                                                                            

                       "We review an award of attorney's fees for abuse of discretion, but 'the  



                                                                                                                                    

determination of which statute or rule applies to an award of attorney's fees is a question  



                                                         11  

                                                       

of law that we review de novo.' " 



IV.        DISCUSSION  



                                                                                                                

           A.          The Interest Rate At Issue In This Case Was Not Usurious.  



                                                                                                                                                   

                      Alaska Statute 45.45.010 contains two subsections relevant to this case.  



            

These provide:  



                                                                                                                          

                                  (a) The rate of interest in the state is 10.5 percent a  

                                                                                                             

                      year and no more on money after it is due except as provided  

                                             

                      in (b) of this section.  



                                                                                                           

                                  (b) Interest may not be charged by express agreement  

                                                                                                                   

                       of the parties in a contract or loan commitment that is more  

                                                                                                                  

                      than the greater of 10 percent or five percentage points above  

                                                                                                                       

                      the annual rate charged member banks for advances by the  

                                                                                                                      

                       12th  Federal  Reserve  District  on  the  day  on  which  the  

                                                                                                                    

                       contract or loan commitment is made.   A contract or loan  

                                                                                                              

                       commitment in which the principal amount exceeds $25,000  



           8           (...continued)  



                                                                                                       

then quoting Estrada v. State, 362 P.3d 1021, 1023 (Alaska 2015)).  



           9  

                                                                                                                                            

                      See Alaskan Adventure Tours, Inc. v. City and Borough of Yakutat, 307  

                                                                                                                                     

P.3d 955, 959-60 (Alaska 2013) (citing Smith v. Groleske, 196 P.3d 1102, 1105 (Alaska  

2008));  Boone v. Gipson                  , 920 P.2d 746, 748-49 (Alaska 1996).                 



           10         Alaskan Adventure Tours , 307 P.3d at 959-60 (quoting Babinec v. Yabuki,  

                                                                                                                                      

799 P.2d 1325, 1332 (Alaska 1990)).  

                                                   



           11         Martin v. Martin, 303 P.3d 421, 424 (Alaska 2013) (quoting McDonald v.  

                                                                                                                                                

Trihub, 173 P.3d 416, 420 (Alaska 2007)).  

                                                             



                                                                      -6-                                                                7290
  


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

                                   is exempt from the limitation of this subsection.                                                                          [12]  



                                                                                                                                                                                                                  

                                   Coxargues that subsection (a) providesthegeneralinterest ratefor all loans  



                                                                                                                                                                                                   

not covered by subsection (b).  And he contends that the second sentence of subsection  



                                                                                                                                                                                                                        

(b) provides that subsection (b) does not cover loans greater than $25,000.  Thus, he  



                                                                                                                                                                                                                                 

argues, subsection (a) must apply to all loans in which the principal exceeds $25,000.  



                                                                                                                                                                                                                          

The  Coopers  argue  that  subsection  (b)  governs  all  loans  where  there  has  been  a  



                                                                                                                                                                                                                   

contracted-for interest rate.  They contend that if the principal of the contract or loan  



                                                                                                                                                                                                     

commitment exceeds $25,000, then the parties may contract for any interest rate.  



                                                                                                                                                                                                          

                                  Although wehavenever directlyaddressed thisquestion,ourcasesstrongly  



                                                                                                                                                                                                                  

support the Coopers' interpretation of the usury statute.   In  Crissey v. Alaska USA  



                                                                                                                                                                                                                         

Federal Credit Union we held that federal usury law, not state usury law, applied to  

                                                                                                                              13     But in two footnotes we expressed  

                                                                                                                                                                                                     

                                                                                                            

loans issued by federally chartered credit unions. 



our opinion that state usury law would not have covered the loan agreement at issue even  

                                                                                                                                                                                                                   



if it were not preempted by federal law.  In the first footnote we explained, "[I]n their  

                                                                                                                                                              



brief to this court the Crisseys cite AS 45.45.010.  This statute imposes a legal rate of  

                                                                                                                                                                                                                         

interest for loans of $25,000 or less . . . ."14                                                                  And in the second footnote we said:  

                                                                                                                                                                                                   



                 12               AS 45.45.010. This is the current version of AS 45.45.010, which has been                                                                                                        



in effect since 2011.                                  See  ch. 29,  1, SLA 2011.                                                At the time the parties in this case                                             

executed the deed of trust and promissory note, the first sentence of subsection (b) read,                                                                                                                        

"No interest may be charged by express agreement of the parties in a contract or loan                                                                                                                              

commitment which is more than five percentage points above the annual rate charged                                                                                                                        

member banks for advances by the 12th Federal Reserve District on the day on which   

the contract or loan commitment is made."                                                                             Former AS 45.45.010(b) (1981).                                                               The  

remainder of subsections (a) and (b) were the same. Because this change does not affect                                                                                                                         

the analysis of this case, we use the current version of the statute.                                                                                 



                 13                811 P.2d 1057, 1060-61 (Alaska 1991).  

                                                                                                                        



                 14               Id. at 1060 n.5.  

                                                                



                                                                                                            -7-                                                                                                   7290
  


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

                               Notably enough, since legislative amendment in July 1981,                                                                       

                                our state usury statute has applied only to loans of $25,000 or                                                                         

                                less (and then only when no other statute preempts the claim).                                                                                

                                Consequently, in November 1981, when the Crisseys entered                                                                   

                                into their $50,000 loan agreement with Alaska USA, no state                                                                       

                                statute governed the interest rate.                                           [15]  



                               In Rockstad v. Erikson  we considered whether one promissory note for  

                                                                                                                                                                                                     



$26,000 that was accompanied by two checks constituted one loan or two smaller loans  

                                                                                                                                                                                                

for the purposes of AS 45.45.010(b).16   Erikson argued that there had been one loan for  

                                                                                                                                                                                                     

over $25,000, so the loan was outside the reach of AS 45.45.010.17  Rockstad argued that  

                                                                                                                                                                                                    

AS 45.45.010 applied because there were two separate loans, each under $25,000.18  We  

                                                                                                                                                                                                    



concluded that there had only been one loan for over $25,000, which meant the loan was  

                                                                                                                                                                                                   

not usurious.19  

          



                               Finally, in Bibi v. Elfrink we considered a loan that originally was under  

                                                                                                                                                                                              

$25,000 but was modified multiple times and rose above $25,000.20                                                                                                   We affirmed the  

                                                                                                                                                                               

superior court's determination that there had only been one loan.21  "Consequently, when  

                                                                                                                                                                                                



the March 2008 modification brought the single loan's principal over $25,000, the  

                                                                                                                                                                                                    



                15             Id.  at   1060  n.6.  



                16              113  P.3d   1215,   1221-22  (Alaska  2005).  



                17             Id.  at   1221.  



                18             Id.  



                19             Id.   at   1222;   id.   at   1217   ("Because   we   hold   that   as   a   matter   of   law   the  



parties'  transaction  was  not  usurious,  we  affirm.").  



                20             408  P.3d  809,  812  (Alaska  2017).  



                21             Id.  at  821.  



                                                                                                   -8-                                                                                          7290
  


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

                                                                        22  

interest rate cap no longer applied."                                        Because Bibi had "paid her entire loan principal                                



plus all interest, both legal and usurious, . . . under AS 45.45.030, [she was] entitled to                                                                                



double whatever portion of these payments constituted usurious interest, that is, interest                                                                      

                                                                                     23   We explained that on remand the superior  

above the statutory maximum at the time."                                                                                                                     



court should "calculate what amount of Bibi's total payments were applied toward  

                                                                                                                                                                



usurious interest generated by the original loan and the two modifications that preceded  

                                                                                                                                                             



the principal's rise over $25,000 in March 2008, the point at which the usury statute  

                                                                                                                                                                 



                                    24  

ceased to apply."                         But we cautioned that "applying a legal hypothetical interest rate  

                                                                                                                                                                       



from the beginning may push the date at which the loan's principal would have exceeded  

                                                                                                                                                            



$25,000 past March 2008,  thereby extending the period to which  the usury statute  

                                                                                                                                                                



applied to the loan.  If so, the new date should be taken into account when calculating  

                                                                                                

Bibi's recovery."25  

              



                           Thus, while we have never been called on to decide whether the usury  

                                                                                                                                                                   



statute contains a maximum interest rate for loans over $25,000, we have consistently  

                                                                                                                                                      



assumed that it does not.  A close examination of the language of AS 45.45.010 and the  

                                                                                                                                                                         



legislative history of the statute support our prior statements on this issue:  there is no  

                                                                                                                                                                          



maximum legal interest rate under AS 45.45.010 for contract or loan commitments with  

                                                                                                                                                                      



express interest rates in which the principal exceeds $25,000.  

                                                                                                           



                           " 'When we construe a statute, we look at both its plain language and . . .  

                                                                                                                                                                             



its legislative history.'  We use a sliding scale approach under which '[t]he plainer the  

                                                                                                                                                                        



statutory language is, the more convincing the evidence of contrary legislative purpose  

                                                                                                                                                               



             22            Id.  



             23            Id.  at 824.   



             24            Id.  (emphasis added).   



             25            Id.  (emphasis added).   



                                                                                    -9-                                                                             7290
  


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

or   intent   must   be.'     '[W]henever  possible,   we   construe   a   statute   in   light   of   its  

purpose.' "   26  



                          The simplest interpretation of AS 45.45.010 is that subsection (b) governs  

                                                                                                                                                        



all contract or loan commitments with express interest rates.  By its plain text the first  

                                                                                                                                                               



sentence of the subsection applies to all contract or loan commitments with express  

                                                                                                                                                        



interest rates.  The second sentence then exempts certain contract or loan commitments,  

                                                                                                                                            



those with a principal exceeding $25,000, from the limitation in the first sentence - that  

                                                                                                                                                                



is, from the maximum interest rate.  Thus contract or loan commitments with principals  

                                                                                                                                                    



over $25,000 may contain any express interest rate.  Cox's reading requires taking the  

                                                                                                                                                                 



interest rate in subsection (a), which provides the interest rate for money after it is due  

                                                                                                                               



and which contains no mention of contract or loan commitments, and making it the  

                                                                                                                                                                 



maximum interest rate only  for  contract or  loan  commitments over  $25,000,  when  

                                                                                                                                                            



contract or loan commitments areotherwisegovernedexclusively bysubsection (b). The  

                                                                                                                                                                



Coopers' reading is more persuasive.  

                                                   



                          The statutory history of AS 45.45.010 confirms this reading.  The original  

                                                                                                                                                        



statute from 1900 stated:  

                                    



                                       The rate of interest in the District shall be eight per  

                                                                                                                                       

                          centum per annum, and no more, on all moneys after the  

                                                                                                                            

                          same become due; on judgments and decrees for the payment  

                                                                                                                             

                          of  money;  on  money  received  to  the  use  of  another  and  

                                                                                                                                      

                          retained  beyond  a  reasonable  time  without  the  owner's  

                                                                                                                             

                          consent, expressed or implied, or on money due upon the  

                                                                                                                                       

                          settlement of matured accounts from the day the balance is  

                                                                                                                                          

                          ascertained; on money due or to become due where there is  

                                                                                                                               



             26           Cent. Recycling Servs., Inc. v. Municipality of Anchorage                                                    , 389 P.3d 54, 57          



(Alaska 2017) (alterations in original) (first quoting                                             Alaskans for a Common Language,                 

Inc. v. Kritz         , 170 P.3d 183, 192 (Alaska 2007); then quoting                                            Pebble P'ship ex rel. Pebble             

Mines Corp. v. Parnell                      , 215 P.3d 1064, 1075-76 (Alaska 2009); and then quoting                                                       Kritz,  

 170 P.3d at 192-93).       



                                                                               -10-                                                                          7290
  


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

                        a   contract   to   pay   interest  and   no   rate   specified.     But   on  

                        contracts interest at the rate of twelve per centum may be                                              

                        charged by express agreement of the parties, and no more.                                              [27]  



Thus, the statute consisted of two sentences, the first addressing situations where there  

                                                                                                                                                   



was  no  agreed-upon  interest  rate  and  the  second  addressing  contract  or  loan  

                                                                                                                                                   



commitments where there was an express interest rate.  As the following recitation will  

                                                                                                                                                     



show, these two sentences would become subsections (a) and (b), and this basic division  

                                                                                                                                              



still exists in the current statute.  

                                             



                        The territorial legislature made minor changes to the statute in 1913, 1933,  

                                                                                                                                                  

                                                                                                                                                28   The  

 1935, and 1939, but there were no relevant changes to the structure of the statute. 

                                                                                                                                                     



statute  first  significantly  changed  in  1962  with  the  formal  revision  of  the  Alaska  

                                                                                                                                               

Statutes.29         The revised statute was divided into subsections.  The first sentence became  

                                                                                                                                              



subsection  (a),  and  the categories covered  in  the first sentence were numbered  (1)  

                                                                                                                                                      



through (5).  The second sentence became subsection (b) and the organization of the  

                                                                                                                                                      



sentence was changed slightly.  After the 1962 revision AS 45.45.010 read:  

                                                                                                                                



                                    (a) The rate of interest in the state is six per cent a year  

                                                                                                                            

                        and no more on (1) money after it is due; (2) judgments and  

                                                                                                                              

                        decrees for the payment of money, except that a judgment or  

                                                                                                                                 

                        decree founded on a contract in writing providing for the  

                                                                                                                              

                        payment of interest until paid at a specified rate exceeding six  

                                                                                                                               

                        per cent a year and not exceeding 10 per cent a year bears  

                                                                                                                          

                        interest at the rate specified in the contract if the interest rate  

                                                                                                                              

                        is set out in the judgment or decree; (3) money received to the  

                                                                                                                               

                        use of another and retained beyond a reasonable time without  

                                                                                                                       

                        the owner's express or implied consent; (4) money due upon  

                                                                                                                           



            27           684 Compiled Laws Annotated (1913).                         



            28          See ch. 17,  1, SLA 1913; ch. 48,  1, SLA 1933; ch. 32,  1, SLA 1935;  

                                                                                                                                                  

ch. 31,  1, SLA 1939.  

                                



            29          Former AS 45.45.010 (1962).  

                                                                 



                                                                          -11-                                                                     7290
  


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

                                               the settlement of matured accounts from the day the balance                                                                                                                               

                                                is ascertained; or (5) money due or to become due where                                                                                                                                      

                                               there is a contract to pay interest and no rate is specified.                                                                                                           



                                                                       (b)  Interest at the rate of eight per cent may be charged                                                                                                       

                                               by express agreement of the parties in a contract.                                                                                          



But in dividing the statute into subsections and modernizing the language, there is no                                                                                                                                                                                                                    



indication that the legislature intended to make any substantive changes. The maximum                                                                                                                                                                                           



interest rate on contract or loan commitments where there was an express interest rate                                                                                                                                                                                                                



was governed entirely by the new subsection (b), while interest rates in other areas were                                                                                                                                                                                                         



governed by subsection (a).                                                           

                                                                                                                                                                                                                  30  but then made significant  

                                                The legislature made a minor change in 1968,                                                                                                                                                                                  



changes in 1969. In 1969 it first repealed subsection (a)(2) dealing with "judgments and  

                                                                                                                                                                                                                                                                                                       

                                                                                                                                 31         At the same time, it amended AS 09.30.070 to  

decrees for the payment of money."                                                                                                                                                                                                                                                                          

                                                                                                  

cover interest on judgments.32                                                                                 Second, the legislature significantly rewrote subsection  

                                                                                                                                                                                                                                                                              

                                                                                                                                                            33       For the first time, subsection (b) tied the  

(b) and added a subsection (c) to the statute.                                                                                                                                                                                                                                                           

                                                                                                                                   



maximum contract interest rate to the Federal Reserve rate, making it four percentage  

                                                                                                                                                                                                                                                                            



points  higher  than  the  Federal  Reserve  discount  rate  for  the  12th  Federal  Reserve  

                                                                                                                                                                                                                                                                                     

District, in effect until the end of 1970 when it would then reset to eight percent.34                                                                                                                                                                                                                The  

                                                                                                                                                                                                                                                                                                    



new subsection (c) for the first time created an exception to the usury statute for large  

                                                                                                                                                                                                                                                                                                 



loans,  specifically  for  loans  over  $500,000  processed  through  certain  financial  

                                                                                                                                                                                                                                                                                 



                        30                      Ch. 143,  20, SLA 1968.                                               



                        31                      Ch. 69,  2, SLA 1969.                                        



                        32                      Ch. 69,  1, SLA 1969.                                        



                        33                     See  ch. 94,  1-2, SLA 1969.                                                          



                        34                      Ch. 94,  1, SLA 1969.                                                               



                                                                                                                                                   -12-                                                                                                                                           7290
  


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

institutions, in effect until the end of 1970.                                                                                                                                                  35  In 1970 the Legislature extended the tie-  



                              35                            Ch. 94,  2, SLA 1969.                                                                                    In 1969 AS 45.45.010 read:                                                                               



                                                                                         (a)  The rate of interest in the state is six per cent a year
                                                                                                                                                       

                                                            and no more on (1) money after it is due; (2) Repealed by  2
                                                                                                                                                                                                  

                                                            ch 69 SLA 1969; (3) money received to the use of another
                                                                                                                                                                               

                                                            and retained beyond a reasonable time without the owner's
                                                                                                                                                                            

                                                            express    or    implied    consent;    (4)    money    due    upon    the
  

                                                            settlement of matured accounts from the day the balance is
                                                                                                                                                                                                       

                                                            ascertained; or (5) money due or to become due where there
                                                                                                                                                                                         

                                                            is a contract to pay interest and no rate is specified.
                                                                                                                                



                                                                                         (b)   Until   December   31,   1970,   during   any   calendar
  

                                                            quarter no interest may be charged by express agreement of
                                                                                                                                                                                                      

                                                           the parties in a contract which is more than four percentage
                                                                                                                                        

                                                           points above the federal reserve discount rate for the 12th
                                                                                                                                                                                          

                                                           Federal Reserve District that prevailed on the first day of the
                                                                                                                                                                                              

                                                           month preceding the commencement ofthat calendar quarter.
                                                                                                                                                                                                                      

                                                           Notice of the prevailing quarterly rate shall be provided by
                                                                                                                                                                                                  

                                                           the Department of Commerce. Conventional mortgage loans
                                                                                                                                                                                            

                                                            covering a one-                                                        to four-family dwelling entered into under
                                                                    

                                                           provisions of this subsection may be prepaid without penalty.
                                                                                                                                                                                                                  

                                                           After December 31, 1970, interest at the rate of eight per cent
                                                                                                                                                                                         

                                                           may be charged by express agreement of the parties in a
                                                                                                                                                                                                            

                                                            contract after that date.
                                                      



                                                                                         (c)   The   maximum rate                                                                                    of   interest   specified   in   this  

                                                            section   does   not   apply   to   transactions   involving  loans  

                                                           processed through Alaska financial institutions when there is                                                                                                                                                                                                       

                                                           participation by corresponding banks or institutional lenders                                                                                                                                                                              

                                                            in   other   states  or   countries   because   the   amount   of   the  

                                                           transaction exceeds the loan limitations on state banks under                                                                                                                                                                                     

                                                           AS 06.05.205(b) and on national banks under 12 U.S.C. 84  

                                                                                                                                                                                                                                                                                                               

                                                            and the regulations and rulings under that section and to those  

                                                                                                                                                                                                                                                                                                     

                                                            loans made by mutual savings banks, state chartered savings  

                                                                                                                                                                                                                                                                                                                     

                                                            and loan associations, and federally chartered savings and  

                                                                                                                                                                                                                                                                                                

                                                            loan  associations  which  exceed  10  per  cent  of  surplus,  

                                                                                                                                                                                                                                                                                                                                       (continued...)  



                                                                                                                                                                                        -13-                                                                                                                                                                                7290
  


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

in to the Federal Reserve rate in subsection (b) until February 15, 1972 and removed the                                                         

expiration provision from subsection (c).                              36  



                       In  1973  the  legislature  again  significantly  amended  AS  45.45.010.  

                                                                                                                                                       



Subsection (b) of the 1973 version of the usury law provided for an eight percent cap,  

                                                                                                                                               



except on loans made before April 15, 1975, for which the maximum rate was either four  

                                                                                                                                               

or four and one-half percentage points above the Federal Reserve rate.37                                                            The 1973  

                                                                                                                                             

amendment repealed subsection (c).38                               It also added subsections (d) through (h), which  

                                                                                                                                            



are not directly relevant to this case, except that subsection (e) affirmatively stated what  

                                                                                                                                              



subsection (b) implied, that "[i]nterest at a rate not to exceed eight per cent may be  

                                                                                                                                                  



charged by express agreement of the parties in a contract or loan commitment dated after  

                                                                                                                                               

April 14, 1975."39  

                  



            35	        (...continued)
  



                                                                                                                      

                       undivided profits and reserves for loan losses, and to those
  

                                                                                                                  

                       loans where the mortgagee is not a bank, mutual savings
  

                                                                                                                       

                       bank, or savings and loan association, and where the loan
  

                                                                                                                       

                       exceeds $500,000.   This provision remains in effect until
  

                                                            

                       December 31, 1970.
  



            36	        Ch. 239,  1-2, SLA 1970.  

                                                                         



            37	        Ch. 84,  1, SLA 1973.  

                                                                 



            38	        Ch. 84,  3, SLA 1973.  

                                                                 



            39         Ch. 84,  2, SLA 1973.  In 1973 AS 45.45.010 read, in relevant part, as  

                                                                                                                                                   

follows:  



                                   (a) The rate of interest in the state is six per cent a year  

                                                                                                                       

                       and no more on (1) money after it is due; (2) Repealed by  2  

                                                                                                                             

                       ch 69 SLA 1969; (3) money received to the use of another  

                                                                                                                  

                       and retained beyond a reasonable time without the owner's  

                                                                                                                 

                       express  or  implied  consent;  (4)  money  due  upon  the  

                                                                                                                        

                                                                                                                              (continued...)  



                                                                       -14-	                                                                 7290
  


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

           In 1974 the legislature introduced the language at the core of this case. The                                        



39         (...continued)
  



                                                                                                            

           settlement of matured accounts from the day the balance is
  

                                                                                                       

           ascertained; or (5) money due or to become due where there
  

                                                                                 

           is a contract to pay interest and no rate is specified.
  



                                                                                              

                      (b) No interest may be charged by express agreement  

                                                                                                       

           of the parties in a contract or loan commitment which is more  

                                                                                                        

           than eight per cent a year, except that the eight per cent a year  

                                                                                   

           rate may be exceeded under the following circumstances:  



                                                                                                          

                      (1) in a contract or loan commitment not involving real  

                                                                                                            

           estate or in a contract or loan commitment covering a one- to  

                                                                                                     

           four-family dwelling, dated after April 29, 1973 and before  

                                                                                                       

           April  15,  1975,  the  interest  rate  may  not  exceed  four  

                                                                                                 

           percentage  points  above  the  annual  rate charged  member  

                                                                                                         

           banks for advances by the 12th Federal Reserve District that  

                                                                                                         

           prevailed  on  the  first  day  of  the  month  preceding  the  

                                                                                                          

           commencement  of  the  calendar  quarter  during  which  the  

                                                                 

           contract or loan commitment is made;  



                                                                                                         

                      (2) in a contract or loan commitment involving real  

                                                                                                          

           estate or secured by a real estate mortgage or trust deed, not  

                                                                                                

           covered in (1) of this subsection, and dated after April 29,  

                                                                                                 

            1973 and before April 15, 1975, the interest rate may not  

                                                                                                    

           exceed four and one-half percentage points above the annual  

                                                                                                   

           rate charged member banks for advances by the 12th Federal  

                                                                                          

           Reserve District that prevailed on the first day of the month  

                                                                                                     

           preceding the commencement of the calendar quarter during  

                                                                                  

           which the contract or loan commitment is made.  



                                                                            

                      (c) Repealed by  3 ch 84 SLA 1973.  



                             

                      . . . .  



                                                                                                        

                      (e) Interest at a rate not to exceed eight per cent may  

                                                                                                  

           be charged by express agreement of the parties in a contract  

                                                                                            

           or loan commitment dated after April 14, 1975.  



                                                         -15-                                                               7290
  


----------------------- Page 16-----------------------

                                                                                                                                           40  

 1974 version of subsection (b) contained two sentences.                                                                                         The first made permanent the                                      



reference to the Federal Reserve rate, setting the maximum interest rate for all contract                                                                                                             



or loan commitments with express interest rates at "four percentage points above the                                                                                                                               



annual rate charged member banks for advances by the 12th Federal Reserve District that                                                                                                                           



prevailed on the 25th day of the month preceding the commencement of the calender                                                                                                                    

                                                                                                                                                              41   The second provided,  

quarter during which the contract or loan commitment is made."                                                                                                                                     



"A contract or loan commitment in which the principal amount exceeds $100,000 is  

                                                                                                                                                                                                                      

exempt from the limitation of this subsection."42  

                                                                                                                            



                 40               Ch. 146,  1, SLA 1974.                                         



                 41              Id.   



                 42              Id.   In 1974 the relevant portions of AS 45.45.010 read:                                                                        



                                                   (a) The rate of interest in the state is six per cent a year  

                                                                                                                                                                            

                                  and no more on (1) money after it is due; (2) Repealed by  2  

                                                                                                                                                                                     

                                  ch 69 SLA 1969; (3) money received to the use of another                                                                            

                                  and retained beyond a reasonable time without the owner's  

                                                                                                                                                                    

                                  express  or  implied  consent;  (4)  money  due  upon  the  

                                                                                                                                                                               

                                  settlement of matured accounts from the day the balance is  

                                                                                                                                                                                     

                                  ascertained; or (5) money due or to become due where there  

                                                                                                                                                                            

                                  is a contract to pay interest and no rate is specified.  

                                                                                                                                           



                                                   (b) No interest may be charged by express agreement
  

                                                                                                                                                               

                                  of the parties in a contract or loan commitment dated after the
  

                                                                                                                                                                                  

                                  effective date of this Act which is more than four percentage
  

                                                                                                                                                              

                                  points  above  the  annual  rate  charged  member  banks  for
  

                                                                                                                                                                                

                                  advances by the 12th Federal Reserve District that prevailed
  

                                                                                                                                                                  

                                  on the 25th day of the month preceding the commencement
  

                                                                

                                  of the calender quarter  during which the contract or loan
  

                                                                                                                                                                             

                                  commitment is made.   A contract or loan commitment in
  

                                                                                                                                                                                   

                                  whichtheprincipal amount exceeds $100,000 is exempt from
  

                                                                                                                                                                             

                                  the limitation of this subsection.
  

                                                                                       

                                                                                                                                                                                         (continued...)  



                                                                                                        -16-                                                                                                  7290
  


----------------------- Page 17-----------------------

                                           The meaning of the second sentence ofsubsection(b) was clearwhen it was                                                                                                                                                   



introduced in 1974:                                              for contract or loan commitments exceeding $100,000, the parties                                                                                                                             



could agree to any interest rate. As the Coopers explain, "The legislature exempted large                                                                                                                                                                           



loans 'from the limitations of this subsection' because subsection (b) was the only                                                                                                                                                                                



subsection that applied to contracts which specified interest rates. Subsection (a) did not                                                                                                                                                                               



apply to them."                                    This is because subsection (a) still read essentially the same as it did in                                                                                                                                               



the original 1900 statute, listing specific circumstances in which it applied:                                                                                                                                       



                                           The rate of interest in the state is six per cent a year and no                                                                                                                       

                                          more on (1) money after it is due; (2) Repealed by  2 ch 69                                                                                                                           

                                           SLA 1969; (3) money received to the use of another and                                                                                                                           

                                          retained   beyond   a   reasonable   time   without   the   owner's  

                                           express    or    implied    consent;    (4)    money  due    upon    the  

                                           settlement of matured accounts from the day the balance is                                                                                                                              

                                           ascertained; or (5) money due or to become due where there                                                                                                                    

                                           is a contract to pay interest and no rate is specified.                                                                                                            [43]  



Under subsection (a) as it existed at the time, the interest rate was six percent in specific  

                                                                                                                                                                                                                                                           



circumstances that did not include loans with express interest rates.  Indeed, at no time  

                                                                                                                                                                                                                                                                     



since 1900 had the first sentence of the usury statute governed contracts with express  

                                                                                                                                                                                                                                                           



interest rates.  Thus, when the exemption in subsection (b) was introduced, it could not  

                                                                                                                                                                                                                                                                         



have reverted loans over $100,000 back to subsection (a).  In short, contract and loan  

                                                                                                                                                                                                                                                                     



commitments with express interest rates and a principal amount exceeding $100,000 had  

                                                                                                                                                                                                                                                                        



no maximum interest rate under the 1974 version of AS 45.45.010.  

                                                                                                                                                                                    



                                           The  economic  realities  in  1974  also  support  this  reading  of  the  1974  

                                                                                                                                                                                                                                                                  



amendment.                                    The  Federal  Reserve  rate  reached  nearly  13%  in  1974,  which  under  

                                                                                                                                                                                                                                                                



                     42                    (...continued)  



                                                                                                                                                                                                                                                                          

Subsection (e), which had provided for an eight percent  maximum interest rate on  

                                                                                                                                                                                                              

contracts after April 14, 1975, was repealed.  Ch. 146,  4, SLA 1974.  



                     43                    Ch. 146,  1, SLA 1974.  

                                                                                                                           



                                                                                                                                   -17-                                                                                                                             7290
  


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

                                                                                                                                                                                       44  

subsection (b) made the maximum interest rate for small loans nearly 17%.                                                                                                                    But,  



according to Cox, the legislature intended that large loans have a maximum interest rate                                                                                                         



of only six percent, the interest rate in subsection (a) at the time. Requiring that all large                                                                                                



loans   have   an  interest   rate   so   far   below   the   market   rate   at   the   time   would   have  



dramatically discouraged lenders from issuing large business loans in the state, a result                                                                                                  

                                                                                       45  Instead, given the high, fluctuating interest rates  

the legislature certainly did                                  not intend.                                                                                                                     



at the time, the legislature decided that people with the finances to borrow large amounts  

                                                                                                                                                                                      



of money were best left to negotiate interest rates for themselves and that only smaller- 

                                                                                                                                                                                      



scale borrowers who were at greater risk of falling prey to usurious lending practices  

                                                                                                                                                                                    



would benefit from a maximum legal interest rate.  

                                                                                                           



                               In 1976 the legislature reorganized subsection (a) in order to raise the  

                                                                                                                                                                                                 



interest rate on money after it is due to eight percent.  The new subsection (a) contained  

                                                                                                                                                                                   

two sentences.46                        The first provided that the interest rate on money after it is due, which  

                                                                                                                                                                                           



had been the first enumerated item in the subsection, was eight percent "except as  

                                                                                                                                                                                                   

                                                                       47   The second maintained the six percent interest rate for  

provided in (b) of this section."                                                                                                                                                                  

                                                    

the other categories, which were renumbered.48   A separate 1976 amendment raised the  

                                                                                                                                                                                                  



maximum interest rate in subsection (b) from four to five percentage points above the  

                                                                                                                                                                                                  



                44             See id.   



                45             Cf.infra            note52           (1981 legislativehistory                                 expresslyexplaining                            legislature's  



recognition that free market rates are preferable to statutory rates).                                                                      



                46             Ch.   159,     1,  SLA   1976.  



                47             Id.  



                48             Id.   



                                                                                                -18-                                                                                         7290
  


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

                                                                                49                                                                                                                                                                                    50  

Federal Reserve rate.                                                                   The rest of subsection (b) remained the same.                                                                                                                                         Thus the 1976                         



amendments, including the addition of the phrase "except as provided in (b) of this                                                                                                                                                                                                                                     



section," did not change the structure of the usury statute. The plain meaning of the first                                                                                                                                                                                                                             



sentence of subsection (a) as it existed in 1976 was that the interest rate on money after                                                                                                                                                                                                                            



it is due was eight percent unless a contract specified a different interest rate, in which                                                                                                                                                                                                                    



case subsection (b) applied.                                              



                                                   In 1980 the legislature raised the interest rate on money after it is due to                                                                                                                                                                                                



 10.5% and deleted the second sentence of subsection (a), resulting in the current version                                                                                                                                                                                                                 



of subsection (a):                                                 "The rate of interest in the state is 10.5 percent a year and no more on                                                                                                                                                                                   



                         49                        Ch. 110,  1, SLA 1976.                                                                       



                         50                       Id.   In 1976 AS 45.45.010 read in relevant part:                                                                                                                  



                                                                            (a) The rate of interest in the state is eight per cent a                                                                                                                                           

                                                  year and no more on money after it is due except as provided  

                                                                                                                                                                                                                                                   

                                                   in (b) of this section. The rate of interest in the state is six per                                                                                                                                                  

                                                   cent a year and no more on (1) money received to the use of  

                                                                                                                                                                                                                                                                             

                                                   another and retained beyond a reasonable time without the  

                                                                                                                                                                                                                                                                        

                                                   owner's express or implied consent; (2) money due upon the  

                                                                                                                                                                                                                                                                         

                                                   settlement of matured accounts from the day the balance is  

                                                                                                                                                                                                                                                                              

                                                   ascertained; or (3) money due or to become due when there   

                                                   is a contract to pay interest and no rate is specified.  

                                                                                                                                                                                                               



                                                                            (b) No interest may be charged by express agreement  

                                                                                                                                                                                                                                             

                                                   of the parties in a contract or loan commitment dated after  

                                                                                                                                                                                                                                                                   

                                                  June 4, 1976 which is more than five percentage points above                                                                                                                                                 

                                                  the annual rate charged member banks for advances by the                                                                                                                                                              

                                                   12th Federal Reserve District that prevailed on the 25th day                                                                                                                                                        

                                                   of the month preceding the commencement of the calendar                                                                                                                                          

                                                   quarter  during  which  the  contract  or  loan  commitment  is  

                                                                                                                                                                                                                                                                             

                                                  made. A contract or loan commitment in which the principal  

                                                                                                                                                                                                                                                   

                                                   amount exceeds $100,000 is exempt from the limitation of  

                                                                                                                                                                                                                                                                            

                                                  this subsection.  

                                                                                                               



                                                                                                                                                            -19-                                                                                                                                                     7290
  


----------------------- Page 20-----------------------

                                                                                                                   51  

money after it is due except as provided in (b) of this section."                                                       Again nothing in this            



change evinces an intent to change the structure of AS 45.45.010.  Subsection (b) still   



exclusively governed contract or loan commitments with express interest rates.                                                           



                         Subsection (b) was amendedin 1981, lowering the                                            exemption in the second         



sentence from $100,000 to the current $25,000, as well as changing the maximum                                                               

                                                                                                                                          52     Finally,  

interest   rate   in  the   first   sentence   to   fluctuate   daily   instead   of   quarterly.                                                                 



            51           Ch. 107,  2, SLA 1980.                        



            52           Ch. 94,  1, SLA 1981.  The legislative history of the 1981 amendment  

                                                                                                                                          

shows the legislature believed there was no maximum interest rate on loans where the  

                                                                                                                                                          

principal exceeded the amount specified in the second sentence of subsection (b), which  

                                                                                                                                                     

it was changing from $100,000 to $25,000, and it shows the legislature exempted large  

                                                                                                                                                       

loans from the usury statute because it was worried that statutory maximum interest rates  

                                                                                                                                                        

would deter lending and harm the Alaska economy.  A "fact sheet" prepared for the  

                                                                                                                                                          

House  Committee  on  Labor  and  Commerce  explained  that  the  "purpose"  of  the  

                                                                                                                                                         

amendment was "to reduce the number of loans on which the interest rate is set by law  

                                                                                                                                                         

rather than by free market forces":  

                                                  



                                     At  present,  the  usury  statute  applies  to  all  loans  

                                                                                                                             

                         originated in Alaska under $100,000. . . .  

                                                                                                   



                                     . . . .  

                                            



                                     If SB 19, as amended, were to become law . . . the  

                                                                                                                               

                         usury ceiling would only apply to those loans under $25,000;  

                                                                                                                        

                         i.e. those loans between $25,000-$100,000 upon which the  

                                                                                                                                  

                         interest  rate  is  presently  set  by  law,  would  be  made  at  

                                                                                                                                   

                         whatever the lender and borrower decided was the market  

                                                                                                                          

                         rate (essentially the cost of the money to the lender plus a  

                                                                                                                                     

                         reasonable profit) . . . .  

                                                                 



H. Labor & Commerce Comm., Fact Sheet:  SB 19, 12th Leg., 1st Sess., Alaska Leg.  

                                                                                                                                                        

Microfiche Collection No. 1778.  The "fact sheet" also explained the "rationale" of the  

                                                                                                                                                          

amendment was that "[a]lthough usury ceilings were originally designed to protect  

                                                                                                                                                   

borrowers from unduly high interest rates, it is more likely that in today's market, they  

                                                                                                                                                        

tend to deny financing to relatively riskier (or smaller) borrowers."  Id.   In a Senate  

                                                                                                                                                   

                                                                                                                                       (continued...)  



                                                                            -20-                                                                      7290
  


----------------------- Page 21-----------------------

subsection (b) was again amended in 2011, after the promissory note in this case, to                                                           



make the maximum interest rate in the first sentence the greater of ten percent or five                                                     

                                                                                          53     The  result  was  the  current  

percentage   points   above   the   Federal   Reserve   rate.                                                                        



AS 45.45.010.  

       



                       This statutory history confirms that the legislature did not intend loans  

                                                                                                                             



exempt from the limitation of subsection (b) to be governed by the interest rate in  

                                                                                                                                               



subsection (a). Rather, subsection (b) governs all contract or loan commitments with an  

                                                                                                                                               



express interest rate, and subsection (a) applies only to debts where no interest rate was  

                                                                                                                                            



specified.  Alaska Statute 45.45.010 does not prohibit parties from contracting for any  

                                                                                                                  



interest rate in contract or loan commitments with a principal exceeding $25,000.  

                                                                                                                           



                      Because the loan in this case was for over $25,000, the 20% annual interest  

                                                                                                                                      



rate was not usurious.  We therefore affirm the superior court's ruling on this point.  

                                                                                                                                    



           B.	         The Superior Court Did Not Abuse Its Discretion When Considering  

                                                                                                                            

                       The Coopers' Motion For Reconsideration.  

                                                                       



                      Alaska  Civil  Rule  77(k)(1)(i)  allows  a  party  to  "move  the  court  to  

                                                                                                                                              



           52          (...continued)  



                                                                                                                                              

Labor and Commerce Committee hearing the 1981 amendment's sponsor expressed the  

                                                                                                                                   

view that "usury limits, such as the rate and the dollar amount, actually prohibit financing  

                                                                                                                               

of high-risk enterprises, and certainly in Alaska we have many high-risk enterprises,  

                                                                                                                                         

particularly in our natural resource area."  Comments of Sen. Patrick M. Rodey at 6:13- 

                                                                                                                                          

6:31, Hearing on S.B. 19 Before the S. Labor & Commerce Comm., 12th Leg., 1st Sess.  

                                         

(Feb.           9,       1981),            http://www.akleg.gov/ftr/archives/1981/SLAC /  

                                                                                                                                               

CB50C10-SLAC-03-810209.mp3.  And in a House Finance Committee hearing one of  

                                                                                                                                          

his aides explained that limiting usury laws "helps the consumer [because] at times when  

                                                                                                                                           

the cost of the money to the financial institutions is more than is allowable by law,  

                                                                                                                                      

they're just not going to be making the loans."  Comments of Jim Kelly, aide to Sen.  

                                                                                                                                              

Rodey at 45:35-45:49, Hearing on S.B. 19 Before the H. Finance Comm., 12th Leg., 1st  

                                                     

Sess.         (May           27,       1981),           http://www.akleg.gov/ftr/archives/1981/HFIN/  

97-HFIN-810000.mp3.  



           53          Ch. 29,  1, SLA 2011.  

                                                                



                                                                     -21-	                                                               7290
  


----------------------- Page 22-----------------------

reconsider a ruling previously decided if, in reaching its decision . . . [t]he court has                                                                                                                                                 



overlooked, misapplied or failed to consider a statute, decision or principle directly                                                                                                                                        



controlling." After the superior court originally ruled in favor of Cox in interpreting the                                                                                                                                                



usury statute, the Coopers moved for reconsideration, contending that the superior court                                                                                                                                              



                                      ha[d] misapplied a statute (AS 45.45.010), ha[d] overlooked                                                                              

                                      or misapplied three Alaska Supreme Court decisions which                                                                                               

                                      [were] directly controlling (                                                  Riley v. Northern Commercial                          

                                      Co.,  Rockstad v. Erikson                                           , and         Crissey v. Alaska USA Federal                                   

                                      Credit Union                          ) and ha[d] also overlooked or misconceived                                               

                                      material facts (the legislative history of AS 45.45.010 and the                                                                                                 

                                      long   standing   practice   in   the   industry)   in   reaching   its  

                                                               [54]  

                                      decision.                         



                                      The superior court refused to consider any evidence about industry practice  

                                                                                                                                                                                                                              



in reaching its decision.  But the statutory history the Coopers presented convinced the  

                                                                                                                                                                                                                                           



court that it had misapplied AS 45.45.010.   The superior court therefore granted the  

                                                                                                                                                                                                                                          



motion for reconsideration.  

                                                                               



                                      The superior court did not abuse its discretion.  The Coopers argued that  

                                                                            



the superior court misapplied a statute and the superior court agreed. This falls squarely  

                                                                                                                                                                                                                            



within Rule 77(k)(1)(i), which envisions a trial court revisiting a ruling that misapplied  

                                                                                                                                                                                                                     



the law.  

           



                                      Cox argues that the superior court abused its discretion by considering  

                                                                                                                                                                                                                  



evidence or issues that had not previously been presented before the court. But the court  

                                                                                                                                                                                                                                      



did not consider any new evidence.  It expressly disregarded the new factual evidence  

                                                



the Coopers submitted about industry practice and limited its reconsideration to statutory  

                                                                                                                                                                                                                            



history materials.  Statutory history is legal material to be analyzed; it is not evidence of  

                                                                                                                                                                                                                                              



                   54  

                                                                   

                                      Footnotes omitted.  



                                                                                                                    -22-                                                                                                                         7290  


----------------------- Page 23-----------------------

                55  

 facts.               And the Coopers did not raise any new legal theories on reconsideration:                                                                                                                                        they  



 merely providedstatutory                                                historybecausethey                                       believed,correctly,                                   that thesuperior court                        



 had made a legal error.                          



                                      The Coopers' motion for reconsideration and the superior court's ruling on                                                                                                                              

                                                                                                                                                        56       Trial judges should have the  

 it are exactly what Rule 77(k) is designed to permit.                                                                                                                                                                                     



 opportunity to review prior rulings and to correct mistakes.  In this case the superior  

                                                                                                                                                                                                                            



 court properly considered the Coopers' arguments, realized its mistake, and corrected it.  

                                                                                                                                                                                                                                                       



 We   affirm   the   superior   court's   decisions   when   considering   the   motion   for  

                                                                                                                                                                                                                                        



 reconsideration.  



                    C.	               Rule 82 Governs The Award of Attorney's Fees The Coopers Incurred  

                                                                                                                                                                                                                         

                                      Defending This Lawsuit.  

                                                                                      



                                      Alaska Statute 34.20.070 allows for non-judicial foreclosure sales.  The  

                                                                                                                                                                                                                                        



 statute also states that a default may be cured at any time before the sale by paying "the  

                                                                                                                                                                                                                                        



 sum then in default . . . and attorney and other foreclosure fees and costs actually  

                                                                                                                                                                                                                             

 incurred by the beneficiary and trustee due to the default."57                                                                                                                 The deed of trust in this  

                                                                                                                                                                                                                                          



                   55                 See Daggett v. Feeney                                          , 397 P.3d 297, 304 (Alaska 2017) ("Interpretation                                                 



 of a statute is a question of law to                                                                     which we apply our independent judgment; we                                                                                      

 interpret the statute according to reason, practicality, and common sense, considering the                                                                                                                                                 

 meaning of the statute's language, its legislative history, and its purpose." (quoting                                                                                                                                    

Adamson v. Municipality of Anchorage                                                                                , 333 P.3d 5, 11 (Alaska 2014)));                                                                    Kaiser v.   

 Sakata, 40 P.3d 800, 805 n.15 (Alaska 2002) (describing legislative history as a "legal                                                                                                                                         

 source for our analysis" of a statute).                                        



                   56                 See In re Adoption of Hannah L., 390 P.3d 1153, 1157 (Alaska 2017)  

                                                                                                                                                                                                                                   

 ("Rule 77(k)'s limited purpose is 'to remedy mistakes in judicial decision-making where  

                                                                                                                                                                                                                                   

 grounds exist, while recognizing the need for  a fair and efficient administration of  

                                                                                                                                                                                                                                             

justice.' " (quoting Magden v. Alaska USA Fed. Credit Union, 36 P.3d 659, 663 (Alaska  

                                                                                                                                                                                                                               

 2001))).  



                   57                 AS 34.20.070(b).  

                                                 



                                                                                                                     -23-	                                                                                                            7290
  


----------------------- Page 24-----------------------

case provided for a foreclosure sale and the deduction of "all costs, fees and expenses of                                                                                                                                        



Trustee and of this Trust including cost of evidence of title and reasonable counsel fees                                                                                                                                    



in connection with sale."                                           The Coopers included attorney's fees incurred in connection                                                                           



with the foreclosure sale in their offset bid worksheet.                                                           



                                    Alaska Civil Rule 82 provides for an award of partial attorney's fees to the                                                                                                                



prevailing party in a case "[e]xcept as otherwise provided by law or agreed to by the                                                                                                                                          

                       58     The superior court awarded partial attorney's fees incurred in defending the  

parties."                                                                                                                                                                                                                      



lawsuit to the Coopers pursuant to Rule 82.   Cox contends that this was error.   We  

                                                                                                                                                                                                                            



disagree.  



                                    In Madden v. Alaska Mortgage Group we addressed the applicability of  

                                                                                                                                                                                                                                  

Rule 82 in litigation about foreclosure sales.59   In Madden, "[t]he Maddens attempted to  

                                                                                                                                                                                                                                  



block [a] foreclosure sale, asserting that Alaska Mortgage had overstated the amount due  

                                                                                                                                                                                                                              



on its deed of trust . . . .  Alaska Mortgage responded by filing a complaint in superior  

                                                                

                                                                                                                              60      At the conclusion of the lawsuit the  

court, seeking to establish the amount owing."                                                                                                                                                                                 

                                                                                                         



superior court "awarded full reasonable attorney's fees to Alaska Mortgage, ruling that  

                                                                                                                                                                                                                             



the award was appropriate as a cost of foreclosure recoverable by the trustee under the  

                                                                                                                                                                                                                               

express terms of the deed of trust."61  

                                                                             

                                    We vacated the award.62   Based on the attorney's fees language in the deed  

                                                                                                                                                                                                                           



of trust, which was similar to the language in the deed of trust in this case, we determined  

                                                                                                                                                                                                          



                  58                Alaska R. Civ. P. 82(a).                        



                  59                54 P.3d 265, 270-71 (Alaska 2002).                                             



                  60               Id.  at 267.   



                  61               Id.  



                  62               Id.  at 271.   



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----------------------- Page 25-----------------------

that Alaska Mortgage was entitled to full attorney's fees "only insofar as [it] performed                                                  



                                                                                                     63  

duties that would ordinarily be required of the trustee."                                                                                         

                                                                                                          Since the duties of a trustee  



                                                                                                                                              

usually consist only of the duty "to conduct a fair sale in the event of the trustor's  



                                                                                                                                        

default," and since neither AS 34.20.070 nor the deed of trust "require[d] or authorize[d]  



                                                                                                                                      

the trustee to pursue a legal action to determine the amount owed to the beneficiary,"  



                                                                                                                                                          

Alaska Mortgage was not entitled to full attorney's fees incurred in connection with its  

        64   Thus Alaska Mortgage was  

suit.                                                   



                        entitled to collect full reasonable attorney's fees under the  

                                                                                                                                

                        deed only to the extent that it incurred those fees on behalf of  

                                                                                                                                  

                        the trustee in connection with arranging the foreclosure sale  

                                                                                                                               

                        itself; correspondingly, its right to recover fees incurred in  

                                                                                                                                  

                        connection with its suit to establish the amount owing on the  

                                                                                                                                

                        deed of trust should be determined under Civil Rule 82's  

                                                                                                                             

                        provisions allowing partial fees to prevailing parties.[65]  

                                                                                                            



                        The Coopers adhered to the principle we set out in Madden :  they sought  

                                                                                                                                                  



attorney's  fees  incurred  in  connection  with  the  foreclosure  sale  in  their  offset  bid  

                                                                                                                                                       



worksheet, and they separately sought a Rule 82 award for partial fees incurred in  

                                                                                                                                                          



defending thelawsuit. The superior court correctly granted theCoopers' motionfor Rule  

                                                                                                                                                      



82 attorney's fees incurred in the lawsuit.  

                                                              



                        Cox attempts to distinguish this case from Madden, noting that he brought  

                                                                                                                                                



suit against the Coopers, instead of the other way around.  He argues that "[i]n order to  

                                                                                                                                                           



proceed in their deed of trust foreclosure the Coopers did have a duty to assert their  

                                                                                                                                                     



claims and defenses in support of the deed of trust demand."  Cox does not identify  

                                                                                                                                                



where he finds this duty.  We agree with the Coopers that they "defended against Cox's  

                                                                                                                                                   



            63          Id.  at 270.   



            64          Id.  at 270-71.   



            65          Id.  at 271.   



                                                                           -25-                                                                     7290
  


----------------------- Page 26-----------------------

 claims not because [they] had some 'duty' to do so under the deed of trust, but because                                                                                                                                                                                                                                                          



 [they] disagreed with the claims Cox asserted in his lawsuit."                                                                                                                                                                  



                                                          Cox also equates the Rule 82 award with a deficiency judgment and notes                                                                                                                                                                                                                            



that   by   choosing   a   non-judicial   foreclosure   the   Coopers   forfeited   their   right   to   a  

                                                                                            66  But the Rule 82 fee award was not a deficiency judgment, and  

 deficiency judgment.                                                                                                                                                                                                      



 it had no bearing on the non-judicial foreclosure.  It was a standard prevailing-party  

                                                                                                                                                                                                                                                                



 award of attorney's fees.  

                                                                                      



                                                          We affirm the superior court's attorney's fees award.  

                                                                                                                                                                                                                                                                 



V.                           CONCLUSION  



                                                          The superior court's rulings are AFFIRMED in all respects.  

                                                                                                                                                                                                                                                                                      



                             66                           See  AS 34.20.100 ("When a sale is made by a trustee under a deed of trust,                                                                                                                                                                                                                          



 as authorized by AS 34.20.070-34.20.130, no other or further action or proceeding may                                                                                                                                                                                                                                                                            

be taken nor judgment entered against the maker or the surety or guarantor of the maker,                                                                                                                                                                                                                                                               

 on the obligation secured by the deed of trust for a deficiency."). A deficiency judgment                                                                                                                                                                                                                                                 

 is "[a] judgment against a debtor for the unpaid balance of the debt if a foreclosure sale                                                                                                                                                                                                                                                                        

 or a sale of repossessed personal property fails to yield the full amount of the debt due."                                                                                                                                                                                                                                                                                           

Judgment, B                                            LACK'S  LAW  DICTIONARY  (10th ed. 2014).                                                                                                                 



                                                                                                                                                                                  -26-                                                                                                                                                                          7290
  

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