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L. Houston et al v. A. Racine (3/1/91), 806 P 2d 848
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring typographical or other formal
errors to the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska 99501, in
order that corrections may be made prior to permanent
THE SUPREME COURT FOR THE STATE OF ALASKA
LEE HOUSTON & ASSOCIATES, ) Supreme Court Nos.
LTD. and KENNETH KRASSELT, ) S-3286/3299
Appellants and )
Cross-Appellees, ) Trial Court No.
) 3AN-88-3052 Civil
) O P I N I O N
ALETHA RACINE, )
Appellee and ) [No. 3668 - March 1, 1991]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District at
Milton M. Souter, Judge.
Appearances: Brett von Gemmingen,
Anchorage, for Appellants/Cross-Appellees Lee
Houston & Associates and Krasselt. Lawrence
A. Pederson, Paul J. Nangle & Associates,
Anchorage, for Appellee/Cross-Appellant
Before: Matthews, Chief Justice,
Rabinowitz, Burke, Compton, and Moore,
MATTHEWS, Chief Justice.
BURKE, Justice, with whom MOORE,
Justice, joins, dissenting.
This case involves several claims arising from alleged
misconduct of a real estate agent. On appeal, we must review
trial court determinations with respect to (1) when the claims
accrued for purposes of the statute of limitations, (2) which
statute(s) of limitation apply to the various claims, and, if any
of the claims were timely brought, (3) whether the plaintiff
submitted sufficient evidence to avoid a directed verdict on her
prayer for two items of damages (lost profits and punitive
I. FACTS AND PROCEEDINGS
Aletha and Wayne Racine lived together for
approximately thirty years before Wayne's death in 1981. The two
were not married, but together they operated a business known as
"The Jockey Club,"located in Moose Pass, Alaska. The property
upon which the club was located was owned by Jockey Club, Inc.
Aletha claimed an interest in the corporation following Wayne's
death intestate in 1981. Wayne Racine's two daughters, Carol
Racine Morgan and Betty Racine Farris (who represented the estate
of Wayne Racine as personal representatives), also claimed an
interest in the corporation.
In 1983 Aletha Racine and the Estate of Wayne Racine
entered into a listing agreement with Kenneth Krasselt, a real
estate agent with Lee Houston & Associates, Ltd., to sell the
Jockey Club property. On January 23, 1984 Marcia Crowell made a
written offer to purchase the Jockey Club property on the
following terms: a total purchase price of $355,000 with
$100,000 cash at closing, and the remainder financed with a
$255,000 promissory note secured by a third deed of trust on a
property known as the "Grizzly Trailer Court" located in
Anchorage. The offer was accepted by Aletha Racine and the
Estate of Wayne Racine the following day, and closing took place
on or about March 16, 1984. Aletha Racine alleges that
Krasselt represented to her prior to sale of the property and
during the closing that she was receiving "an exceptional deal,"
and that she had "nothing to worry about"because she would be
receiving a third deed of trust position, with only $70,000 to
$80,000 in debt ahead of her,17 on a property worth over $600,000.
In fact, the documents signed at the closing by Aletha Racine and
the representatives of the Estate of Wayne Racine indicate that
the sellers were receiving a sixth deed of trust position, with
over $410,000 in superior indebtedness on the property.18
Shortly after the closing, Aletha Racine and the Estate
of Wayne Racine reached a settlement in their ongoing dispute
over the Racine Estate. As part of this settlement, the Estate
assigned to Aletha Racine all of its interest in the secured
promissory note received from Marcia Crowell in exchange for the
Jockey Club property. Crowell continued to make regular payments
to Racine on the note until September 1985, when her payments
ceased. After unsuccessful attempts to bring about resumption of
payments, Racine contacted an attorney, Jesse C. Bell, in January
1986. Bell apparently consulted with Racine, reviewed the escrow
materials she had brought to him, and promised to prepare a
demand letter. In February 1986 Bell contacted Racine to advise
her that no response to the demand letter had been received from
Apparently no further action was taken on the matter
until April 1986 when Racine received a foreclosure notice from
the holder of a senior deed on the Grizzly Trailer Court
property. Racine thereafter contacted Bell, who investigated the
matter and informed Racine (1) that she held a sixth, rather than
a third, deed of trust position on the property and (2) that
there was hundreds of thousands of dollars in debt superior to
hers, rather than the $70,000 to $80,000 she had anticipated.
Racine filed suit against Krasselt and Lee Houston &
Associates (Lee Houston) on March 21, 1988, alleging several tort
claims, including negligence, misrepresentation, and fraud. The
complaint also contained a cause of action for breach of
professional contract of employment. Racine sought punitive as
well as compensatory damages, including damages for "lost
profits" which Racine might have received had she been able to
foreclose upon a third deed of trust and sell the property at
Prior to trial, Lee Houston sought summary judgment on
the grounds that (1) although one of Racine's claims was framed
in breach of contract terms, her claims were in fact based upon
breach of a duty of care implied by law and thus sounded in tort
rather than contract, and (2) all of Racine's claims were barred
by the two-year statute of limitations contained in AS 09.10.070.19
The motion was denied.20
Trial commenced, and, at the conclusion of Racine's
case, Lee Houston moved for a directed verdict on Racine's claims
of negligence, misrepresentation and fraud, on the ground that
they were barred by the two-year statute of limitations;21 it also
sought a directed verdict on Racine's claims for lost profits and
punitive damages. The trial court granted Lee Houston's motion,
concluding (1) that Racine knew or should have known of Lee
Houston's alleged misfeasance no later than February 1986 (when
Racine was informed by counsel that no answer to the demand
letter was forthcoming) and, because she filed her complaint in
March 1988, her tort claims were thus barred by the two-year
statute of limitations; (2) Racine's claim for lost profits was
too speculative to be submitted to the jury; and (3) reasonable
minds could not differ that Racine had failed to introduce clear
and convincing evidence demonstrating entitlement to punitive
However, over Lee Houston's objections, the trial court
submitted the case to the jury on the breach of contract claim.
The jury returned a verdict in favor of Racine.
Lee Houston appeals, contending that the trial court
erred in submitting the case to the jury on the breach of
contract claim. Racine cross-appeals, contending that the trial
court erred in directing a verdict on her tort claims and in
rejecting her claims for punitive damages and lost profits.
A. Racine's causes of action accrued more than two
years, but less than six years, from the date she filed
her complaint on March 21, 1988.
Racine claims that at the time she signed the closing
documents she thought she was receiving a third deed of trust on
the Grizzly Trailer Park property; an encumbrance inferior to
only $70,000 to $80,000 worth of indebtedness. She in fact
received a sixth deed of trust inferior to over $400,000 of
indebtedness. Racine contends that she did not discover the
discrepancy until April 1986, when she received a foreclosure
notice from a senior deed holder and subsequent investigation by
her attorney revealed the terms of the closing documents. She
therefore argues that the statute(s) of limitation applicable to
her causes of action did not begin to run until April 1986,
within two years of March 21, 1988, the date she brought the
Where the plaintiff does not actually know of the
existence of elements essential to her cause of action, under the
"discovery rule,"the limitations period does not begin to run
until "a reasonable person [in like circumstances would have]
enough information to alert that person that he or she has a
potential cause of action or should begin an inquiry to protect
his or her rights." Mine Safety Appliances Co. v. Stiles, 756
P.2d 288, 291 (Alaska 1988). The evidence here, when viewed in a
light most favorable to Racine, creates a reasonable inference
that Racine did not in fact know of her actual security position
until April 1986; however, we agree with the trial court that no
later than February 1986 a "reasonable person" in Racine's
situation would have possessed "enough information" concerning
Lee Houston's alleged misfeasance to "begin an inquiry" to
protect her rights.22
Racine signed several documents at the closing which
revealed the true nature of the security position she was
receiving, including one which expressly stated that the Grizzly
Trailer Park property was encumbered by some $410,000 in debt
"which [the sellers] are inferior to." Several months later she
received separate copies of the closing documents, which she
could, presumably, review at her leisure. Racine testified that
she did review the documents, then placed them in a filing
cabinet. In September 1985 she learned of Crowell's default, but
did not then investigate her potential remedies or security
position. Not until January 1986 did she contact her attorney,
who also claims to have reviewed the escrow documents provided by
Racine. In February 1986 the attorney informed Racine of
Crowell's failure to respond to a demand letter, but she
continued to delay investigation of her potential remedies or
security position until April 1986, when a superior creditor
informed her of its own foreclosure action on the property.
Given these facts, we believe that the superior court
correctly concluded that reasonable minds could not differ on the
question whether Racine should have begun investigation into her
security interest no later than February 1986. By that time,
Crowell's payments were five months overdue, she had not
responded to a demand for payment, and both Racine and her
attorney had reviewed the closing documents. Her claims thus
accrued more than two years before March 21, 1988, the date she
brought the action.
B. Racine's breach of contract action, whether
regarded as an action upon a fiduciary duty arising
from the agreement or as professional malpractice, was
timely brought within the six-year limitation period
provided by AS 09.10.050.
We have held that the "gravamen"of the plaintiff's
claim determines whether the "contract"or "tort" statute of
limitation applies. That is, if the plaintiff's claim sounds in
contract, the six-year limitation period of AS 09.10.05023
applies; if it sounds in tort, the two-year period of AS
09.10.07024 applies. See Van Horn Lodge, Inc. v. White, 627 P.2d
641, 643 (Alaska 1981); Austin v. Fulton Ins. Co., 444 P.2d 536,
538-39 (Alaska 1968).
Lee Houston contends that Racine brought a breach of
contract claim only as a matter of form, not substance. It
argues that Racine's claim sounds in tort as a claim of
professional malpractice, rather than in contract as a breach of
the listing agreement. Lee Houston points out that under the
agreement it expressly promised only two things: (1) to "use due
diligence in procuring a purchaser"and (2) to "submit this
listing to the multiple listing service within seventy-two
hours." Racine does not claim that either of these specific
promises were breached and, according to Lee Houston, allegations
that it failed to use reasonable care in securing for Racine a
closing in conformity with the sale agreement, or that it failed
to use reasonable care in disclosing the terms of the closing
documents, are in substance allegations of tortious conduct
(i.e., negligence) and are therefore governed by AS 09.10.070.
Lee Houston relies on Van Horn Lodge, where, consistent
with Lee Houston's argument in the present case, we classified an
attorney malpractice claim as a tort (i.e., negligence) because
there was no allegation of a breach of a "particular" promise,
and "the claim that [the attorneys] breached an implied term of
their contract of employment, to render competent and diligent
legal services, [was] only a claim that they failed to exercise
due care."25 627 P.2d at 643. We reasoned that the duty of due
care was "imposed by law,"and that "[t]he contract only gave
rise to the duty." Id.
Racine responds that her claim lies in contract because
the listing agreement gave rise to fiduciary duties owed, and
allegedly breached, by Lee Houston. Among the fiduciary duties
owed by real estate agents to their clients are the duty to
"exercise reasonable care, skill, and judgment in securing for
the principal the best bargain possible"and the duty to make
"full, fair, and timely disclosure to the principal" of known
facts material to the principal's interests. Black v. Dahl, 625
P.2d 876, 881 (Alaska 1981). Racine claims that because such
duties arise in contract, an alleged breach thereof comes within
Racine's position also finds support in our case law.
In Bibo v. Jeffrey's Restaurant, 770 P.2d 290 (Alaska 1989) we
held that an alleged breach of a fiduciary duty by a corporate
director (the fiduciary duty to honestly and diligently direct
corporate business) is, in essence, a claim upon "implied
contract"and thus comes within AS 09.10.050.26 Id. at 295-96.
Bibo and Van Horn Lodge are difficult to reconcile.
Both cases involved alleged professional incompetence. In
neither case was it alleged that the defendant promised
(expressly or impliedly) to do a particular thing and then failed
to perform.27 Rather, to use the language of Van Horn Lodge, in
both cases "[t]he duty that [was] allegedly breached was . . .
imposed by law. The contract only gave rise to the duty[.]" 627
P.2d at 643. In Bibo, the director-corporation agreement gave
rise to a fiduciary duty to "honestly and diligently direct the
business of the corporation." 770 P.2d at 295. In Van Horn
Lodge, the attorney-client agreement gave rise to a duty to
render "competent and diligent legal services." 627 P.2d at 643.
Thus, in both cases, we dealt with a professional's alleged
breach of a duty of due care which was implied by law as a result
of a contractual undertaking. Yet in one case the claim was
deemed to be in contract, while in the other case the claim was
deemed to be in tort. This disparity cannot be meaningfully
justified by the formalistic distinction that in Van Horn Lodge
the claim was characterized as malpractice, whereas in Bibo the
claim was characterized as breach of fiduciary duties. "`This
court should avoid applications of the law which lead to
different substantive results based upon distinctions having
their source solely in the niceties of pleading and not in the
underlying realities.'" Jones v. Wadsworth, 791 P.2d 1013, 1017,
(quoting Higa v. Mirikitani, 517 P.2d 1, 4-5 (Haw. 1973).
The substantial irreconcilability of these cases
results from the limited utility of the "gravamen"test in the
context of claims of professional incompetence which may be
reasonably said to arise either in tort or in contract. Id.
Therefore, to resolve the statute of limitations question
presented by this case, we believe that there is a need to re-
examine the scope of the so-called "tort" and "contract"
statutes. In doing so, we are mindful of the need for
consistency and clarity in this quite confusing area of law. See
To begin with, we point out that AS 09.10.070 and AS
09.10.050 do not create a tort-contract dichotomy. AS 09.10.070
states, in relevant part: "No person may bring an action . . .
for libel, slander, assault, battery, seduction, false
imprisonment, or for any injury to the person or rights of
another not arising on contract and not specifically provided for
otherwise . . . unless commenced within two years." By its own
terms, this provision extends to, but not beyond, personal torts28
unless the action is for an injury to the "rights of another not
arising on contract and not specifically provided for otherwise."
(Emphasis added.) Thus, for claims that do not involve personal,
reputational or dignitary injury, the right(s) allegedly
infringed upon must "not aris[e] on contract."29 This suggests
the inapplicability of AS 09.10.070 to actions arising out of
professional service relationships which primarily involve
economic injury, since, as already indicated, the duty allegedly
breached does in part arise from the contract.
On the other hand, AS 09.10.050 contains language which
suggests inclusion of professional service relationship actions.
In relevant part, the statute applies to an action "upon a
contract or liability." (Emphasis added.) Unless we are to
ignore the "or liability" language, the statute must be
interpreted as applying to a category of actions broader than
those based only on contract principles. Indeed, "[l]iability is
a broad legal term which is usually held to include every kind of
legal obligation, responsibility or duty . . . . Liability may
arise from contract, express or implied, from duty imposed by
law, or by judgment of a court, or as a consequence of tort
committed." Mayfield v. First National Bank of Chattanooga, 137
F.2d 1013, 1019 (6th Cir. 1943); see also Black's Law Dictionary
823 (5th ed. 1979). Because of the breadth of such a provision,
other "contract" statutes have been held to apply to actions
arising out of professional service relationships. See Higa v.
Mirikitani, 517 P.2d 1, 5 (Haw. 1973) (statute of limitations
applicable to actions upon a "contract, obligation, or liability"
encompasses attorney malpractice actions "which have as their
gravamen injury to intangible property interests"); Neel v.
Magana, Olney, Levy, Cathcart & Gelfand, 491 P.2d 421, 424 (Cal.
1971); 2 A.L.R. 4th 300-303 (1980) (collecting cases which treat
statutes of limitations for actions upon a "`contract,
obligation, or liability' or the like"as a "hybrid" statute).
We believe now, as we did when we decided Wadsworth, that this
interpretation has "considerable merit."30 791 P.2d at 1017.
Two other considerations support application of AS
09.10.050, rather than AS 09.10.070, to the present claim.
First, although the defense of the statute of limitations is a
legitimate one, it is generally disfavored by the courts. Jenkins
v. Daniels, 751 P.2d 19, 22 (Alaska 1988). Therefore, doubts as
to which of two statutes is applicable in a given case should be
resolved in favor of applying the statute containing the longer
limitations period. See id. at 22 n.6; see also Bibo, 770 P.2d
at 296 (opting for application of AS 09.10.050 over AS 09.10.070
"because of the preference given to the longer period of
limitations when two periods reasonably may apply").
Second, application of a six-year limitation period,
rather than a two-year period, to claims arising out of
professional service relationships involving economic loss is
consistent with the primary purpose of the statutes of
limitations. The statutes are intended to encourage prompt
prosecution of claims and thus avoid injustices which may result
from lost evidence, faded memories and disappearing witnesses.
Haakanson v. Wakefield Seafoods, Inc., 600 P.2d 1087, 1090
(Alaska 1979). Actions like the present one involving economic
loss are often based largely on documentary evidence31 not unaided
recollections which quickly grow stale. On the other hand, a
shorter limitations period is consistent with the more evanescent
nature of evidence which is frequently found in cases involving
personal, reputational or dignitary injuries.
For the foregoing reasons, we hold that the present
case involves action upon a "contract or liability"for purposes
of AS 09.10.050, and is therefore subject to a six-year
limitation period. To the extent that Van Horn Lodge is
inconsistent, it is overruled. Accordingly, the decision of the
trial court to submit Racine's breach of contract claim to the
jury is affirmed.
C. The trial court did not err in directing a verdict
against Racine on her claims for lost profits and
Racine sought damages for "lost profits"on the theory
that, had there actually been only $70,000 to $80,000 of
indebtedness ahead of her on the Grizzly Trailer Court property,
she could have foreclosed upon the property, purchased it at
auction, paid off the senior creditors, and sold it for its
market value of between $500,000 and $600,000. The trial court
directed a verdict on the issue, reasoning, in part, that Racine
failed to introduce evidence sufficient to lead reasonable jurors
to conclude that she had proven lost profit damages with
reasonable certainty.32 This ruling was correct.
As we have explained:
Loss of profits damages have been
awarded in a variety of civil contexts,
including tort actions . . . [and] contract
actions . . . . In any case seeking loss of
profits, such damages must be "reasonably
certain": the trier of fact must be able to
determine the amount of lost profits from
evidence on the record and reasonable
inferences therefrom, not from mere
speculation and wishful thinking.
State v. Hammer, 550 P.2d 820, 824-25 (Alaska 1976) (footnotes
omitted). Here, the only evidence of lost profits introduced by
Racine was evidence tending to suggest that the property had a
fair market value of between $500,000 and $600,000 at the time of
default, that Racine had $80,000 in her possession at the time of
the default and that she "could get more money if [she] needed
it." As the trial court observed, there was no evidence from
which a jury could have estimated the price at which the property
would have sold at a foreclosure sale, or the likelihood that
Racine would or could have outbid other bidders (including junior
creditors) hoping to make the same "profits" on the property
sought by Racine. The directed verdict on the issue is therefore
Racine also appeals the trail court's directed verdict
against her on the issue of punitive damages. While there is not
a simple tort-contract dichotomy determining the applicable
statute of limitations, there is for determining whether punitive
damages are recoverable. We have consistently maintained that
"[p]unitive damages are not recoverable for breach of contract
unless the conduct constituting the breach constitutes an
independent tort." ARCO Alaska, Inc. v. Akers, 753 P.2d 1150,
1153 (Alaska 1988); see also Great Western Savings Bank v. George
W. Easley Co., 778 P.2d 569, 580 (Alaska 1989) ("punitive damages
are not normally allowed on a breach of contract claim unless the
conduct would also be a tort"); Walt v. State, 751 P.2d 1345,
1354 (Alaska 1988) (punitive damages unavailable because claimant
"assert[ed] no recognizable tort claims"); Wien Air Alaska v.
Bubbel, 723 P.2d 627, 630-31 (Alaska 1986).33 Thus, it would seem
that we must decide whether Racine's hybrid action is a "tort"
for purposes of determining the availability of punitive damages.
However, we need not address this question. Even if we
assume that punitive damages are recoverable in actions such as
the present one, the trial court properly ruled that they could
not be recovered in this case. "Punitive damages may not be
awarded in an action, whether in tort, contract, or otherwise,
unless supported by clear and convincing evidence." AS
09.17.020. Specifically, the plaintiff must prove by clear and
convincing evidence that the defendant's conduct was outrageous,
such as acts done with malice, bad motive, or reckless
indifference to the interests of another. See Hayes v. Xerox
Corp., 718 P.2d 929, 934 (Alaska 1986). "If the evidence does
not give rise to an inference of actual malice or conduct
sufficiently outrageous to be deemed equivalent to actual malice,
then the trial court need not submit the issue of punitive
damages to the jury." Id. at 935.
Here, the only evidence Racine offers in support of her
punitive damages claim is her own allegation that during the
closing Mr. Krasselt told her that she was receiving a third deed
of trust position. While reasonable jurors could thus believe
that a misrepresentation occurred, they would have no basis for
determining that Krasselt's mental state rose to a level of
culpability equivalent to actual malice. The misrepresentation
alone does not provide a reasonable basis for a clear and
convincing inference that it was made in conscious disregard of
the terms of the closing documents, rather than the result of a
careless oversight. The trial court's ruling directing a verdict
on the issue was therefore correct.
17 The Grizzly Trailer Court property was encumbered by,
inter alia, a first deed of trust for $18,000 and a second deed
of trust for $60,000.
18 The escrow instructions signed by Aletha Racine state in
part that the "[p]resent indebtedness on [the Grizzly Trailer
Court property] is $410,698.08 as of 3/16/84 which [the sellers]
are inferior to." The deed of trust signed by Racine specified
five superior deeds of trust. The title insurance policy
likewise revealed the senior encumbrances.
19 AS 09.10.070 is set forth infra at n.8. A six-year
limitations period is provided for by AS 09.10.050, which is set
forth infra at n.7.
20 Racine cross-moved for partial summary judgment and that
motion was likewise denied.
21 As to Racine's fraud claim, Lee Houston alternatively
sought a directed verdict based upon insufficient evidence.
Although the trial court declined to rule on this alternative
theory in light of its statute of limitations ruling, it strongly
suggested that it would otherwise have concluded that the
evidence on the fraud claim was insufficient as a matter of law
to support a jury verdict.
22 In reviewing the trial court's directed verdict on this
question, we must determine whether the evidence, when viewed in
a light most favorable to Racine, the non-moving party, is such
that reasonable persons could not differ in their judgment. See
Korean Air Lines Co., Ltd. v. State, 779 P.2d 333, 338 (Alaska
1989); see also Rauschenberger v. Radetsky, 745 P.2d 640, 643
(Colo. 1987) ("[T]he question of whether a party discovered or
reasonably should have discovered an injury . . . in most
circumstances involves determination of questions of fact to be
made by the fact-finder rather than by the trial judge.").
23 AS 09.10.050 provides that
[n]o person may bring an action (1) upon
a contract or liability, express or implied,
excepting those mentioned in AS 09.10.040 or
09.10.055; (2) for waste or trespass upon
real property; or (3) for taking, detaining,
or injuring personal property, including an
action for its specific recovery, except
those mentioned in AS 09.10.055; unless
commenced within six years.
24 AS 09.10.070 provides that
[n]o person may bring an action (1) for
libel, slander, assault, battery, seduction,
false imprisonment, or for any injury to the
person or rights of another not arising on
contract and not specifically provided
otherwise; (2) upon a statute for a
forfeiture or penalty to the state; or (3)
upon a liability created by statute, other
than a penalty or forfeiture; unless
commenced within two years.
25 Recently, in Jones v. Wadsworth, 791 P.2d 1013 (Alaska
1990), we called into question the validity of the Van Horn Lodge
distinction between breaches of "particular" promises and
breaches of "implied"promises. Id. at 1016-17. However, we
found it unnecessary to resolve the question because the case
then before us came within the former category and was therefore
clearly governed by AS 09.10.050 as an action "upon a contract."
Id. at 1017. Whether the breach of an implied promise (such as
an implied promise to use due care) also came within AS 09.10.050
was not decided.
26 We noted a split of authority on the issue, but opted for
a contract, rather than tort, classification "because of the
preference given to the longer period of limitations when two
periods reasonably may apply." 770 P.2d at 295-96.
27 A claim based on the alleged breach of a specific, express
or implied-in-fact term of a contract would come within AS
09.10.050 as an action "upon a contract . . . express or
implied." See Wettanen v. Cowper, 749 P.2d 362, 364 (Alaska
1988) (observing that an argument to the effect that AS 09.10.050
applied to an attorney malpractice action where the attorney
failed to appear for trial was "not without plausibility"on the
basis that it was "implicit if not explicit"that an attorney
retained to represent a client will attend trial).
28 A "[p]ersonal tort . . . involv[es] . . . an injury to the
person or to the reputation or feelings, as distinguished from an
injury or damage to real or personal property, called a `property
tort.'" Black's Law Dictionary 1335 (5th ed 1979).
Property torts are generally governed by AS 09.10.050. That
is, AS 09.10.050 applies to claims "for waste or trespass upon
real property . . . or . . . for taking, detaining, or injuring
personal property . . . ." See e.g., Vest v. First National Bank
of Fairbanks, 659 P.2d 1233, 1234 (Alaska 1983) (action for
conversion governed by six-year period of AS 09.10.050); Kodiak
Elec. Ass'n, Inc. v. DeLaval Turbine, Inc., 694 P.2d 150, 156
(Alaska 1984) (strict liability and negligence claims governed by
09.10.050 because they involved injury to personal property).
We express no view as to whether the statutory phrase "not
arising on contract"also modifies "injury to the person"as that
question is not involved in this case.
29 An example of a claim not involving a personal,
reputational or dignitary injury (i.e., involving economic loss),
and not arising on contract, would be a claim of fraud or
misrepresentation not based on fiduciary duties owed by a
30 However, as we also pointed out, the question presented in
Wadsworth did not require reconsideration of the approach we took
in Van Horn Lodge, because the case clearly came within AS
09.10.050 as an action upon a specific, express contractual
undertaking. See 791 P.2d at 1017.
31 For example, in the present case, much of the evidence
related to Lee Houston's alleged negligence in handling the
closing is documented in the sale agreement (which included the
promise of a third deed of trust) and various closing documents
(which reveal a transfer of a sixth deed of trust).
32 A directed verdict is proper only if the evidence, when
viewed in a light most favorable to the non-moving party, is such
that reasonable minds could not differ in their judgment. See
33 In Bubbel, we also stated that punitive damages are
"proper in a contract action [if] the offensive conduct was
outrageous . . .", 723 P.2d at 630, but our more recent cases
have embraced a more limited view also expressed in Bubbel that
"`courts in contract cases do not award damages to punish the
party in breach or to serve as an example to others unless the
conduct constituting the breach is also a tort for which punitive
damages are recoverable.'" Id. at 631, (quoting Restatement
(Second) of Contracts 355, comment a (1981)).