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Himschoot and Legislative Affairs Agency v. Shanley (1/5/96), 908 P 2d 1035
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THE SUPREME COURT OF THE STATE OF ALASKA
REBECCA HIMSCHOOT and the )
STATE OF ALASKA, LEGISLATIVE ) Supreme Court Nos. S-5813/5843
AFFAIRS AGENCY, )
) Superior Court No.
Appellants and ) 1JU-91-47 CI
v. ) O P I N I O N
THOMAS EDWARD SHANLEY, ) [No. 4307 - January 5, 1996]
Appellee and )
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Larry R. Weeks, Judge.
Appearances: J. Ron Sutcliffe, Assistant
Attorney General, and Bruce M. Botelho,
Attorney General, Juneau, for Appel
lants/Cross-Appellees. David V. George,
Juneau, for Appellee/Cross-Appellant.
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton and Eastaugh, Justices.
I. FACTS AND PROCEEDINGS
In January 1989, while employed by the Alaska Marine
Highway System (AMHS), Thomas Shanley was in a car accident. The
vehicle in which Shanley rode was owned and driven by Rick
Garrison. The vehicle that struck Garrison's vehicle was owned
by the State of Alaska, and driven by the State's agent, Rebecca
Himschoot of the Legislative Affairs Agency.
Shanley sued the State to recover damages for the
injuries he sustained in the accident. The State raised the
affirmative defense that the Alaska Workers' Compensation Act
(Act) was the exclusive remedy available to Shanley.1
Twenty-one months after the suit was filed the State
moved to stay Shanley's case pending a determination by the
Alaska Workers' Compensation Board (Board) as to whether the
injury arose out of and in the course of Shanley's employment.
Shanley opposed the motion arguing that (1) there was no claim
pending before the Board because he had never filed a claim; (2)
a stay was pointless because the State did not have standing to
file a claim before the Board on Shanley's behalf; and (3) the
superior court already had taken jurisdiction of the issue.
After receiving Shanley's opposition the State filed a petition
with the Board to determine whether Shanley's injuries arose out
of his employment. The superior court denied the State's motion
for a stay, the State moved to reconsider, and the court again
denied the State's motion.
Following the superior court's denial of the State's
motion for a stay, the parties stipulated that the court would
determine whether or not the Act applied to the facts of this
case in a summary proceeding. If the Act applied, it would be
Shanley's only remedy. If the Act did not apply, the parties
would proceed to a jury trial on the issue of damages, as the
State had admitted liability.
At the summary proceeding hearing the witnesses were
Shanley; Shanley's supervisor, George Reifenstein; and the three
other men present in the car at the time of the accident: Lee
Gavin of Oak Harbor, Washington, Grant Smith of Ketchikan, and
Rick Garrison of Juneau.
Many facts were undisputed. Gavin, Smith, and Garrison
were all in the food business. The three men met in Juneau to
discuss bidding on a food contract with AMHS. AMHS was
developing a new program for ordering food. In the past, AMHS
had purchased food from numerous distributors; under the new plan
AMHS would enter one contract for all its food needs.
On the morning of the accident, Gavin, Smith, and
Garrison went to AMHS's offices to discuss procuring the
contract. At some point, the three men ended up in Garrison's
car with Shanley. Shanley did not fill out a leave slip for the
time he was gone from work or tell his supervisor, Reifenstein,
that he was going to a meeting.
The four men drove to the Juneau airport. They planned
to eat lunch before Smith caught an afternoon flight back to
Ketchikan. On the way to the airport, the accident occurred.
After the accident, they continued to the airport and had lunch.
There were several disputes in the testimony relevant
to whether Shanley's lunch was personal or work related. The
main factual disputes were (1) was Shanley at the pre-lunch
meeting at AMHS? (2) did Shanley and the three other passengers
leave for lunch together, or did the three other men pick Shanley
up later? (3) did the men discuss business in the car? (4) did
the men discuss business at lunch?
The first disputed issue was whether or not Shanley was
at the meeting at AMHS. Smith and Garrison testified that
Shanley was at the meeting, Gavin did not remember but did not
believe Shanley was there, and Shanley testified that he was not
at the meeting. Reifenstein was not at the meeting, but he
testified that he believed Shanley was there.
The second disputed issue was whether Shanley got in
the car at the same time as the other three men, or whether they
picked him up at his office after the meeting. Smith believed
they all got in the car together. Garrison was unsure; he
thought they all got in together, but admitted he could be
mistaken. Shanley and Gavin both testified that the three men
picked Shanley up later.
The third disputed issue was whether the men discussed
business in the car on the way to the airport. Shanley could not
remember, Smith could not remember either but assumed they did,
Garrison testified they did talk about business in the car, and
Gavin testified they did not.
The final disputed issue was whether the men discussed
business at lunch. Smith and Garrison testified that they did
discuss business at lunch. Shanley did not remember, but assumed
they probably talked about some business. Gavin testified that
they did not discuss business.
The parties focused on three other areas as relevant to
whether Shanley was attending a business lunch: whether lunch
with business associates was a normal part of Shanley's job,
Shanley's lunch hour and leave procedures, and Shanley's
relationship with Gavin.
Shanley and Reifenstein both testified that lunch with
business associates was not a normal part of Shanley's job.
While it was permissible and foreseeable, it was uncommon;
Shanley only recalls going on business lunches twice over a
several-year period. However, both Shanley and Reifenstein agree
that Shanley had permission to meet with people in the food
business to discuss the new single-buyer program. In fact,
meeting with these people was part of his job, although a
different department was in charge of selecting who would receive
the state contract.
Shanley and Reifenstein also both testified regarding
the normal work hours, lunch hours, and leave proceedings.
Shanley's normal work hours were 8:00 A.M. to 4:30 P.M., with a
one hour lunch break. Shanley's lunch break was flexible,
although he usually left from 1:00 to 2:00 to swim at the local
pool. If Shanley left during the day for personal reasons, he
would turn in a leave slip or make up the time at the end of the
day. If Shanley worked more than seven and one-half hours per
day he would receive comp time or be paid overtime.
In Shanley's answers to interrogatories, he claimed he
went to a meeting with Reifenstein after his long lunch break on
January 19, and then went home due to pain from the accident.
The State seemed to assume that this meant Shanley did not stay
until 4:30. Therefore, the State apparently concluded, the lunch
would have been part of his work day. However, at the summary
proceedings, Shanley testified that the meeting lasted until
after 4:30 P.M. Therefore, according to Shanley, he made up the
time he spent on his long, personal lunch at the end of the day.
Reifenstein does not remember a meeting. Shanley did not turn in
a leave slip for his long lunch, but he also did not receive comp
time or overtime pay.
Finally, Shanley and Gavin both testified about their
personal relationship. Both men claimed that they were good
friends who were going out to lunch for purely personal reasons.
However, Shanley was impeached on cross-examination by his
earlier interrogatory, in which he claimed he had no personal
relationship with any of the other men involved in the accident.
The State also implied that Gavin was unreliable because he knew
his friend Shanley would recover only if the lunch was personal.
Finally, the State pointed out that Gavin had refused to disclose
his personal tax returns to the State in his own claim for
damages and had claimed to be working at the time of the
The superior court ruled that Shanley's injuries did
not arise out of his employment. It stated:
The court believes that the purpose of
the lunch very well may have been business
for the three people in the car other than
[Shanley].2 However, the preponderance of
the evidence was that neither [Shanley] nor
his employer regarded this lunch trip as
business. The supervisor might well have
approved of a meeting for this length of time
for the purposes of business with these
individuals if he had been asked but there is
nothing to suggest that was done.3
The State has the burden to prove that
[Shanley] was acting in the scope of
employment.4 The State did not prove that
[Shanley] was going to anything other than
lunch or that it was for purposes of
The court believes that for the purposes
of this case the issue is how the employee
and employer regarded the use of time, not
how others may have viewed it.
It stretches credulity to believe it was not.
3 The circumstantial evidence surrounding the
events is strong that the other three man
[sic] in the car regarded this as a business
trip. The evidence that [Shanley] did not
regard it as a business trip was also strong.
It included [Shanley's] testimony that he had
only gone out with vendors in such a
situation only once or twice in all his years
with the ferry system, [Shanley] didn't think
it was business, he wasn't at the meeting in
the morning, other witnesses didn't know if
he was at the morning meeting or were
obviously confused. The others picked
[Shanley] up outside his employment. He had
obviously not been with them immediately
before the lunch discussing business. He
made no special arrangements to stay gone for
business purposes. No witness said that
business was discussed in the car before the
wreck, it is hard to believe that much
business was discussed after the wreck given
the witnesses' description of the wreck.
4 Alaska Pulp v. United Workers
International, 791 P.2d 1008 (Alaska 1990).
The case then proceeded to trial and a jury awarded Shanley
$113,507.00 in damages.
After the jury verdict, Shanley was awarded prejudgment
interest from the date the complaint was served on the
State, February 5, 1991.
II. THE STATE'S APPEAL
A.The Superior Court Did Not Err in Refusing to Stay
Two of our cases are relevant to the question whether
the court should have stayed the suit. The first is
Alaska Workmen's Compensation Board v. Marsh, 550 P.2d
805 (Alaska 1976). Marsh was injured by a member of
the Loyal Order of the Moose on an evening in which he
had been bartending at the Moose Lodge. Id. at 806.
Marsh sued the Loyal Order of the Moose for negligence
and filed for worker's compensation benefits. Id. The
parties then agreed that Marsh would abandon any
"action in the superior court and instead assert his
rights, if any, for benefits" before the Board. Id. at
807. The Board refused to decide Marsh's claim, in
part, because Marsh had a suit pending in the superior
court. Id. On appeal, the superior court held that
the Board should hear the compensation claim. Id. We
agreed and held that there was no concurrent
jurisdiction; because Marsh had given up any right to
adjudication by the superior court only the Board had
jurisdiction. Id. at 808-09. However, we added a
Were it not for the settlement agreement, the
superior court and the workmen's compensation
board would have concurrent jurisdiction on
the issue of Marsh's employee status at the
time of injury.
Id. at 808, n.8 (citing Sea World Corp. v. Superior Court, 110
Cal. Rptr. 232, 234 (Cal. App. 1973)).
We affirmed that the superior court and the Board have
concurrent jurisdiction in Ehredt v. DeHavilland
Aircraft Co. of Canada, 705 P.2d 446 (Alaska 1985). In
Ehredt, Walters was killed in a plane crash while
piloting a plane owned by Ehredt and manufactured by
DeHavilland. Id. at 449. Walters' widow filed a
workers' compensation claim and sued both Ehredt and
DeHavilland in superior court. Id. Ehredt sought a
stay in court to allow the Board to decide the claim;
the court denied the stay. Id. Walters' widow
prevailed at trial and assigned all her rights against
Ehredt to DeHavilland. Id.
On appeal, Ehredt argued that the "filing of a workers'
compensation claim prior to his civil suit deprived the
superior court of jurisdiction; therefore, its refusal
to stay the action at law constitutes reversible
error." Id. at 449-50. We cited Marsh for the
proposition that the superior court and the Board had
concurrent jurisdiction. Id. at 450. However, the
question of "whether prior filing of a workers'
compensation claim abrogates the concurrent
jurisdiction of the superior court to hear the merits
of the claim" had not been decided. Id. We noted that
the Nevada Supreme Court had recently held that a trial
court could proceed with an action at law as long as
the Board had made no final disposition.2 Id. We
agreed with the Nevada decision and held:
The policy goal is to coordinate the work of the courts
and administrative agencies, therefore the
question whether a court should defer depends
on the unique facts of every case.
Mechanical application of the rule does not
further its underlying policy given the facts
of this controversy. The major issue before
the court was the construction of an
insurance contract, which is a question of
law uniquely suited to judicial resolution.
Furthermore, Ehredt waited until six weeks
before the trial date, after much discovery
had taken place, to request a stay.
Moreover, no action had been taken in the
administrative proceeding. We therefore
conclude that the superior court did not
abuse its discretion when it refused to grant
Id. (citation omitted).
Shanley argues that the issue of concurrent
jurisdiction is settled in Alaska: the superior court
and the Board both have jurisdiction over workers'
compensation cases under Ehredt. The State disagrees
and argues that Ehredt involved a legal question that
was "uniquely suited to . . . judicial resolution."
Thus, the State argues, unlike the present fact-based
question, superior court jurisdiction was appropriate
in Ehredt. The State concludes that Ehredt does not
extend to fact-based questions.
The State's arguments do not withstand scrutiny. We
rejected a bright line test in Ehredt and stated that
"the question of whether a court should defer depends
on the unique facts of every case." Ehredt, 705 P.2d at
450. We then highlighted the facts that affected our
decision in Ehredt, namely the delay in requesting a
stay, and the fact that no action had been taken in the
In this case, the question of whether or not Shanley
was working while injured is not uniquely suited for
judicial resolution. However, the two other factors
listed in Ehredt are present in this case. The State
waited twenty months after it filed its answer to
request a stay. Furthermore, the State requested the
stay before the Board had taken any action -- before,
in fact, a claim had even been filed with the Board.
Therefore, as in Ehredt, we conclude that the superior
court did not abuse its discretion when it refused to
grant the stay.3
B.The Superior Court Did Not Err in Refusing to Apply
the Statutory Presumption of Compensability.
Alaska Statute 23.30.120(a)(1) raises a presumption in
favor of compensability. The statute states:
(a) In a proceeding for the enforcement of a claim for
compensation under this chapter it is
presumed, in the absence of substantial
evidence to the contrary, that
(1) the claim comes within the provisions of
The State argues that this presumption should have operated in
this case, forcing Shanley to prove that the accident
was not work related.
The superior court found that "[t]he State has the
burden to prove that [Shanley] was acting in the scope
of employment. The State did not prove that [Shanley]
was going to anything other than lunch or that it was
for purposes of employment."4 (Footnote omitted.)
Whether or not the presumption applies is not a
question of first impression. We addressed a similar
issue in Ruble v. Arctic General, Inc., 598 P.2d 95
(Alaska 1979). In Ruble, JIJ Nelson (JIJ) was hired to
construct a highway. Id. at 96. JIJ hired Arctic
General (Arctic) to supply and maintain the necessary
equipment, and Arctic hired Ruble to operate some of
the equipment. Id. To comply with state and federal
requirements, JIJ put all the Arctic operators on its
payroll, although Arctic remitted Ruble's wages to JIJ
after JIJ paid the equipment rental fees. Id. Ruble
was injured, and filed a workers' compensation claim
against JIJ. Id. He then filed a negligence suit
against Arctic. Id.
One issue in Ruble was whether the presumption of
compensability applied in the negligence action. We
held it did not: "[T]here are neither presumptions
. . . for or against finding an employment relation
with respect to a particular employer." Id. at 97.
See also Avila v. Northrup King Co., 880 P.2d 717, 725
(Ariz. App. 1994) ("That presumption, however, only
arises where the employee attempts to hold a particular
employer liable for workers' compensation benefits. It
does not apply where, as in this case, an employee who
has workers' compensation coverage seeks to hold a
particular employer liable as a third party.").
Another case bearing on this issue is Alaska Pulp Corp.
v. United Paperworkers International Union, 791 P.2d
1008 (Alaska 1990). In Alaska Pulp, Gernandt was
injured while picketing his former employer, Alaska
Pulp Corporation, as part of a union demonstration.
Id. at 1009. Gernandt was receiving strike benefits
from his union at the time. Id. at 1010. Therefore,
Alaska Pulp argued, the presumption of compensability
raised the presumption that Gernandt was a union
employee when he was injured. Id. at 1010-11. We
rejected Alaska Pulp's claim, stating "we do not think
that the pro-worker presumption of AS 23.30.120(1) was
intended to facilitate proof of an employee status
contrary to that asserted by the worker." Id. at 1011.
Ruble and Alaska Pulp illustrate that the presumption
of compensability may not be used against an injured
worker. Thus, the superior court properly placed the
burden of proving work relatedness on the State.
C.The Superior Court Did Not Err in Finding that
Shanley's Injury Did Not Arise out of and in the Course
The State argues that Shanley's injury arose out of his
employment for AMHS under a theory that the trip in the
car had a dual personal and business purpose, and that
the latter was at least a substantial reason for the
In Anchorage Roofing Co. v. Gonzales, 507
P.2d 501, 504 (Alaska 1973), the court quotes
Mr. Justice Cardozo in the landmark case of
Marks' Dependents v. Gray, 167 N.E. 181 (N.Y.
We do not say that service to the employer must be
the sole cause of the journey, but
at least it must be a concurrent
cause. To establish liability
[employment relatedness], the
inference must be permissible that
the trip would have been made
though the private errand had been
cancelled. . . . The test in brief
is this: If the work of the
employee creates the necessity for
travel, he is in the course of his
Anchorage Roofing at 504.
Shanley responds, quoting a like standard:
[W]hen a trip serves both business and personal
purposes, it is a personal trip if the trip
would have been made in spite of the absence
of the business purposes and would have been
dropped in the event of the failure of the
private purpose, though the business errand
remained undone; it is a business trip if a
trip of this kind would have been made in
spite of the failure or absence of the
private purpose, because the service to be
performed for the employer would have caused
the journey to be made by someone even if it
had not coincided with the employee's
1 Larson, The Law of Workmen's Compensation ' 18.12, at
The superior court, noting that the burden of proof was
on the State, found that "[t]he State did not prove
that [Shanley] was going to anything other than lunch
or that it was for purposes of employment."5 Thus, the
superior court concluded that the evidence did not show
by a preponderance standard that business was one of
the reasons Shanley was in the car.6
Shanley testified that he would not have gone to lunch
if his friend, Gavin, had cancelled. In addition,
Shanley testified he didn't really remember much talk
about business or consider the lunch part of his job.
Gavin testified that the men did not talk about
business in the car or at lunch. Although there was
much contrary evidence, the two men's testimony was
evidence upon which the superior court could rely to
find that business was not a purpose of the trip. We
conclude that the superior court did not err in finding
that the accident did not arise out of and in the
course of employment.
Shanley received prejudgment interest from the date the
complaint was served on the State, February 5, 1991.
He argued that interest should have begun to run on
December 24, 1989. Under AS 09.30.070(b), "prejudgment
interest accrues from the day process is served on the
defendant or the day the defendant received written
notification that an injury has occurred and that a
claim may be brought against the defendant for that
injury, whichever is earlier." The statute goes on to
state that "written notification must be of a nature
that would lead a prudent person to believe that a
claim will be made against the person receiving the
notification, for personal injury . . . ." AS
Shanley argues that the State received written
notification of his claim on December 24, 1989, and
supports his argument with the following facts. A
State claims adjuster wrote Shanley on December 13,
1989. The letter, in its entirety, stated:
It is my understanding that in talking with Mr. Gavin
you were injured in an accident on January
19, 1989 and it is also my understanding that
you are currently represented by an attorney.
Would you please forward this letter to your
attorney immediately as I will need a letter
of representation from him, and I will want
to talk to him.
On December 21, 1989, Shanley's lawyer responded by
writing the State's adjuster. Shanley's attorney
stated: "I have undertaken the representation of Mr.
Shanley but am not prepared to discuss the case with
you at this time." Shanley argues that the date this
letter was mailed, plus three days for delivery
(December 24, 1989), is the day the State received
written notice that a claim would be made on his
The State contends that the issue is whether Shanley
gave anything that "constitutes notice of intent to sue
as required by AS 09.30.070." The State argues that a
letter that merely states representation and refuses to
discuss a case should not qualify as written
The superior court found that neither the State's
letter to Shanley, nor Shanley's attorney's response
met "the requirements of AS 9.30.070(b). Interest
should commence to run when the complaint was served on
We agree with Shanley. In our view a prudent person
upon receipt of Shanley's lawyer's letter in response
to that of the adjuster would believe that a claim
would be made against the State for Shanley's injuries.8
We therefore hold that the superior court erred in
calculating prejudgment interest from the date the
complaint was filed, rather than December 24, 1989.
We AFFIRM the judgment except as to the date from which
prejudgment interest was calculated. The award of
prejudgment interest is VACATED and this case is
REMANDED for calculation of prejudgment interest from
December 24, 1989.
1 AS 23.30.055 provides:
The liability of an employer prescribed
in AS 23.30.045 is exclusive and in place of
all other liability of the employer and any
fellow employee to the employee, the
employee's legal representative, husband or
wife, parents, dependents, next of kin, and
anyone otherwise entitled to recover damages
from the employer or fellow employee at law
or in admiralty on account of the injury or
death. The liability of the employer is
exclusive even if the employee's claim is
barred under AS 23.30.022. However, if an
employer fails to secure payment of compensa
tion as required by this chapter, an injured
employee or the employee's legal representa
tive in case death results from the injury
may elect to claim compensation under this
chapter, or to maintain an action against the
employer at law or in admiralty for damages
on account of the injury or death. In that
action the defendant may not plead as a
defense that the injury was caused by the
negligence of a fellow servant, or that the
employee assumed the risk of the employment,
or that the injury was due to the
contributory negligence of the employee.
2 Although we held otherwise, we noted that
Professor Larson's treatise stated that the majority of
jurisdictions held that "it is an abuse of discretion
for a court to refuse to stay a civil action initiated
after a workers' compensation action is filed."
Ehredt, 705 P.2d at 450 (citing 2A Arthur Larson, The
Law of Workmen's Compensation ' 67.33, at 12-111
(1983)). This is no longer true. The most recent
edition of Larson states, "If claimant has brought a
compensation claim, and while it is actually pending .
. . attempts to . . . follow the action-at-law road,
this attempt may be denied." See 2A Arthur Larson, The
Law of Workmen's Compensation ' 67.33, at 12-175 & 12-
176 n.96.1 (1994).
3 We will not reverse a trial court decision not to
grant a stay unless the court abused its discretion.
Ehredt, 705 P.2d at 450.
4 Whether the statutory presumption of
compensability applies is a question of law. We review
questions of law de novo, adopting the rule of law
which is "most persuasive in light of precedent, reason
and policy." Langdon v. Champion, 745 P.2d 1371, 1372
n.2 (Alaska 1987) (citations omitted).
5 The superior court also stated, "The court
believes that for the purposes of this case the issue
is how the employee and employer regarded the use of
time, not how others may have viewed it." The State
argues that this is legally incorrect. We disagree
with the State, and hold that when neither the employee
nor the employer regard an act as for the purpose of
business, other people's opinions are not relevant.
Cf. 1 Larson, The Law of Workmen's Compensation ' 18.18
at 4-284) ("When two or more persons go on an
automobile trip together, the character of the trip as
business or personal must be judged separately as to
each individual. The fact that, as to others, the trip
would have gone forward for business reasons if the
particular claimant's personal purpose had failed, is
immaterial; the question is whether this claimant would
have joined in this trip if his own personal business
6 We will not reverse the superior court's factual
findings unless they are clearly erroneous. City of
Nome v. Catholic Bishops of N. Alaska, 707 P.2d 870
(Alaska 1985) ("[W]hen a court is the fact finder for
an otherwise administrative proceeding, the traditional
'clearly erroneous' standard of review applies.").
7 Because the issue is whether, as a matter of law,
a prudent person would have believed that a claim would
be made against the State, we review the superior
court's decision de novo, adopting the rule of law
which is "most persuasive in light of precedent, reason
and policy." Langdon v. Champion, 745 P.2d 1371, 1372
n.2 (Alaska 1987) (citations omitted).
8 It appears that the State did realize this. On
December 27, 1989, the State's adjuster wrote a
I have found out that claimant Mr. Shanley is . . .
complaining of injuries however he is
represented as you can see by the attached
letter. . . . I am following this claim
rather closely however, since Mr. Shanley has
already been represented by an attorney and
since Mr. Gavin seems to be rather defensive
I seriously question if we will be able to
keep this from having attorneys in our