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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Wasser & Winters Company v. Ritchie Bros. Auctioneers (America), Inc. (05/23/2008) sp-6270
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| WASSER & WINTERS COMPANY, | ) | |
| ) Supreme Court Nos. S- 12581/12611 | ||
| Appellant/Cross-Appellee, | ) | |
| ) Superior Court No. 3AN-04-9230 CI | ||
| v. | ) | |
| ) O P I N I O N | ||
| RITCHIE BROS. AUCTIONEERS | ) | |
| (AMERICA | ), INC., | ) No. 6270 May 23, 2008 |
| ) | ||
| Appellee/Cross-Appellant. | ) | |
| ) | ||
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Mark Rindner, Judge.
Appearances: Patrick G. Gilmore and
Christopher J. Slottee, Atkinson, Conway &
Gagnon, Anchorage, for Appellant. Michael A.
Grisham, Dorsey & Whitney, LLP, Anchorage,
for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Bryner,
Justice, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
A creditor authorized an auctioneer to sell seven
pieces of equipment in which the creditor held a security
interest, and agreed to release its interest upon payment of net
proceeds not to exceed the entire amount of debt owed to the
creditor and subject to the payoff of a known senior lien. The
creditor and auctioneer disagree about whether net proceeds was
to include the proceeds from the sale of all of the debtors
equipment or only the equipment in which the creditor held a
security interest. They also disagree on which party bears the
risk of mistake due to the discovery of additional liens after
the release of the creditors interest. The superior court
concluded that net proceeds was limited to the items in which the
creditor held a collateral interest, reformed the contract to
reflect payoff of all senior lien holders before payoff to the
creditor, and granted summary judgment to the auctioneer.
Because we determine that the superior court correctly declined
to assign the risk of mistake to the auctioneer and therefore did
not err in reforming the contract, we affirm the grant of summary
judgment. We remand for further proceedings relating to the
prevailing partys paralegal fees.
II. FACTS AND PROCEEDINGS
Wasser & Winters, Inc. made loans to Ben A. Thomas,
Inc., a logging company. Thomass debt to Wasser was secured by
liens on seven pieces of Thomass equipment. In early 2004 Thomas
hired Ritchie Bros. Auctioneer, an auctioneer of used industrial
equipment, to sell some of its equipment. The auction contract
made Thomas responsible for identifying the creditors holding an
interest in the equipment to be auctioned. Thomas identified
KeyBank National and Wasser as its creditors.
Ritchie then informed Wasser that Ritchie was arranging
a sale of the equipment securing the Thomas obligations. Ritchie
wanted to auction the equipment free of any liens. Ritchie sent
Wasser a release form (Release #1) asking for Wassers consent and
requested payoff figures for Wassers liens. Release #1 gave
Wasser three options: disclaim any interest in the equipment or
its proceeds; accept the net proceeds earned from the auction; or
accept payment of a fixed amount. Ron Berg, Wassers vice
president, returned Release #1 by fax on March 1, 2004. Berg
chose the fixed amount option and set the proposed payoff figure
as $331,078.55, the amount of Thomass total debt to Wasser.
On March 29, 2004, Ritchie employees held an internal
telephone conference to discuss the Thomas auction. The
conference included Karl Werner, regional manager for Ritchies
Northwest Division. He was responsible for approving or denying
Wassers request. During the conversation the Ritchie
representatives identified liens held by Wasser, KeyBank, and
HSBC. Werner compared the value of the equipment to Thomass debt
and would not agree to the payoff proposed in Release #1.
Werner telephoned Wassers Berg to discuss the terms of
Wassers proposed release. During the call, Berg asked Werner
whether there were any IRS liens against the equipment. Werner
put Berg on hold and asked John Meese of Ritchies Settlement
Department if Meese was positive there were no other liens; Meese
stated [t]hats correct. Werner later testified that he informed
Berg there were no other liens. Werner apparently did not tell
Berg about the HSBC lien because it was specific to pieces of
Thomass equipment in which Wasser did not hold a security
interest.
This March 29 conversation between Berg and Werner is
at the center of this lawsuit. According to Wasser, Ritchie
agreed to pay Wasser up to approximately $331,000 from the net
proceeds of the entire Thomas auction after discharge of the
KeyBank lien. Thomass auction equipment consisted of thirty-
eight items in total; Wasser held a security interest in seven of
those items. Wasser contends that the parties agreed that Wasser
would receive net proceeds from sale of all thirty-eight items of
Thomass equipment and without consideration of the HSBC lien or
any lien other than the KeyBank lien. But Ritchie asserts that
Werner and Berg agreed that Wasser would receive only the net
proceeds from the sale of the items of equipment in which Wasser
held a security interest, and then only after Thomass senior
creditors were paid.
Ritchie prepared a new release form, Release #2, based
on the March 29 conversation with Berg. Release #2 lists the
seven pieces of Thomass equipment in which Wasser held a security
interest and states that Wasser accepts NET PROCEEDS not to
exceed $331,078.55 after KeyBank National payoff. Ritchie sent
Release #2 to Wasser and Wasser signed it without modification on
March 29.
Ritchie held the auction on March 30, 2004. The Thomas
auction was part of Ritchies quarterly regional auction which
included over 3,000 lots and generated gross sales exceeding
twenty-three million dollars. The sale of all of Thomass
equipment resulted in gross revenue of $961,550 and net proceeds
of $607,064.77. The sale of the seven items in which Wasser held
a security interest yielded gross revenue of $174,000 and net
proceeds of $127,063.88.
Meese informed Wassers Berg on April 9 that Ritchie
would pay Wasser $331,000 on April 21. On April 19 Ritchie
issued a check payable to Wasser in the amount of $331,078.55.
Before sending the check, Ritchie discovered various loggers
pension trusts that were claiming a priority interest in
approximately $450,000 of the proceeds of the sale of all of
Thomass auctioned equipment. The equipment was also encumbered
by tax liens in favor of the IRS and the Kodiak Island Borough.
After discovering the additional liens Ritchie held the sale
proceeds in a trust account. Ritchie withheld the Wasser check
and eventually cancelled it.
On July 2 Thomas was forced into involuntary bankruptcy
proceedings by the loggers pension trusts. Ritchie filed an
interpleader complaint in bankruptcy court and deposited the net
proceeds $607,064.77 from the entire Thomas auction into the
court registry. The loggers pension trust liens were subordinate
to Wassers lien, but the IRS and the Kodiak Island Borough tax
liens had higher priority than the unsecured portion of Wassers
liens. The tax liens reduced Wassers proceeds from sale of the
seven pieces of equipment and consumed the excess proceeds from
sale of the other Thomas equipment. Wasser agreed to a
stipulated resolution of the creditors entitlement to the
interpleader funds and received $85,954.36 in net proceeds from
the seven items in which it held a collateral interest. On July
22 Wasser sued Ritchie, asserting breach of contract,
misrepresentation, promissory estoppel, and conversion. Ritchie
removed the case to United States District Court for the District
of Alaska, which referred the case to bankruptcy court.
In 2005 Ritchie moved for summary judgment in the
bankruptcy court. After determining that a mutual mistake
existed and that it was more reasonable to have Wasser bear the
risk of the parties mistake, the bankruptcy court granted
Ritchies motion and dismissed Wassers lawsuit. The bankruptcy
court later vacated its grant of summary judgment, noting that it
did not have jurisdiction over Wassers complaint because it was a
state-law contract dispute. The district court then remanded the
case to the superior court.
Ritchie moved for summary judgment in the superior
court. That court concluded that net proceeds was limited to the
items in which Wasser held a collateral interest, reformed the
contract to reflect payoff of all senior lien holders before the
payoff to Wasser, and granted summary judgment to Ritchie. The
court awarded Ritchie attorneys and paralegal fees totaling
$24,048.
Wasser appeals the grant of summary judgment, arguing
that the contractual term net proceeds includes proceeds from the
entire Thomas auction, and that the superior court erred in
allocating the risk of mistake to Wasser and therefore erred in
reforming the contract. Both parties appeal the awards of
attorneys fees and paralegal fees.
III. DISCUSSION
A. Standard of Review
We review grants of summary judgment de novo, drawing
all reasonable factual inferences in favor of, and viewing the
facts in the light most favorable to the non-prevailing party.1
A grant of summary judgment will be affirmed when there are no
genuine issues of material fact and the prevailing party is
entitled to judgment as a matter of law.2 Summary judgment is
. . . improper in contractual disputes when the evidence before
the superior court establishes a factual dispute as to the intent
of the contracting parties. 3
Because the extrinsic evidence is not in dispute, we
are not confined to the clearly erroneous standard in our review
of the superior courts decision to grant summary judgment on the
basis of its interpretation of a contract.4 In a case such as
this, interpretation of a contract is treated in the same manner
as a question of law.5
We review a superior courts award of attorneys fees for
abuse of discretion and will uphold an award unless it is
manifestly unreasonable.6
B. Reformation
Wasser appeals the grant of summary judgment, arguing
that net proceeds includes proceeds from the entire Thomas
auction and that the superior court erred in reforming the
contract. We turn first to the reformation issue because it
turns out to be controlling in this case.
Reformation is an equitable remedy by which a court
alters the terms of a written instrument to make the writing
conform with the meaning that the parties agreed upon.7 We have
previously listed the circumstances under which reformation may
be appropriate:
(1) mutual mistake of fact in which the
[contract], as written, does not conform to
the prior agreement of the parties; (2) fraud
by one party which causes the other party to
be under a mistaken belief as to the contents
of the [contract]; (3) duress by one party
which deprives the other party of any true
freedom of choice; (4) unilateral mistake by
one party and fraudulent or inequitable
conduct by the other party, especially where
the latter party knew of the others mistake
and kept silent; and (5) mistake of law .
. . .[8]
The superior court determined that a mutual mistake
existed because neither party was aware of the additional liens
at the time of contract formation. The court therefore reformed
the contract to require that all senior lien holders be paid
before Wasser. The court stated that the reformation comports
with Wassers interest in the property. Since Wasser would have
been subject to the senior lienholders, Wasser cannot recover
more than it has already received from the distribution of
proceeds in the bankruptcy court.
Wasser argues that reformation was not available as a
matter of law because the written contract accurately conforms to
the parties agreement and that Ritchie bore the risk of mistake
because it informed Wasser that no additional liens existed.
1. The superior court correctly determined the
existence of mutual mistake.
We use a three-part test to determine whether there is
a mutual mistake of fact.9 To satisfy the test the party urging
reform must show: (1) the mistake relates to a basic assumption
on which the contract was made, (2) the mistake has a material
effect on the agreed exchange of performances, and (3) the party
seeking relief does not bear the risk of the mistake.10
Wasser first argues that there was no mutual mistake
and that therefore reformation was not available because the
written agreement accurately conveyed the parties oral agreement.11
A court may only reform a contract if the words of the writing do
not correctly express the meaning that the parties agreed upon.12
Wasser essentially argues that the discovery of additional liens
was irrelevant to the parties agreement because the parties
intended Wasser to be paid after KeyBanks payoff regardless of
whether additional liens were later discovered. In effect Wasser
asserts that Ritchie did not satisfy the second prong because the
discovery of the additional liens did not have a material effect
on the parties agreed-upon performances.
We disagree. It is undisputed that neither party was
aware of the additional senior lien holders when the parties
entered into Release #2. Both parties believed that KeyBank was
the only senior lien holder on the seven pieces of equipment in
which Wasser held a security interest and this belief was a basic
assumption of the agreement. The presence of the additional lien
holders materially altered the agreement because it significantly
reduced the net proceeds from the Thomas auction.
2. Ritchie did not bear the risk of mistake.
Wasser also argues that Ritchie did not meet the third
requirement of the mutual mistake test because Ritchie, the party
seeking reformation, bore the risk of mistake. In response
Ritchie argues that it did not assume the risk of mistake because
it did not guarantee the lien search.
Wasser is correct that a party which bears the risk of
mistake cannot satisfy the mutual mistake test.13 There are three
acknowledged bases for allocating risk of mistake.14
First, one bears the risk of mistake if the contract
allocates that risk to her.15 This basis is inapplicable here.
Release #2 is silent about whether Wasser or Ritchie bore the
risk of additional liens. The RitchieThomas Contract to Auction
authorizing Ritchie to auction Thomass equipment required Thomas
to accurately identify all lien holders. It also states that
[Thomas] authorizes [Ritchie] to carry out title searches in
respect of the Equipment at the expense of [Thomas], but in no
case shall [Ritchie] have a duty to conduct, nor be responsible
for the results of any such title search. Therefore Ritchie did
not assume the risk based on its contracts with Wasser and
Thomas.
Second, [a] party bears the risk of a mistake when
. . . he is aware, at the time the contract is made, that he has
only limited knowledge with respect to the facts to which the
mistake relates but treats his limited knowledge as sufficient.16
This is sometimes referred to as conscious ignorance.17 This
basis is inapplicable here because neither party had reason to
believe that its knowledge might be insufficient.
Finally, if a contract does not allocate the risk of
mistake and neither party bears the risk due to conscious
ignorance, [a] party bears the risk of a mistake when . . . the
risk is allocated to him by the court on the ground that it is
reasonable in the circumstances to do so.18 Wasser argues that
Ritchie should bear the risk of mistake because Ritchie conducted
the lien search and drafted the contract. Ritchie argues that
Wasser should bear the risk of mistake because Wasser was on
constructive notice of all recorded liens and had financial
incentive to determine the existence of other liens.
When allocating risk among parties, the court will
consider the purposes of the parties and will have recourse to
its own general knowledge of human behavior in bargain
transactions.19 [A] court has broad discretion in determining
when to deny relief to a mistaken contracting party under the
theory that a party bore the risk of the mistake.20 The superior
court was not asked, and did not explicitly state, which party
bore the risk of mistake. But because the court determined that
there was mutual mistake and reformed the contract in favor of
Ritchie, the court impliedly determined that Wasser bore the risk
of mistake.
Wasser cites our decision in Fairbanks North Star
Borough v. Tundra Tours, Inc.21 to argue that the risk of mistake
should have been assigned to Ritchie because it is allocated to
the party who could have discovered the mistake, but did not.
But there is no indication that Ritchie was the only party that
could have discovered the liens. Wasser asserts that Ritchie had
a sophisticated lien search program that was unavailable to
Wasser. Assuming that statement is true, there is no indication
that Wasser did not have the capability of discovering the liens
itself, nor is there any indication that performing its own
search would have been so expensive or otherwise infeasible that
relying on the Ritchie search was commercially necessary. As
Ritchie points out, Wasser is a sophisticated company that had
indisputably performed lien searches prior to releasing its
interest in Thomass equipment.
Wassers reply brief asserts that [t]here is no evidence
in the record that the undiscovered liens were recorded. Indeed,
the record suggests that those liens were not recorded. But
assuming they were not recorded, this does not mean that upon
inquiry Wasser could not have learned about the tax liens. At
the very least, Wasser could have asked Thomas whether liens
existed.
Wasser had particular reason to investigate whether its
collateral was encumbered by additional liens. In late 2003
Thomas defaulted on its loan to Wasser, and Berg admitted that he
was in constant communication or frequent communication with
Thomas after the default. Wasser therefore knew Thomas was in
financial trouble.
Furthermore, we are persuaded by Ritchies assertion
that it was reasonable to allocate the risk to Wasser given the
relative interests of the parties. As a secured creditor, Wasser
had a direct financial interest in the equipment itself. As an
auctioneer, Ritchies only interest in the equipment was the
commission the auction would generate. Thomass debt of
$331,078.55 to Wasser was secured by liens on the seven pieces of
equipment, whereas Ritchies commission on the sale of those seven
items was less than $16,000. The amount available for payoff to
creditors included the total proceeds less the auction costs
including Ritchies commission. Ritchie would receive the same
commission without regard to whether the parties were mistaken
about additional lien holders; Ritchies interest in accurate lien
information was therefore markedly lower than Wassers. Accurate
lien information would determine where Wasser stood in the
hierarchy of lenders; this information was of relatively little
importance to Ritchie, but of great importance to Wasser.
Because of the relative disparity in the parties
interests in the consequences of undiscovered senior liens, it
seems appropriate for Wasser to bear the risk of mistake. The
only theoretical basis for allocating risk to Ritchie would be
Ritchies telephonic representation to Wasser that there were no
IRS liens. This argument is bolstered by the fact that Ritchies
assertion was given to Wasser only one day before the auction.
But given Wassers paramount interest in whether there were other
senior lien holders, and given the consequences to Wasser if
Ritchie was wrong, Ritchies innocent misrepresentation should not
cause the risk of mistake to be reallocated from Wasser to
Ritchie. Both of these sophisticated parties must have known
that IRS liens or other senior liens would reduce the proceeds
available to satisfy Wasser and that Wassers interest would
inevitably be subordinate.
Moreover, allocating the risk of mistake to Ritchie
would expose Ritchie to liability far exceeding its possible
interest, whereas placing the risk of mistake on Wasser would
give Wasser essentially what it would have received had it known
about the other liens. There is no reason to think that Wasser
could have arranged an auction on terms that would have defeated
the tax liens; there is therefore no reason to think Wasser would
have been in a better position had it been fully informed about
the liens. In other words, imposing the risk of mistake on
Ritchie would have exposed it to consequences far out of
proportion to those Wasser faced whether or not it was fully
informed.
Wasser, citing Old Harbor Native Corp. v. Afognak Joint
Venture,22 argues that allocation of the risk of mistake is a
question of fact, the evidence of which must be construed in
Wassers favor. But Old Harbor Native Corp. does not establish
that the allocation of risk of mistake is a question of fact. In
that case, we did not allocate the risk of mistake to either
party.23 We determined that the evidence, when viewed in the
light most favorable to the non-prevailing party below, supported
the contention that the parties made a mutual mistake and
therefore concluded that the superior court erred in dismissing
the mutual mistake claim.24
As Ritchie notes, it was simply an auctioneer, and was
not acting as a title company for Wasser. . . . Ritchie Bros. was
neither the buyer nor seller of Thomass equipment, and had no
interest in the items; as the auctioneer, Ritchie Bros. was
simply an agent for the seller. As Ritchie argues, it is
counterintuitive to think that the risk of mistake ought to be on
the auctioneer under these circumstances. Wasser has provided no
case authority that would overcome that intuitive notion, and
Wasser produced no evidence to justify a finding that Ritchie
bore the burden of risk of mistake. We consequently allocate the
risk of mistake to Wasser as a matter of law.25
3. Ritchies innocent misrepresentation did not cut
off the possibility of reformation.
Wasser additionally argues that Ritchie assumed the
risk that its representation that there were no additional liens
was not accurate and that Ritchies misrepresentation terminated
the availability of reformation.
Alaska law states that a party has a duty to provide
accurate information once one undertakes to speak.26 But a party
has no right to rely on another partys representations if doing
so would be so negligent as to amount to a failure to act in good
faith and in accordance with reasonable standards of fair
dealing. 27 In rejecting Wassers separate misrepresentation
claim,28 the superior court stated that Wasser could not have
justifiably relied on Ritchie statements that there were no other
liens because Wasser itself should have investigated what liens
existed.
Wasser argues that whether it was justified in relying
upon the statement, and therefore whether Ritchie assumed the
risk of mistake by making the statement, is an issue of fact that
precludes the grant of summary judgment. Wasser is correct that
whether reliance is justified is ordinarily a question of fact
material to a misrepresentation claim.29 But if reasonable minds
could reach but one conclusion the issue may be determined as a
matter of law.30 The three cases31 Wasser cites note that whether
one party justifiably relied upon another is ordinarily a
question of fact, but none supports Wassers contention that it
was reasonably justified in relying upon Ritchie.
In Industrial Commercial Electric Inc. v. McLees, we
stated that [w]hether reliance is justified in a given case seems
to us more likely to turn on the course of dealings between the
parties before and during the dispute.32 Berg testified that
Wasser had several items auctioned by Ritchie prior to the Thomas
auction, but he did not recall that any of the previous auctions
was conducted consistent with Wassers proposed interpretation
here that the parties intended to allow full payoff to Wasser
regardless of whether senior liens existed. Wasser has not shown
that the parties prior dealings or their dealings during the
Thomas auction could support a finding that Wassers reliance was
justified. In Ambassador Insurance Co. v. Kenneth I. Tobey,
Inc., we held that because misrepresentations were made by an
authorized agent that had apparent authority, the issue of
whether reliance was justified precluded summary judgment.33 But
that case is distinguishable because even though Ritchie was an
agent of Thomas, it was an unrelated, third-party agent and as
such Ritchie was not making an authoritative statement about
Thomass equipment. In Anchorage Chrysler Center, Inc. v. Daimler
Chrysler Corp., we determined that the superior court did not err
in finding, after trial, that the plaintiffs reliance upon an
email was unjustified because the email was so hedged.34
Wasser asserts that [a]uctioneers have no special
license to make misrepresentations, even if negligently or
innocently, regarding the status of property they are selling.
Wasser had every right to rely on Ritchie . . . . Ritchie is not
a title company. And although Wasser is not a purchaser or owner
of auctioned equipment, it is significant that Ritchie does not
guarantee clear title even to its auction purchasers and that its
Contract to Auction specifically disclaims any duties or
liabilities regarding any title search. Ritchie is an auctioneer
involved in the business of appraising and valuing equipment.
Wasser admits that Ritchie would not guarantee a payoff based on
Ritchies valuation. Wasser could not reasonably rely on Ritchies
title search knowing that Ritchie is not a title company, when
Wasser knew that Ritchie was even unwilling to guarantee its
valuation estimates, an area in which Wasser asserts that Ritchie
is an expert.
We determine that Wassers proffered evidence is
insufficient to support a finding that Wasser was justified in
relying upon Ritchies misrepresentation. We therefore conclude
that the undisputed evidence regarding the parties relative
interests establishes that Wassers reliance was unjustified as a
matter of law; there is consequently no genuine issue of fact
whether Ritchie assumed the risk of loss based on its
misrepresentation.
Wasser similarly argues that Ritchies misrepresentation
terminated the availability of reformation. In support, Wasser
cites Hercules Machinery Corp. v. McElwee Bros., in which the
court refused to reform a contract entered into after one party
relied upon the misrepresentation of another.35 In that case, a
construction company sent a detailed inquiry with job
specifications to an equipment supplier and asked whether the
suppliers pile driver could adequately perform the job; the
seller answered affirmatively.36 The court held that the seller
bore the risk that the pile driver would fail to meet the buyers
specifications and refused to rescind the contract for mutual
mistake because of the sellers affirmative representations.37
Even though a buyer of sophisticated equipment supplying detailed
specifications may rely on the assertions of a seller, Wasser
could not, for the reasons discussed above, reasonably rely on
Ritchies assertions. Ritchies innocent misrepresentation
therefore did not cut off the possibility of reformation.
4. Ritchie proved mutual mistake by clear and
convincing evidence.
A party urging reformation must establish the elements
of reformation by clear and convincing evidence.38 Wasser argues
that Ritchie failed to meet this high burden of proof for the
extraordinary relief of reformation. In support, Wasser
reiterates the arguments discussed above. It argues that there
was a question of fact as to whether the parties intended to pay
senior lien holders before paying Wasser. It also argues that
the mistake was the result of Ritchies inaccurate lien search and
that the burden of additional liens should therefore fall on
Ritchie.
The superior court did not state in its opinion the
standard of proof it applied to Ritchies reformation argument. A
superior court does not need to explicitly state the standard of
proof it is applying if there is no dispute about the applicable
standard.39 We will normally assume that the superior court has
applied the correct standard.40
There is no indication the superior court applied an
incorrect standard. The superior court noted that [r]escission
is another remedy available when the defense of mutual mistake is
argued. A party seeking to rescind a contract on the basis of
mutual mistake must show by clear and convincing evidence that
the agreement should be set aside. Because the superior court
correctly acknowledged that mutual mistake must be shown by clear
and convincing evidence in the context of rescission, because
Wasser asserted below that the clear and convincing standard
applied to reformation, and because Ritchie never asserted that
any other standard applied to reformation, we conclude that the
superior court understood that mutual mistake must be shown by
clear and convincing evidence in the context of reformation as
well. From this we can safely assume the superior court
recognized and applied the correct standard. Therefore, the
superior court did not err in granting reformation.
Wasser additionally argues that the superior court
erred in determining that net proceeds was limited to sale of
those items of Thomass equipment in which Wasser held a security
interest. Because we hold that the contract was properly
reformed, there are no proceeds from the other equipment
available to pay Wasser; we therefore do not need to address this
issue.
C. Attorneys Fees
Ritchie asked the superior court for an enhanced award
of attorneys fees under Alaska Civil Rule 82. Wasser partially
opposed the motion, arguing that Ritchie did not establish
grounds for enhancement and that Ritchie improperly included fees
for paralegal work. The superior court declined to award
enhanced fees but awarded Ritchie $24,048 under Alaska Civil Rule
68. The fees subject to the Rule 68 offer of judgment totaled
$32,064, including paralegal fees of $2,164. Because the
superior court awarded Ritchie seventy-five percent of the total
fees Ritchie had incurred, Ritchie was awarded paralegal fees
totaling $1,623.
Wasser appeals the paralegal fees award. Rule 82(b)(2)
provides that [t]he actual fees shall include fees for legal work
customarily performed by an attorney but which was delegated to
and performed by an investigator, paralegal or law clerk. Wasser
argues that Ritchie included fees for paralegal work not
customarily performed by an attorney. Ritchie argues that Wasser
waived this objection by not referring the superior court to
specific time entries. But Wasser did object to the inclusion of
paralegal fees by arguing below that Ritchie has made no showing
that the work performed by these individuals was of a type
customarily performed by an attorney, and a cursory review of the
narrative establishes that it was not.41 Accordingly, we remand
this part of the case with directions that the superior court
determine what portion of this work may be included in the fee
award under the standard expressed in Rule 82(b)(2).42
Ritchie cross-appeals the superior courts denial of
Ritchies request for enhanced fees.43 Rule 82(b)(3) provides that
[t]he court may vary an attorneys fee award calculated under
subparagraph (b)(1) or (2) of this rule if . . . the court
determines a variation is warranted. To determine whether a
variation is warranted we consider factors that include the
complexity of the litigation and the reasonableness of the claims
and defenses pursued by each side.44 Ritchie argues that the fee
award should be remanded with instructions to depart upward from
the Rule 82 schedule because Wassers claims were patently
unreasonable and its litigation strategy significantly increased
the complexity of the case.
Ritchie argues that Wasser could not have reasonably
believed it was entitled to net proceeds from the sale of all of
Thomass equipment regardless of the existence of any additional
liens. Ritchie also asserts that Wasser refused to clarify the
legal basis for its claims to give the illusion of unresolved
issues of fact and law. But although Wassers interpretation of
the contract may appear commercially implausible, it is not
patently unreasonable, nor does Wassers litigation strategy
appear to have made the litigation unduly complex.45 The superior
court believe[d] any further enhancement is not warranted and
nothing in the record indicates that the court abused its
discretion by declining to award enhanced fees.
III. CONCLUSION
For these reasons, we REMAND for reconsideration of the
paralegal fees award, but otherwise AFFIRM the judgment below.
_______________________________
1 Estate of Polushkin ex rel. Polushkin v. Maw, 170 P.3d
162, 166 (Alaska 2007); Alaska Constr. Equip., Inc. v. Star
Trucking, Inc., 128 P.3d 164, 167 (Alaska 2006).
2 Alaska Constr. Equip., Inc., 128 P.3d at 167 (citing
Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005)).
3 Rockstad, 113 P.3d at 1219 (quoting K & K Recycling,
Inc. v. Alaska Gold Co., 80 P.3d 702, 712 (Alaska 2003)).
4 Norton v. Herron, 677 P.2d 877, 880 (Alaska 1984)
(noting that extrinsic evidence consisting of affidavits and
depositions merely restated parties conflicting litigation
positions).
5 Id.
6 Laidlaw Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d
1018, 1038 (Alaska 2005); Parker v. Tomera, 89 P.3d 761, 765
(Alaska 2004).
7 Restatement (Second) of Contracts 155 cmt. a (1981).
8 Adams v. Adams, 89 P.3d 743, 752 (Alaska 2004) (quoting
Voss v. Brooks, 907 P.2d 465, 468 (Alaska 1995)).
9 Old Harbor Native Corp. v. Afognak Joint Venture, 30
P.3d 101, 108 (Alaska 2001) (determining that whether parties
made mutual mistake regarding settlement agreement raised genuine
issue of material fact, precluding grant of summary judgment).
10 Id. (quoting Stormont v. Astoria Ltd., 889 P.2d 1059,
1061 (Alaska 1995)).
11 In a footnote to its opening brief, Wasser also
contends that Wasser continues to assert that the Superior Court
erred in determining that Ritchie had not waived the defense of
mutual mistake. Because Wasser devotes only a single sentence to
this argument, we consider it waived. Bodkin v. Cook Inlet
Region, Inc., __ P.3d __, Op. No. 6246 at 8 (Alaska, April 4,
2008); Petersen v. Mut. Life Ins. Co., 803 P.2d 406, 410 (Alaska
1990) (Where a point is not given more than a cursory statement
in the argument portion of a brief, the point will not be
considered on appeal.).
12 Arthur L. Corbin, 7 Corbin on Contracts 28.45, at 281
(2002).
13 Restatement (Second) of Contracts 152(1); see Mat-
Su/Blackard/ Stephan & Sons v. State, 647 P.2d 1101, 1104-05
(Alaska 1982) (refusing to find mutual mistake after
unanticipated supply cost increase because contract expressly
allocated burden of providing materials to contractor).
14 Restatement (Second) of Contracts 154.
15 Dickerson v. Williams, 956 P.2d 458, 466 (Alaska 1998);
see Restatement (Second) of Contracts 154(a).
16 Restatement (Second) of Contracts 154(b).
17 Id. 154 cmt. c.
18 Id. 154(c).
19 Id. 154 cmt. d.
20 77 Am. Jur. 3d Proof of Facts 18, at 217 (2004).
21 Fairbanks N. Star Borough v. Tundra Tours, Inc., 719
P.2d 1020, 1033 (Alaska 1986) (holding that because school
district received detailed billing statements and paid total
billed amount superior court reasonably allocated risk of mistake
to school district based on contract that was ambiguous whether
sign-off and sign-on times were compensable).
22 Old Harbor Native Corp. v. Afognak Joint Venture, 30
P.3d 101 (Alaska 2001).
23 Id. at 108.
24 Id. at 109.
25 See Zontelli & Sons, Inc. v. City of Nashwauk, 373
N.W.2d 744, 752 (Minn. 1985) (holding that mutual mistake existed
after allocating risk of unanticipated circumstances on city as
matter of law because contractor had right to rely on citys
specifications in making bid).
26 Barber v. Natl Bank of Alaska, 815 P.2d 857, 862
(Alaska 1991) (quoting Bevins v. Ballard, 655 P.2d 757, 760
(Alaska 1982)) (knowing or negligent misrepresentation cases).
27 Cousineau v. Walker, 613 P.2d 608, 614-15 (Alaska 1980)
(citing Restatement (Second) of Contracts 314, cmt. b (Tent.
Draft no. 11, 1976)).
28 In the superior court, Wasser asserted a
misrepresentation claim against Ritchie as an alternative cause
of action. Wasser has not pursued its direct misrepresentation
claim on appeal but nonetheless argues that Ritchie assumed the
risk of mistake through its misrepresentation.
29 Anchorage Chrysler Ctr., Inc. v. Daimler Chrysler
Corp., 129 P.3d 905, 914-15 (Alaska 2006), states:
Although some courts appear to hold that
determinations as to whether reliance was
justified can be a question of law reviewed
de novo, our own precedents suggest that it
is a question of fact, and it seems that most
jurisdictions that have addressed the issue
say it is either a purely factual issue or a
mixed question of law and fact, to be
reviewed for clear error in either event.
30 Id. at 914-15; accord Barnes v. Cornerstone Invs.,
Inc., 773 P.2d 884, 886-87 (Wash. App. 1989) (holding that
appellants did not create triable issue of fact with regards to
justifiable reliance because submitted affidavits did not place
any facts at issue); see also Vigortone Ag Prods., Inc. v. PM Ag
Prods., Inc., 217 F. Supp. 2d 858, 865 (N.D. Ill. 2001) (The
issue of justifiable reliance is a question of fact, but it can
be decided on summary judgment when no reasonable jury could find
that it was reasonable for a plaintiff to rely upon the
defendants statements.); Keenan v. Allan, 889 F. Supp. 1320, 1386
(E.D. Wash. 1995) (stating that justifiable reliance can be
decided on summary judgment if reasonable minds would reach only
one conclusion).
31 Anchorage Chrysler Ctr., Inc. v. Daimler Chrysler
Corp., 129 P.3d 905 (Alaska 2006); Indus. Commercial Elec., Inc.
v. McLees, 101 P.3d 593 (Alaska 2004); Ambassador Ins. Co. v.
Kenneth I. Tobey, Inc., 618 P.2d 572 (Alaska 1980).
32 Indus. Commercial Elec., Inc. v. McLees, 101 P.3d 593,
601 (Alaska 2004).
33 Ambassador Ins. Co. v. Kenneth I. Tobey, Inc., 618 P.2d
572, 574 (Alaska 1980).
34 Anchorage Chrysler Ctr., Inc. v. Daimler Chrysler
Corp., 129 P.3d 905, 914-15 (Alaska 2006).
35 Hercules Mach. Corp. v. McElwee Bros., 2002 WL 31015598
(E.D. La. 2002).
36 Id. at *4.
37 Id. at *9.
38 Adams v. Adams, 89 P.3d 743, 752 (Alaska 2004).
39 Anchorage Police & Fire Ret. Sys. v. Gallion, 65 P.3d
876, 883 (Alaska 2003).
40 Id.
41 On appeal, Wasser points to entries describing the work
as [c]ompil[ing] and mark[ing] trial exhibits and [p]repar[ing]
key documents binder.
42 See Nielson v. Benton, 903 P.2d 1049, 1054 n.8 (Alaska
1995) (remanding attorneys fee award and directing superior court
to review paralegal work charged and determine what portion could
be included in fee award).
43 Although Ritchie is not barred from seeking enhanced
fees under Rule 82, if it were to receive enhanced Rule 82 fees
exceeding the Rule 68 fees that were awarded, it would be
precluded from receiving the Rule 68 fees; if, on the other hand,
enhanced fees were awarded that did not exceed Ritchies Rule 68
award, Ritchie would be barred from collecting the enhanced Rule
82 fees because attorneys fees cannot be awarded under both Rule
68 and Rule 82. See Ellison v. Steam Fitters Union Local 375,
118 P.3d 1070, 1078 (Alaska 2005).
44 Alaska R. Civ. P. 82(b)(2)(A), (F).
45 Cf. Cole v. Bartels, 4 P.3d 956, 959-61 (Alaska 2000)
(affirming superior courts award of enhanced fees after
determining that appellant had pursued inconsistent legal
positions and joined third-party defendants on claims lacking
factual support).
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