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Mogg v. National Bank of Alaska (2/12/93), 846 P 2d 806
<![CDATA[
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 publication.
THE SUPREME COURT OF THE STATE OF ALASKA
HENRY F. MOGG, )
) Supreme Court No. S-4596
Appellant, )
)
v. ) Superior Court No.
) 4FA-83-1860 Civil
NATIONAL BANK OF ALASKA, a )
National Banking Association, ) O P I N I O N
)
Appellee. )
______________________________) [No. 3929, February 12, 1993]
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Niesje J. Steinkruger, Judge.
Appearances: Kenneth D. Lougee and
Joseph S. Slusser, Hughes, Thorsness, Gantz,
Powell & Brundin, Fairbanks, for Appellant.
Barbara L. Schuhmann, Staley DeLisio Cook &
Sherry, Inc. Fairbanks, for Appellee.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
RABINOWITZ, Chief Justice.
This appeal arises from the remand ordered in Lundgren
v. National Bank of Alaska, 756 P.2d 270 (Alaska 1987).
Originally, the case concerned the rights of James Lundgren and
Henry Mogg, holders of deeds of trust in two properties
foreclosed upon by the National Bank of Alaska ("NBA").1 In
Lundgren, we held that NBA improperly invoked a "dragnet clause"
in conjunction with foreclosure of its security interest in the
subject properties. Id. at 279-80. We remanded for a new
foreclosure or a hearing "in the event that intervening third
party rights preclude this remedy. . . ." Id. at 282.
On remand, the superior court ordered a second sale of
the One Mile Peger Road Property. Mogg sought and was denied
alternative remedies in the superior court. His right to such
alternative remedies is the subject of this appeal.
FACTS
Lundgren Pacific Construction Company ("LPCC") and John
R. McCall, LPCC's owner, leased the One Mile Peger Road property
from James Lundgren with an option to purchase. Lundgren, 756
P.2d at 273. John R. McCall also owned another corporation, J.
McCall, Inc. (JMI). JMI and LPCC had guaranteed each other's
debt to NBA, which by the time of the judicial foreclosure suit
that led to this controversy amounted to more than $2 million.
756 P.2d at 271.
In 1973, NBA advanced a loan of $530,000.00 to Lundgren
for the purchase of the One Mile Peger Road Property, which was
secured by the first deed of trust in the Property. Id. at 273.
That deed of trust contained a "dragnet clause"which provided
that the deed of trust secured the principal balance as well as:
[A]ny and all other indebtedness of the
Trustor (or any successor in interest of the
Trustor to the property covered by this Deed
of Trust) to the Beneficiary, whether contin
gent, now due, or hereafter to become due,
and whether heretofore or contemporaneously
herewith or hereafter contracted, or whether
arising by operation of law out of the same
or different transactions between the parties
hereto or between others.
On June 30, 1983, NBA declared that JMI and LPCC were
in default, but allowed McCall additional time before foreclosure
to repay the loans or to sell LPCC. Id. at 273 n. 2. McCall
sought to exercise his option to purchase the One Mile Peger Road
Property because the fair market value of the property had
appreciated above the $684,730.50 option price. NBA and McCall
agreed that NBA would benefit from McCall's exercise of the
option. McCall's purchase of the One Mile Peger Road Property
would increase the value of LPCC's assets and thereby improve
NBA's equity position.
In order to purchase the property, McCall borrowed
$245,000.00 from Mogg. Mogg was given a second deed of trust on
the property as security in exchange for this loan. Id. at 273.
In Lundgren, we summarized the proceeding leading up to McCall's
exercise of the option to purchase the One Mile Peger Road
Property as follows:
Negotiations took place between
McCall and NBA, both represented by counsel,
on February 28, 1983. NBA had previously
indicated to McCall that it might help
finance payment of the option price by
allowing LPCC to assume Lundgren's $530,000
note and the corresponding first deed of
trust on One Mile Peger Road. Apparently
Lundgren still owed NBA approximately
$440,000 on this note. McCall arrived at the
negotiations with a check for $245,000 made
payable to himself and already signed by
Mogg. Mogg was not present or represented by
counsel at the negotiations.
A Memorandum of Agreement between
NBA and McCall resulted from the
negotiations. The agreement provided that
NBA would release Lundgren and allow LPCC to
assume the approximately $440,000 remaining
balance of the original $530,000 debt and the
first deed of trust on One Mile Peger Road.
(This was accomplished by an Agreement for
Assumption executed by McCall and NBA.) The
agreement also provided that LPCC would give
NBA, as additional collateral, a third deed
of trust for $100,000 on One Mile Peger Road,
a second deed of trust on another piece of
property, and an assignment of proceeds of
any sale of LPCC or any of its assets or
stock. The agreement further stated that
LPCC reaffirmed all undertakings,
representations and agreements it had entered
into with NBA.
The parties also agreed (although
this is not stated in the agreement) that
Mogg would take a second deed of trust on One
Mile Peger Road to secure his $245,000
investment. This deed of trust was recorded
on March 6, 1983.
Id. at 273.
NBA was aware of the agreement between Mogg and McCall
concerning the second deed of trust. Mogg asserts that at the
time of the agreement, it was NBA's intent that Mogg would be
fully secured by his second deed of trust. 756 P.2d at 280.
NBA's attorney, however, admits that she knew of the existence of
as well as the effect of the dragnet clause but chose to remain
silent during these negotiations. In her affidavit Barbara
Schuhmann states:
I certainly felt under no obligation to
explain the legal effect of the documents to
Mr. McCall, who was represented by counsel.
The deed of trust was recorded in 1976 and I
did not think it necessary to explain to
opposing counsel the terms it contained: I
expected him to know them better than I did.
NBA commenced judicial foreclosure proceedings in
November 1983 while McCall was still in default. NBA sought
judgment against McCall, LPCC and JMI, jointly and severally, in
the amount of $2,541,322.99, plus interest, attorney's fees, and
costs, noting that its interests in both Seven Mile North Yard
and the One Mile Peger Road Property were superior to those of
Lundgren and Mogg, respectively.2 The superior court upheld the
dragnet clause which rendered ineffectual Mogg and Lundgren's
deeds of trust. Mogg and Lundgren then appealed.
While the Lundgren appeal was pending, foreclosure
proceedings continued in the superior court. The superior court
supervised sale was completed in 1985. Id. at 275. NBA was the
only bidder on the One Mile Peger Road Property, with an offset
bid of $716,494.59. 756 P.2d at 275. On appeal, we held that
the dragnet clause in NBA's first deed of trust was unenforceable
and remanded for "further proceedings not inconsistent with this
opinion."3 756 P.2d at 280.
On remand, NBA sought to have the superior court order
a second foreclosure sale and to make findings concerning the
priorities of lienholders in accordance with our Lundgren
opinion. Mogg objected to the sale and moved to amend his earlier
answer to assert a counterclaim against NBA. Thereafter, the
superior court entered an order partially setting aside the first
sale and ordering a second sale. At the second sale NBA, was
once again the only bidder on the property, making an offset bid
of $687,000. On April 2, 1989, the superior court granted Mogg's
motion to allow a counterclaim against NBA.4 The second
foreclosure sale was confirmed by the superior court.
Mogg also moved to have Schuhmann and her law firm
disqualified from representing NBA. The superior court denied
the motion to disqualify, but indicated that Mogg could renew his
motion if a showing were made that Schuhmann would be called as a
witness or that her testimony would prejudice NBA.5 NBA
responded to Mogg's amended answer and counterclaim with a motion
for summary judgment.6
The superior court subsequently granted summary
judgment in favor of NBA as to Mogg and Lundgren's counterclaims
for damages. The superior court also concluded that the
counterclaims were timely and were not barred by the applicable
statute of limitations. The superior court noted that the
counterclaims "for damages for wrongful and intentional
misrepresentation of the 1983 agreement with McCall and/or the
decline in value of the property because of any other actions NBA
caused or contributed to . . . are not ruled on by this order."
Thereafter, Mogg sought to abrogate NBA's
attorney-client privilege, alleging that NBA had defrauded him.
NBA responded with a motion for summary judgment requesting
dismissal of the fraud claims raised in the motion to abrogate
and seeking a ruling that all counts of Mogg's counterclaim were
disposed of by the superior court's prior orders. Mogg also
moved for summary judgment. The superior court denied Mogg's
motion to abrogate and dismissed Mogg's amended counterclaim.
Mogg now appeals the superior court's denial of his
motion to abrogate NBA's attorney-client privilege as well as the
dismissal of his counterclaim.
I. DOES MOGG HAVE A RIGHT TO ASSERT COMPENSATORY AND PUNITIVE
DAMAGE CLAIMS?
On remand, the superior court dismissed Mogg and
Lundgren's claim for damages due to the decline in market value
of the properties between the time of the initial sale and the
resale. The court noted that "[d]efendants cannot assert a claim
for damages because the alternate remedy was ordered by the
Alaska Supreme Court in Lundgren v. NBA, 756 P.2d 270, 282
(Alaska 1987), stating that the foreclosure sale was to be
vacated and the sale renoticed." We reverse the superior court's
grant of summary judgment to NBA with respect to Mogg's
compensatory and punitive damage counterclaim.
Whether Mogg may assert compensatory and punitive
damage counterclaims is determined by the doctrines of res
judicata and law-of-the-case. Res judicata provides that a final
judgment on the merits is conclusive as to the rights of the
parties involved, and as to these parties, constitutes an
absolute bar to a subsequent action involving the same claim.7
Similarly, the doctrine of law of the case generally requires
adherence by a lower court to an appellate court's decision and
generally prohibits reconsideration of issues which have been
adjudicated in an appeal of the case.8
Mogg argues that the superior court erred in ruling
that his contract, tort, and punitive damages claims were
precluded by Lundgren because this court did not render a final
judgment in that case. He notes that in Lundgren, this court
"simply corrected the error made by Judge Blair with regard to
his ruling on the dragnet clause,"and remanded for further
proceedings consistent with that opinion. NBA counters that our
decision in Lundgren provided Mogg with "full and complete relief
and was an adjudication on the merits of his claim for estoppel
or equitable relief." Therefore, NBA asserts, Mogg was not
entitled to an additional remedy of contract, tort, or punitive
damages because these claims were extinguished by Mogg's receipt
of equitable relief.
The Restatement (Second) of Judgments indicates that
the fact that a trial court order is reviewed on appeal "does not
necessarily mean that the matter resolved in the order should be
treated as final for the purposes of res judicata." Restatement
(Second) of Judgments 13 cmt. b, (1982). Furthermore, a claim
will be final for purposes of res judicata only:
[I]f it is not tentative, provisional,
or contingent and represents the completion
of all steps in the adjudication of the claim
by the court, short of any steps by way of
execution or enforcement that may be
consequent upon the particular kind of
adjudication. Finality will be lacking if an
issue of law or fact essential to the
adjudication of the claim has been reserved
for future determination, or if the court has
decided that the plaintiff should have relief
against the defendant of the claim but the
amount of the damages, or the form or scope
of other relief, remains to be determined.
Id. Under this definition of finality, the judgment in Lundgren
is not final for purposes of res judicata because there we merely
addressed the validity of the dragnet clause. 756 P.2d at 282.
Mogg correctly argues that because all matters were not
litigated to finality in Lundgren, he was entitled to amend his
pleadings on remand to assert additional claims against NBA. He
relies on Wells Fargo v. Sunshine Security & Detective Agency,
575 So. 2d 179 (Fla. 1991), to support the proposition that
"[t]he law-of-the-case doctrine was meant to apply to matters
litigated to finality, not matters that remain essentially
unresolved due to the erroneous ruling of a lower court." Id.
The Wells Fargo court also noted that the effect of returning
such litigation to the trial court is that the matter is treated
as if "the erroneous ruling never was made." Id.
Mogg also appropriately analogizes the instant case to
Harbel Oil Co. v. Superior Court of Maricopa County, 345 P.2d 427
(Ariz. 1959). In Harbel, the supreme court of Arizona initially
ruled that the trial court erred in finding that a mortgage given
by Harbel Oil had been foreclosed. The court remanded to the
superior court for "proceedings not inconsistent" with the
supreme court's decision. On remand, Harbel Oil argued that the
superior court could not hear additional defenses in the amended
counterclaim because the first appeal "disposed of all relevant
questions of law which were raised or which might have been
raised." (Emphasis in original.) 345 P.2d at 429. The Arizona
supreme court rejected this argument, noting that although res
judicata and law-of-the-case are applicable where a court of last
resort renders a final judgment:
Such was not the case here. The court
had before it only the foreclosure issues
upon which the trial court based its
judgment. The reversal was simply a decision
that the [superior court] was in error on
that point, and the cause was remanded for
proceedings not inconsistent with the holding
that said mortgage had not been foreclosed.
None of the defenses now pressed below is
inconsistent with this Court's holding.
Therefore, it is clear that the [superior
court] is not deprived of jurisdiction to
hear such defenses under the principle of res
judicata.
Id. at 430. The parallels between Harbel and the instant case
are evident. See also R.E.B., Inc. v. Ralston Purina Co., 525
F.2d 749 (10th Cir. 1975);9 Metropolitan Hous. Dev. Corp. v.
Village of Arlington Heights, 469 F. Supp. 836 (N.D. Ill. 1979).10
We agree with the reasoning of the supreme court of
Arizona and hold that our decision in Lundgren did not preclude
Mogg from raising contract, tort, and punitive damages
counterclaims on remand. Therefore, the superior court's grant
of summary judgment dismissing Mogg's counterclaim on the grounds
of res judicata was erroneous.11 Further support for this
conclusion is found in King v. Alaska State Hous. Auth., 571 P.2d
1010 (Alaska 1977), where we held that the superior court had not
abused its discretion by granting a motion to amend a complaint
where occurrences during the pendency of an appeal made the
remedy sought no longer available. We noted that:
On remand, the superior court could not
alter our decision; however, it could take
action which was not inconsistent with our
decision. The amended and supplemental
complaint does not attempt to revive the
theories which we determined adversely to
appellants. It is based primarily on the
same underlying facts on which appellants had
made a prima facie case of abuse of
discretion and does not conflict with our
previous decision.
The question whether the amended
and supplemental complaint should have been
allowed was within the discretion of the
superior court. Estate of Thompson v.
Mercedes-Benz, Inc., 514 P.2d 1269, 1271
(Alaska 1973). An amended or supplemental
complaint may be permitted during trial, or
during trial proceedings, if the requirements
of Civil Rule 15 are met. The fact that the
case had once been partially tried, appealed
and remanded did not deprive the superior
court of power to permit the amendment.
Nucor Corp. v. Tennessee Forging Steel Serv.,
Inc., 513 F.2d 151, 153 (8th Cir. 1975);
R.E.B., Inc. v. Ralston Purina Co., 525 F.2d
749, 751 (10th Cir. 1975). Accord, Texarkana
v. Arkansas Louisiana Gas Co., 306 U.S. 188,
203, 59 S.Ct. 448, 455, 83 L.Ed. 598, 607-608
(1939).
ASHA suggests that the superior
court abused its discretion in allowing the
filing of the amended and supplemental
complaint. We do not agree. As we have
said, the claim for damages is based on the
same fundamental facts as those alleged in
the original complaint. The sale and
development of the property during the
pendency of this appeal required some change
in the relief sought because the remedy of
injunction was no longer available.
Appellants chose not to seek rescission,
believing that remedy to be barred by
practical considerations.
571 P.2d at 1012. In the instant case, as in King, we conclude
that the superior court did not err in its allowance of the
questioned amendments.
NBA also argues that the grant of summary judgment can
be affirmed on the alternative ground that no contract exists
between Mogg and the bank. Mogg alleges that he was a third
party beneficiary of the contract between McCall and NBA.
Alternatively, Mogg argues that McCall was acting as Mogg's agent
at the negotiations. Mogg indicates that McCall assured him that
McCall would obtain a second deed of trust to protect Mogg's
interests. This allegation is supported by McCall, who noted in
his affidavit that:
All parties agreed, including the bank
who was represented by Ms. Schuhmann and Mr.
Granger, that Mr. Mogg would indeed be
secured. It was also made clear that the
specific manner in which Mr. Mogg would be
secured was a second deed of trust.
McCall's attorney further supports this allegation noting that,
at the negotiations, "it was absolutely clear that the National
Bank of Alaska understood and agreed that the debt secured by Mr.
Mogg would be second in priority only to the unpaid balance of
the debt owed on the original Lundgren note, which was secured by
NBA's first deed of trust." These affidavits and Mogg's
deposition testimony are sufficient to demonstrate that a genuine
issue of material fact exists as to the existence of a contract.
We therefore reject NBA's alternative theory for upholding the
superior court's dismissal of Mogg's contract claims.12
II. WAS MOGG'S AMENDED COUNTERCLAIM SOUNDING IN TORT BARRED BY
THE STATUTE OF LIMITATIONS?
In his counterclaims, Mogg alleged claims in both
contract and tort based upon NBA's actions between February 1983
and July 30, 1985. The superior court ruled that the applicable
statute of limitations barred Mogg's tort claims. In so ruling
the court reasoned that "Mogg was aware of the cause of action by
his own testimony in the fall of 1983, and its a two year statute
of limitations." Mogg argues that the superior court erred in
finding the claims barred by the statute of limitations because
the amended counterclaims related back to the original answer
under Civil Rule 15(c).13
Rule 15(c) states in part:
Relation Back of Amendments. Whenever
the claim or defense asserted in the amended
pleading arose out of the conduct,
transaction or occurrence set forth or
attempted to be set forth in the original
pleading, the amendment relates back to the
date of the original pleading.
Citing Estate of Thompson v. Mercedes-Benz, Inc., 514 P.2d 1269
(Alaska 1973), Mogg contends that the counterclaim should relate
back to the answer that was filed in 1984. In Mercedes-Benz we
stated:
We are persuaded that the correct rule
is that a counterclaim should relate back
under Civil Rule 15(c), if it arose from the
same transaction, and that the same test
should be applied to an omitted cross-claim.
514 P.2d at 1274.
NBA argues that the counterclaims are not an
"amendment"and that if the counterclaims arose out of the same
transaction, they were compulsory counterclaims that are governed
by Rule 13(f) and therefore should have been asserted before the
statute of limitations had run. In Mercedes-Benz we considered
and disposed of a similar argument observing:
It is somewhat inconsistent to conclude
that after the limitations period has run
plaintiff may allege an additional claim for
relief arising from the conduct, transaction
or occurrence involved in his original claim
and that it will relate back under Rule
15(c), yet deny defendant an analogous
opportunity by deciding that a compulsory
counterclaim will not relate back. . . .
514 P.2d at 1273-74 (quoting 6 C. Wright & A. Miller, Federal
Practice and Procedure: Civil 1496, at 487-88 (1971)). While
NBA is correct in asserting that there must be notice to the
party against whom the amended claims are brought, there is no
evidence to demonstrate any lack of notice and resulting
prejudice against NBA. Therefore, we conclude that the superior
court erred in dismissing Mogg's tort counterclaim as barred by
the statute of limitations.14
III. DID THE SUPERIOR COURT ERR IN DENYING MOGG'S MOTION TO
ABROGATE THE ATTORNEY CLIENT PRIVILEGE?
Mogg argues that the superior court erred by failing to
abrogate NBA's attorney client privilege and by granting summary
judgment against him before allowing Mogg to proceed with full
discovery. Evidence Rule 503 protects a client from being
compelled to disclose confidential communications between the
client and the attorney. The attorney may also assert the
privilege on behalf of the client. Evidence Rule 503(c).
However, Evidence Rule 503(d)(1) provides an exception to the
privilege for communications made in "furtherance of crime or
fraud." That exception is applicable:
If the services of the lawyer were
sought, obtained or used to enable or aid
anyone to commit or plan to commit what the
client knew or reasonably should have known
to be a crime or fraud. . . .
Alaska Rules of Evidence 503(d)(1).
Mogg argues that NBA's attorney, "has effectively
admitted under oath that in the context of her attorney-client
relationship, she intentionally misled a party with whom she was
negotiating." Mogg further asserts that it appears that NBA's
attorney "may have been a prime architect of a plan which was
nothing less than intentional deception."
Mogg correctly cites United Services Automobile Ass'n
v. Werley, 526 P.2d 28, 32 (Alaska 1974), for the proposition
that there must be a prima facie showing of fraud before the
court will defeat the privilege. Werley explained that in order
to make a prima facie showing, the "evidence in favor of a
proposition [must] be sufficient to support a finding in its
favor, if all of the evidence to the contrary be disregarded."
526 P.2d at 32, n.15. In Central Constr. Co. v. Home Indemnity
Co., 794 P.2d 595 (Alaska 1990), we held that a court could grant
in camera review in its discretion upon a showing of ". . . a
factual basis adequate to support a good faith belief by a
reasonable person . . . that in camera review of the materials
may reveal evidence to establish the claim that the crime-fraud
exception applies." 794 P.2d at 599. Whether or not to grant in
camera review is within the discretion of the judge. Central
Constr., 794 P.2d at 599.
NBA argues that neither it nor its counsel owed Mogg
any fiduciary duty and that "NBA did not agree to give Mogg a
second deed of trust; LPCC did. NBA did not take Mogg's money."
NBA also asserts that "NBA did not benefit from Mogg's loan to
McCall or McCall's payment to Lundgren." Despite NBA's arguments
that the negotiations were not directly with Mogg, Mogg asserts
that his loan to McCall would not have been consummated absent
NBA's representations to McCall regarding the value of the second
deed of trust. Mogg's claim of fraud rests on NBA's actions in
agreeing with McCall that Mogg would have a second deed of trust
in the property in exchange for $245,000 while counsel for NBA
knew that the dragnet clause would render Mogg's second deed of
trust valueless. Mogg argues that by allowing NBA to agree to
McCall's request for a second deed of trust for Mogg and by
allowing NBA to take a third deed of trust in the property,
counsel for NBA in effect misrepresented the value of the
security he was given. Citing Carter v. Hoblit, 755 P.2d 1084,
1086 (Alaska 1988), Mogg argues that fraud can be committed
absent a fiduciary duty when statements are made that omit
material information. In brief, Mogg argues that the superior
court erred in rejecting his abrogation contentions and in
failing to grant in camera review.
After reviewing the record we conclude that Mogg made a
prima facie showing of fraud in that NBA agreed to a second deed
of trust for Mogg and a third deed of trust for itself knowing
that the second deed of trust was worthless.15 We therefore hold
that the superior court should have ruled that Mogg had made a
prima facie case for abrogation of the attorney-client privilege.
IV. DID THE SUPERIOR COURT ERR IN DENYING MOGG'S REQUEST FOR
PUNITIVE DAMAGES?
The superior court denied Mogg's motion for punitive
damages because the tort claims were dismissed as barred by the
statute of limitations. Whether punitive damages are recoverable
now must await developments upon remand of the case.16
CONCLUSION
The superior court's grant of summary judgment to NBA
dismissing Mogg's counterclaim for compensatory and punitive
damages is REVERSED. The superior court's grant of summary
judgment to NBA in regard to Mogg's motion to abrogate NBA's
attorney-client privilege is REVERSED. The superior court's
denial of Mogg's motion for summary judgment as to this tort and
contract counterclaim is AFFIRMED.
_______________________________
1. The two properties that NBA foreclosed upon have been
denominated the "Seven Mile North Yard"and the "One Mile Peger
Road Property." Both properties are located in Fairbanks. The
Seven Mile North Yard was purchased by JMI in 1978. Alaska
National Bank (ANB) held a first deed of trust on the property.
NBA held a second deed of trust on the property. The NBA deed of
trust contained a dragnet clause similar to the dragnet clause in
NBA's first deed of trust on the One Mile Peger Road Property.
Lundgren v. National Bank of Alaska, 756 P.2d 270 (Alaska 1987).
2. At the time of the foreclosure, Lundgren held a third
deed of trust on the Seven Mile North Yard.
3. We also held that the dragnet clause in the NBA deed of
trust on the Seven Mile North Yard was unenforceable. Only
Mogg's appeal is now before the court.
4. In his amended counterclaim, Mogg sought monetary
damages from NBA based upon several theories: 1) breach of the
agreement giving Mogg a second deed of trust because NBA invoked
the dragnet clause claiming "broader coverage . . . than was
intended or authorized by law"; 2) wrongful and/or intentional
misconduct when NBA conducted the first sale of the property; 3)
that NBA should be estopped from changing its position from that
taken at the time of the agreement of February 28, 1983; and, 4)
breach of NBA's duty of good faith and fair dealing.
5. The superior court also noted that Mogg could renew his
motion for disqualification by showing that the probable evidence
that Schuhmann's testimony would provide was unobtainable
elsewhere.
6. Lundgren also had asserted a counterclaim against NBA.
NBA then moved for summary judgment against both Mogg and
Lundgren.
7. See Ferguson v. Dep't of Corrections, 816 P.2d 134, 138
(Alaska 1991) (for res judicata to apply, there must have been a
full and fair opportunity to litigate the issue); Nelson v.
Jones, 787 P.2d 1031, 1033 (Alaska 1990) (noting that res
judicata precludes relitigation by the same parties of relevant
claims that could have been raised); Denardo v. State, 740 P.2d
453 (Alaska 1987), cert. denied, 484 U.S. 919 (1987); Denardo v.
Municipality of Anchorage, 775 P.2d 515, 517 (Alaska 1989) (res
judicata applies "when (1) a court of competent jurisdiction, (2)
has rendered final judgment on the merits, and (3) the same cause
of action and same parties or their privies were involved in both
suits"); cf. Luedtke v. Nabors Alaska Drilling, Inc., 768 P.2d
1123, 1130 n.5 (Alaska 1989) (res judicata does not preclude
employer's claim that employee was fired for due cause after
decision by Commissioner of Labor that employee was not fired for
misconduct, because discharge for misconduct and wrongful
discharge are separate issues).
8. See Luedtke v. Nabors Alaska Drilling, Inc., 834 P.2d
1220, 1228 (Alaska 1992) (doctrine of law of the case is a
doctrine of judicial policy, not law, and "merely expresses the
practice of courts generally to refuse to reopen what has been
decided, not a limit to their power"); Alaska Diversified
Contractors, Inc. v. Lower Kuskokwim School Dist., 778 P.2d 581,
583 (Alaska 1989) (doctrine of law of the case prohibits
reconsideration of issues decided in a prior appeal in the same
case, except where there are exceptional circumstances); cf.
Hayes v. Xerox Corp., 718 P.2d 929, 934 (Alaska 1986) (doctrine
of law of the case not applicable where judge newly assigned to
case reverses earlier ruling of judge formerly assigned to case).
9. In R.E.B. the court said in relevant part:
Authority for granting amendments
stems from Rule 15(a). It contemplates
allowing amendments freely when justice
requires. Changes or expansion are not to be
allowed on remand if to do so would run
counter to the mandate of the appellate
court. Moore's Federal Practice 15.11;
Britton v. Dowell, 243 F.2d 434 (10th Cir.
1957). In this case the mandate neither
expressly nor implicitly dealt with the
propriety of pleading changes.
The principal factors which are
considered in connection with the offer of an
amendment are, first, whether it will cause
delay and, second, whether the adversary will
suffer prejudice. Lateness does not of
itself justify the denial of the amendment.
Moore, supra, 15.08(4); 4 A.L.R. Fed. 128.
And the fact that it is offered following
remand does not suffice of itself to require
denial. Retail Clerks Int'l Ass'n. v. Lion
Dry Goods, Inc., 341 F.2d 715, 722 (6th Cir.
1965). Unless the granting of the amendment
after remand caused grave prejudice, the
action is not an abuse of discretion. See
Patton v. Guyer, 443 F.2d 79, 86 (10th Cir.
1971).
525 F.2d at 751.
10. In Metropolitan Hous. Dev. Corp. the court observed:
The intervenors misstate the law. While
it is true that an inferior court cannot
question or vary the mandate of a superior
court on issues actually presented to the
higher court, it is free to allow additional
pleadings and conduct additional proceedings
in response to changed circumstances. While
a mandate is controlling as to matters within
its compass, on the remand a lower court is
free as to other issues.
469 F. Supp. at 849 (citations omitted).
11. NBA further argues that Mogg should be deemed to have
waived any right to receive damages since he pursued one remedy
to the exhaustion of all others and failed to ask for damages in
the superior court until after our remand. However, Mogg did not
elect foreclosure as a remedy. Instead he defended against NBA's
foreclosure action and filed a counterclaim in part because of a
declining Fairbanks real estate market which occurred between
September 7, 1984 (the date the superior court granted NBA
summary judgment on the dragnet clause issue) and December 9,
1987 (the date of our opinion in Lundgren as amended pursuant to
a petition for rehearing). Thus Mogg had no reason to amend his
answer and counterclaim to add claims for damages until after
this court had rendered its opinion in Lundgren.
NBA contends that Mogg waived his additional claims
when he allowed the February 26, 1985 deadline for amendments and
pleadings to expire. However, by that date, the superior court
had decided that the dragnet clause was legal and had been
properly invoked and Mogg's appeal was pending before this court.
Therefore, it is clear that Mogg did not waive these additional
claims.
NBA also asserts that Mogg waived his right to present
additional claims and evidence in support thereof by obtaining a
Rule 54(b) certification. However, NBA has previously asserted a
contrary (although correct) view in a memorandum submitted to the
superior court after its decision in Lundgren noting that
Mr. Mogg filed a Rule 54(b) request for
final judgment as to the decision upholding
the effectiveness of NBA's "dragnet" clause
on or about February 19, 1985. He
specifically recognized that not all claims
were decided in that judgment. Rule 54
provides that such orders or decisions do not
terminate the action "as to any of the claims
or parties, and the order or other form of
decision is subject to revision at any time
before the entry of judgment adjudicating all
the claims and the rights and liabilities of
all the parties.
In brief we reject NBA's contention that Mogg should be deemed to
have waived any additional claims he might have by virtue of his
obtaining a Rule 54 certification as to the dragnet issue.
12. As noted previously, the superior court granted summary
judgment in favor of NBA on the misrepresentation claims partly
on res judicata grounds. As to the misrepresentation claim, Mogg
argues that NBA's failure to disclose the existence of the
dragnet clause was an actionable misrepresentation. NBA argues
that there was no claim for the tort of misrepresentation because
there was neither reliance on Mogg's part nor a misrepresentation
or omission in the context of a duty to disclose. NBA argues
that Mogg did not rely because he gave the check to McCall four
days prior to the alleged misrepresentation. However, as the
record indicates, Mogg gave the check to McCall with the
understanding that he would be secured by a second deed of trust.
Thus, as to the issue of reliance, Mogg has raised a genuine
issue of material fact.
On the issue of the existence of an omission or
misrepresentation, Mogg points to Schuhmann's affidavit as
indicating that Schuhmann was aware of the dragnet clause at the
February 28, 1983 meeting and took the position that she was not
under a duty to inform Mogg or McCall of its existence. Mogg
further relies on the affidavit of NBA officer William Granger
indicating that he became aware of the dragnet clause after the
February 28, 1983 meeting. In our view Mogg raises genuine
issues of material fact as to whether an agency relationship
between McCall and Mogg existed, whether NBA had a duty to
disclose in this circumstance, and whether NBA and Schuhmann made
an incomplete disclosure to Mogg's agent.
13. Mogg alleges that the superior court also erred in
focusing on February 28, 1983 as the date on which the tortious
conduct occurred for the purposes of calculating the statute of
limitations period. Mogg argues that the Bank's tortious
behavior continued until the wrongful foreclosure sale on June 3,
1985. However, even if the later date was employed by the
superior court in calculating the statute of limitations period,
the two years would have run before the motion to file an amended
counterclaim was filed on June 28, 1988.
14. See also Magestro v. State, 785 P.2d 1211, 1213 (Alaska
1990) (relation back under Rule 15(c) should be liberally
construed); Betz v. Chena Hot Springs Group, 742 P.2d 1346, 1351
(Alaska 1987) (theory behind rule of relation back is that a
party who has been given notice of litigation concerning a given
matter has been given notice adequate to satisfy the intent of
statutes of limitations).
15. Our conclusion that Mogg has made a prima facie case of
fraud should not be taken as expressing the view that Mogg has in
fact proven fraud. As to the scope of a fraud based abrogation
of the attorney-client privilege, see United Services Automobile
Servs. v. Werley, 526 P.2d 29, 32 (Alaska 1974).
16. Concerning our affirmance of the superior court's denial
of Mogg's motion for summary judgment on his tort and contract
counterclaim, we are of the view that genuine issues of material
fact exist with respect to these claims.
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