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Fairbanks North Star Borough v. Lakeview Enterprises, Inc., Rahoi, & City of Fairbanks (6/9/95), 897 P 2d 47
<![CDATA[
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, telephone (907) 264-0607, fax (907) 276-
5808.
THE SUPREME COURT OF THE STATE OF ALASKA
FAIRBANKS NORTH STAR BOROUGH, )
) Supreme Court No. S-5329
Appellant, )
) Superior Court No.
v. ) 4FA-89-615 CI
)
LAKEVIEW ENTERPRISES, INC., )
URBAN RAHOI, VIENNA RAHOI, ) O P I N I O N
PHILLIP RAHOI, and BEVERLY )
RAHOI, ) [No. 4218 - June 9, 1995]
)
and )
)
CITY OF FAIRBANKS, )
)
Appellees. )
______________________________)
)
LAKEVIEW ENTERPRISES, INC., )
URBAN RAHOI, VIENNA RAHOI, )
PHILLIP RAHOI, and BEVERLY )
RAHOI, ) Supreme Court Nos. S-5763/5819
)
Appellants, )
Cross-Appellees, )
)
v. )
)
FAIRBANKS NORTH STAR BOROUGH, )
)
Appellee, )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, Fourth Judicial District,
Fairbanks,
Richard D. Savell,
Judge.
Appearances: David A. Bricklin and
David S. Mann, Bricklin & Gendler, Seattle,
Washington, and Ward Merdes, Merdes & Merdes,
P.C., Fairbanks, for Lakeview Enterprises,
Inc., Urban Rahoi, Vienna Rahoi, Phillip
Rahoi and Beverly Rahoi. Charles D. Silvey
and A. Rene' Broker, Cook, Schuhman &
Groseclose, Inc., Fairbanks, Mark Andrews,
Assistant Borough Attorney, Ardith Lynch,
Borough Attorney, Fairbanks, for Fairbanks
North Star Borough. Paul J. Ewers, Deputy
City Attorney, and Herbert P. Kuss, City
Attorney, Fairbanks, for City of Fairbanks.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton and Eastaugh,
Justices.
EASTAUGH, Justice.
I. INTRODUCTION
Lakeview Enterprises, Inc. and Urban, Vienna, Phillip
and Beverly Rahoi (collectively Lakeview) appeal the trial
court's directed verdict on their inverse condemnation claim
against the Fairbanks North Star Borough (Borough). Lakeview
also argues that the trial court erroneously instructed the jury
on Lakeview's nuisance and negligence claims and erroneously
limited the testimony of Lakeview's expert. We affirm.
By cross-appeal, the Borough challenges the trial
court's denial of certain summary judgment motions and some of
its trial rulings. The Borough also appeals its attorney's fees
award against Lakeview, the judgment entered in favor of the City
of Fairbanks (City) against the Borough in the Borough's third-
party action, and the grant of attorney's fees to the City. We
remand to the superior court for consideration of the Borough's
successful Civil Rule 68 offer in determining its attorney's fees
award against Lakeview and affirm the remaining rulings
questioned by the Borough.
II. FACTS AND PROCEEDINGS
Lakeview has operated three trailer courts in the
vicinity of its current land holdings. The only remaining
trailer court, Lakeview Terrace, opened in 1976 or 1977 because
of the perceived need for housing during the pipeline years.
In the early 1960's, the City began operating a
landfill on property adjacent to Lakeview's property despite
Lakeview's opposition. The City disposed of solid waste on a
portion of the landfill nearest Lakeview's property. Lakeview
experienced problems associated with the landfill immediately
after it opened. According to Urban Rahoi, one of Lakeview's
owners, the landfill was a nuisance from its inception because of
the smell and smoke it generated, and birds, flies, rats and
mosquitos it attracted. In 1972 Lakeview considered the
situation "desperate,"and Phillip Rahoi threatened to sue the
City if it did not move the landfill; however, Lakeview did not
pursue legal action at that time.
The Borough assumed operation of the landfill in 1974.
It closed several other small dumps and began transporting all
its garbage to the landfill. In 1978 the Borough made several
improvements to the landfill, including purchase of a bailer to
compress solid waste. After 1978 the Borough did not dispose of
any solid waste in the landfill area nearest Lakeview's property.
It made additional improvements to the landfill during the
1980's, including installation of a tire shredder, development of
a rat eradication program, and implementation of a hydro-seeding
and landscaping project.1
In 1981 Lakeview's attorney wrote the Borough and
threatened legal action on account of the Borough's operation of
the landfill. According to Lakeview, it sent the letter because
the Borough had broken "many promises"to clean up the landfill
and because Lakeview's numerous complaints about the operation of
the landfill to the Borough and Department of Environmental
Conservation had gone unheeded.
According to Lakeview, the volume of garbage at the
landfill increased in the 1980's, as did the dump's noxious
impact on neighboring property. The Rahois complained of
increased odors, rats, flies, birds, fires, smoke and dust. On
April 18, 1989, Lakeview filed a complaint against the Borough
alleging inverse condemnation and claiming damages as of 1958.
Lakeview amended its complaint in January 1990 to assert claims
for negligence and nuisance. The Borough later filed a third-
party action against the City claiming that any damages Lakeview
suffered were caused by the City's operation of the landfill.
Over Lakeview's opposition,2 the court allowed the Borough's
third-party claim to proceed.
The court later granted complete summary judgment to
the City, concluding that claims arising prior to 1973 were
barred by the statute of limitations. The Borough also moved for
partial summary judgment on the ground that Lakeview's claims
were time-barred. The trial court denied the Borough's motion,
ruling that there was an issue of fact as to when the last taking
occurred.
The Borough filed a second motion for partial summary
judgment, claiming that the statute of limitations barred any
claim based on the existence and location of the landfill next to
the Lakeview property. Lakeview cross-moved, claiming that the
Borough could not prove the hostility requirement necessary to
establish an adverse possession claim, and that the Borough was
equitably estopped from raising a statute of limitations defense.
The superior court granted the Borough's motion regarding
Lakeview's claims "based on the existence and/or location of the
Fairbanks North Star Borough Landfill,"and denied Lakeview's
cross-motion to strike the Borough's statute of limitations
defense.
The superior court later clarified the effect of its
previous order:
In its order of February 20, 1992,
this Court granted the Fairbanks North Star
Borough's . . . motion for summary judgment
for takings "based upon the existence and/or
location of" the landfill. This order
dismissed any claims for damages based on the
decision of the Borough to operate the
landfill at its present site or damages
resulting from the mere existence of a
landfill adjacent to the plaintiffs'
property. The order was based on the ten
year property statute of limitations. The
order did not decide issues of liability
arising from the Borough's operation of the
landfill. Consequently, the plaintiffs'
equitable estoppel argument was irrelevant.
In addition, the plaintiffs
continue to assert that an adverse possession
analysis must be used to determine whether
claims for takings alleged to have occurred
more than ten years prior to the commencement
of the present action are barred. This
position, however, has been rejected. This
Court has explicitly stated that the ten year
property statute of limitations is applicable
to inverse condemnations claims. . . .
Accordingly, takings claims for damages
arising more than ten years prior to the
commencement of this action are barred. The
Borough must prove the elements of adverse
possession only to bar takings claims for
damage within the ten year limitations
period.
The rulings effectively limited Lakeview's inverse
condemnation claim to takings occurring within the ten years
before Lakeview filed suit.3
Lakeview and the Borough tried the inverse
condemnation, nuisance and negligence claims to a jury. The
trial court directed a verdict for the Borough on Lakeview's
inverse condemnation claim. The jury returned a special verdict
finding (1) that the Borough was negligent in its operation of
the landfill, but that the negligence did not proximately cause
damage to Lakeview; and (2) that the landfill was not a nuisance
to Lakeview. These appeals followed.
III. DISCUSSION
A. The Directed Verdict on Lakeview's Inverse Condemnation
Claim
Government actions become "takings"under principles of
inverse condemnation when a private landowner is forced to bear
an unreasonable burden as a result of the government's exercise
of power in the public interest. Anchorage v. Sandberg, 861 P.2d
554, 558 (Alaska 1993). A property owner may recover damages for
inverse condemnation where the state's activities deprive the
owner of the "economic advantages of ownership." Homeward Bound,
Inc. v. Anchorage Sch. Dist., 791 P.2d 610, 614 (Alaska 1990).
In order to have a legally cognizable claim of inverse
condemnation, the property owner must show that his property has
diminished in value because of the state's action. State v.
Doyle, 735 P.2d 733, 738 (Alaska 1987).
The trial court considered the basis for Lakeview's
inverse condemnation action to be the incremental increase in the
amount of garbage deposited at the landfill.4 The trial court
reasoned that Lakeview could prove a taking "by showing
quantitative or qualitative change attributable to the Borough's
non-negligent interference which results in a measurable loss of
market value sustained during the ten years preceding
commencement of the suit." (Footnote omitted.) Lakeview filed
suit on April 18, 1989. Having previously determined that the
ten-year statute of limitations barred claims for any takings
prior to April 18, 1979, the trial court directed a verdict on
Lakeview's inverse condemnation claim because the court found
that Lakeview failed to establish that the Borough's non-
negligent actions during the statutory period caused compensable
damage to Lakeview's property.5
Lakeview attacks the directed verdict on several
grounds. It argues that the trial court erred by applying the
ten-year statute of limitations to Lakeview's inverse
condemnation claims. Lakeview also claims that the trial court
erred in excluding portions of its expert's testimony. Lakeview
also seems to contend that it presented sufficient evidence at
trial to support its inverse condemnation claim. Finally,
Lakeview claims that the trial court erred in restricting
Lakeview's inverse condemnation claims to damages resulting from
the Borough's non-negligent actions.6
1.
The ten-year statute of limitations
The initial summary judgment order implied that the
Borough had to establish each of the elements for adverse
possession to time-bar Lakeview's claims.7 The trial court later
ruled that AS 09.10.030 barred all inverse condemnation claims
for damages arising prior to 1979.8 Alaska Statute 09.10.030 is
the ten-year statute of limitations for real property disputes.9
Lakeview argues that the ten-year limitations statute
does not bar its inverse condemnation claims for injury occurring
more than ten years before the suit was filed unless all the
requirements for establishing adverse possession are satisfied.
Lakeview relies on the following passage to support its
contention that the Borough was obliged to prove the elements of
adverse possession to time-bar Lakeview's claims.
When there is no special statute of
limitations applicable to condemnation
proceedings the condemnor cannot rely on a
general statute of limitations. Eminent
domain proceedings are not sufficiently
analogous to suits at law or equity to fall
under provisions intended to apply to
ordinary private controversies. But it is
held that after the expiration of the period
necessary to acquire by adverse possession,
the owner who has tolerated such occupancy
without applying for payment has lost his
rights.
1A Nichols on Eminent Domain 4.102[5] at 4-78-80 (3d ed. 1990)
(emphasis added, footnotes omitted). On its face, this statement
does not help Lakeview because it indicates that only the
prescriptive period need expire before a condemnation proceeding
is barred. We also note that Lakeview's argument is contrary to
the position it took when it opposed the Borough's effort to
assert a third-party claim against the City. Lakeview then
argued that it had not sued the City because the statute of
limitations would have barred any claim against the City, which
had last operated the landfill in 1973.
In City of Kenai v. Burnett, 860 P.2d 1233, 1240
(Alaska 1993), we rejected the City's assertion the Burnetts'
1988 inverse condemnation claim for a 1985 taking was time-
barred. We approvingly cited City of Anchorage v. Nesbett, 530
P.2d 1324, 1336 (Alaska 1975), for the proposition that inverse
condemnation claims "are subject to the limitations periods for
adverse possession or ejectment, whichever applies." 860 P.2d at
1240 n.13. We stated:
In City of Anchorage v. Nesbett, 530
P.2d 1324, 1336 (Alaska 1975), we rejected an
argument that inverse condemnation actions
may be time barred either through laches or a
limitations period shorter than the statutory
period provided for adverse possession. We
reaffirm our holding in Nesbett that such
actions are subject to the limitations
periods established for adverse possession or
ejectment, whichever applies. Under AS
09.10.030, the limitations period for
ejectment is ten years. Under AS 09.25.050,
a seven year period applies when the adverse
possessor acquires possession "under color
and claim of title."
Burnett, 860 P.2d at 1240 n.13 (emphasis added).10
According to Lakeview, Nesbett supports the proposition
that an inverse condemnation claim can only be barred if the
government proves that it adversely possessed the complainant's
property. In Nesbett the owner sued to compel the City to remove
a power line from his property and to pay reasonable rental value
for the use of the property. Alternatively, the owner sought
damages because the power lines impaired the economic use of the
land. 530 P.2d at 1327. The City claimed it had a prescriptive
easement for the power lines across the owner's property. Id. at
1327-28. We upheld the trial court's determination that the
City's use of the property was permissive rather than adverse.
Id. 1330-32. We did not rule that proof of all elements for
adverse possession is necessary to time-bar an inverse
condemnation suit. Expiration of the statute of limitations is a
distinct defense, and can be asserted separately from the defense
that the defendant has adversely possessed the plaintiff's
property.
We hold that Lakeview was obliged to file its inverse
condemnation claim within the ten-year period prescribed by
AS 09.10.030. Therefore, the trial court did not err in limiting
recovery on that claim to any new or additional injury occurring
within the ten years before Lakeview filed its complaint.
2. Equitable estoppel
Lakeview argues that the Borough was
equitably estopped from asserting that the statute of limitations
barred inverse condemnation claims pre-dating 1979. Lakeview's
argument is without merit because critical prerequisites for
equitable estoppel are absent. Lakeview relied on Urban Rahoi's
affidavit to support its estoppel claim. That affidavit does not
allege fraudulent conduct nor does it indicate that Lakeview
resorted to legal action within a reasonable period after the
circumstances ceased to justify the delay. Gudenau & Co. v.
Sweeney Ins., Inc., 736 P.2d 763, 769 (Alaska 1987). Likewise,
the record does not permit a conclusion that Lakeview's reliance
on the Borough's promises to clean up the landfill was
reasonable.11 Id. The trial court properly rejected Lakeview's
equitable estoppel argument.12
3. Evidence bearing on the inverse condemnation claim
Lakeview has not adequately briefed the issue of
whether the admitted evidence was sufficient to prevent a
directed verdict. Lakeview essentially argues only that "[e]ven
if the 1979 cut-off were applied, the directed verdict was still
in error. . . . Dr. Mundy's analyses did not include pre-1979
damages." Dr. Mundy was Lakeview's expert appraiser. Our
independent review of the record indicates that the evidence was
not sufficient to avoid a directed verdict.
Because the statute of limitations barred recovery for
harm predating April 18, 1979, to prevail on its inverse
condemnation claim, Lakeview had to prove the Borough caused
economic loss that exceeded the impairment predating April 18,
1979. Consequently, Lakeview had to prove that odors, flies and
other effects from the landfill caused additional decline in the
value of its property in the ten years preceding its April 18,
1989 complaint.13 Phillip Rahoi testified that the landfill's
impacts on the Lakeview property worsened after 1979. For
example, Phillip testified that there were more rats, flies and
gulls on the Lakeview property after 1979. Nonetheless, Lakeview
offered no evidence of the value of these increased impacts and
did not otherwise quantify any incremental impact on the value of
its property.14
The only valuation evidence Lakeview presented to
support its inverse condemnation claim was the testimony of Dr.
Mundy, its expert appraiser. However, as counsel for Lakeview
candidly conceded at oral argument, Mundy calculated Lakeview's
damages by comparing the value of a totally unimpaired trailer
park with the value of the Lakeview property at the time of
trial. Mundy did not compare the value of the Lakeview property
at the time of trial with its value on April 18, 1979, when it
was already impaired, and thus did not quantify the incremental
impact for the relevant period.
The admitted evidence was insufficient to require the
court to submit the inverse condemnation claim to the jury.
4. Limiting expert testimony
Lakeview argues that the trial court erred in limiting
Mundy's expert testimony and that consequently a new damages
trial is required. The court limited Mundy's opinions following
a prolonged dispute about the adequacy of Lakeview's pretrial
disclosure of Mundy's opinions and proposed testimony. The trial
court did not abuse its discretion. To understand why, it is
necessary to review the dispute in some detail.
Lakeview filed its lawsuit on April 18, 1989, and
ultimately sought over thirty-two million dollars in damages.
The Borough sent discovery requests to Lakeview in December 1990
seeking an explanation of Lakeview's damage calculations and
production of supporting documents. The requested information
was potentially relevant to the condemnation claim with respect
to the date of taking, the limitations defense, and the amount of
damages. Lakeview did not respond; the Borough moved to compel.
The parties initially stipulated to hold the motion in abeyance
until the Borough could examine Lakeview's records. Lakeview
understood the Borough's first discovery requests to encompass
appraisals of Lakeview's property.
When Lakeview failed to provide relevant documents as
promised, the Borough renewed its motion to compel. The trial
court granted the motion on September 12, 1991, ordered
production, and also ordered Lakeview to pay $270 in attorney's
fees.
On October 13 the Borough served a second, more
detailed, request for production seeking appraisals, economic
reports and other documents reflecting a landfill-caused
diminution in the value of Lakeview property.
In March 1992 the trial court issued a pretrial order
requiring that expert witnesses be listed and their opinions
disclosed by August 28. The order specified that general
discovery would close August 31 and that experts could be deposed
no later than October 16. Trial was to begin the week of May 3,
1993.
The Borough had difficulty obtaining the documents
sought in its second request for production and in June 1992
again moved to compel. It also moved to bar Lakeview from
presenting evidence that Lakeview had failed to produce in
discovery. Those motions were unresolved as of August 26, 1992,
when the Borough deposed Mundy. Mundy testified at his
deposition that he had not yet calculated damages but had
performed a preliminary analysis of the unimpaired value of the
Lakeview property. Lakeview gave Mundy's preliminary analysis to
the Borough at the Mundy deposition. Mundy had transmitted his
preliminary analysis to Lakeview's attorneys by letter of
September 10, 1991, nearly one year before it was first produced
to the Borough on August 26, 1992. As the pretrial order
required, Lakeview disclosed Mundy's anticipated opinions on
August 28. The outline contained specific damages calculations.
In September 1992 the Borough moved to preclude Mundy's testimony
on the ground Lakeview failed to produce his 1991 appraisal until
the day of his August 26 deposition, although the appraisal was
encompassed by the Borough's December 1990 request and the
court's September 12, 1991 order compelling discovery. Two days
after the Borough filed its motion, Lakeview gave the Borough a
letter from Mundy to Lakeview's counsel. The letter was dated
August 28, 1992 and contained an opinion that differed from
Mundy's 1991 analysis.
On October 5 the trial court sua sponte scheduled a
hearing to address discovery problems. At the hearing the court
again instructed Lakeview to produce "immediately"all previously-
requested documents and ordered it to produce within forty-eight
hours all documents relied upon or created by Mundy that were
previously identified as being located in Mundy's office. The
court ordered Lakeview to make Mundy and another witness
available for redeposition and required Lakeview to pay all costs
and attorney's fees associated with the redepositions and the
Borough's September motion to compel. The trial court warned
Lakeview of the danger of a preclusion order: "If there's any
further difficulty in obtaining information from Mr. Mundy, a
preclusion order will enter. The plaintiffs are about one
centimeter away from a preclusion order at this point."
Mundy was to be redeposed October 9, 1992. On October
8 the Borough received from Mundy all documents he relied upon in
reaching the opinions disclosed in Lakeview's August 28 outline.
The Borough's attorney and appraiser reviewed the documents in
preparation for the Mundy redeposition. Before Mundy's October 9
redeposition began, however, Lakeview's counsel told the
Borough's attorney that Mundy had prepared yet another set of
documents that were "essentially a tabular presentation of Dr.
Mundy's earlier analysis,"with one substantive change. These
new documents were then faxed to the Borough's attorney while he
was redeposing Mundy. During a deposition recess, the Borough's
appraiser advised the Borough's attorney that the documents
contained a significantly different valuation analysis from that
used in either the August 28 opinion or the Mundy letter
previously provided to the Borough. The unimpaired value of the
land changed by more than two million dollars and the damages
calculation changed by more than three million dollars. The
Borough then suspended Mundy's deposition and filed a motion to
preclude Mundy's testimony because it violated the court's
pretrial and October orders, even though Lakeview offered to
reschedule the deposition.
In moving for preclusion, the Borough argued that for
more than a year it had unsuccessfully tried to obtain evidence
of Lakeview's economic damages claims. Lakeview responded that
the pretrial order and the October 1992 order did not preclude
Mundy from refining his opinion after the August 28 disclosure.
The trial court was not persuaded that the changes simply refined
or modified Mundy's previously-disclosed opinion and found
Lakeview's explanation "disingenuous." The court entered an
order October 30, stating in part:
The deadline for disclosure of the
expert's opinion is just that. It does not
contemplate disclosure of only preliminary
material, a preliminary estimation, initial
findings, or an initial draft. It does not
contemplate subsequent substantial
elaboration, refinements of analyses,
modifications, newly disclosed development
plans, or changes in the size and scope of
these new plans.
Lakeview must be held to these
deadlines. It cannot be rewarded for its
abuse of the discovery process or the
inexcusable tardiness of its expert. It must
be stripped of any advantage it might gain by
these practices. And, its attorneys must be
deterred from engaging in or facilitating
these practices.
IT IS THEREFORE ORDERED that the
Borough's motion is granted, in part.
Lakeview, at the Borough's option, will be
precluded from using any opinions or
materials inconsistent with the opinion on
damages and the supporting facts as they were
provided to the Borough on August 28, and
September 24, 1992, or the materials produced
on October 8, 1992. . . . If the Borough
wishes, it may re-depose Mr. Mundy. All
expenses associated with the re-taking of the
deposition shall be borne by Lakeview.[15]
The Borough also filed a separate motion in October to
preclude Mundy's testimony because his opinion was erroneously
based on a 1989 taking date. Lakeview acknowledged in response
that Mundy's previously-expressed opinions were erroneous and
advised the Borough that Lakeview would provide still another
analysis, this one using an April 19, 1979 taking date. The
court denied the Borough's motion in December, but did not
address the propriety of any subsequent revised analysis by Mundy
employing a 1979 taking date.
In March 1993 Lakeview produced a revised Mundy
analysis. It was also flawed. The calculations for the 1979
impaired versus unimpaired analysis that were omitted from the
earlier opinions were again omitted. This omission was in part
due to a clerical mistake and in part because Lakeview's attorney
appears to have not yet communicated the necessity of this
analysis to Lakeview's expert. The revised report again failed
to take into account the existence of the landfill prior to April
19, 1979. According to Mundy, "the unfortunate thing is, . . .
[the 1979 calculations] . . . didn't get into the report. I was
not at my office when the final report was put together, and the
1979 information inadvertently was left out." The trial court
indicated it would exclude the 1993 analysis produced in March
because it did not comply with the October 30, 1992 order. As
Lakeview admitted, the 1993 analysis was inconsistent with the
court's 1991 ruling that Lakeview was barred from recovering
based on the existence and location of the landfill, conditions
that predated the complaint by more than ten years.
At trial, Mundy attempted to testify to a still
different valuation. For the first time, Mundy attempted to
determine damages by subtracting the pre-1979 damages.16 Mundy
admitted the report produced in March 1993, and by implication
each of his earlier reports, did not take into account the
property's impaired, as opposed to unimpaired, value in 1979.
Therefore, when Mundy attempted to testify at trial about the
1979 value, the court ordered that testimony stricken.
Lakeview contends that it was faced with a "Hobson's
choice." It either had to use an incorrect valuation date or it
had to change the analysis, contrary to the court's order
precluding testimony inconsistent with Mundy's pre-October 9,
1992 analysis. Lakeview argues that the trial court erred by
excluding the March 1993 report and by preventing Mundy from
modifying his opinion at trial, and that the court effectively
forced Mundy to testify to an erroneous opinion.
Lakeview relies upon Grimes v. Haslett, 641 P.2d 813
(Alaska 1982), to support its contention that the trial court
should have ordered a continuance to allow the Borough to defend
against Mundy's "modified"opinion, instead of preventing him
from changing his analysis.17 Grimes is not dispositive; it
supports the Borough's argument that the trial court did not
abuse its considerable discretion in excluding or limiting
Mundy's testimony.
Another decision illustrates the trial court's
discretion in excluding evidence following a discovery violation.
In State v. Guinn, 555 P.2d 530 (Alaska 1976), we affirmed the
trial court's exclusion of testimony after a party inadvertently
failed to comply with a discovery order. The State there failed
to produce the requested notebooks of a state trooper who
investigated an accident; the trial court struck the trooper's
testimony regarding accident measurements because the trooper had
no independent recollection of the measurements contained in the
unproduced notebook. We held that a showing of "wilful"
disobedience was not required in order to preclude a witness'
testimony. Id. at 543.
In Guinn, we distinguished between a "devastating
establishment-preclusion order"and the "far less drastic"remedy
of precluding testimony. Id. We have previously noted the
difference between the "extreme"sanction of striking an answer
or complaint, and the sanction of limiting or excluding evidence
as a result of a discovery violation. See Dade v. State, Child
Support Enforcement Div. ex rel. Lovett, 725 P.2d 706, 708
(Alaska 1986). Here, the trial court did not impose "litigation
ending"sanctions, but rather prevented Mundy from testifying in
a manner inconsistent with his pre-October 1992 opinion.
Likewise, in Drickersen v. Drickersen, 604 P.2d 1082
(Alaska 1979), we upheld the trial court's exclusion of an
expert's new opinions offered for the first time at trial. In
his pretrial deposition, the expert testified he had reached only
"preliminary conclusions" that were subject to change. The
opinion he proffered at trial had not previously been disclosed.
Id. at 1087.
Guinn and Drickersen support the exclusion of Mundy's
post-October 1992 opinions and testimony.18 The trial court did
not abuse its discretion by excluding the March 1993 analysis and
refusing to allow Mundy to change his opinion at trial.19
5. Trial court's decision to consider only the
Borough's non-negligent conduct in assessing the inverse
condemnation claim
Lakeview claims that the trial court erred by refusing
to consider inverse condemnation damages caused by the Borough's
"improper, unlawful, or negligent maintenance or operation of the
landfill." According to the trial court, "Lakeview must prove a
taking in this regard by showing quantitative or qualitative
change attributable to the Borough's non-negligent interference
which results in a measurable loss of market value sustained
during the ten years preceding commencement of the suit."
It is not necessary to consider whether the trial court
erred in concluding that only "non-negligent"activities can be
considered in assessing an inverse condemnation claim. Any error
was harmless. Cf. Poulin v. Zartman, 542 P.2d 251 (Alaska 1975),
on rehearing, 548 P.2d 1299, disavowed on other grounds, State v.
Alex, 646 P.2d 203, 208 n.4 (1982). The trial court properly
directed a verdict on the inverse condemnation claim in the
absence of sufficient evidence to permit the jury to conclude the
Borough impaired the value of the property after 1979. Further,
by special verdict form, the jury found that the Borough was
negligent between 1987 and the time of trial, but that the
Borough's negligence did not cause Lakeview's injuries. That
finding is necessarily conclusive regarding causation for a
negligence-based inverse condemnation claim during the same time
period. Further, Lakeview elicited evidence supporting its
assertion that impacts on its property from the landfill worsened
over time and that the effects were especially bad after 1987.
Given that evidence, the jury which found that Borough negligence
had caused Lakeview no damage from 1987 onward also would have
been compelled to find a lack of causation regarding Borough
negligence before 1987.20 Consequently, any error in failing to
allow the jury to consider Borough negligence in deciding
Lakeview's inverse condemnation claim must be considered
harmless.21
B.
Jury Instructions
Lakeview contends that the jury instructions
erroneously failed to inform the jury that Lakeview could recover
damages for nuisance and negligence from April 1989, when it
filed its complaint, until the time of trial in 1993.22 This
contention is without merit. Lakeview confuses the period for
establishing liability with the period for which damages are
recoverable. The instructions correctly defined the time period
within which any acts constituting negligence or creating a
nuisance had to occur. The instructions did not limit Lakeview's
damages to those suffered in the two years before Lakeview filed
its complaint. The instructions specifically provided that
damages could be recovered until "the present."23
Moreover, any possible error was harmless because the
jury found there was no nuisance and also found that Lakeview's
damages, if any, were not caused by the Borough's negligence.
See Zoerb v. Chugach Elec. Ass'n, Inc., 798 P.2d 1258, 1262 n.7
(Alaska 1990) (holding that any error in punitive damage
instructions was harmless because the jury found for defendants).
Lakeview next complains that the trial court erred in
instructing the jury about the impact of violations of certain
sanitary regulations.24 The court gave the following instruction:
Department of Environmental
Conservation regulations provide that a
person who owns or operates a landfill shall
ensure that the solid waste is compacted in
two foot increments, and covered with six
inches of cover on a daily basis.
If you decide that it is more
likely true than not true that the Borough
violated this regulation then you are
required to find the [Borough] negligent in
respect to the specific acts that constituted
such violation.
Lakeview argues that the court erred in failing to instruct the
jury that it could hold the Borough liable for the acts of
Environmental Recycling Incorporated (ERI), the operator of the
landfill, even though ERI was an independent contractor.25
Lakeview unsuccessfully sought an instruction based on
Restatement (Second) of Torts 424 (1986). Lakeview concedes we
have not adopted 424 as an exception to the usual rule that an
employer of an independent contractor is not liable for the torts
of the independent contractor.26
Because any possible error was harmless, it is not
necessary to decide whether the trial court erred in declining to
give the requested instruction. First, it is undisputed that the
Borough owned the landfill during the entire time ERI operated
the facility. Under 18 AAC 60.035, the Borough, as owner, would
have been liable if ERI violated any sanitary regulations. The
court instructed the jury that the Borough would be liable for
regulatory violations occurring while the Borough owned the
landfill. The independent contractor instruction was
unnecessary.
Second, although it found the Borough negligent, the
jury found by special verdict that the Borough's negligence was
not a legal cause of Lakeview's claimed damages. Any error in
failing to provide an alternative basis for finding the Borough
negligent must be considered harmless.27 We therefore reject
Lakeview's argument that instructional errors require a new
trial.28
C. The Borough's Cross-Appeal
1. The characterization of Lakeview's nuisance claim
The Borough asks us to characterize
Lakeview's nuisance claim as permanent to prevent
future Lakeview claims. However, the jury found
that there was no nuisance. The Borough is not
entitled to a declaration on an issue mooted by
the verdict and our affirmance. And to the extent
the Borough claims the jury instructions
mischaracterized the nuisance claim, the Borough's
failure to object also bars appellate review.
Alaska R. Civ. P. 51(a).
2. The Borough's offer of judgment
Lakeview did not accept a Civil Rule 68 offer of
judgment made by the Borough; the judgment was not more favorable
than the offer. The Borough argues that the trial court erred in
concluding that it was unable to consider the unaccepted offer of
judgment in awarding attorney's fees against Lakeview pursuant to
Civil Rule 82.
The trial court found that the Borough was the
prevailing party and that the Borough's total fees of $269,969.77
were reasonable. Notwithstanding those findings and the
Borough's defense verdict, the court declined to enhance the
Borough's attorney's fee award. Rule 68 provides in relevant
part:
(a) At any time more than 10 days before
the trial begins, either the party making a
claim or the party defending against a claim
may serve upon the adverse party an offer to
allow judgment to be entered in complete
satisfaction of the claim for the money or
property or to the effect specified in the
offer, with costs then accrued. . . .
(b) If the judgment finally rendered by
the court is not more favorable to the
offeree than the offer, the prejudgment
interest accrued up to the date of judgment
is entered shall be adjusted as follows:
(1) if the offeree is the party
making the claim, the interest rate will be
reduced by the amount specified in
AS 09.30.065 and the offeree must pay the
costs and attorney's fees incurred after the
making of the offer (as would be calculated
under Civil Rules 79 and 82 if the offeror
were the prevailing party). The offeree may
not be awarded costs or attorney's fees
incurred after the making of the offer.
In briefing this issue, the parties cite various
decisions of this court pre-dating amendments to Civil Rule 82.
Those amendments became effective July 15, 1993. The trial
court's attorney's fees order was dated August 11, 1993. The
record does not reveal whether the trial court considered the
effect of the 1993 amendments, which allow the trial court to
consider various factors to determine whether to vary from awards
calculated per the rates set out in Civil Rule 82(b)(1) and (2).
See Civil Rule 82(b)(3).29 Given these amendments, our pre-
amendment decisions discussing the impact of a successful Rule 68
offer on attorney's fees awards have limited application.30
Considering the relationship between Rule 82 as amended
in 1993 and Rule 68, we conclude that when a trial court awards
fees it may, but need not, take into account the existence of an
unaccepted Rule 68 offer if the claimant-offeree fails to better
the offer.31 Because the trial court believed that it was unable
to consider the Borough's successful Rule 68 offer, we remand so
the trial court can consider whether to increase the attorney's
fees award in light of the Borough's successful offer.32
3. Attorney's fees in favor of the City
After Lakeview sued the Borough, the trial court
permitted the Borough to file a third-party complaint against the
City notwithstanding Lakeview's argument that any claims Lakeview
had against the City "expired long ago." The trial court later
granted summary judgment to the City, ruling that the Borough's
third-party claims were barred by the statute of limitations.
The court entered final judgment for the City pursuant to Civil
Rule 54(b).33
The Borough argues that the trial court erred in
ordering the Borough to pay part of the City's attorney's fees
incurred in defending against the Borough's third-party
complaint.34 It states that "[w]hen a third-party defendant
successfully defends against a derivative claim, the trial court
has the discretion to award attorneys fees in favor of that
defendant directly against the principal plaintiff." While no
party disagrees with this statement, the City and Lakeview
maintain that the trial court was not required to award the City
fees against Lakeview, and that the trial court did not abuse its
discretion in awarding fees to the City against the Borough. We
agree.
Even though the Borough's perceived need to file a
third-party complaint was fueled by Lakeview's statements
regarding damages and by the trial court's rulings regarding the
statute of limitations, the City prevailed on the Borough's third-
party claims. It was appropriate to award the City fees against
the Borough, the party which began the third-party action.
Because the primary dispute in this case was between Lakeview and
the Borough, not Lakeview and the City, the trial court did not
abuse its discretion by imposing the City's award against the
Borough and not against Lakeview. Cases such as State ex rel.
Palmer Supply Co. v. Walsh, 575 P.2d 1213 (Alaska 1978), relied
upon by the Borough, are inapplicable.35 We find no error.
IV. CONCLUSION
The court did not err in directing a verdict on
Lakeview's inverse condemnation claim. Lakeview presented
insufficient evidence to submit that claim to the jury. The
trial court did not err in applying the ten-year statute of
limitations to Lakeview's inverse condemnation claim. It did not
err in preventing Lakeview's expert from changing his opinion at
trial. Further, any error in limiting the inverse condemnation
claim to the Borough's non-negligent conduct was harmless, as was
any possible error regarding the jury instructions. The judgment
against Lakeview is AFFIRMED.
We REMAND for consideration of the effect of the
Borough's successful offer of judgment on the Borough's claim for
attorney's fees. The remaining issues raised by the Borough's
cross-appeal against Lakeview are moot.
The attorney's fees award in favor of the City against
the Borough is AFFIRMED.
_______________________________
1 Since 1972, the active portion of the landfill has been
moving in a direction away from the Lakeview property.
2 Lakeview opposed the Borough's third-party action on
the basis that any claim Lakeview had against the City for its
operation of the landfill from 1964 to 1973 was barred by the ten-
year statute of limitations for damage to real property. See AS
09.10.030.
3 The Borough later filed more motions for partial
summary judgment to limit the remaining issues. Among other
things, the court granted the Borough's request for summary
judgment on any regulatory taking claim by Lakeview. However,
the court again rejected the Borough's claim that it adversely
possessed any of Lakeview's property rights regarding the waste
processed at the landfill pursuant to the DEC permit.
4 The Borough never physically invaded Lakeview's
property, nor did the Borough excessively regulate the Lakeview
property so as to constitute a taking. Further, Lakeview
admitted that it had no claim "for damages resulting from the
Borough's initial decision to operate the dump," and does not
appeal the trial court's ruling on summary judgment that claims
based on the existence and location of the landfill were time-
barred.
5 In reviewing a directed verdict, we consider the
evidence in a light most favorable to the non-moving party and
will affirm the verdict only if fair minded jurors could not
reach different conclusions. Colt Indus. v. Murphy, 822 P.2d
925, 928 (Alaska 1991).
6 Lakeview also claims that the trial court "erred in
refusing to acknowledge evidence of contaminated groundwater as a
partial cause of the economic loss suffered by the Rahois."
Lakeview does not adequately brief this argument. It is
consequently waived. See Peterson v. Mutual Life Ins. Co., 803
P.2d 406, 410 (Alaska 1990).
7 Summary judgment is appropriate only where there is no
genuine issue of material fact and the moving party is entitled
to judgment as a matter of law. We review de novo an order
granting summary judgment. Gilbert v. State Dep't of Fish &
Game, 803 P.2d 391, 394 (Alaska 1990).
8 The trial court also stated that proof of the elements
of adverse possession was necessary "only to bar takings claims
for damage within the ten year statute of limitations."
Expiration of the ten-year statute of limitations is a pre-
condition for prescriptively acquiring property without color of
title. See Weidner v. Department of Transp., 860 P.2d 1205, 1209
(Alaska 1993); City of Anchorage v. Nesbett, 530 P.2d 1324, 1328
(Alaska 1975).
9 AS 09.10.030 provides in part, "No person may bring an
action for the recovery of real property, or for the recovery of
the possession of it unless commenced within 10 years [after the
cause of action has accrued]."
10 In Weidner, 860 P.2d at 1212, we stated:
The theory of prescriptive easement does
not grant the State the affirmative authority
to take property without just compensation.
Rather, the prescriptive period -- as with
any statute of limitations -- requires a
private landowner to bring an inverse
condemnation action for public use of private
property within a specified period of time.
At the end of the prescriptive period, the
landowner's right to bring suit is
extinguished, effectively vesting property
rights in the adverse user. In the present
case, Weidner's claim for just compensation
has been extinguished by expiration of the
prescriptive period.
(Footnotes omitted.) In Weidner we upheld the trial court's
determination that the state's reconstruction of a road that was
originally built with a prior owner's permission, coupled with
the expiration of the statutory ten-year period, constituted a
prescriptive easement. Id. at 1209-11. We had no occasion to
consider whether the State was required to demonstrate that it
prescriptively acquired the complainant's property in order to
bar the inverse condemnation claim.
11 Since the "early 1970's,"Lakeview had made "numerous"
complaints to the Borough about the landfill, and had received
"numerous" promises from the Borough to correct the problems.
Lakeview threatened to sue the City in 1972 and the Borough in
1981 because of the landfill. Based on Lakeview's own assertions
that the Borough took inadequate precautions to alleviate the
long-standing and worsening effects of the landfill on
neighboring property, Lakeview could not reasonably believe the
Borough would eliminate the problem.
12 Because the essential elements of an equitable estoppel
claim are lacking, we decline to consider the Borough's argument
that a higher standard of proof is required when equitable
estoppel is asserted against the government.
13 See City of Anchorage v. Sandberg, 861 P.2d 554, 558-59
(Alaska 1993) (defining a taking under principles of inverse
condemnation); Homeward Bound v. Anchorage Sch. Dist., 791 P.2d
610, 614 (Alaska 1990) ("private property is taken or damaged for
constitutional purposes if the government deprives the owner of
the economic advantages of ownership"); State v. Doyle, 735 P.2d
733, 735 (Alaska 1987) ("taking" requires proof of the
deprivation of economic benefits to the owner).
14 We note that the Rahois did not themselves offer
opinions about any diminution in value of the Lakeview property
after 1979. An owner's opinion on the topic of property value is
normally admissible in Alaska. See Schymanski v. Conventz, 674
P.2d 281, 286 (Alaska 1983).
15 Despite the court's order, Lakeview refused to allow
the Borough to redepose Mundy. A week before trial was to begin,
the court ordered Lakeview to make Mundy available for deposition
without any conditions.
16 In reaching his March 1993 valuation, Mundy computed
the value of the Lakeview property with and without the landfill
in 1979 and subtracted the difference from the impaired minus the
unimpaired value of the property in 1993.
17 In Grimes, the plaintiff failed to supplement responses
to interrogatories as required by Alaska R. Civ. P. 26(e), and
the trial court granted the defendant an extension of time to
prepare to refute a doctor's opinion that had changed during the
course of three examinations of the plaintiff. Although we found
that the trial court's decision to grant the continuance was
reasonable and was not an abuse of discretion, we also recognized
that a trial court has the discretion to exclude testimony if
there have been discovery failures. Id. at 821-23. "Its
decision in these matters will only be overturned upon an abuse
of discretion." Id. at 822.
18 Exclusion of the March 1993 report was proper both as a
discovery sanction and because it contained a fundamentally
erroneous valuation date. Even though it excluded the March 1993
report, the trial court considered its contents before directing
a verdict on the inverse condemnation claim. As to Mundy's
proffered trial testimony, Lakeview failed to make an offer of
proof regarding the proposed changes to Mundy's testimony, and
consequently failed to preserve the issue for appeal. Agostinho
v. Fairbanks Clinic, 821 P.2d 714, 717 (Alaska 1991).
19 The Borough argues that the trial court should have
precluded all of Mundy's testimony. The trial court did not
abuse its discretion by allowing Mundy to express opinions
consistent with opinions timely disclosed to the Borough.
20 To the extent Lakeview is objecting to the trial
court's exclusion of evidence of pre-1987 negligence, Lakeview
made no offer of proof regarding the excluded testimony, and
therefore did not preserve the issue on appeal. Agostinho, 821
P.2d at 717.
21 The Borough's argument that the trial court erred in
denying its summary judgment motion on the inverse condemnation
and nuisance claims is moot because the Borough prevailed on
those issues at trial and the trial court's decision with respect
to those issues is affirmed.
22 "An erroneous statement of law in a jury instruction
will not constitute reversible error unless it prejudiced one of
the parties." Grimes, 641 P.2d at 818.
23 The instructions on negligence and nuisance damages
likewise did not limit Lakeview's damages to those accruing as of
the date Lakeview filed its complaint.
24 The general requirements for operating a solid waste
disposal facility are found in 18 Alaska Administrative Code
(AAC) 60.035. This regulation applies to persons who own or
operate a solid waste disposal facility. Id.
25 Lakeview does not dispute that ERI operated the
landfill during 1987 until 1989.
26 Restatement (Second) of Torts 424 provides:
One who by statute or administrative
regulation is under a duty to provide
specified safeguards or precautions for the
safety of others is subject to liability to
the others for whose protection the duty is
imposed for harm caused by the failure of a
contractor employed by him to provide such
safeguards or precautions.
27 The jury did not answer that portion of the special
verdict form which asked whether it found the Borough negligent
"during the periods that the landfill was operated by ERI," and
Lakeview did not request clarification or an instruction that the
jury answer that question. Lakeview consequently failed to
preserve this issue for appeal. Alaska R. Civ. P. 51(a).
28 Lakeview also argues that the trial court erred in
allowing the Borough to ask leading questions of a witness even
though Lakeview called the witness as a "hostile"witness. Trial
courts are granted "almost unlimited discretion"in determining
the order of proof at trial. American Nat'l Watermattress Corp.
v. Manville, 642 P.2d 1330, 1339 (Alaska 1982) (referring to
Evidence Rule 611, governing the use of leading questions in
Alaska). Lakeview does not allege that the trial court's rulings
regarding the use of leading questions denied it a fair trial,
nor does Lakeview claim that it is entitled to a new trial
because of the leading questions. Therefore, the issue is not
reviewable. McCormick on Evidence 6, at 18-19 (4th ed. 1992).
29 As amended, Civil Rule 82(b)(3) provides:
(3) The court may vary an
attorney's fee award calculated under
subparagraph (b)(1) or (2) of this rule if,
upon consideration of the factors listed
below, the court determines a variation is
warranted:
(A) the complexity of
the litigation;
(B) the length of trial;
(C) the reasonableness
of the attorneys' hourly rates and the
number of hours expended;
(D) the reasonableness
of the number of attorneys used;
(E) the attorneys'
efforts to minimize fees;
(F) the reasonableness
of the claims and defenses pursued by
each side;
(G) vexatious or bad
faith conduct;
(H) the relationship
between the amount of work performed and
the significance of the matters at
stake;
(I) the extent to which
a given fee award may be so onerous to
the non-prevailing party that it would
deter similarly situated litigants from
the voluntary use of the courts;
(J) the extent to which
the fees incurred by the prevailing
party suggest that they had been
influenced by considerations apart from
the case at bar, such as a desire to
discourage claims by others against the
prevailing party or its insurer; and
(K) other equitable
factors deemed relevant.
If the court varies an award, the court
shall explain the reasons for the variation.
30 See Hutchins v. Schwartz, 724 P.2d 1194, 1203 (Alaska
1986) (holding that Rule 82 subsumes Rule 68 where a defendant
who betters his offer of judgment prevails at trial); Wickwire v.
State, 725 P.2d 695, 703-04 (Alaska 1986) (holding that a
defendant who ultimately fares better than its Rule 68 offer is
entitled only to partial compensation for post-offer attorney's
fees); Wright v. Vickaryous, 611 P.2d 20, 23 (Alaska 1980)
(rejecting the argument that Rule 68 only applies when an offeree
obtains judgment in his or her favor).
31 Lakeview concedes that the trial court has the
discretion to increase an attorney's fees award based on a Rule
68 offer.
32 We do not mean to imply that the existing award is
inadequate or that an additional award is required.
33 The Borough filed a separate appeal from the trial
court's entry of final judgment in favor of the City, the denial
of the Borough's Rule 59(f) motion, and the award of attorney's
fees to the City against the Borough. Except for the attorney's
fees issue, all other issues briefed in that appeal are rendered
moot by our resolution of Lakeview's appeal.
34 We review the trial court's allocation of attorney's
fees among the parties for an abuse of discretion. State ex rel.
Palmer Supply Co. v. Walsh, 575 P.2d 1213, 1221 (Alaska 1978).
35 In Palmer Supply Co., a supplier of materials brought a
state Miller Act claim against a general contractor's payment
bond and the general contractor impleaded the subcontractor that
was responsible for paying the supplier. 575 P.2d at 1216. The
trial court found that the supply company was not entitled to
payment and ruled that the supply company had to pay the
subcontractor's attorney's fees. Id. In upholding the trial
court's award this court noted that
the realities of this kind of litigation
are that the prime contractor and his surety
will implead the party which may ultimately
have to pay the judgment or which has
knowledge of the facts necessary for the
defense of the action.
Id. at 1220-21.
The Borough's reliance on Moses v. McGarvey, 614 P.2d
1363 (Alaska 1980), is also misplaced. In that case a
shareholder brought suit against a corporation, its president
(Moses) and the president's daughter. The corporation asserted
no claim against Moses. This court upheld the trial court's
decision that Moses, as an individual co-defendant, should pay
the shareholder's costs and attorney's fees. We upheld the award
because Moses was the most blameworthy of the defendants. Id. at
1367-71. However, we overturned the trial court's award of full
shareholders' attorney's fees against Moses and found that Moses
was not responsible for the attorney's fees of the co-defendant
corporation. The corporation did not bring an action against
Moses, therefore, it could not "prevail"over him. Id. at 1373.
Moses does not help the Borough because in the present dispute,
Lakeview did not sue both the Borough and the City; they were
consequently not co-defendants.
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