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Mount Juneau Enterprises, Inc. v. Juneau (9/6/96), 923 P 2d 768
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NOTICE: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501; phone (907) 264-0607; fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
MOUNT JUNEAU ENTERPRISES, )
INC., ALASKA TRAMS, INC., ) Supreme Court No. S-6611
ARNT I. ANTONSEN, and CHARLES )
KEEN AND KAREN KEEN, ) Superior Court No.
) 1KE-91-642 CI
Appellants, )
) O P I N I O N
v. )
) [No. 4396 - September 6, 1996]
THE CITY AND BOROUGH OF )
JUNEAU, a Municipal Corpora- )
tion, BRUCE BOTELHO, CAREN )
ROBINSON, ROSALEE T. WALKER, )
KIM S. ELTON, DENNIS W. EGAN, )
ROSIE PETERSON, ERROL )
CHAMPION, GEORGE DAVIDSON, )
JOHN MacKINNON, KEVIN )
RITCHIE, BARBARA BLASCO, )
and MURRAY WALSH, )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Ketchikan,
Larry C. Zervos, Judge.
Appearances: Phillip Paul Weidner, Weidner &
Associates, Inc., Anchorage, for Appellants.
Avrum M. Gross and Susan A. Burke, Gross &
Burke, Juneau, for Appellees.
Before: Rabinowitz, Matthews, and Compton,
Justices. [Moore, Chief Justice, and
Eastaugh, Justice, not participating.]
RABINOWITZ, Justice.
I. INTRODUCTION
This appeal involves an interwoven property right and
contractual dispute surrounding a failed attempt by Charles Keen to
construct a tram to the top of Mount Juneau.
II. FACTS AND PROCEEDINGS
There are two separate sets of facts underlying the
issues of this appeal, those relating to the tunnel claim and those
relating to the tram claims.
A. The Tunnel Claim
In 1913, the Alaska Juneau Gold Mining Company (AJ)
obtained an easement to construct and maintain a tunnel underneath
the Red Jacket and White Wing mining claims. The easement granted
AJ, "its successors and assigns forever, the right to drive,
construct and maintain"a 9' by 14' tunnel under the Red Jacket and
White Wing mining claims to enable the AJ "to construct and
perpetually maintain a transit tunnel in and through which to lay
water pipes, flumes and other conduits for the purpose of conveying
water. . . ." The tunnel connected the two already existing ends
of what is known as "Tunnel No. 3."
On January 3, 1974, AJ Industries conveyed its rights in
the tunnel to the Alaska Electric Light & Power Company (AEL&P) by
a statutory quitclaim deed. That June, AEL&P granted the City and
Borough of Juneau (City) a permanent easement specifically
authorizing the City to use the tunnel for "the transmission and
storage of water." From September 1977 to April 1979, contractors
for the City worked to convert the tunnel into a public water
reservoir. The entire project was accepted as complete on November
1, 1979; however, additional work continued until May 1982.
Sometime in 1972, Charles Keen became interested in
purchasing the Red Jacket and White Wing mining claims overlying
the tunnel. He contacted Leonard Idso, who was paying taxes on the
property at the time, and apparently obtained an option to purchase
the property. The first record of Keen's interest in the property
is an earnest money agreement, dated October 5, 1981, between Keen
and Idso for the sale of property including the Red Jacket and
White Wing mining claims. The agreement provides that the purchase
price for the two mining claims, as well as a third mining claim,
was $10,000. The agreement also states that the real property was
to be conveyed subject to "easements of record." A statutory
warranty deed from Idso to Charles and Karen Keen for the three
mining claims was executed on October 16, 1981, and on October 22,
1981, the Keens quitclaimed their interest to Alaska Trams, Inc.
Keen testified in his deposition that he first learned of
the City's use of the tunnel either just prior to or immediately
after his purchase. (EN1) Keen testified that, at some time after
the purchase, he and his wife saw a map at the municipal building
showing the City's use of the tunnel. He advised the City that a
mistake had been made and thereafter took the position that the
City was trespassing on his property.
B. The Tram Claims
In 1976, the City became involved in Keen's plans to
build a tram to the top of Mount Juneau. The first plan called for
a tramway from a base terminal on South Franklin Street to the top
of Mount Juneau with a mid-point tower on Gastineau Ridge. The
City leased a piece of land on Gastineau Ridge to Alaska Trams for
the mid-point tower and issued a conditional use permit that would
allow the construction. In 1978, the City sold Keen some land on
South Franklin Street to be used for the base terminal. The deed
of sale contained a reversion clause providing that the City could
repurchase the land if it was not used to develop the tram within
four years. The deadline, however, was extended several times. In
1984, the City modified its procedures and required contractors
with conditional use permits to secure building permits and begin
construction within 18 months. Keen applied for a new permit, set
to expire in February 1986, based on the same plan outlined in
1976.
On February 25, 1985, Keen offered to waive all of his
potential tunnel claims against the City if the City would deed him
the property he already owned on South Franklin Street free of the
reversion clause, deed him the land owned by the City on Gastineau
Ridge and at that time leased to Keen for the mid-point towers,
grant him certain air rights over City property, and "road deed
access and parking space . . . over City property"to his mining
claims. After an initial ordinance reflecting the terms of this
settlement was debated and rejected by the Assembly, a new
ordinance reflecting similar terms, Ordinance No. 85-53am, was
introduced and passed. The provision required Keen to submit
surveys describing the as yet unspecified location, extent and
scope of the easements for the road and the parking lot "at a
location and size to be approved by staff in accordance with
existing planning and zoning standards."
At the time Ordinance 85-53am was adopted, Keen's
conditional use permit authorized the placement of mid-point towers
on Gastineau Ridge. However, Keen then decided to change the plans
for the tram due to a dispute over air rights. Instead of having
the tram begin on South Franklin Street, the new plan located the
base of the tram on one of Keen's mining claims in Gold Creek
Basin. In August of 1985, the City apparently concluded that the
new plan would have to be evaluated by the Planning Commission and
that Keen would have to proceed through the conditional use permit
procedure. Keen's representative was subsequently informed that
the new plan would require a zoning change and a new conditional
use permit.
In late 1986, the City Manager requested Keen to provide
the survey required under Ordinance 85-53am. Specifically, he
noted that the granting of an easement "for a road and parking lot
over city and borough property connecting Red Jacket, White Wing,
and Black Diamond mining claims to the nearest existing road"was
conditioned on Keen "providing the manager with a stamped survey,
describing the location, scope and extent of the easement at a
location and size to be approved by staff in accordance with
existing planning and zoning standards."
Keen eventually applied for a zoning change for the land
near his mining claims. However, because of numerous problems
identified with that plan, Keen and the City agreed to come up with
an alternative plan. Under the alternative plan, the base terminal
would be located on South Franklin Street as envisioned by the
original plan, but it would be located on City land to avoid any
dispute over air rights. The City issued a new conditional use
permit for this plan in April of 1987.
Keen's representatives and the City worked to prepare
Ordinance No. 87-30 which provided for the conveyance of City land
on South Franklin Street to Keen in exchange for Keen's release of
his tunnel trespass claims against the City. The ordinance was
hotly debated at the Assembly meeting on May 4, 1987, and it ran
into heavy public opposition due in part to the lack of an
appraisal value for the tunnel claim. The ordinance was defeated
by a 4 to 3 vote of the Assembly.
In the meantime, several events of importance were taking
place. First, in mid-1986, Alaska Trams filed for Chapter 11
bankruptcy. Second, City attorneys interpreted Ordinance No. 85-
53am simply as an ordinance designed to settle the tunnel claims by
authorizing the City Manager to negotiate a settlement and to
transfer City land as part of the deal. Keen, on the other hand,
had always contended that the ordinance was a binding contract.
Third, City attorneys and some City assembly members were concerned
that Keen's tunnel claim was worthless and an appraisal was
eventually ordered to value the claim.
Keen's representatives and the City subsequently began to
work on Ordinance No. 87-34 to address the problems which led to
the defeat of Ordinance No. 87-30. The appraisal, received prior
to the Assembly's final action on Ordinance No. 87-34, concluded
that the tunnel claim was valueless. Thus, the Assembly directed
City staff to remove certain reversion and repurchase provisions in
Ordinance No. 87-34 and to provide for the sale of City land at
fair market value subject to a discount to reflect the litigation
value of Keen's claim. This version of the ordinance was passed by
the Assembly.
Keen did not support this ordinance and refused to
negotiate a credit for settling the tunnel claim. Keen approached
the City and requested that the land transfer be separated from the
issues surrounding the tunnel claim. The Assembly then passed
Ordinance No. 88-03 which authorized conveyance of the property to
Alaska Trams for an established price without requiring him to
compromise the tunnel claim. The ordinance also required Keen to
undertake certain actions before obtaining title to the property,
including providing necessary surveys. These conditions were to be
met by December 5, 1988, but due to delays, the land transfer was
not completed until July 12, 1989.
In the meantime, the 1987 conditional use permit was set
to expire in October of 1988. Prior to the expiration, Keen
applied for and was granted a "fast track authorization"permit
(FTA) that would allow him to build the project in phases. The
permit required the work to commence by April 28, 1989, and that
"construction activity shall continue without interruption until
all work of the lower and mid terminal lower tram is accomplished."
No work was commenced prior to April 28, 1989 and the
starting date was extended until October 9, 1989. Work commenced
prior to that date and continued sporadically until the spring of
1990. On October 29, 1990, Keen and City staff agreed to the
conditions under which the FTA would be continued in force even
though Keen's work on the project had stopped. Specifically, Keen
agreed to provide insurance to cover damages to adjoining
landowners and to provide a written guarantee from a reputable
contractor that if Keen did not complete the lower retaining wall
by April 30, 1991, the contractor would do so. Keen failed to
deliver the insurance and guarantee, and the City set a January 22,
1991 deadline for Keen's performance of the agreement.
At about this time, the Alaska Trams bankruptcy was
converted into an involuntary Chapter 7 proceeding, and the City
began to deal with the bankruptcy trustee. The City extended the
insurance coverage and building commitment deadline until February
1, 1991 at the request of the bankruptcy trustee. The insurance
was then finally posted and a contractor signed an agreement to
complete the work if Keen failed to complete it. However, the
contractor's guarantee was conditioned on Mount Juneau Enterprises'
retaining the building permits.
On January 25, 1991, the City Manager, Kevin Ritchie, was
interviewed by a radio reporter. Ritchie stated that he could not
think of a good reason to extend the permit past its last
expiration date for Keen, but that the City would cooperate with
the bankruptcy trustee. The City and the bankruptcy trustee began
to discuss the status of the permit. The City informed the trustee
that if the project was cancelled for reasons beyond Alaska Trams'
control, the City would be able to refund $27,000 of the unexpended
building permit fees to the bankruptcy estate. The trustee
subsequently informed the City that the project was cancelled.
Mount Juneau Enterprises immediately objected to the
cancellation, and filed a motion before the bankruptcy court
seeking to enjoin the trustee from cancelling the project. A
hearing was held on March 8, 1991. The bankruptcy judge refused to
enter an order, but ruled that the trustee had not effectively
cancelled the project, and that the proper procedure to follow for
cancellation of the project was to move for abandonment.
Immediately after the hearing, the City Manager wrote to
Keen and the Assembly advising them of the judge's ruling and
stating that the City would determine whether all the conditions of
the building permit had been satisfactorily met. He invited Keen
to meet with him and discuss the matter. A meeting was held. (EN2)
The City agreed to confirm in writing that the permit was valid,
and extended the time period within which Keen was to complete the
retaining wall until May 31, 1991.
However, Keen did not comply with the new deadline, and
on June 23, 1991, he filed this suit against the City. Counts 1
through 5 of Mount Juneau Enterprises' complaint concerned the
tunnel claim and included a claim for damages for trespass. Counts
6 through 13 concerned the tram claims and included claims for
damages for breach of contract and fraud. The City subsequently
informed Keen that the permit had expired.
After extensive discovery, both parties moved for summary
judgment. Following oral argument, the superior court concluded
that there were no issues of material fact concerning any of the
claims and entered final judgment in favor of the City. Mount
Juneau Enterprises appeals.
III. STANDARD OF REVIEW
This is an appeal from the superior court's grant of
summary judgment in favor of the City. In reviewing a grant of
summary judgment, this court applies a de novo standard of review
and determines whether there are any genuine issues of material
fact, and whether the moving party is entitled to judgment on the
law applicable to the established facts. Farmer v. State, 788 P.2d
43, 46 n.8 (Alaska 1990); Zeman v. Lufthansa German Airlines, 699
P.2d 1274, 1280 (Alaska 1985).
Mount Juneau Enterprises also appeals the superior
court's denial of a motion to continue discovery under Civil Rule
56(f). This court reviews a trial court's decision on whether to
permit further discovery under Civil Rule 56(f) for an abuse of
discretion. Munn v. Bristol Bay Housing Auth., 777 P.2d 188, 192
(Alaska 1989).
IV. DISCUSSION
A. The Tunnel Claim
The superior court concluded that the City had acquired
title to the tunnel through inverse condemnation, that the
condemnation had occurred before Keen obtained any interest in the
tunnel and, accordingly, denied Keen's claims for damages for
trespass or condemnation for a taking of property. On appeal, Keen
argues that the superior court erred in determining that the City
had inversely condemned the tunnel. Keen also argues that, even if
the City had inversely condemned the tunnel, he has a right to
compensation by virtue of his option to purchase.
1. Trespass Damages
Subsections (4) and (5) of AS 09.55.240(a) provide that
municipalities may use the power of eminent domain to condemn
"sites for reservoirs necessary for collecting and storing water."
An inverse condemnation occurs when a governmental entity takes
private property for public purposes under the good-faith but
mistaken belief that the taking does not require the exercise of
eminent domain. State, Department of Highways v. Crosby, 410 P.2d
724, 728-29 (Alaska 1966).
The doctrine of inverse condemnation was the basis of
this court's decision in Wickwire v. City & Borough of Juneau, 557
P.2d 783 (Alaska 1976). In Wickwire, the City mistakenly placed a
sewer line on Wickwire's property. Although Wickwire asserted a
trespass claim, as did Mount Juneau Enterprises in this case, we
concluded that the landowner's only remedy in such a case "is an
inverse condemnation action for just compensation for the value of
the easement on the date of taking . . . ." Id. at 784.
Keen's only argument that no inverse condemnation took
place in this case is that the City's belief that it owned an
easement sufficient to construct the reservoir was not a good-faith
belief since a title search would have revealed that AEL&P did not
have the power to convey this interest. We do not agree that the
City's reliance on AEL&P's easement is inconsistent with a good-
faith but mistaken belief that there was no need to exercise
eminent domain powers. Accordingly, we conclude that the City
inversely condemned the tunnel sometime in the mid-1970s and that
Mount Juneau Enterprises could not, therefore, be entitled to
damages for trespass.
2. Compensation for Inverse Condemnation
Generally, "when there is a taking of property by eminent
domain in compliance with the law, it is the owner of the property
at the time of the taking who is entitled to compensation." 2
Sackman, Nichols on The Law of Eminent Domain  5.01[4], at 5-29
(Rev. 3d ed. 1993). (EN3) This right is a personal one which does
not pass to a subsequent purchaser unless the parties explicitly
agree to that arrangement. Wickwire, 557 P.2d at 785 n.7; see also
Williams v. City of Valdez, 624 P.2d 820, 821 (Alaska 1981). The
agreement signed by Keen and Idso in 1981 nowhere provides for such
a transfer. Since Keen was not the owner of the property on the
date of the taking and did not receive any right of action against
the government in his deed, he is not entitled to compensation as
the owner of this easement.
For purposes of this appeal, however, we must assume that
Keen had an option to purchase the claims at the time that the City
commenced construction of the reservoir, and we must consider the
significance of this option. There is a recent trend favoring "the
conclusion that the owner of an unexercised option to purchase land
possesses a property right which is compensable in eminent domain
. . . ." 2 Sackman,  5.03[1], at 5-72 and 5-73. The leading case
taking this approach is County of San Diego v. Miller, 532 P.2d 139
(Cal. 1975), in which the California Supreme Court held that the
owner of an unexercised option to purchase land possesses a
property right which is a compensable interest in a condemnation
action. To this effect, the Miller court stated as follows:
[C]ompensation issues should be decided on
considerations of fairness and public policy.
"The constitutional requirement of just
compensation derives as much content from the
basic equitable principles of fairness of
property law." "[T]he right to compensation
is to be determined by whether the
condemnation has deprived claimant of a
valuable right rather than by whether his
right can technically be called an 'estate' or
'interest' in the land."
Miller, 532 P.2d at 143 (citations and emphasis omitted). The
court held that the measure of damages to the optionee is the
excess, if any, of the total award above the optioned purchase
price. (EN4) Id. at 144.
Although we agree that an option does create a
compensable interest in property and that, in some cases, an
option-holder may be entitled to some proceeds from an inverse
condemnation action, Keen's allegations in this case are simply not
sufficient to support such a claim. In his affidavit, Keen stated
as follows:
I can state with certainty that I
purchased this option in 1971 or 1972. I do
not remember the amount I paid for the option.
I did not keep a copy of this option. My wife
and I are not sophisticated bookkeepers and at
the time I had no idea that the option
agreement would become an important document.
In 1981 when we exercised the option to
purchase and received a warranty deed we did
not believe the option agreement was necessary
to keep anymore.
The fact that Keen held some kind of an option to
purchase the land in question is not alone sufficient to entitle
him to compensation. The proper inquiry should focus on the extent
to which his option diminished in value as a result of the City's
actions. In order to calculate this amount, Keen would have to
introduce the terms of the option itself with adequate specificity;
he has failed to do so.
Without any evidence of the terms of the option, it is
impossible to determine whether the condemnation has deprived Keen
of a valuable right, thus warranting compensation. See Miller, 532
P.2d at 143. If, for example, the option allowed Keen to purchase
the property at a price of one dollar at any time before the year
2000, the option may have diminished in value as a result of the
City's actions to nearly the full extent of the value of the
taking. On the other hand, if the option was merely a right of
first refusal, the diminution of value would probably be
negligible. (EN5)
Because Mount Juneau Enterprises can neither produce the
option agreement nor any evidence of its terms, it has failed to
raise a material fact as to whether the condemnation deprived Keen
of a valuable right. (EN6) See Alaska-Canadian Corp. v. Ancow
Corp., 434 P.2d 534, 537-38 (Alaska 1967). Based on the foregoing,
we conclude that summary judgment was appropriate as to the tunnel
claim. (EN7)
B. The Tram Claims
1. Ordinance No. 85-53am
The superior court concluded that Ordinance No. 85-53am
established certain rights and duties in the City and Alaska Trams,
but that the City did not violate the terms of the ordinance. To
this effect, the superior court stated:
There is no legitimate issue in dispute on
this claim. Alaska Trams was required, as a
condition precedent to the City's performance,
to provide a stamped survey showing the
location and size of the easement that could
be approved by City staff in accordance with
planning and zoning ordinances. This was
never done. . . .
A new route was planned and eventually
land transferred and work begun. There is no
breach by the City, or by Alaska Trams for
that matter concerning the new plan. The
parties just agreed to do something else.
On appeal, Mount Juneau Enterprises argues that the City breached
the contract embodied in Ordinance No. 85-53am.
Ordinance No. 85-53am authorized the City Manager to
transfer certain City land to Keen in exchange for Keen's
abandoning the tunnel claim against the City. Part of the property
to be conveyed was described in Section 3(a) of the ordinance,
which stated as follows:
Section 3. Land and Easement Convey-
ances. In exchange for a conveyance by Chuck
Keen as representative of Alaska Trams of an
unrestricted easement, in perpetuity,
consisting of Water Tunnel No. 3 so that the
City and Borough of Juneau may continue its
existing use of the tunnel as a water
reservoir, the manager is authorized to convey
to Chuck Keen:
(a) an easement for a road and parking
lot over city and borough property connecting
Red Jacket, White Wing and Black Diamond
mining claims to the nearest existing road.
The grant of the easement shall be conditioned
on Chuck Keen providing the manager with a
stamped survey describing the location, scope
and extent of the easement at a location and
size to be approved by staff in accordance
with existing planning and zoning standards.
Keen never provided the City with a stamped survey, and
it was eventually determined that Keen was not likely to get the
zoning change approved. Thus, Keen and the City agreed to come up
with an alternative plan. Since Keen failed to meet the conditions
for conveyance of the land in Ordinance No. 85-53am in the first
place, the City's actions would not have amounted to a breach even
if a contract had been formed.
Mount Juneau Enterprises argues that Ordinance No. 85-
53am constituted a binding agreement that the City would transfer
land to Keen in exchange for Keen's agreement to abandon the tunnel
claim. Such an agreement was based on the assumption that the
tunnel claim was valuable. Thus, Mount Juneau Enterprises seems to
argue that even though the original agreement had been mutually
abandoned, the City was still obligated to treat Keen's tunnel
claim as valuable in subsequent negotiations, and to transfer land
to Keen in exchange for Keen's agreement to abandon the claim.
Apparently, the City was supposed to treat the claim as valuable
even after determining that it had no value.
The City cites City of Louisville v. Fiscal Court of
Jefferson County, 623 S.W.2d 219 (Ky. 1981) for the proposition
that a legislative body may not bind itself to future legislative
action. In that case the Supreme Court of Kentucky considered a
contract allegedly resolving a dispute over annexation, where the
City had agreed to limit certain future tax rates and to cooperate
fully with the owners of the annexed property in applications for
zoning changes. The court stated as follows:
The law is clear that a legislative body may
not limit its power to act one way or another
in the future in governmental as opposed to
proprietary, functions.
Id. at 224. The court then stated:
Not only does the contract place an obligation
on the city which may create conflicts of
interest, but it also creates an obligation to
legislate in the future. The area of zone
changes, changes in street entrances, flood
control, etc., are all legislative in nature.
A contract which binds a legislative body,
present or future, to a course of legislative
action is void against public policy.
Id. at 225 (citations omitted).
The conveyance of City land can only be authorized by the
Assembly. See CBJ Ordinance 53.09.200. Thus, even if Ordinance
No. 85-53am constituted a contract providing that the City would
both treat Keen's tunnel claim as valuable in the future and
transfer land to Keen in exchange for an agreement to abandon it,
such a contract would likely be unenforceable because it requires
future legislative action. That is, it would require the Assembly
to agree in advance to authorize the exchange of unspecified
parcels of land in the future.
Based upon on the foregoing, we conclude that even if
Ordinance No. 85-53am did create a contract of some sort between
Keen and the City, the City did not violate any enforceable
obligations in the course of its negotiations with Keen. (EN8)
2. The Building Permits
The superior court granted summary judgment in favor of
the City on Mount Juneau Enterprises' claims relating to the
building permits on three grounds: failure to exhaust admini-
strative remedies, statutory immunity for discretionary acts under
AS 09.65.070(d)(2), and statutory immunity for actions relating to
building permits under AS 09.65.070(d)(3). On appeal, Mount Juneau
Enterprises challenges the superior court's conclusions that it
failed to exhaust administrative remedies and that the City had
discretionary immunity under AS 09.65.070(d)(2).
In Ben Lomond, Inc. v. Municipality of Anchorage, 761
P.2d 119 (Alaska 1988), rather than appealing the revocation of its
building permit, Ben Lomond filed suit against the Municipality
based on a claim of unconstitutional deprivation of property. We
held that the failure to appeal the revocation of a building permit
under applicable municipal appeal procedures barred any judicial
action for damages based on the revocation. Id. at 121-22.
We stated that whether a court should require exhaustion
of administrative remedies "turns on an assessment of the benefits
obtained through affording an agency an opportunity to review the
particular action in dispute." Id. at 121. To this effect, we
noted that the basic purpose of the doctrine of exhaustion of
administrative remedies is "to allow an administrative agency to
perform functions within its special competence -- to make a
factual record, to apply its expertise, and to correct its own
errors so as to moot judicial controversies." Id. at 122 (citation
omitted).
In Eufemio v. Kodiak Island Hosp., 837 P.2d 95, 98
(Alaska 1992), we held that, in applying the doctrine of exhaustion
of administrative remedies, a court must determine the following:
1) is exhaustion of remedies required; 2) did
the complainant exhaust those remedies; and 3)
is the failure to exhaust remedies excused?
The City has an ordinance specifically providing for an independent
Board of Appeals to review disputed decisions or orders of the City
building official. See CBJ Ordinance 19.02.010. The ordinances
relating to building permits are contained within that same title.
Since an administrative appeal is clearly provided for,
exhaustion of remedies is required in this case. Mount Juneau
Enterprises did not avail itself of these appeals provisions.
However, Mount Juneau Enterprises argues that the failure to
exhaust remedies should be excused because (1) this suit was filed
before the final administrative decision was made; (2) the final
decision did not provide proper notice of the right to appeal; and
(3) an appeal to the Board of Appeals would have been futile.
We find the first and third reasons to be without merit.
And as to the second reason, Keen was given actual notice of the
existence of the appeal provisions in a letter granting an
extension of the FTA in 1989. Accordingly, we find that all claims
regarding the building permits are barred as a result of Mount
Juneau Enterprises' failure to exhaust its administrative remedies.
(EN9) Since the claims are barred, we need not reach the issue of
whether the City is immune from suit under AS 09.65.070(d)(3) or AS
09.65.070(d)(2).
C. Further Discovery
Mount Juneau Enterprises filed a motion before the
superior court to stay ruling on the motions for summary judgment
pending further discovery under Civil Rule 56(f). (EN10) The
superior court denied the motion because Alaska Trams had sixteen
months within which to conduct discovery, (EN11) Alaska Trams did
not file an affidavit as required by the rule, the superior court
did not believe that a genuine issue of material fact would emerge
from further discovery, and the superior court questioned the
diligence of Alaska Trams. Civil Rule 56(f) specifically requires
that an affidavit be filed with a motion for further discovery.
See Munn, 777 P.2d at 192-93; Jennings v. State, 566 P.2d 1304,
1313-14 (Alaska 1977).
For the reasons expressed by the superior court, we
conclude that it was not an abuse of discretion to deny the motion
requesting further discovery.
V. CONCLUSION
The superior court's grant of summary judgment in favor
of the City is AFFIRMED in all respects.
ENDNOTES:
1. In the late 70s, Keen learned that the City was converting a
tunnel into a water reservoir. He claimed that he contacted City
officials but was assured that the tunnel being converted was not
the same tunnel he was interested in purchasing.
2. The meeting was apparently very difficult. Keen believed that
Ritchie's statements to a radio reporter and newspaper had
effectively ended his hopes for financing and caused great injury
to the tram project. Keen apparently stated that he would not
attempt to resolve the matter unless the City took out a full page
newspaper ad apologizing to him. No such ad, however, was ever run
by the City.
3. Wickwire defines the date of the taking as the date when the
construction began. 557 P.2d at 784 n.4.
4. This approach has been adopted by a number of states. Texaco,
Inc. v. Commissioner of Transportation, 383 A.2d 1060 (Conn. 1977);
Sholom, Inc. v. State Roads Comm'n, 229 A.2d 576 (Md. 1967); State
v. Las Vegas Bldg. Materials, Inc., 761 P.2d 843 (Nev. 1988);
Fullington v. M. Penn Phillips Co., 395 P.2d 124 (Or. 1964); In re
Petitioner of Governor Mifflin Joint School Auth., 164 A.2d 221
(Pa. 1960); Spokane School Dist. No. 81 v. Parzybok, 633 P.2d 1324
(Wash. 1981).
5. In a supporting affidavit, Robert Slatzer described the option
as "a hand-written document which was an option of first refusal to
purchase the land on which the tunnel was located." (Emphasis
added). Although he had a copy of the option in his possession,
Slatzer is apparently unable to recall any of the specific terms.
6. The City accurately summarizes the state of the evidence
relating to the terms of the option as follows:
Keen does not remember the date of the
option (Keen Dep. at 951); or the terms of the
option (Keen Dep. 954, 959-960); or whether he
paid anything for the option (Keen Dep. at
1009). He does not remember if the option was
written or verbal (Keen Dep. at 952). He does
remember that he was not legally obligated to
buy the property (Keen Dep. at 954) though he
cannot remember whether the owners were
obligated to sell. (Keen Dep. at 959-960.) At
one point, he asserted it was a "first refusal
option"that would entitle him to a "first
refusal"when the family got some legal
matters "cleared up." Keen didn't "have a
clue"what the legal matters were. (Keen Dep.
at 954-55.) Keen cannot remember whether the
option could be revoked or, if so, under what
circumstances. (Keen Dep. at 973).
7. In light of this holding we need not consider the question of
whether the City gained title to the easement by adverse
possession.
8. Mount Juneau Enterprises also argues that the City should be
estopped from denying that Ordinance No. 85-53am constituted a
settlement of the tunnel litigation. Estoppel may apply where
there is: (1) an assertion of a position by conduct or word; (2)
reasonable reliance thereon; and (3) resulting prejudice.
Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 (Alaska
1984).
It was not reasonable for Keen to rely on Ordinance No. 85-
53am when it was Keen who failed to provide the City with the
necessary stamped survey. Moreover, Mount Juneau Enterprises
argues that Keen and Alaska Trams spent hundreds of thousands of
dollars on construction of the tram and that the City "should be
estopped from taking away the building permits to gain advantage in
the tunnel litigation." However, Keen is the one who let the
permit expire on its own terms. Keen's estoppel arguments are
without merit.
9. Counts 7 and 8 of Mount Juneau Enterprises' complaint allege
breach of contract arising out of the building permits. However,
building permits are not contracts. 9A McQuillin, The Law of
Municipal Corporations  26.212, at 225 (3d ed. 1996). See also
Rehmann v. City of Des Moines, 215 N.W. 957, 960 (Iowa 1927) ("a
permit is merely a privilege to do what would otherwise be
unlawful, and is not a contract between the authority, federal,
state, or municipal, granting it and the person to whom it is
granted").
10. Civil Rule 56(f) provides as follows:
Should it appear from the affidavits of a
party opposing the motion that the party
cannot for reasons stated present by affidavit
facts essential to justify the party's
opposition, the court may refuse the
application for judgment or may order a
continuance to permit affidavits to be
obtained or depositions to be taken or
discovery to be had or may make such other
order as is just.
11. To this effect, the superior court stated as follows:
Alaska Trams had sixteen months to
conduct discovery in this case. (The suit was
filed in June of 1991 and Judge Schulz imposed
a stay of discovery in November of 1992.)
During that time thousands of pages of
documents have been disclosed, numerous
depositions have been conducted, alleged
privileged materials have been turned over or
offered for inspection in camera. The
deposition of the City's attorney, Barbara
Blasco, alone, was close to 1000 pages.
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