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Lowery v. McMurdie (9/5/97), 944 P 2d 50
Notice: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska
99501, phone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT J. LOWERY, and )
FRANK "GERALD"DeBERRY, ) Supreme Court No. S-7159
Appellants, ) Superior Court No.
) 4FA-94-2283 CIV
DENNIS S. McMURDIE, ) O P I N I O N
Appellee. ) [No. 4880 - September 5, 1997]
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Jay Hodges, Judge.
Appearances: Richard W. Wright, Niewohner &
Wright, P.C., Fairbanks, for Appellants. No appearance by
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
COMPTON, Chief Justice.
FABE, Justice, with whom EASTAUGH, Justice,
joins, concurring in part and dissenting in part.
This case arises out of a dispute over unpaid wages owed
to Robert Lowery and Gerald DeBerry for labor on a mining claim.
Lowery and DeBerry appeal a superior court judgment in favor of
Dennis McMurdie. The decision of the superior court is vacated in
part and remanded for further proceedings.
II. FACTS AND PROCEEDINGS
Dennis McMurdie owns and manages certain gold claims
located on the Steese Highway. McMurdie hired Robert Lowery to
work these claims. Lowery operated these claims in 1993 and 1994.
In 1994 Lowery hired Frank "Gerald"DeBerry and others as a crew.
Relations between McMurdie and Lowery soon soured. In August 1994
McMurdie secured a preliminary injunction ordering Lowery and
DeBerry to stay off the claims.
The superior court found that seventy-six ounces of gold
recovered from the site were unaccounted for by Lowery. The court
valued this gold at $26,600, and entered judgment against Lowery
for $12,027, the value of the unaccounted-for gold minus offsets
for unpaid wages due Lowery, out-of-pocket expenses advanced by
Lowery, unpaid wages due DeBerry, and equipment rented by Lowery.
Despite its finding that McMurdie was overdue in paying Lowery's
wages, the superior court did not find that there should be a
penalty against McMurdie.
The superior court found no reason to hold DeBerry
accountable for the missing gold, and refused to enter judgment
against him. In its oral findings, it concluded that "Lowery
should be responsible for the additional payment of the $2,000 to
[DeBerry] for the wages he . . . was not paid during 1994." The
superior court found, however, that this amount should be offset
against McMurdie's judgment against Lowery, and it factored this
additional $2,000 into its computation in concluding that Lowery
only owed McMurdie $12,027. In its written findings the superior
court deleted all references to the $2,000, although it still
offset McMurdie's judgment against Lowery by this additional
amount. [Fn. 1]
Lowery and DeBerry appeal. They each claim that the
superior court erred in failing to award them a statutory penalty
for unpaid wages. DeBerry further claims that the superior court
erred in failing to award him unpaid wages of $2,000 against
A. Standard of Review
Lowery and DeBerry seek penalties pursuant to
AS 23.05.140(d). The decision to award a penalty under this
section is within the sound discretion of the trial court and will
only be reversed for an abuse of discretion. Klondike Indus. Corp.
v. Gibson, 741 P.2d 1161, 1171 (Alaska 1987).
The dispute as to whether McMurdie is responsible for
paying the $2,000 in unpaid wages due DeBerry is a question of law.
The parties have not appealed the superior court's underlying
factual findings regarding this issue. The parties no longer
dispute that Lowery hired DeBerry to work the claim, DeBerry did in
fact work the claim, and $2,000 in wages were not paid to him.
This court "may review the application of a legal doctrine to
undisputed facts without the usual deference to the superior
court." Foss Alaska Line, Inc. v. Northland Servs., 724 P.2d 523,
526 (Alaska 1986).
B. Alaska Statute 23.05.140(d) Penalties
Lowery and DeBerry counterclaimed against McMurdie for
"back wages, plus AS 23.05.140 penalties." The superior court
ruled that Lowery was owed "wages"and that no penalty should be
awarded against McMurdie. [Fn. 2] The superior court made no
findings to support the decision on penalties.
When "employment is terminated, regardless of the cause
of termination, all wages, salaries, or other compensation for
labor or services become due immediately and shall be paid within
three working days after the termination." AS 23.05.140(b).
Alaska Statute 23.05.140(d) provides for possible penalties when an
employer fails to make such payments:
If an employer violates (b) of this section by
failing to pay within three working days of termination, the
employer may be required to pay the employee a penalty in the
amount of the employee's regular wage, salary, or other
compensation from the time of demand to the time of payment, or for
90 working days, whichever is the lesser amount.
We have held that the use of the permissive "may"
indicates that penalties were not intended to be mandatory.
Klondike, 741 P.2d at 1171 (award of penalty under AS 23.05.140(d)
within sound discretion of trial court). In Klondike we concluded
that where the superior court "found no evidence that [the
employer] intentionally withheld wages due,"denial of the penalty
claim was not an abuse of discretion. Id.
On appeal, Lowery and DeBerry attempt to distinguish
The entitlement to and the amount of wages
were hotly contested in Klondike, and this Court was careful to
note that there was no evidence the employer had intentionally
withheld wages. In this case, Mr. McMurdie simply offered no
reason for their withholding, or at least none the [superior] Court
felt worthy of comment in its findings. On the status of such a
record, the Court should find the Superior Court abused its
discretion and award the full penalty of an amount equal to the
employee's regular wages.
However, Klondike does not require that the refusal to award
penalties be supported by a finding that the withholding was
unintentional. Nor does Klondike require that the entitlement to
an amount of wages be "hotly contested." Instead, it merely
requires that the superior court not abuse its discretion in
assessing or refusing to assess such penalties.
In its oral findings, the superior court simply stated
that it "does not find in the facts or circumstances of this case
that any penalty should be applied." Its written finding on this
issue provided no additional explanation for this conclusion. The
superior court's unarticulated understanding of the "facts or
circumstances of this case"does not provide findings from which we
can determine whether its decision not to award penalties against
McMurdie was an abuse of discretion in light of the record as a
C. DeBerry's Unpaid Wages
DeBerry was hired by Lowery, but it is clear that
McMurdie was his employer. Lowery was himself an employee of
McMurdie, one to whom McMurdie had designated the power to hire.
The superior court found that "on Mr. Lowery's part, it was
reasonable[,] based on his discussion with Mr. McMurdie that he
could hire a crew to work for the 1994 season." Moreover, while
the superior court initially concluded that it was Lowery who
should pay DeBerry the $2,000, it simultaneously concluded that
Lowery should be able to offset this $2,000 against the judgment
rendered against him in favor of McMurdie. Thus, it was McMurdie,
not Lowery, who was ultimately responsible for the wages owed
The superior court, in its written findings, deleted all
findings to the effect that Lowery owed DeBerry the $2,000.
Nonetheless, it offset the judgment for McMurdie by the additional
$2,000 that was originally explained in the oral findings as an
offset intended to cover the wages due DeBerry. This ruling
created an odd situation in which Lowery was credited for the wages
the court concluded he should pay DeBerry, but was not required to
actually pay DeBerry.
As DeBerry's employer, it was McMurdie, and not Lowery,
who ultimately had the duty to pay DeBerry's wages within three
days of termination. Alaska Statute 23.05.140 consistently uses
the terms "employee"and "employer"in discussing who owes what
duties to whom. Alaska Statute 23.05.140(b) provides that the
employee "shall be paid within three working days." It is clear
from context that the person on whom this duty ultimately rests is
the employer. The statute goes on to state that such payment may
be made "at a location agreed upon by the employer and employee."
Furthermore, AS 23.05.140(d) provides for possible penalties "[i]f
an employer violates (b) of this section by failing to pay within
three working days of termination." (Emphasis added.) It was
McMurdie who had the legal duty to pay DeBerry's wages. The fact
that it was his employee, Lowery, who neglected to do so does not
shift the ultimate duty for this failure from McMurdie onto Lowery.
The superior court erred in not awarding DeBerry the $2,000 in
unpaid wages he had requested from McMurdie in his counterclaim.
[Fn. 3] Lowery should not be credited $2,000 against the judgment
for McMurdie. It is McMurdie who must pay DeBerry.
The superior court's conclusion that penalties under
AS 23.05.140(d) were unwarranted is VACATED, and the issue REMANDED
for the entry of findings addressing this issue. The superior
court's decision not to award DeBerry the $2,000 in unpaid wages he
requested from McMurdie is VACATED and REMANDED for proceedings
consistent with this decision. [Fn. 4]
FABE, Justice, with whom EASTAUGH, Justice, joins, concurring in
part and dissenting in part.
I agree with all aspects of the court's opinion except
for Part III.B. I dissent from the court's conclusion that the
superior court failed to make adequate findings to support its
decision not to penalize McMurdie under AS 23.05.140(d). Recently,
this court recognized that a trial court's findings are important
because they permit us to review the factual and legal steps in the
trial court's decision. Bird v. Starkey, 914 P.2d 1246, 1249
(Alaska 1996). Consistent with this conclusion, we observed that
findings "need not be extensive"if they "allow us to glean from
the record"the considerations underlying the trial court's
decision. Id. at 1249 n.4; see also Bellanich v. Bellanich, 936
P.2d 141, 146 (Alaska 1997) (Fabe, J., dissenting); D.H. v. State,
Dep't of Health & Soc. Servs., 929 P.2d 650, 657-58 (Alaska 1996)
(Fabe, J., dissenting).
In this case, the trial court stated that it did "not
find in the facts or circumstances of this case that any penalty
[under AS 23.05.140(d)] should be applied." In the paragraphs
immediately preceding this conclusion, the trial court found that
amounts owed to McMurdie by Lowery fully offset all sums owed to
Lowery by McMurdie. In particular, while the trial court found
that McMurdie owed Lowery approximately $23,000 for unpaid wages
and other incidentals, it also concluded that Lowery owed McMurdie
more than $36,000 for the value of seventy-six ounces of gold
unaccounted for by Lowery, as well as the purchase price of a
Given the context of the trial court's conclusion, I
cannot agree that the findings were inadequate. It is possible to
glean from the trial court's findings that it based its decision
upon the "facts or circumstances"reviewed in the immediately
preceding paragraphs of its opinion and the conclusion that Lowery
owed McMurdie for the missing gold even after the wages due were
subtracted. In my view, those portions of the record provide
sufficient support for the trial court's decision. Therefore, I
dissent from the court's decision to remand this case for
additional findings relating to whether McMurdie should be
penalized under AS 23.05.140(d).
Lowery and DeBerry suggest that the superior court
crossed out proposed findings to the effect that Lowery owed
DeBerry $2,000 because "[o]n the status of the pleadings, no
judgment in favor of Mr. DeBerry and against Mr. Lower[y] was
possible, since there were no claims between them."
The superior court implicitly found that Lowery and DeBerry
were employees of McMurdie, entitled to the protection of AS
23.05.140. McMurdie has not challenged this finding and we assume
there was an employment relationship for purposes of applying AS
We note that the counterclaims of Lowery and DeBerry
were improperly designated as cross-claims.
On remand the superior court should increase
McMurdie's judgment against Lowery to $14,027, since it is
McMurdie, and not Lowery, who is responsible for payment of these