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Nome Commercial Co. v. National Bank of Alaska (10/10/97), 948 P 2d 443
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
NOME COMMERCIAL COMPANY, an )
Alaska corporation, S. WAYNE ) Supreme Court No. S-6980
BROWN, and CARROL A. BROWN, )
) Superior Court Nos.
v. ) 2KB-93-47 CI
) 2KB-93-48 CI
NATIONAL BANK OF ALASKA, a )
national banking association, )
NOME COMMERCIAL COMPANY, an )
Alaska corporation, S. WAYNE ) Supreme Court No. S-7320
BROWN, and CARROL A. BROWN, )
) O P I N I O N
VICKEY HIGASHI, individually ) [No. 4892 - October 10, 1997]
and as Personal Representative)
of the Estate of Gregory )
Appeal from the Superior Court of the State of
Alaska, Second Judicial District, Kotzebue,
Richard H. Erlich, Judge.
Appearances: Timothy R. Byrnes, Hughes,
Thorsness, Gantz, Powell & Brundin LLC, Anchorage, for Appellants.
David Floerchinger, Deirdre D. Ford, DeLisio, Moran, Geraghty &
Zobel, Anchorage, for Appellee National Bank of Alaska. C.R.
Kennelly, Stepovich, Kennelly & Stepovich, P.C., Anchorage, for
Appellee Vickey Higashi.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
In 1989 the Browns and the Higashis entered into an
agreement concerning the Browns' liquor store. The Browns contend
it was a management agreement; Vickey Higashi alleges it was a
sales agreement. All the documentary evidence supports the Browns'
position, including sworn statements by the Higashis. We reverse
the superior court's denial of the Browns' motion for directed
verdict, because no reasonable juror could find that the parties
entered into an agreement to sell the store.
In the companion case, Nome Commercial Company (NCC) sued
the National Bank of Alaska (NBA) for breach of contract. The
superior court held that a stakeholder cannot be liable for damages
that occur after an interpleader action is filed. A stakeholder
does not become immune to suit for damages occurring after filing
an interpleader action, if the damages were caused by the
stakeholder's independent, pre-interpleader activities. We reverse
the directed verdict entered against NCC.
II. FACTS AND PROCEEDINGS
A. NCC v. Higashi
In 1989 the Browns owned both the Stop Shop & Save and
the Nome Liquor Store. [Fn. 1] Mr. Higashi managed both stores.
Mrs. Higashi worked at the Stop Shop & Save as a part-time clerk.
In November 1989 the Browns completed a sale of the Stop
Shop & Save. They decided to move to Snohomish, Washington. The
parties disagree about what happened next.
The Browns allege that they offered Mr. Higashi a
position as manager of the Nome Liquor Store in November 1989. Mr.
Higashi accepted the offer; the management fee would be the net
income Mr. Higashi could earn for NCC. This management agreement
was functionally a lease of the business. At termination of the
agreement, an inventory accounting would provide final management
compensation. The terms were memorialized in corporate minutes.
[Fn. 2] Mrs. Higashi claims that the Browns sold the liquor
store to her and her husband as of December 1, 1989. The agreement
required the Higashis to pay for the inventory on hand at takeover,
the cash in the tills and safe, and the money in NCC's bank
account, and to sign a five-year lease at $15,000 a month on the
building that was owned by the Browns. The Higashis would run the
business as their own until they paid for the inventory, at which
time the liquor license would be transferred to their names. This
agreement was not put in writing.
The Browns added the Higashis as authorized signators on
NCC's operating account at NBA. The signature card shows that the
Browns remained authorized to utilize the account. Minutes of a
shareholders' meeting dated December 14, 1989, explain that "the
Shareholders and Board of Directors had passed resolutions which
would leave Greg and Vickey Higashi in charge of the Nome Liquor
Store operation,"and "that Greg and Vickey Higashi be added as
check signers on the Corporate Bank Account." These minutes also
indicate that the Alaska Liquor Control Board would be notified
that the Higashis had been elected officers of the corporation,
[Fn. 3] and granted permission to Mr. Higashi to operate a pull-tab
business "so long as [it is] done independently of Nome Commercial
Company, and Nome Liquor Store."
The Browns continued to be responsible to pay the vendors
for the inventory on hand at the time of the agreement. Mr.
Higashi ordered inventory with Mr. Brown's continuing personal
guarantees to the liquor vendors. On December 14, 1989, Mr. Brown
wrote to his vendors:
We are pleased to announce the appointment of
Greg and Vickey Higashi to the position of Vice-President, General
Manager, and Vice-President, Assistant General Manager, respec-
tively, for Nome Liquor Store.
This appointment is effective December 1,
1989, and I hope you will extend to them the same service and
assistance you have provided me over the years.
Carrol and I are moving back to our home in
Snohomish, Washington, and are looking forward to taking it easy
for the next year.
To insure timely payment of all future
invoices would you please change your records
to reflect our new address . . . .
In December 1990 and 1991 Mr. Higashi signed liquor
license applications for Nome Liquor Store. On both applications,
the Browns are shown as the sole owners of NCC, dba Nome Liquor
Store. Mr. Higashi signed both applications under oath; Mrs.
Higashi signed the 1990 application also. On August 31, 1992, Mr.
Higashi filed a sales statement with the city of Nome, stating
under penalty of perjury that he was Vice-President of NCC.
The Browns did some of NCC's bookkeeping and accounting
from Snohomish. On December 8, 1990, Mr. Brown wrote to C.J. and
Rosemary Phillips, who had sold the store to the Browns and
retained a security interest in it, explaining that the Browns had
moved out of Nome, but "left the liquor store in really capable
According to Mr. Brown, he approached Mr. Higashi in 1991
with an offer to sell NCC and the real estate for a price of
$1,458,274. Mr. Higashi was not interested. The Phillips, who had
to consent, indicated they would not.
Mrs. Higashi disputes Mr. Brown's testimony. She
testified that in February 1991 Mr. Brown told the Higashis that
the lease would be prepared and the liquor license would be
transferred into the Higashis' names.
The parties met in Cabo San Lucas, Mexico, in February
1991. Mr. Brown sent the Higashis a memorandum summarizing the
meetings held there. According to the memorandum, the discussions
focused on "various operating considerations for the liquor store."
Mr. Brown also wrote, "We next discussed the need to formalize our
operating arrangement, and we agreed to proceed with the drafting
of a long term lease which when executed would also cause the
liquor license to be transferred in compliance with applicable
Mr. Higashi died on October 19, 1992. Mr. Brown flew to
Nome to manage the store while Mrs. Higashi attended the funeral in
Oregon. When she returned, she and her brother met with Mr. Brown.
Again, the parties disagree about what happened at this
meeting. The Browns contend it was a meeting to discuss the future
of the management agreement. Mr. Brown stated he gave Mrs. Higashi
several options, including having Mrs. Higashi continue to manage
the store. He claims to have left the meeting allowing Mrs.
Higashi and her brother to propose a new deal.
Mrs. Higashi claims that Mr. Brown's first comment to her
at this meeting was that "[your] lease [is] terminated." Mrs.
Higashi thought he meant the rent on the building where the liquor
store was located, and that she was losing her place of business.
She started crying, was upset, and felt like it was a "real blow."
Mr. Brown returned to Snohomish. On November 6, 1992,
the Browns learned that Mrs. Higashi had signed a management
contract with a competitor and was moving the liquor store's
inventory to the competing store. Mrs. Higashi claims that because
she thought the liquor store's lease of the Browns' building was
terminated, she was looking for a new place to run her business.
Mr. Brown fired Mrs. Higashi, and telecopied a demand
that she leave the premises. When she left, she padlocked the door
to the store. NCC sued to enjoin her from barring access to the
store. The superior court denied a temporary restraining order and
scheduled a preliminary injunction hearing for November 20, 1992.
NCC withdrew its motion after "peaceably"securing access. Mrs.
Higashi testified that Mr. Brown changed the locks over her
protest. She wanted to avoid the use of force and leave the
decision to the court so she did not fight Mr. Brown. She never
got back into the building.
NCC sued for an accounting of the management fee. Mrs.
Higashi counterclaimed for damages. She alleged fraud if the
Browns sold the liquor store with no intent to sign over the
The case went to trial. NCC and the Browns moved for a
directed verdict on all counts. The judge granted a directed
verdict in favor of the Browns on Mrs. Higashi's claim for
negligent accounting services, and denied the motion as to all
other counts. The jury returned its verdict, awarding Mrs. Higashi
$1,188,709.00, and ownership of NCC's bank account. NCC and the
Browns moved for a judgment notwithstanding the verdict. This was
denied. They appeal.
B. NCC v. NBA
NCC opened its operating account at NBA. The Browns
signed a "signature card." The bank was provided with copies of
NCC's Articles of Incorporation and Bylaws, as well as NCC's
taxpayer identification number.
In 1989 the Browns signed a second signature card, adding
the Higashis as signators to the account. On July 28, 1992, the
Higashis signed a third signature card, removing the Browns as
signators, and adding their son. NBA did not notify the Browns of
NBA deleted NCC's taxpayer identification number on the
account, and replaced it with the Higashis' personal number. Mrs.
Higashi signed the card as "secretary/certifying officer." NBA did
not ask for corporate records or minutes. The Higashis' taxpayer
identification number is crossed out on the card, but the previous
number is not reinstated.
Mr. Brown affied that he would not have permitted this
change to occur if NBA had informed him at that time. However, he
did not discover the change until Mr. Higashi's death. He returned
to Nome to help manage the business while Mrs. Higashi was
attending her husband's funeral; he inquired about the balance in
his account. An account clerk informed him he was no longer on the
When Mrs. Higashi returned to Nome, she and Mr. Brown
went to NBA and filled out a fourth signature card, eliminating the
Higashis' son (although Mr. Brown still did not know he was on the
account), and adding Mr. Brown. Mr. Brown instructed a bank clerk
that Mrs. Higashi did not have authority to change the account, and
that the bank should not permit any more changes without Mr.
Brown's approval. Corporate documentation was neither provided by
Mr. Brown, nor requested by the bank.
When Mr. Brown found out that Mrs. Higashi was
transferring inventory to another store, he called the bank and
requested that the account be frozen. The bank agreed to do so if
a confirming letter was received. Mr. Brown provided the letter.
Mrs. Higashi also called the bank the same day, asking to
remove the funds from the account, and to open a new account with
those funds. The bank refused.
Three days later, Mr. Brown attempted to "unfreeze"the
account. The bank refused, requesting documents to show why Mrs.
Higashi should not retain authority over the account.
NBA's Anchorage office told the Nome branch to ask for
corporate documentation which could give NBA the authority to
unfreeze the NCC account. Mr. Brown provided NBA with a corporate
resolution; Mrs. Brown provided corporate Bylaws. The Browns were
then requested to provide a corporate seal. The account was never
The Browns were unable to deposit large amounts of cash
that accumulated as a result of the operation of the liquor store.
The cash on hand approached $60,000. NBA dishonored a check
written by Mr. Brown to cover NCC expenses after November 6, 1992.
Mr. Brown did not write another check because he felt that to do so
would be useless.
On November 18, 1992, a bank manager wrote in a
memorandum that he had "heard many rumours of the working agreement
between the Higashis and the Browns as the Higashis were the
working managers." On November 18, 1992, Mrs. Higashi's attorney
sent NBA the following letter:
The Nome Liquor Store bank account is owned by
my clients, Mr. and Mrs. Higashi. I am hereby notifying the Bank
that if any money is disbursed from the account without my clients'
written consent or a court order directing its disbursement, my
clients and I will be looking to recover all losses they incur as
a result of such disbursement from the National Bank of Alaska.
I will be glad to discuss this matter with the
Bank's attorney. If you wish to avoid any problems, I would
request that the funds be interpleaded into the court in Nome in
Case 2NO-92-250 Civil. Thank you for your attention regarding this
Shortly thereafter, Mr. Brown's attorney wrote NBA a letter stating
that "this is not a case for interpleader"and provided documents
that the Browns' attorney "hope[d] [would be] sufficient to allow
Wayne Brown to unfreeze the account that he froze, and to sign new
signature cards on which he [and Mrs. Brown] would be the sole
The Browns contend that NBA then "embarked on a campaign
of retribution against NCC and the Browns." NBA refused to let the
Browns open personal accounts, deposit cash into the accounts of
NCC's vendors, buy bank checks or cashier's checks, or convert
bills to change. Mrs. Higashi was allowed to continue using NBA
for all her personal banking.
On December 21, 1992, NBA filed an interpleader action.
NCC and the Browns counterclaimed for damages. NBA was granted
either a summary judgment or a directed verdict on all of NCC's and
the Browns' claims. NCC and the Browns appeal.
III. DISCUSSION - NCC v. Higashi
A. The Evidence Does Not Support a Finding that the Browns
Sold the Liquor Store to the Higashis.
We review the grant or denial of a directed verdict or a
judgment notwithstanding the verdict by determining "whether the
evidence, when viewed in the light most favorable to the non-moving
party, is such that reasonable persons could not differ in their
judgment as to the facts." Ben Lomond, Inc. v. Schwartz, 915 P.2d
632, 635 (Alaska 1996); ARCO Alaska, Inc. v. Akers, 753 P.2d 1150,
1154 (Alaska 1988).
Reasonable jurors could not find that the Browns had
agreed to sell the liquor store. All of the documentary evidence
supports the Browns' position that the parties had entered into a
management agreement. Mr. Brown informed the vendors that the
Higashis were the new managers, and continued to personally
guarantee all liquor purchases. The Browns had access to the
store's bank account after the time Mrs. Higashi alleges the sale
was completed. Mrs. Higashi permitted Mr. Brown to reinstate his
authority over the account in 1992 without objection. The Higashis
made several sworn statements that the Browns continued to own the
store. NCC's and the Browns' income tax returns reflect the fact
that they were the store's owners.
Mrs. Higashi finds support in the statement contained in
the notes of the Cabo San Lucas meetings that the parties "agreed
to proceed with the drafting of a long term lease which when
executed would also cause the liquor license to be transferred in
compliance with applicable state law." While this could suggest
that the parties had entered into an agreement to sell the liquor
store in 1989, it could also be interpreted to support Mr. Brown's
contention that the parties discussed the sale of the store in
1991, a couple of years after Mrs. Higashi contends she and her
husband had already purchased the store. Regardless of how the
statement is interpreted, it is not enough to contradict the
overwhelming evidence to the contrary.
The remaining evidence is the conflicting testimony of
the parties. The Browns testified that the parties entered into a
management agreement. Mrs. Higashi testified that she and her
husband purchased the store on December 1, 1989, and had completed
their end of the bargain as of September 1990. The documentary
evidence directly contradicts this assertion. The Higashis
themselves made several sworn statements after these dates that the
Browns were the sole owners of the liquor store. The Higashis
never asserted an ownership interest in the store prior to the
instant litigation, although there were several instances where one
would expect an owner to object to a non-owner's assertion of
On balance, we conclude that the documentary evidence is
compelling. Reasonable jurors could not conclude that the Higashis
purchased the store on December 1, 1989. We remand the case with
instructions to the superior court to enter a directed verdict in
favor of NCC and the Browns.
B. Mrs. Higashi Cannot Recover Damages for Intentional
Infliction of Emotional Distress.
"An actor is never liable . . . where he has done no more
than to insist upon his legal rights in a permissible way, even
though he is well aware that such insistence is certain to cause
emotional distress." Restatement (Second) of Torts 46, comment
g (1964); see also Woods v. ABC Ins. Co., 580 So. 2d 480, 481 (La.
App. 1991) (holding eviction for non-payment of rent is proper and
not a valid basis for an intentional infliction of emotional
Since the Browns did not agree to sell the store to the
Higashis, Mrs. Higashi's contractual rights to run the store ended
upon her husband's death. The Browns cannot be held liable for
emotional distress suffered by Mrs. Higashi. The Browns were
legally entitled to inform her that the contract with her husband
ended upon his death, and to protect their interests regarding the
management of their store. We reverse, and instruct the superior
court to enter a directed verdict in favor of the Browns. [Fn. 4]
IV. DISCUSSION - NCC v. NBA
A. An Interpleader Is Appropriate Even Where the Stakeholder
May Be Independently Liable to a Claimant.
A threshold question in this case is whether NBA was
entitled to file an interpleader. We answer in the affirmative.
Both the Browns, as owners of NCC, and Mrs. Higashi
assert that they are entitled to the funds in the account. NBA
therefore may be subject to "double or multiple liability." This
satisfies the requirements for an interpleader under Civil Rule 22.
Although the requirements of Civil Rule 22 were
satisfied, the superior court apparently was of the view that an
additional prerequisite must be met before an interpleader action
may be filed. The superior court cited Arizona Bank v. Wells Fargo
Bank, N.A., 713 P.2d 337 (Ariz. App. 1985), for the proposition
that, in order to maintain an interpleader action, the stakeholder
must not have incurred independent liability to any claimant.
The case cited by the superior court exemplifies the
traditional view that there are four requirements for filing an
1. The same thing, debt, or duty must be
claimed by both or all the parties against whom the relief is
demanded; 2. All their adverse titles or claims must be dependent
on or be derived from a common source; 3. The person asking the
relief - the plaintiff - must not have or claim any interest in the
subject-matter; 4. He must have incurred no independent liability
to either of the claimants; that is, he must stand perfectly
indifferent between them, in the position merely of a stakeholder.
7 Wright et al., Federal Practice and Procedure 1701 (2d ed.
1986). Civil Rule 22 expressly eliminates the first three of these
Whether Civil Rule 22 has eliminated the "no independent
liability"requirement is a question of first impression in Alaska,
and other courts differ in their treatment of this issue. Wright,
supra at 1706. [Fn. 6] Wright points out that "[c]ontemporary
procedure . . . is well adapted to disposing of interpleader cases
even when independent liability is asserted. Thus, there is no
reason today . . . for continuing to honor a limitation on the
remedy that has no claim to validity other than that it is old."
Id. We agree, and join the courts that have held that Civil Rule
22 eliminates the requirement that the stakeholder not be
independently liable to a claimant. See Oliver v. Humble Oil &
Ref. Co., 225 F. Supp. 536, 539 (E.D. La. 1963).
B. An Innocent Stakeholder Is Not Liable for Damages Caused
by Interpleading Disputed Funds.
As mentioned above, the superior court in this case held
that a stakeholder may not be held liable for damages that occur
after an interpleader action is filed.
The superior court's holding was incorrect inasmuch as it
implies that an interpleader is a defense to independent claims
against the stakeholder. It is not the function of the
interpleader rule to bestow upon a stakeholder immunity from
liability for damages that (1) are unrelated to the act of
interpleading, but (2) happen to occur after an interpleader action
is filed. In the present case, NCC claims damages for negligence,
breach of contract, and breach of fiduciary duty. The alleged
actions giving rise to these claims -- mishandling the signature
cards and failing to give notice to signators -- occurred many
months in advance of any competing claims to the funds. These
claims are not based upon the decision to file an interpleader, and
are not deficient on account of the interpleader.
However, the superior court was correct to the extent
that it was holding that a claimant may not seek to recover from an
innocent stakeholder damages caused by the stakeholder's filing of
an interpleader. Civil Rule 22 permits a stakeholder to interplead
funds whenever the stakeholder may be exposed to "double or
multiple liability." A stakeholder who reasonably and in good
faith believes that there are adverse claims to the fund cannot be
held liable for invoking the protections of Civil Rule 22. A
contrary result would defeat the purpose of the interpleader rule:
to protect the innocent stakeholder from multiple liability. See
Johnston v. All State Roofing & Paving Co., 557 P.2d 770 (Alaska
1976) (holding interpleader rules should be liberally construed);
see also Wright, supra at 1702 (purpose of interpleader is to
protect stakeholder). NCC's claims for conversion and wrongful
dishonor seek damages caused by NCC's inability to access its funds
due to the fact that NBA decided to interplead the account. NCC
may not recover under these theories.
C. NBA Was Entitled to File an Interpleader; Mrs. Higashi
Was Not an "Adverse Claimant"under AS 06.05.145.
NCC argues that, even if a stakeholder cannot be liable
for damages caused by interpleading funds of disputed ownership,
NBA can be held liable in the present case because NBA did not
follow the requirements of AS 06.05.145. [Fn. 7] NBA asserts that
AS 06.05.145 does not apply to this case, as Mrs. Higashi is not an
adverse claimant to the account. NBA is correct.
NBA was not faced with a situation in which a stranger to
the account was disputing the account holder's right to receive its
money. Instead, the Browns and Mrs. Higashi both claimed an
ownership interest in the company named on the account. Mr. Brown
and Mrs. Higashi were both authorized signators of the account. It
was not clear to NBA who represented NCC, dba Nome Liquor Store,
and who was the adverse claimant. "Had [NBA] guessed wrong and
invoked the [adverse claim] statute against the wrong party, it
still could have incurred liability." First Union Nat'l Bank of
South Carolina v. FCVS Communications, VSC, 469 S.E.2d 613, 617
(S.C. App. 1997), cert. granted, March 5, 1997; see also AARTS
Prods., Inc. v. Crocker Nat'l Bank, 225 Cal. Rptr. 203, 208 (Cal.
App. 1986) (following majority rule that a named depositor is not
an "adverse claimant"to account). NBA's decision to file an
interpleader was appropriate under the circumstances of this case.
NCC's claim for conversion is unfounded, and summary
judgment was correct. Since the wrongful dishonor claim is
premised on a check presented to the bank after the bank was aware
of the competing claims to the account, summary judgment in favor
of NBA on this aspect of this case was correct.
D. The Superior Court Erred in Entering a Directed Verdict
against NCC for Its Breach of Contract, Breach of Fiduciary Duty
and Negligence Claims.
The superior court entered a directed verdict against NCC
on its independent claims, relying upon a lack of evidence of any
damages caused by these legal theories. However, NCC was prevented
from presenting damage evidence. The superior court ruled that the
bank could not be liable for damages claimed for the bank's acts
after November 5 or 6, 1992, because Johnston v. All State Roofing
& Paving Co., 557 P.2d 770 (Alaska 1976), prevents claimants from
recovering for damages caused by filing an interpleader.
NCC's complaint does seek to recover for damages caused
by filing the interpleader. However these damages do not,
according to NCC's complaint, arise from the interpleader, but from
NBA's breach of contract, breach of fiduciary duty, and negligence.
NCC claims that, but for NBA's actions, there would be no competing
claims to the funds in the account, and therefore no need to
NCC presented evidence that the bank did not follow
proper banking procedures, and did not follow the requirements of
its contract with NCC. NCC claims NBA permitted the Higashis to
delete the Browns from NCC's account without documentation, and
without notifying the Browns. The account agreement states, "All
persons authorized by the account to have access to the account of
any corporation or unincorporated association must notify the bank
in writing of any change in the corporate officers that would
affect the terms of the contract."
The superior court erred by directing a verdict on these
claims for the reasons expressed above in Part IV.B. NBA cannot be
held liable for damages that were caused solely by NBA's decision
to interplead the funds. NBA can be liable for damages resulting
from the interpleader if NCC proves NBA breached a duty which
created the basis that permitted NBA to interplead the funds.
E. The Superior Court Did Not Err in Directing a Verdict
against NCC's Claims for Breach of the Duty of "Good Faith".
We have previously indicated that a claim for a breach of
the implied covenant of good faith and fair dealing in ordinary
commercial contracts sounds only in contract. State, Dep't of
Natural Resources v. Transamerica Premier Ins. Co., 856 P.2d 766,
774 (Alaska 1993). Insurance contracts, because of the special
relationship between the insurer and the insured, justify an action
in tort for such a breach. Id.
NCC states, "Breach of this covenant should be actionable
in tort against banks, just as it is against insurers,"citing
State Farm Fire & Casualty Co. v. Nicholson, 777 P.2d 1152 (Alaska
1989). NCC makes no further argument why a cause of action in tort
should be extended to such contracts. NCC's argument does not
persuade us that the relationship between a bank and its depositor
justifies creating a tort action for the breach of the implied
covenant of good faith and fair dealing.
F. The Superior Court Did Not Err in Granting Summary
Judgment for NBA against the Browns' Individual Claims.
The Browns counterclaimed against NBA, claiming damages
for negligent or intentional infliction of emotional distress, and
for damages arising out of liquidating personal assets to fund the
Nome Liquor Store. The superior court entered summary judgment
against the Browns.
1. The superior court did not err in granting summary
judgment against the Browns on their claims for damages caused by
liquidating their assets to protect the store.
The Browns' answer asserts that "NBA's improper actions
in freezing the account of Nome Commercial Company required the
Browns to liquidate investments to fund company operations. NBA
should be liable for all damages proximately caused thereby." NBA
moved for summary judgment on this claim, arguing that "a
shareholder has no personal or individual right of action against
third parties for acts which result in injury to their
corporation." Arctic Contractors, Inc. v. State, 573 P.2d 1385,
1386 (Alaska 1978).
In their memorandum in opposition to summary judgment,
the Browns argued that they were seeking damages for injuries
caused to them personally. They stated, "When the Browns were
required to liquidate their own investments and fall back on their
personal resources, the damage was caused to them individually.
Nome Commercial Company itself might have had to borrow all of the
personal resources of the Browns to remain in operation, while
arguably not incurring a loss in doing so." On appeal, they argue,
"The Browns have no quarrel with the proposition that shareholders
may not sue for damage to their corporation. NCC, however, was not
damaged by seizure of its bank account, to the extent it was able
to borrow money from the Browns."
The Browns have failed to set forth specific facts
showing that NBA is not entitled to summary judgment. Alvey v.
Pioneer Oilfield Serv., 648 P.2d 599, 600 (Alaska 1982). Specific-
ally, the Browns have failed to indicate that they suffered any
damages, other than damages for emotional distress, that cannot be
recovered in an action by their corporation, and for which NCC is
not already seeking redress. If NCC borrowed money from the Browns
as a result of NBA's negligence or breach of contract, NCC would
presumably be obligated to repay the loan with interest. NCC, in
turn, would be able to recover from NBA any finance charges it
incurred as a result of its loan from the Browns. Accordingly, the
fact that the Browns lent NCC money does not entitle the Browns to
recover from NBA. The Browns failed to present any evidence that
would be admissible at trial of any other damages. Summary
judgment was correct against the Browns on this claim. Alaska
Civil Rule 56.
2. The superior court did not err in entering summary
judgment against the Browns on their claims for negligent and
intentional infliction of emotional distress.
a. Negligent infliction of emotional distress
The Browns are seeking to recover for negligently
inflicted emotional distress. This claim fails. To recover for
negligent infliction of emotional distress, either the defendant
must owe a preexisting duty to the plaintiff, or the plaintiff must
have suffered physical injury. Chizmar v. Mackie, 896 P.2d 196,
203 (Alaska 1995). The Browns have not asserted that they were
physically injured in any way.
The preexisting duty may arise from a contractual
relationship. Id. However, ordinary contracts do not give rise to
such a duty; the only contracts that will are those that are
"highly personal and laden with emotion"such as "contracts to
marry, to conduct a funeral, to sell a sealed casket, to conduct a
cesarean birth, [or] to surgically rebuild a nose." Id. (quoting
Hancock v. Northcutt, 808 P.2d 251, 258-59 (Alaska 1991)). A
contract between a bank and its customer is not the kind of
contract that is "highly personal and laden with emotion." Thus,
negligent infliction of emotional distress will not lie absent
physical injury. See id. The superior court did not err in
granting summary judgment against the Browns on this claim.
b. Intentional infliction of emotional distress
To recover damages under intentional infliction of
emotional distress (IIED), the plaintiff must show severe injury.
Cameron v. Beard, 864 P.2d 538, 548 (Alaska 1993). The superior
court must determine as a threshold matter whether the severity of
the emotional distress is sufficient to submit a claim for IIED to
the jury. Chizmar, 896 P.2d at 208. The court's determination
will not be overturned absent an abuse of discretion. Id. at 209.
The Browns point solely to a statement in Mr. Brown's
affidavit that NBA's refusal to allow them to open an account
"caused Carrol and me great concern for our physical safety." The
court was not presented with any further evidence of emotional
harm. The court did not abuse its discretion in directing a
verdict against the Browns for this claim.
We REVERSE and REMAND with instructions to the superior
court to enter a directed verdict against Mrs. Higashi as to all
her claims. We AFFIRM the superior court's disposal of NCC's
claims against NBA for conversion and wrongful dishonor and breach
of the implied covenant of good faith and fair dealing. We REVERSE
the superior court's directed verdict against NCC for its claims of
breach of contract, breach of fiduciary duty, and negligence. We
AFFIRM the dismissal of the Browns' personal claims against NBA.
NCC, dba Nome Liquor Store, was incorporated in March 1988 as
an entity that would own the liquor license and operating assets.
Mr. and Mrs. Brown each own fifty per cent of NCC's stock.
The minutes of the meeting held December 10, 1989 read:
It was pointed out that the simplest
solution would be to sell the Corporation's assets to the Higashis,
transfer the liquor license to them, and at the same time, assign
to them the property lease now held by the Corporation. The
consideration to the Corporation would be relief from the lease
obligation, and monetary consideration for the value of the assets
Once the sale of the assets, and transfer
of the lease and liquor license were completed the Corporation
could dissolve if that were determined to be desirable.
The Higashis noted that they were unable
to purchase the assets of the Corporation for cash. Moreover, they
expressed reservations about being able to operate at a profit high
enough to cause them to want to stay in Nome and operate the store,
much less buy the store. Consequently, the Corporation would be
unwilling to transfer the lease and liquor license until the terms
of a sale could be fully worked out, and it was also pointed out
that C.J. and Rosemary Phillips would also have to approve any sale
or transfer of the property as well as the liquor license. There
was also a question of how the State of Alaska, Liquor Control Laws
would affect such a transaction.
. . . Acting upon the advice of counsel
and on motion duly made, seconded, and unanimously carried, it was
RESOLVED to allow the Higashis to operate
the Corporation's Liquor Store, and all other assets associated
with the Nome Liquor Store Operation in Nome, Alaska, as Vice-
President General Manager, and Vice-President Assistant Manager, in
consideration for a deposit in an amount equal to the value of the
inventory determined by a physical inventory to be $132,746.00, and
payment of the Corporation's monthly lease obligation of
$15,000.00. The remainder of all profits generated by the
Higashis' management and operation of the store would be paid to
them as compensation. . . .
Mrs. Higashi suggests these corporate minutes are fabricated.
A letter dated December 15, 1989, and addressed to the Control
Board, advised the Board that there was a change in corporate
officers for the liquor store, but that "[t]here was no change in
At oral argument, the Browns abandoned their appeal on their
claim for accounting fees.
Civil Rule 22 provides:
Persons having claims against the
plaintiff may be joined as defendants and required to interplead
when their claims are such that the plaintiff is or may be exposed
to double or multiple liability. It is not ground for objection to
the joinder that the claims of the several claimants or the titles
on which their claims depend do not have a common origin or are not
identical but are adverse to and independent of one another, or
that the plaintiff avers that the plaintiff is not liable in whole
or in part to any or all of the claimants. A defendant exposed to
similar liability may obtain such interpleader by way of cross-
claim or counterclaim. The provisions of this rule supplement and
do not in any way limit the joinder of parties permitted in Rule
Because Civil Rule 22 is identical in relevant respects to
Federal Civil Rule 22, federal cases are persuasive on this issue.
Johnston v. All State Roofing & Paving Co., 557 P.2d 770, 773 n.7
AS 06.05.145 states:
Notice to a bank of an adverse claim to a
deposit standing on its books to the credit of a person is
ineffective unless the adverse claimant procures a restraining
order, injunction or other appropriate process against the bank
from a court in a cause where the person to whose credit the
deposit stands is made a party or executes to the bank in form and
with sureties acceptable to it a bond, indemnifying the bank from
any liability, loss, damage, costs and expenses on account of the
payment of the adverse claim or the dishonor of the check or other
order of the person to whose credit the deposit stands on the books
of the bank.