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Osborne v. Hurst (11/14/97), 947 P 2d 1356
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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) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
ESTER OSBORNE and )
HARRIET CHRISTENSEN, ) Supreme Court Nos. S-7205/7235
)
Appellants/ ) Superior Court No.
Cross-Appellees, ) 3HO-92-59 CI
)
v. ) O P I N I O N
)
HARLEY HURST, ) [No. 4902 - November 14, 1997]
)
Appellee/ )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Homer,
Charles K. Cranston, Judge.
Appearances: C. Michael Hough, Homer, for
Appellants/Cross-Appellees. Marc D. Bond, Delaney, Wiles, Hayes,
Gerety & Ellis, Inc., Anchorage, for Appellee/Cross-Appellant
Harley Hurst.
Before: Compton, Chief Justice, Matthews,
Fabe, and Bryner, Justices. [Eastaugh, Justice, not participating.]
FABE, Justice.
I. INTRODUCTION
Two property owners sued a neighbor for setting a fire
that burned down the trees on their property. The trial concluded
in a jury verdict and judgment in favor of the defendant. Both
sides appeal various decisions of the trial court concerning
summary judgment, admission of testimony, and attorney's fees. We
reverse and remand.
II. FACTS AND PROCEEDINGS
In 1985 Ester Osborne and Harriet Christensen purchased,
for $40,000, a 3.62 acre plot of land with a cabin on it. The
plot, on a point near Homer, overlooked Kachemak Bay. About twenty
percent of the land was forested. Osborne and Christensen live in
Washington. They held the land as a vacation spot for themselves
and relatives, as an investment, as a rental property, and for
their retirement. They called it "a playground, a retirement home,
a place of peace."
In 1991 a neighbor, Harley Hurst, set a grass fire that
grew as the wind caught it and spread out of control. The fire
burned down Osborne and Christensen's cabin. It killed or severely
damaged all the trees on their property.
The cabin was insured, and the insurer reimbursed Osborne
and Christensen for $22,903.69, the value of the cabin less the
policy's $250 deductible. The insurer concluded that the loss was
attributable to Hurst's negligence and sought compensation from him
for the cost.
Osborne and Christensen sued Hurst for the property
damage not covered by their insurance. Hurst admitted liability
for compensatory damages and offered Osborne and Christensen
$18,600, plus interest, attorney's fees under Alaska Civil Rule 82,
and costs to settle their suit. Osborne and Christensen apparently
declined his offer.
Osborne and Christensen requested treble damages, seeking
to apply the law that provides punitive treble damages if a
trespasser intentionally removes trees from the property of
another. AS 09.45.730. The superior court granted Hurst's motion
for summary judgment on this issue, holding that the treble damages
provision was inapplicable because Hurst destroyed the trees
unintentionally.
To measure damages, Osborne and Christensen retained John
Hall of Taiga Resource Consultants. Hall stated that the cost of
restoring the property to its original condition by replacing the
burned trees with healthy ones would be $170,074.43. He noted that
the larger trees on the property would be replaced by the "largest
available transplantable size."
Hurst's expert, a real estate appraiser, stated that the
fire diminished the fair market value of the property, excluding
the cabin, from approximately $32,000 to approximately $21,000.
This $11,000 reduction in the value of the property consisted of
$4000 in removal costs to clear the dead trees and debris,
approximately $4000 in "holding costs,"defined as the opportunity
cost of waiting a year after the fire for ground vegetation to
regrow before selling, and a $3000 decrease in the value of the
land due to the loss of its trees.
Because the parties proposed standards that would have
produced very different results, Hurst moved for summary judgment
on the issue of the measure of damages. The superior court granted
Hurst's motion. The court concluded that restoration costs were
"so disproportionate to the decrease in value"that restoration
costs were an inappropriate measure of Osborne and Christensen's
damages.
At trial, Hurst objected to Osborne's and Christensen's
testimony about the value of their property, on grounds that they
were not qualified to give such testimony. The court permitted the
property owners to testify.
Osborne and Christensen called Karen Berg-Forrester, a
Homer real estate broker, to testify to the property's value.
Hurst objected because Berg-Forrester was not identified as an
expert witness until after the trial had begun and because she was
a realtor instead of a qualified real estate appraiser. After an
offer of proof, the court permitted Berg-Forrester to testify.
Berg-Forrester testified that the pre-fire value of the property
without the cabin was between $32,000 and $39,500 and that the
value fell to between $22,000 and $24,000 immediately after the
fire.
The case was tried before a jury. Instructions required
the jury to calculate damages suffered by Osborne and Christensen
according to the diminution in the property's value excluding the
loss of the cabin. The jury found damages to be zero.
Because Osborne and Christensen did not recover a money
judgment, the trial court applied Alaska Civil Rule 82 and awarded
Hurst attorney's fees. However, the court adjusted downward from
the Rule 82 scheduled amount and awarded Hurst $12,500 of his
$65,846.50 in attorney's fees. It used an adjusted amount because
it found that "the issues in this case were not very complex, . . .
the trial was short, and . . . a large fee award . . . would be so
onerous to Plaintiffs that it would deter similarly situated
litigants from voluntarily pursuing valid claims in court."
Both sides appeal. Osborne and Christensen claim that
the trial court erred in granting summary judgment in favor of
Hurst on the issues of treble damages and restoration costs. On
cross-appeal, Hurst claims that the trial court erred by admitting
certain valuation testimony by Osborne, Christensen, and Berg-
Forrester and by reducing the attorney's fee award to an amount
lower than the scheduled fee in Rule 82.
III. DISCUSSION
A. Standard of Review
This court "will uphold summary judgment only
if the record presents no genuine issues of material fact and 'the
moving party was entitled to judgment on the law applicable to the
established facts.' When the court makes this determination,
'[a]ll reasonable inferences must be drawn . . . in favor of the
non-moving party.'"
Bishop v. Municipality of Anchorage, 899 P.2d 149, 153 (Alaska
1995) (quoting Newton v. Magill, 872 P.2d 1213, 1215 (Alaska
1994)).
We review rulings concerning the admissibility of opinion
testimony under the abuse of discretion standard. See Schymanski
v. Conventz, 674 P.2d 281, 286-87 (Alaska 1983). We also review
rulings concerning a witness's qualifications as an expert under
the abuse of discretion standard. See Handley v. State, 615 P.2d
627, 630 (Alaska 1980). Finally, we review attorney's fee awards
under the abuse of discretion standard. See Kelly v. Kelly, 926
P.2d 1168, 1170 (Alaska 1996).
B. The Superior Court Erred in Granting Summary Judgment on
the Issue of Restoration Costs.
The superior court granted summary judgment in favor of
Hurst on the issue of restoration costs. Thus, it precluded
Osborne and Christensen from arguing that their damages were equal
to the cost of restoring the property to its original condition by
replacing the trees that Hurst destroyed. Osborne and Christensen
argue that the superior court erred. We agree.
We have recognized that "a plaintiff who has been injured
by an invasion of his land not totally destroying its value may
elect as damages either the loss in value"or reasonable
restoration costs. G & A Contractors, Inc. v. Alaska Greenhouses,
Inc., 517 P.2d 1379, 1385 (Alaska 1974). To determine when
awarding restoration costs is appropriate, we have embraced the
test set forth in Restatement (Second) of Torts  929 (1977). See
Andersen v. Edwards, 625 P.2d 282, 288 (Alaska 1981).
The Restatement provides in part:
(1) If one is entitled to a judgment for harm
to land resulting from a past invasion and not amounting to a total
destruction of value, the damages include compensation for
(a) the difference between the value of the
land before the harm and the value after the harm, or at his
election in an appropriate case, the cost of restoration that has
been or may be reasonably incurred[.]
Restatement (Second) of Torts  929(1)(a) (1977). Comment b
explains:
[T]he reasonable cost of replacing the land in
its original position is ordinarily allowable as the measure of
recovery. . . . If, however, the cost of replacing the land in its
original condition is disproportionate to the diminution in the
value of the land caused by the trespass, unless there is a reason
personal to the owner for restoring the original condition, damages
are measured only by the difference between the value of the land
before and after the harm.
In this case, the superior court found that using
reasonable restoration costs was an inappropriate measure of
damages because "[t]he amount of restoration costs is so
disproportionate to the decrease in value caused by the burning of
the trees." As the Restatement provides, disproportionately large
restoration costs do not necessarily prohibit a party from
successfully seeking reasonable restoration costs as the measure of
damages. Id. Instead, the Restatement indicates that reasonable
restoration costs are an inappropriate measure of damages when
those costs are disproportionately larger than the diminution in
the value of the land and there is no "reason personal to the owner
for restoring"the land to its original condition. Id. We
previously interpreted "reason personal"to mean peculiar or
special to the owner. See Andersen, 625 P.2d at 288. We explained
that the plaintiff in G & A Contractors had a "reason personal"
justifying reasonable restoration damages because its use of the
damaged property as "a showplace in connection with its nursery
business"was a purpose "peculiar"to the plaintiff. Andersen, 625
P.2d at 288.
Other authorities determine whether a "reason personal"
exists by examining a landowner's motivation for holding the land.
If the landowner's principal reason for holding the land is to sell
it for profit, Professor Dobbs suggests that awarding restoration
damages would confer a windfall upon the landowner. See 1 Dan B.
Dobbs, Law of Remedies  5.2(1), at 714-15 (2d ed. 1993). In such
cases, damages equal to the diminished value of the property
usually will fully compensate the injured landowner. See id. 
5.2(1), at 713 ("The diminution measure permits the plaintiff to
recover the difference between the reasonable sale value of the
property immediately before the harm was done and the value
immediately afterward.").
In contrast, courts have recognized that landowners
should not be forced either to sell property they wish to keep or
to make repairs partly out of their own pockets. See, e.g., Roman
Catholic Church of the Archdiocese of New Orleans v. Louisiana Gas
Serv. Co., 618 So. 2d 874, 877 (La. 1993). As the Louisiana Gas
court observed: "If the plaintiff wishes to use the damaged
property, not sell it, repair or restoration at the expense of the
defendant is the only remedy that affords full compensation." Id.
Thus, a reason personal to the owner for restoring the original
condition exists where the owner holds property primarily for use
rather than for sale and where the owner is likely to make repairs
with the restoration costs award rather than to pocket the funds
and enjoy a windfall.
Professor Dobbs notes that applying the Restatement's
"reason personal"rule may be difficult in some cases. See Dobbs,
Law of Remedies supra,  5.2(2), at 719. Indeed, no rule "appears
to govern all cases with complete success." Id. We agree with
Professor Dobbs that there is "no substitute for practical good
sense"in distinguishing the situations when a property owner will
actually face the choice recognized in Louisiana Gas from those
situations when the property owner will experience a windfall. See
id.  5.2(2), at 720.
The need for "practical good sense"exists at two levels.
First, the plaintiff's "reason personal"must itself be objectively
reasonable. Second, once a "reason personal"is found, restoration
costs exceeding diminished market value may be awarded only to the
extent such added costs are objectively reasonable in light of the
"reason personal"and in light of the diminution in value. Thus,
the Restatement rule permits an injured landowner to recover "at
his election in an appropriate case, the cost of restoration that
has been or may be reasonably incurred." Restatement (Second) of
Torts  929(1)(a) (1977) (emphasis added). The purpose for
limiting an award to those costs that have been or may be
reasonably incurred appears to be a desire to reduce the economic
waste that occurs when a party incurs repair costs in excess of the
diminished value of the property. Cf. Dobbs, Law of Remedies
supra,  5.2(1), at 715 (observing that making expensive repairs in
excess of the property's diminished value maximizes the loss and
"seem[s] uncomfortably like economic waste").
Under the foregoing principles, Osborne and Christensen
were entitled to elect as their preferred measure of damages
restoration costs instead of diminished market value; but if
restoration costs were disproportionate in relation to the
diminution in market value, Osborne and Christensen were further
required to prove the existence of a case-specific justification,
or "reason personal"for their chosen measure of damages. If that
justification was objectively reasonable, it would support an award
of restoration costs exceeding diminished value, but only to the
extent the added costs were themselves objectively reasonable in
light of the established reason personal [Fn. 1] and the diminution
in market value.
In granting summary judgment to Hurst on the measure of
damages issue, the trial court did not fully apply these
principles. The record suggests that the superior court did not
consider whether a "reason personal to the owner for restoring the
original condition"existed. Restatement (Second) of Torts  929
cmt. b (1977). Instead, the court evidently decided to require
Osborne and Christensen to rely on diminished value simply because
restoration costs were disproportionately higher.
The record unquestionably showed that restoration costs
were disproportionately higher than diminished market value:
Osborne and Christensen sought restoration costs of $170,000,
whereas experts for both parties agreed that the pre-fire value of
the land, excluding the cabin, was less than $40,000. Given this
evidence, Osborne and Christensen plainly bore the burden of
justifying their choice of restoration costs by adducing evidence
of a "reason personal."
The superior court could properly grant summary judgment
on this issue, but only in the absence of evidence raising a
genuine issue of fact as to the existence of a "reason personal."
Yet the record before the superior court when it granted summary
judgment did contain evidence indicating a potentially valid
"reason personal."
Christensen testified in a deposition that she and
Osborne had selected the property because of its unique views, its
abundant trees, and the unusual juxtaposition of the trees, the
cabin, and the views. Christensen claimed that other properties in
the area were not comparable. As previously mentioned, Christensen
and Osborne planned to use the property for their retirement. This
evidence, if accepted, might have supported the finding of a
"reason personal"justifying an award of at least some replacement
costs in excess of market value. The issues of whether replacement
costs should be awarded and the extent to which such costs might
have been reasonable should properly have been left for the jury.
Because these issues were not suitable for disposition by
summary judgment, the superior court erred in precluding the jury
from determining the appropriate measure of damages in accordance
with the "reason personal"test. The error requires a remand for
a retrial.
C. The Superior Court Did Not Err in Granting Summary
Judgment on the Issue of Treble Damages.
The superior court granted summary judgment in favor of
Hurst by finding that the treble damages provisions of AS 09.45.730
did not apply to this case. That statute provides treble damages
against a person who "injures or removes a tree, timber or a shrub"
from the land of another. AS 09.45.730. However, the provision
does not apply "if the trespass was unintentional or involuntary."
Id.
The superior court concluded that AS 09.45.730 did not
entitle Osborne and Christensen to treble damages by reasoning
"there is no question of fact concerning the intent of Mr. Hurst in
starting the fire. The spread of the fire to plaintiffs' property
was unintended and accidental." On appeal, Osborne and Christensen
contend that the superior court erred in granting summary judgment
in favor of Hurst because a disputed issue of material fact remains
about whether Hurst's conduct was "unintentional"within the
meaning of AS 09.45.730. Specifically, they concede that Hurst did
not burn their trees "with the intention as an arsonist would have
in setting a fire." Nevertheless, they argue that AS 09.45.730
also punishes reckless conduct and that "Mr. Hurst showed utter and
reckless disregard for the rights and property of
Christensen/Osborne and Mr. Hurst's other neighbors."
Before 1988, the exception to AS 09.45.730 read "if the
trespass was casual or involuntary." Ch. 85,  16, SLA 1988. We
interpreted this pre-amendment language in Matanuska Electric
Association v. Weissler, 723 P.2d 600, 606-07 (Alaska 1986). We
recognized that "casual"was derived from a nineteenth century
statute and that it meant unintentional. Id. We concluded that
"casual"refers to "whether the trespasser intended"to cut,
damage, or remove trees. Id. at 607.
The 1988 amendment to 09.45.730 replaced "casual"with
"unintentional." See 1988 House & Senate Joint Journal Supp. No.
18, at 4. The amendment's legislative history refers to the
Weissler court's construction of "casual"to mean "unintentional."
Id. It also specifically notes that "[t]he amendment is suggested
to update the language in conformity with the court's
construction." Id. Thus, we conclude that the holding of Weissler
remains undisturbed.
In light of our interpretation of AS 09.45.730 in
Weissler, we conclude that the superior court did not err in
granting summary judgment in favor of Hurst on the issue of treble
damages. When the court was considering the summary judgment
motion, the parties agreed that Hurst did not specifically intend
to burn the trees on Osborne's and Christensen's property. Nothing
in the language of the statute, its legislative history, or our
decision in Weissler indicates that the legislature intended to
apply treble damages where a party negligently or recklessly
damages trees if that party did not specifically intend to do so.
D. Osborne's and Christensen's Property Value Testimony was
Admissible.
Hurst contends that Osborne and Christensen should not
have been permitted to testify about the value of their property
before and after the fire. He argues that, beyond the actual
purchase of the land, they had no "basis upon which either of them
could offer an opinion regarding its value." "In Alaska, lay
testimony offered by the landowner as to property value is
admissible because of the owner's presumed knowledge about the
value of such property." Schymanski v. Conventz, 674 P.2d 281, 286
(Alaska 1983). Evidence of the owner's familiarity with the
property is relevant to the weight that the trier of fact should
give to the testimony. See John Henry Wigmore, 1A Evidence in
Trials at Common Law  29, at 976 (Tillers rev. 1983) ("It is for
the jury to give the fact the appropriate weight in effecting
persuasion. The rule of law the judge employs is concerned merely
with admitting the fact through the evidentiary portal.").
Therefore, we conclude that the superior court did not abuse its
discretion.
E. The Superior Court Did Not Abuse Its Discretion in
Admitting Berg-Forrester's Expert Testimony.
Hurst argues that Berg-Forrester's expert testimony was
improperly admitted. He asserts that she was not qualified as an
expert and that her identity was disclosed late. We disagree.
As to Hurst's first argument, "[t]he true criterion [for
determining whether a person qualifies as an expert witness] is
whether the jury can receive appreciable help from this particular
person on this particular subject." Crawford v. Rogers, 406 P.2d
189, 192 (Alaska 1965). Berg-Forrester indicated that she has been
a real estate agent in Homer for the past eighteen years and that
she is a certified residential specialist and a certified
residential broker. She testified that she was familiar with the
subdivision within which Osborne's and Christensen's lot is
situated, had sold properties within the subdivision, and had
visited the property before and after the fire. She also explained
that her job requires her to be familiar with the value of real
property and that she is frequently asked to give "a fair market
value or a fair estimation value"of property. Under these
circumstances, the superior court did not abuse its discretion in
qualifying Berg-Forrester as an expert. [Fn. 2]
We also determine that it was within the superior court's
discretion to admit Berg-Forrester's testimony, even though Berg-
Forrester was not identified as an expert until the time of trial.
Hurst correctly concedes that the superior court has substantial
discretion in dealing with late-disclosed witnesses. See Lewis v.
Lewis, 785 P.2d 550, 557 (Alaska 1990). Exercising this
discretion, the court required Osborne and Christensen to make an
offer of proof on the record regarding Berg-Forrester's proposed
testimony so that Hurst and his expert would have the opportunity
to review the basis of her opinion before she testified in front of
the jury.
We conclude that the superior court employed appropriate
measures under the circumstances to minimize any prejudice to
Hurst. Moreover, if any prejudice did occur, it does not appear to
have harmed Hurst. Hurst's expert stated that the fire diminished
the fair market value of the property, excluding the cabin, from
$32,000 to $21,000. Berg-Forrester testified that the pre-fire
value without the cabin was between $32,000 and $39,500 and that
the post-fire value was between $22,000 and $24,000. Neither of
these opinions appears to have formed the basis for the jury's
conclusion that Hurst was not liable for any damages. Therefore,
any prejudice that occurred was harmless. [Fn. 3]
IV. CONCLUSION
We conclude that the superior court erred in granting
summary judgment in favor of Hurst as to the measure of damages.
On remand, the court should conduct proceedings to determine
whether Osborne and Christensen have a "reason personal"for
restoring the property to its pre-fire condition. Should the jury
find that Osborne and Christensen have a "reason personal,"Osborne
and Christensen may elect to use reasonable restoration costs as
the measure of damages. The superior court should reexamine its
attorney's fees award in light of these additional proceedings.
Finally, we conclude that the superior court did not err
in granting summary judgment in favor of Hurst on the issue of
treble damages.
FOOTNOTES
Footnote 1:
For example, a jury might find that the unique setting of the
land in this case was a valid "reason personal"justifying some
restoration costs in excess of diminished market value, but that
expenditure of the full estimated cost of $170,000 would not be
reasonable.
Footnote 2:
Hurst points out that Berg-Forrester had no training as a real
estate appraiser and asserts that she used unsound techniques to
assess the value of the property. Such evidence is appropriate for
cross-examination and is relevant to the credibility and weight the
trier of fact should give to the testimony.
Footnote 3:
Hurst also challenges the superior court's decision to award
him attorney's fees in an amount less than the scheduled fee in
Alaska Civil Rule 82(b)(2). In particular, he argues that the
superior court erred in reducing the attorney's fee award because
it did not explain its analysis of all the possible reasons, under
Rule 82(b)(3), for deviating from the schedule set forth in Rule
82(b)(2). We disagree. If one or more Rule 82(b)(3) factors
justifies departure from the schedule for fee awards, the trial
court may base its decision on those factors, without specifically
explaining why the other factors are not relevant. Nevertheless,
we conclude that the superior court must reexamine the attorney's
fee award. The superior court based its reduced award in part upon
the short duration of the trial and the lack of complexity of the
issues. On remand, the duration and complexity of this case may
change. Accordingly, the superior court may need to adjust its fee
award.
 In the Supreme Court of the State of Alaska
Ester Osborne and Harriet Christensen, )
) Supreme Court No. S-07205/7235
Appellants/Cross-Appellees, )
v. ) Order
) Withdraw an Opinion
Harley Hurst, )
)
Appellee/Cross-Appellant. )Date of Order: 11/14/97
)
Trial Court Case # 3HO-92-00059CI
Before: Compton, Chief Justice, Matthews, Fabe, and Bryner, Justices, [Eastaugh,
Justice, not participating].
It is Ordered, Sua Sponte:
1. Opinion No. 4893, issued on October 16, 1997 is Withdrawn and Opinion No.
4902 is issued in its place today. Footnotes 2 and 3 have been removed, the remaining footnotes
have been renumbered, and the language on page 16, lines 1 through 4 has been modified.
Entered by direction of the court.
Clerk of the Appellate Courts
Cheryl Jones, Deputy Clerk
cc: Supreme Court Justices
Trial Court Judge
Trial Court Appeals Clerk
Publishers
Distribution:
C. Michael Hough
Attorney at Law
Beluga Professional Center
3691 Ben Walters Lane, #2
Homer AK 99603
Marc D. Bond
Delaney, Wiles, Hayes, et. al.
1007 West 3rd Avenue, Suite 400
Anchorage AK 99501
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