You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Mapco Express Inc. v Faulk (06/15/2001) sp-5422
Mapco Express Inc. v Faulk (06/15/2001) sp-5422
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
MAPCO EXPRESS, INC., )
) Supreme Court No. S-9500
Appellant, )
) Superior Court No.
v. ) 3AN-97-1954 CI
)
DAVID G. FAULK, ) O P I N I O N
)
Appellee. ) [No. 5422 - June 15, 2001]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
John Reese, Judge.
Appearances: Douglas S. Parker, Dorsey &
Whitney, LLP, Anchorage, for Appellant. Charles G. Evans, Law
Office of Charles G. Evans, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Bryner, and Carpeneti, Justices. [Matthews,
Justice, not participating.]
FABE, Chief Justice.
I. INTRODUCTION
MAPCO Express, Inc. stockpiled snow on its property in
south Anchorage, and the snow melt flowed downhill onto warehouse
property owned by David Faulk. Subsequently, some areas of Faulk's
warehouse suffered damage, and Faulk brought suit against MAPCO for
nuisance and trespass. After a bench trial, the superior court
found a trespass and awarded $106,815.43 in compensatory damages
and an equal amount in punitive damages. MAPCO has appealed this
judgment. We conclude that the superior court's factual findings
on liability were sufficiently clear and explicit and that these
findings were not clearly erroneous. Moreover, because Faulk's
offer of judgment was no longer valid once the trial court issued
a verdict, we affirm the finding of liability. We reverse the
award of compensatory and punitive damages and remand for further
proceedings.
II. FACTS AND PROCEEDINGS
David Faulk owns a warehouse and office building at 8401
Brayton Drive in south Anchorage. On three sides (north, east, and
west) the building is almost completely surrounded by asphalt. On
the remaining south side, the building borders property owned by
MAPCO Express, Inc. The Faulk building sits only a few inches from
the property line dividing Faulk's property from MAPCO's property.
On the north side of the Faulk building, there are three
dock-high loading bays. This loading area is bounded by retaining
walls and paved with asphalt. The loading area is recessed below
the level of the warehouse floor; this allows delivery vehicles to
load and unload their payloads at the same level as the warehouse
floor. The warehouse floor consists of a single concrete slab that
varies in thickness from approximately six inches to perhaps as
much as twelve inches. Before 1998 this floor was reinforced with
steel mesh and rebar leading into the walls of the building.
After purchasing the property in 1993, Faulk made some
cosmetic repairs and then leased the building to Odom Corporation
until March 1998. Odom Corporation used the facility until March
1998 for warehousing and distribution of food products.
On the MAPCO property is a MAPCO convenience store and
gas station. Before 1997 the northern part of the MAPCO lot sat at
a higher elevation than Faulk's property. Beginning in the winter
of 1992 MAPCO began piling snow plowed from its property, as well
as from two other MAPCO convenience stores, on the north side of
the MAPCO property -- the side adjacent to the Faulk property. The
snow was placed in piles that at one time were approximately ten
feet high. Each year, snow and snow melt fell or drained from
these piles down the slope toward the Faulk property. Once down
the slope, this water pooled against Faulk's building and was
trapped there; water was observed there in the late spring seasons
of 1994, 1995, and 1996. The water pooled there at a depth that
was sometimes between eight and twenty inches.
Faulk first became aware of damage to his property on
June 30, 1994, when an Odom employee notified him that the surface
of the asphalt loading area, on the north side of the Faulk
building, was becoming soft and breaking up, causing difficulties
for Odom's delivery vehicles. Faulk suspected that the problem was
caused by poor subsurface materials used below the asphalt, but did
not repair the problem in June 1994. During the next year the
retaining walls in the loading area were observed to be leaning,
and the floor of the warehouse just inside the loading doors
started to settle.
In June 1995 one of Odom's vehicles broke through the
asphalt surface in the loading area and was stuck there. Faulk
assisted in freeing the vehicle and commenced repairs of the area.
However, while Faulk was excavating this area a stream of water
suddenly gushed out from behind a cracked concrete block in the
buried wall of the building underneath the loading area; the
resulting stream lasted for about five minutes. At this time Faulk
suspected that the snow melt water pooled at the southern wall was
draining underground and migrating underneath the warehouse,
causing the damage to the asphalt and concrete surface and creating
the flow observed earlier at the loading area. Faulk observed that
as the water streamed out from under the excavated loading area,
the level of the pooled water at the southern wall dropped
dramatically, such that when the stream stopped, the pool was
almost gone.
In July 1995 Faulk contacted MAPCO environmental manager
Paul Farnsworth and explained the problem and his suspicions, and
requested that MAPCO stop piling snow from other MAPCO convenience
stores on the MAPCO property. Faulk completed repairs to the
loading area by the fall of 1995 but did not re-asphalt the area at
this time.
Despite Faulk's request, in the winter of 1995-1996 MAPCO
continued to pile snow from other MAPCO convenience stores on the
northern part of its property. Faulk and his office staff
contacted MAPCO at least two times in early 1996 to reiterate the
request that this piling be stopped. On February 26 Faulk spoke
with MAPCO's Farnsworth, and Faulk asked Farnsworth if a permit was
required to pile the snow on the MAPCO property. Faulk testified
that Farnsworth replied by stating that "if we need a permit I have
a permit." Faulk sent Farnsworth a letter restating the request,
and explaining the damage and Faulk's suspicions that the damage
was caused by the snow melt. After receiving the March 25, 1996
letter, MAPCO ceased piling snow from other locations at the site
but failed to remove the existing snow pile.
In the summer of 1996 Faulk's warehouse floor began to
develop problems. The floor slab appeared to be settling and
developed hairline cracks. By August 1996 the warehouse floor was
exhibiting more significant signs of failure, including slump and
more cracking. "Voids" consisting of pockets of empty space were
found underneath the concrete. Faulk repaired the floor slab in
1996 and again in 1998.
On February 21, 1997, Faulk brought suit against MAPCO,
claiming nuisance and trespass. The original trial date was set
for October 25, 1999. However, the superior court advanced the
trial date to October 14, 1999 sua sponte. On October 13, 1999,
the superior court stated that trial would not commence the next
day but would be pushed back until December.
On October 18, 1999, Faulk made an Alaska Civil Rule 68
offer of judgment to MAPCO in the amount of $100,000. MAPCO did
not initially respond to this offer. On October 25, 1999, the
parties were informed by the superior court that the trial would
start on October 27, 1999. A bench trial commenced on October 27
and continued through October 29.
The superior court issued its oral verdict, findings, and
conclusions on November 1, 1999. The court found for Faulk and
awarded $65,856.43 in compensatory damages and an equal amount in
punitive damages, plus interest, costs and attorney's fees. On
November 5 Faulk filed a motion for reconsideration concerning
damages. The court accepted the revised figures in Faulk's motion,
and in its December 7 order of judgment, the court awarded
$106,815.43 in compensatory damages, $26,387.07 in attorney's fees,
$2,237.07 in costs, and $1,841.80 in interest. Without
explanation, the superior court also increased punitive damages to
$106,815.43.
After the November 1, 1999 verdict, MAPCO accepted
Faulk's October 18 Rule 68 offer of judgment. However, the
superior court refused to affirm the accepted offer on the grounds
that it was untimely.
MAPCO has appealed the decision below.
III. STANDARD OF REVIEW
This appeal requires us to review the superior court's
factual findings. We will overturn these findings only if they are
clearly erroneous. [Fn. 1] These factual findings must be "so
clear and explicit as to give [us] a clear understanding of the
basis for the decision made." [Fn. 2]
We will review questions of law addressed by the superior
court de novo. [Fn. 3] It is a question of law whether quasi-
estoppel applies to bar the plaintiff's claims in this case. [Fn.
4]
In this appeal, we must review the superior court's
interpretation of Civil Rule 68; in so doing, we will exercise our
own independent judgment. [Fn. 5]
Also, we must review the superior court's award of
compensatory and punitive damages. The superior court's award of
compensatory damages will not be set aside unless it is clearly
erroneous. [Fn. 6] We will overturn the superior court's award of
punitive damages only if it is manifestly unreasonable, the result
of passion or prejudice, or entered in disregard of rules of law.
[Fn. 7] IV. DISCUSSION
A. The Superior Court Did Not Err in Finding MAPCO Liable
for Trespass.
The superior court found MAPCO liable for trespass
against Faulk. It awarded Faulk $106,815.43 in compensatory
damages and an equal amount in punitive damages. MAPCO argues that
we should reverse the superior court's finding of liability and
award of damages because: (1) the superior court's factual findings
were not adequately clear and explicit; (2) the superior court's
factual findings were clearly erroneous; and (3) quasi-estoppel
applies to bar Faulk's claims. We reject all of these arguments.
1. The factual findings on liability were sufficiently
"clear and explicit."
MAPCO claims that we must reverse because the superior
court's factual findings were not "clear and explicit," as required
by Civil Rule 52(a) and our prior decisions. [Fn. 8]
We explained the requirements of Rule 52(a) in Sullivan
v. Subramanian:
Under Alaska Civil Rule 52(a), the trial court
had a duty, upon completing the non-jury trial, to "find the facts
specially and state separately its conclusions of law thereon."
This rule required the court to "deal adequately with and state
with clarity what it finds as facts and what it holds as
conclusions of law. The findings and conclusions should be so
clear and explicit as to give the Supreme Court a clear
understanding of the basis for the decision made."[ [Fn. 9]]
If the superior court's findings are not adequate, we must remand
the case to the superior court for more explicit findings. [Fn. 10]
MAPCO claims that the superior court's findings were
inadequate because the court failed to comment on (i) the
inconsistency between Faulk's trial testimony and a prior written
statement and (ii) the fact that Faulk presented no evidence in
support of his causation theory.
MAPCO claims that there is an "inconsistency" between
Faulk's prior written statement and his testimony at trial. On May
16, 1996, Faulk wrote a letter to the Municipality of Anchorage
regarding a tax assessment for his property. In that letter, Faulk
claimed that the parking area was constructed using "substandard
methods and materials," and that this resulted in the asphalt
breakup problems in the loading area that Odom had complained of in
1994 and 1995. MAPCO claims that this prior written statement is
inconsistent with Faulk's position at trial, since Faulk's position
at trial was that the problems with the asphalt surface of the
loading area were caused not by substandard materials, but rather
by MAPCO's migrating snow melt. MAPCO claims that it is
"impossible" to determine how the superior court resolved this
conflict, and that the superior court should have issued findings
specifically dealing with this inconsistency.
Secondly, MAPCO claims that the superior court should
have commented on Faulk's failure to address MAPCO's expert
testimony. MAPCO's two expert witnesses testified that the snow
melt could not have caused the damage to the loading area and the
warehouse floor. Faulk presented no expert testimony of his own.
Instead, he relied on his own testimony and that of his employees
to support his theory that the snow melt migrated under the
building to cause his damages. MAPCO claims that the superior
court should have "explained" why it disagreed with the expert
testimony presented by MAPCO.
In response, Faulk argues that the superior court is not
required to explain these inconsistences, and that the superior
court's findings are adequate because each of the critical disputes
in the case were resolved by these findings.
Faulk is correct: the superior court's findings are
"clear and explicit" because the findings are sufficiently detailed
to allow review by this court, and because each of the critical
disputes in this case was resolved by these findings.
Two major principles emerge from our past decisions
concerning Civil Rule 52(a). A trial court's findings are
sufficiently "clear and explicit" if they (i) allow for meaningful
appellate review and (ii) resolve all critical issues and disputes
between the parties. [Fn. 11] We will remand for more detailed
findings only if these standards are not met.
The superior court's findings are sufficiently detailed
to allow for meaningful appellate review. Superior Court Judge
John Reese found that MAPCO committed a trespass by allowing snow
melt to invade Faulk's property. The superior court further found
that the water from the snow melt migrated under Faulk's building
and made the surface of the loading area unstable; when the block
under the loading area broke open, this water flowed out of the
block with sufficient volume to create "channels" under the
warehouse floor, causing voids to form that subsequently caused the
floor slab to fail. Finally, the superior court found that the
costs of the repairs undertaken by Faulk were "directly caused" by
the flow of water from MAPCO's property.
MAPCO cites this court's decision in Murray v. Murray
[Fn. 12] in its attempt to show that the trial court here issued
incomplete factual findings. MAPCO claims that this case and
Murray are similar because in both cases the trial court did not
fully reveal its reasoning and the appellate court was unable to
apply meaningful review. Murray was a divorce and property
division proceeding in which the lower court awarded the wife some
of the husband's separate property without valuing the marital
estate. [Fn. 13] We remanded in Murray because a clear
understanding of the lower court's ruling was impossible: without
factual findings on the value of the marital estate, we could not
review the decision to invade separate property. [Fn. 14] MAPCO
claims that the case at bar is similar to Murray because "[i]t is
impossible to determine from the trial court's verdict how, if at
all, the trial court resolved [the] material conflict between
[Faulk's] testimony and his documents." That is, MAPCO claims that
we cannot meaningfully review the superior court's ruling because
the superior court failed to comment on the inconsistency between
Faulk's trial testimony and his 1996 written statement to the
Municipality.
However, it is obvious how the trial court resolved this
conflict: it accepted Faulk's testimony as credible, in spite of
the allegedly inconsistent earlier statement. Because the superior
court accepted Faulk's trespass theory, which was based primarily
on evidence from Faulk's own testimony, [Fn. 15] we must infer that
the superior court accepted Faulk's testimony as credible, and did
not view the 1996 letter as destroying this credibility.
Similarly, in Frontier Saloon, Inc. v. Short, we refused to remand
because, even though the factual findings were brief, it was
"readily apparent" that the lower court accepted the testimony of
one side's witnesses and rejected the testimony of witnesses
presented by the other side. [Fn. 16] In Frontier Saloon, a
builder brought suit to recover for extra work done, and the lower
court entered a judgment for the builder. [Fn. 17] We held that
detailed findings were not necessary because "it is readily
apparent that the trial court accepted [the builder's] testimony
and rejected [the saloon's] conflicting testimony as to the
disputed items." [Fn. 18] Here it is also obvious that the trial
court accepted Faulk's testimony and Faulk's causation theory.
The findings of the superior court below also addressed
and resolved all critical issues and claims and are therefore
sufficiently detailed under Civil Rule 52(a). MAPCO cites the
Fifth Circuit's decision in Echols v. Sullivan [Fn. 19] in its
attempt to show that the superior court's findings failed to
address critical issues -- the inconsistency between Faulk's trial
testimony and his 1996 letter and Faulk's failure to rebut or
address MAPCO's expert testimony. In Echols, the trial court
entered a judgment against a prisoner who filed a sec. 1983 action;
the Fifth Circuit held that the trial court did not issue adequate
findings because it failed to address critical issues, including
whether the prisoner was beaten or threatened. [Fn. 20] However,
this case is not like Echols or any of our similar decisions
ordering a remand on this basis. The "critical issues" here were
the elements of Faulk's trespass claim: ownership, invasion, and
damages. Judge Reese addressed and resolved all three of these
issues. MAPCO is essentially arguing that the superior court
should have been required to explain its determination of each
witness's credibility, and to explain why it found Faulk's
witnesses to be more credible than MAPCO's witnesses. We have
never required a lower court to do this.
2. The superior court's factual findings supporting
its finding of liability were not clearly erroneous.
MAPCO also claims that the factual findings underlying
the superior court's verdict are clearly erroneous. MAPCO has a
heavy burden here: in order to reverse, we must have a "definite
and firm conviction that a mistake has been made." [Fn. 21] In
determining whether a mistake has been made, we will take the view
of the evidence most favorable to the prevailing party below. [Fn.
22]
Trespass is an unauthorized intrusion or invasion of
another's land. [Fn. 23] MAPCO does not dispute that an
unauthorized intrusion occurred; rather, MAPCO disputes that the
intrusion caused Faulk's damages.
MAPCO claims that it presented "overwhelming" evidence of
its own causation theory, and that Faulk neither rebutted MAPCO's
causation theory nor presented credible evidence for his own.
MAPCO's witness, Steve Johnson, testified that
groundwater seepage, together with the conditions of the soil and
the building, caused the damage. [Fn. 24] MAPCO's theory was that
groundwater seeped into channels just under the warehouse floor and
then escaped through the hole that appeared in 1995 while Faulk was
excavating the loading area. This process was assisted by the
formation of frost lenses and the poor condition of the building --
specifically, the warehouse slab floor which allegedly could not
withstand Odom Corporation's traffic.
MAPCO claims that, in contrast, Faulk failed to prove his
competing causation theory -- that the snow melt migrated from the
southern wall underneath the building to the loading area. MAPCO
claims that Faulk's only evidence was Faulk's observation of water
at the southern wall of his building and Faulk's belief that this
water migrated to the loading area and under the warehouse slab.
MAPCO claims that it rebutted Faulk's theory with its expert
testimony: Johnson testified that the depth of pooled water
observed by Faulk at the southern wall could not acquire a
sufficient "hydraulic head" (pressure) to migrate all the way
through to the loading area and cause the blowout and stream
described by Faulk. Also, MAPCO claims that Faulk's theory makes
no sense because, if the buried northern wall [Fn. 25] acted as a
dam that held back the water until Faulk's 1995 excavations, the
buried southern wall should have done so even more effectively --
with the help of impermeable soils -- keeping water from seeping
under the building entirely.
However, Faulk's causation theory was not impossible on
its face and was supported by evidence in the record. Faulk's
causation theory is that the snow melt migrated from the southern
wall underneath the building to the loading area. Once there, the
snow melt caused problems in the loading area and then eventually
blew through the underground portion of the northern wall in a
stream while Faulk was excavating the area. It then created
channels under the warehouse, carrying sand out of the space under
the building with it as it went. This created voids under the
warehouse floor and caused the floor's failure.
Every part of Faulk's theory has support in the record.
First, Faulk himself testified about the stream that blew out while
he was excavating in the loading area. Faulk testified that as the
stream continued to flow, the water level at the southern wall
began to drop until the pools were almost gone. A reasonable
conclusion to draw is that the snow melt water from the pools was
flowing under the warehouse out through the hole in the loading
area. Faulk also testified that a large quantity of sand came out
with the water.
Second, MAPCO's expert, Johnson, seemed to confirm the
validity of this theory by stating that water could flow under the
building, taking sand with it, if there was a hole at one end to
release the water (an "open channel flow"). [Fn. 26] Also, both
Johnson and MAPCO's witness, Mobley, confirmed that the concrete
blocks of the walls of the building that extended underground were
permeable -- meaning that the pooled water could have seeped
through them into the space under the warehouse slab.
Also, one of Faulk's employees, an engineer named Arthur
Whitmer, testified that the cracks and heaving in the warehouse
floor slab that he observed were not really consistent with frost
action.
Finally, it should also be noted that acceptance of
Faulk's theory is not clear error simply because MAPCO presented
expert testimony on its causation theory and Faulk failed to rebut
this evidence with expert testimony of his own. As we have stated,
a court is not bound by expert testimony of one party simply
because the other side failed to present contrary expert testimony.
[Fn. 27]
Construing the evidence in Faulk's favor, Faulk's
causation theory is supported by the evidence, and therefore the
superior court's factual findings accepting this theory are not
clearly erroneous.
3. Quasi-estoppel does not apply to bar Faulk's
claims.
MAPCO claims that quasi-estoppel should bar Faulk's
claims, because the position that he took in his May 1996 letter to
the Municipality of Anchorage was inconsistent with his position at
trial. This is a question of law that we review de novo. [Fn. 28]
In his 1996 letter, Faulk asserted that the parking area
was constructed using substandard methods and materials, and that
this caused the breakup of the asphalt in the loading area during
1995 and 1996. MAPCO maintains that at trial, Faulk stated a
"fundamentally inconsistent" position: that the loading area
problems were instead caused by the water migrating from the MAPCO
snow melt.
However, this quasi-estoppel argument is waived because
it was not presented below. [Fn. 29] MAPCO did not explicitly
claim quasi-estoppel, or any kind of estoppel, either at trial or
in its answer to the complaint. In his opening statement at trial,
defense counsel stated that, as a reason to doubt Faulk's causation
theory, the court should consider "Mr. Faulk's own admission to the
Municipality of Anchorage in his statement to the municipal
assessor when it benefits him to say it that the materials
surrounding that building were unsuitable and caused frost heaving,
and caused trucks to get stuck in the mud." But this statement was
not enough to raise the issue of quasi-estoppel. Read in the
context of defense counsel's opening statement, this argument
focused on Faulk's credibility as a witness, rather than a claim
for quasi-estoppel.
Moreover, even if the quasi-estoppel argument had been
preserved, the argument would fail on its merits. In the seminal
case of Jamison v. Consolidated Utilities, Inc., we established
that trial courts must consider three factors in evaluating quasi-
estoppel claims: (i) the offending party has gained an advantage or
produced some disadvantage by asserting the first (inconsistent)
position; (ii) the inconsistency is great enough to make the second
position unconscionable; and (iii) the first assertion was made in
full knowledge of the facts. [Fn. 30]
None of the Jamison factors supports a finding of quasi-
estoppel. First of all, Faulk did not receive any advantage by
stating that the loading area problems were caused by substandard
asphalt. As MAPCO points out, it is true that the May 1996 letter
was successful in securing a more favorable tax assessment for
Faulk. However, the advantage secured was not related to the
statement that MAPCO complains of. The objective of the May 1996
letter was to receive a more favorable tax assessment by showing
that the property was less valuable than the Municipality had
claimed earlier; the cause of the property's problems was
irrelevant to the tax assessment. Thus, even if Faulk misstated
the cause of these problems, this would not affect the tax
assessment.
Moreover, the inconsistency does not rise to the level of
unconscionability. Indeed, it is unclear that there is even a real
inconsistency here. In the 1996 letter, Faulk stated that the
parking area was built using substandard methods and materials.
MAPCO does not point to any section of the record in which Faulk
contradicted this assertion at trial. In fact, Faulk reaffirmed
the statement in the 1996 letter at trial by stating that he
believed that some areas of the parking area (but not the loading
area) were poorly built. Also, Faulk stated that during the 1995
repairs he came to believe that the subsurface materials were not
at fault for the loading area problems. Faulk stated at trial that
in the May 1996 letter he was referring to the parking area
asphalt, including the asphalt in the loading area [Fn. 31] -- he
did not explicitly claim in the May 1996 letter that the subsurface
materials under the loading area were substandard or improperly
constructed. More generally, Faulk's claim that the asphalt was
substandard is not inconsistent with his claim that the MAPCO snow
melt caused the loading area problems as well as the failure of the
warehouse slab. It could be that the substandard asphalt combined
with the invading water to cause the loading area problems. Thus,
any inconsistency between the letter and his trial testimony cannot
be characterized as unconscionable.
As for the final Jamison factor, it does not seem that
Faulk's assertions in the 1996 letter were made in "full knowledge
of the facts." [Fn. 32] As MAPCO points out, the stream of water
in the loading area was observed in the summer of 1995, before the
1996 letter was written. So, in 1996, Faulk did suspect that
MAPCO's snow melt was the cause of the damage in the loading area.
However, in May 1996 Faulk did not yet know about the damage to the
warehouse floor; evidence of this did not appear until the summer
of 1996. At the least, Faulk did not know the full extent of the
damage caused by the water in May 1996. Therefore, MAPCO has
failed to show that quasi-estoppel applies here.
B. The Superior Court Properly Refused to Affirm the
Acceptance of Faulk's Offer of Judgment After the Trial.
MAPCO also claims that the judgment below should be
reversed because MAPCO accepted a valid pretrial offer of judgment
made by Faulk. MAPCO asserts that the accepted offer of judgment
should be substituted for the superior court's judgment. We reject
this argument.
Under Civil Rule 68, a party may make an offer of
judgment more than ten days before trial that is non-revocable for
ten days. [Fn. 33] On October 18, 1999, Faulk made a Rule 68 offer
of judgment to MAPCO in the amount of $100,000. At the time this
offer was made, it was timely under Rule 68 because trial was
scheduled for sometime in December, more than ten days later. On
October 25, 1999, the parties were informed by the superior court
that trial would commence on October 27, and the trial did start on
that date. After the trial and the November 1, 1999 verdict in
Faulk's favor, MAPCO attempted to accept Faulk's offer of judgment,
on November 1. MAPCO claims that this acceptance was timely
because it was within ten days of the offer's issuance, plus three
days due to service by mail. However, the superior court refused
to affirm this judgment, ruling that the offer was invalid, since
it was made within ten days of the beginning of trial.
Citing decisions of this court that have stated that a
valid Rule 68 offer is "irrevocable" for ten days, [Fn. 34] MAPCO
claims that it had an "absolute right" to accept Faulk's offer, and
that this right was not affected by the trial or the superior
court's verdict. MAPCO's argument is that in this situation Rule
68 gives it the power to choose between the verdict issued by the
court and the offer made by the plaintiff.
However, Rule 68 applies to offers of judgment made "more
than ten days before the trial begins." Because Faulk's offer was
not made more than ten days before the trial actually began, the
literal language of the rule would not apply to Faulk's offer.
Given the unusual situation present here, it is conceivable that
interests of justice might have required the rule's literal
language to be relaxed to accommodate an acceptance made before the
trial concluded. But extending the time for acceptance until after
the verdict would clearly violate the spirit and purpose of Rule
68. As three other state jurisdictions have held under their
corresponding rules, [Fn. 35] the purpose of Rule 68 is to
encourage pretrial settlement, and this goal is frustrated if
parties are allowed to pick and choose between the settlement offer
and a known verdict, after subjecting all parties and the state to
the time and expense of a trial. [Fn. 36]
C. A Remand Is Required for Portions of the Superior Court's
Compensatory Damages Award.
Having affirmed the finding of liability, we must next
examine the award of compensatory damages. MAPCO claims that (1)
the superior court failed to enumerate "clear and explicit"
findings on compensatory damages as required by Civil Rule 52(a),
and (2) the superior court's findings supporting its award of
compensatory damages were clearly erroneous. We reject the first
of these arguments; however, MAPCO is correct in its second
argument as to some of the compensatory damages awarded.
1. The superior court's findings on compensatory
damages were sufficiently "clear and explicit."
As discussed earlier, Rule 52(a) requires the superior
court to issue factual findings that are sufficiently "clear and
explicit" to allow this court to analyze the decision below. [Fn.
37] MAPCO claims that the superior court failed to issue "clear
and explicit" findings to support the court's award of compensatory
damages. MAPCO points out that, in the initial verdict, the court
did not explain how it arrived at the figure of $65,856.43. Upon
a motion for reconsideration, the court revised this figure --
again without explanation -- to $106,815.43.
However, as Faulk points out, the court apparently agreed
with Faulk's computation of his damages, and simply adopted his
methodology. After Faulk's motion for reconsideration, the court
awarded the sum requested by Faulk -- $106,815.43. Faulk's
methodology for reaching this amount is clearly laid out in Faulk's
motion for reconsideration and based on specific testimony
presented at trial. The $106,815.43 figure is arrived at by adding
together (i) repairs from 1994 through December 18, 1996, (ii)
repairs from December 19, 1996 through March 31, 1998, and (iii)
professional and consulting service fees.
We have in three other decisions remanded, or implied
that we should remand, for lack of "clear and explicit" findings on
damages; however, in these decisions there were no findings to
support the award of damages, nor did we have enough information to
understand the damages award. [Fn. 38] In this appeal, the
superior court's damages findings are more than adequately
explained by the computations included in Faulk's motion for
reconsideration read in conjunction with evidence presented at the
trial.
2. Portions of the award of compensatory damages
require further findings.
MAPCO also argues that certain aspects of the
compensatory damages award were clearly erroneous. We agree that
some portions of the award are problematic and that further
findings are required.
MAPCO alleges three errors. MAPCO claims that (a) the
costs included double billing for equipment leasing; (b) the labor
costs submitted by Faulk for repairs were inflated; and (c) the
costs included repair of areas of the Faulk property not affected
by the MAPCO snow melt.
a. Faulk's costs may have included some double
billing.
MAPCO asserts that Faulk double billed for his own labor
time in his computation of damages. Faulk allegedly did this by
billing the same time in the following manner. While Faulk was
operating equipment at the warehouse, Faulk billed his own time at
an hourly rate. At the same time, Faulk billed the equipment use
at a "wet" rate that included a charge for the operator -- while
Faulk himself was the operator. This is double billing, MAPCO
claims, because the operator's time is not separately billed -- it
is part of the enhanced "wet" rate for the equipment.
Faulk denies double billing and claims that "there is no
evidence" that he actually separately billed for any time that he
spent operating equipment.
It is difficult to tell from the record which party is
correct here. Faulk did indicate at the trial that the "wet" rate
for equipment was sometimes used when he himself was the operator.
[Fn. 39] And Faulk indicated that he billed his own time as a
"supervisor" for some work at $39.60 an hour. [Fn. 40] However, it
is not clear from the record whether these two charges actually
overlapped. The alleged double billing, if true, would warrant a
reduction in the compensatory damages award. Therefore, a remand
is required to clarify whether any double billing occurred.
b. Faulk's labor costs were not inflated.
MAPCO claims that Faulk's labor costs were inflated
because they included a markup and did not represent the actual
cost to Faulk. Faulk used his own business's laborers to do the
repair work. Instead of claiming as damages the actual amounts
that he paid them, he claimed the normal rates billed to his
clients for work done by these laborers and his company. MAPCO
claims that Faulk is only entitled to the money that he actually
paid the laborers.
Without citing any authority, Faulk claims that he should
be able to use normal market rates as a basis for calculating his
repair costs. Faulk is generally correct. When a party is damaged
and repairs the damage itself using its own workforce and
equipment, that party is entitled to normal market rates for the
use of the labor and equipment, as if the party had contracted the
job out to some third party. [Fn. 41] If Faulk's regular workforce
and equipment were tied up undertaking the repairs, then Faulk
incurred an opportunity cost, since he could have been using these
resources elsewhere to generate revenue for his business. [Fn. 42]
Compensating him at normal market rates for the time spent on the
repairs would fully compensate Faulk for this opportunity cost.
Because the record indicates that Faulk used his own workforce to
make the repairs, we cannot say that the award of compensatory
damages for the full labor costs claimed by Faulk was clearly
erroneous. [Fn. 43]
c. Faulk's costs did not include repair for areas
of the Faulk property that were not affected by the MAPCO snow
melt.
MAPCO's last assertion of error concerning compensatory
damages is that Faulk's submitted damages included costs for paving
and gravel to repair areas that were not affected by the MAPCO snow
melt. We find no error here.
MAPCO claims that extra paving was done to the west and
north of the area affected by the snow melt, and that Faulk
included the cost for this additional work in his submission of
damages. The record does not indicate that extra paving was done.
The extent of the paving is clearly marked in the record. It is
true that the paving does radiate some distance from the loading
area. However, it is also true that the extent of the damage to
the loading area was substantial and it is unclear from the record
just how far out this damage radiated from the loading area itself.
Faulk testified at trial that the entire amount of the paving
expenses was "fair and reasonable." We cannot say that the
superior court's award of compensatory damages for paving this
entire area was clearly erroneous.
MAPCO also claims that Faulk listed as damages the cost
of gravel hauled in for other buildings Faulk owned --
specifically, the "Sandlewood building" next door to 8401 Brayton
Drive. MAPCO points to Faulk's testimony that he wrote on the
gravel invoices the name of the Sandlewood building, instead of the
building at 8401 Brayton Drive.
However, Faulk testified that he filled the invoices out
this way to prevent Odom Corporation, his tenant, from being billed
for the gravel, so that the bills would instead go to Faulk's
business. Faulk explicitly testified that the gravel was only used
for the loading area at 8401 Brayton Drive, and not for any other
Faulk building. [Fn. 44] Again, we cannot say that the superior
court's award of compensatory damages for all of the gravel used
was clearly erroneous.
D. A Remand Is Required for Reconsideration of the Punitive
Damages Award.
In addition to the $106,815.43 award of compensatory
damages, the superior court awarded an identical amount of punitive
damages to Faulk. In this appeal, MAPCO claims that the award of
punitive damages was improper because (1) Faulk "abandoned" his
claim for punitive damages and because (2) the award itself was
manifestly unreasonable.
1. Faulk did not abandon his claim for punitive
damages.
MAPCO claims that Faulk abandoned his claim for punitive
damages by failing to mention them in his initial disclosures, in
response to an interrogatory, and at trial. [Fn. 45] Civil Rule
26(a)(1)(G) states that a party's initial disclosures must state
"all categories of damages claimed." In his initial disclosures,
Faulk did not explicitly mention punitive damages, but he stated
that documents supported "the damages claimed." This can certainly
be read to refer to the damages claimed in Faulk's complaint,
including both compensatory and punitive damages. The requirements
of Rule 26(a)(1)(G) are fulfilled here by the reference in the
initial disclosures. All parties were on notice of the punitive
damages claim in the complaint, and we decline to treat any later
failures to mention punitive damages as waiver or abandonment of
the punitive damages claim.
MAPCO also claims that punitive damages were not
mentioned in response to a specific interrogatory from MAPCO on
damages. This interrogatory stated: "Please list all damages
claimed by the Plaintiff." Faulk responded with "Please see
Plaintiff's Documents No. 000066 through 000076 and Documents No.
000242 through 000285"; Faulk claims that these documents were
pertinent to claims for both compensatory and punitive damages;
however, Faulk implies that the documents only directly support
claims for compensatory damages. Nevertheless, we decline to hold
that this answer constitutes a "waiver" or "abandonment" of the
punitive damages claim.
Finally, MAPCO notes that punitive damages were not
mentioned or discussed at trial. However, the circumstances of the
trial were unusual. Judge Reese stated at the onset of the trial
that an opening statement was not necessary because the court was
"familiar with the case." Nevertheless, because the plaintiff's
first witness had not yet arrived, Faulk's counsel used the time to
make a short opening statement that did not raise the issue of
punitive damages. Closing arguments were waived by both parties,
because MAPCO's counsel had scheduling difficulties and, as
revealed at oral argument, a death in the family. Thus, while
Faulk never waived his claim for punitive damages at trial, MAPCO
never had an opportunity to address the question of punitive
damages. Because we remand the issue for further consideration and
findings, the superior court should give the parties an opportunity
to address the issue of punitive damages through oral or written
argument on remand.
2. The superior court's findings are inadequate to
support the award of punitive damages.
We have most recently discussed the requirements for an
award of punitive damages in Wal-Mart, Inc. v. Stewart: [Fn. 46]
Punitive damages may not be awarded in an
action, whether in tort, contract, or otherwise, unless supported
by clear and convincing evidence. To support a claim for punitive
damages, the plaintiff must prove by clear and convincing evidence
that the defendant's conduct was outrageous, such as acts done with
malice, bad motive, or reckless indifference to the interests of
another. We have stated that a showing of malice is not required;
however, [the plaintiff] must establish that [the defendant's]
conduct amounted to reckless indifference to the rights of others,
and conscious action in deliberate disregard of [those rights].[[Fn. 47]]
Two aspects of the superior court's punitive damages
award are problematic: the court's award is based on a finding that
is not supported by any evidence in the record, and the increase in
the award between the verdict of November 1, 1999 and the final
judgment of December 7, 1999 is not explained by the court.
The superior court's award of punitive damages is based
on the following factual finding: "[T]he intentional trespass was
authorized [by] Mr. Farnsworth on behalf of MAPCO after being
informed of the problem that the trespass was causing . . . and it
was therefore done with the deliberate intent to cause injury to
the Faulk property." (Emphasis added.) There is no evidence in
the record to support the finding that the trespass was done with
the "deliberate intent to cause injury" to Faulk's property. There
is evidence that tends to show that MAPCO negligently or willfully
failed to stop stockpiling snow on the MAPCO property, after Faulk
warned MAPCO several times that there was a problem with the snow
pile. However, this is not evidence that tends to show that MAPCO
had a deliberate intent to cause injury.
As noted above, although a finding of malice is not
required to support an award of punitive damages, a finding of
"reckless indifference" is required. [Fn. 48] We remand to the
superior court for findings in accordance with the proper standard.
Also, the increase in the punitive damages award between
November 1, 1999 and December 7, 1999 is not supported by any
explanation, reasoning, or analysis. On November 1, 1999, the
superior court awarded $65,856.43 in punitive damages. Upon a
motion for reconsideration, the superior court increased this
figure without any reasoning or explanation to $106,815.43. As
discussed earlier, we must reverse the superior court's findings
under Rule 52(a) when no findings are made to support the court's
conclusion. [Fn. 49]
We have held that a number of considerations go into the
award of punitive damages. These include: (i) the magnitude and
flagrancy of the offense, (ii) the importance of the policy
violated, (iii) the ratio of punitive damages to compensatory
damages, and (iv) the wealth of the defendant. [Fn. 50] The
superior court in this case did not explicitly consider any of
these factors, and in granting the December 7 increase implicitly
considered only the ratio of punitive to compensatory damages,
since the ratio remained at 1:1. Yet we have repeatedly stated
that the ratio of punitive to compensatory damages is not the
determinative factor. [Fn. 51] Because this increase from
$65,856.43 to $106,815.43 was not explained by any findings, we
must reverse the award of punitive damages and remand to the
superior court for reconsideration of punitive damages and
findings.
V. CONCLUSION
Because the superior court's factual findings on
liability were sufficiently clear and explicit, because these
findings were not clearly erroneous, because quasi-estoppel does
not apply, and because Faulk's offer of judgment became invalid
once a verdict was announced, we AFFIRM the superior court's
finding of liability in favor of Faulk. However, because portions
of the compensatory damages award were clearly erroneous, and
because the award of punitive damages requires further
consideration and findings, we REVERSE the award of compensatory
and punitive damages and REMAND for further proceedings consistent
with this opinion.
FOOTNOTES
Footnote 1:
See Kilmer v. Dillingham City Sch. Dist., 932 P.2d 757, 763-64
(Alaska 1997); Alaska R. Civ. P. 52(a).
Footnote 2:
Sullivan v. Subramanian, 2 P.3d 66, 69 (Alaska 2000).
Footnote 3:
See Hayes v. Bering Sea Reindeer Prods., 983 P.2d 1280, 1282
(Alaska 1999).
Footnote 4:
See Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20,
26 (Alaska 1998).
Footnote 5:
See Airoloufski v. State, 922 P.2d 889, 892 (Alaska 1996)
(applying standard to superior court's interpretation of other
rules of court).
Footnote 6:
See Pluid v. B.K., 948 P.2d 981, 983 (Alaska 1997).
Footnote 7:
See id.
Footnote 8:
Sullivan, 2 P.3d at 69.
Footnote 9:
Id.
Footnote 10:
See id. at 72.
Footnote 11:
See Sullivan, 2 P.3d at 69-72 (lower court failed to address
or resolve critical disputes or claims); Beaulieu v. Elliott, 434
P.2d 665, 670 (Alaska 1967) (findings not detailed enough for
meaningful appellate review).
Footnote 12:
856 P.2d 463 (Alaska 1993).
Footnote 13:
Id. at 466.
Footnote 14:
Id.
Footnote 15:
Faulk's testimony established the existence of the pooled
water along the southern wall of the Faulk building, the stream
that erupted from the loading area, and the fact that the pool at
the southern wall gradually subsided as the stream continued to
flow.
Footnote 16:
557 P.2d 779, 781 (Alaska 1976).
Footnote 17:
Id. at 780-81.
Footnote 18:
Id. at 781.
Footnote 19:
521 F.2d 206 (5th Cir. 1975).
Footnote 20:
Id. at 207.
Footnote 21:
Kilmer v. Dillingham City School Dist., 932 P.2d 757, 763-64
(Alaska 1997).
Footnote 22:
See id. at 764.
Footnote 23:
See Parks Hiway Enterprises, L.L.C. v. CEM Leasing, Inc., 995
P.2d 657, 664 (Alaska 2000); Restatement (Second) of Torts sec.sec.
158,
163 (1965).
Footnote 24:
Specifically, Johnson testified that the following conditions
of the soil contributed to the damage: high ground water, "frost
susceptible" silty sand, and the formation of frost lenses.
Johnson did not personally undertake any geotechnical exploration
of the Faulk property, he did not install any monitoring wells on
the property, and he did no mapping of the drainage on the
property.
Footnote 25:
The walls of the Faulk building continued under the ground for
4.5 feet.
Footnote 26:
However, Johnson testified that he believed that the failure
of the warehouse slab was caused by high ground water, and not snow
melt. Therefore, Johnson implied that the stream that Faulk
testified about was created by ground water, not snow melt.
Footnote 27:
See Alto v. State, 565 P.2d 492, 503 n.17 (Alaska 1977)
(refusing to treat expert medical testimony as conclusive merely
because it is not disputed by other medical testimony).
Footnote 28:
See Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20,
26 (Alaska 1998).
Footnote 29:
As a general rule, this court will not consider arguments
attacking a judgment for the first time on appeal. See Frost v.
Ayojiak, 957 P.2d 1353, 1355-56 (Alaska 1998).
Footnote 30:
576 P.2d 979, 102-03 (Alaska 1978).
Footnote 31:
At trial, during cross-examination Faulk stated:
Q. [Plaintiff's counsel]: Looking at [the
May 1996 letter], can you explain what you meant in your references
to heaving problems and breaking up?
A. [Faulk]: The asphalt had completely
deteriorated and was moved in sections in the loading bay. All of
the asphalt in the parking lots need replacing.
Faulk also reaffirmed the statements made in the May 1996 letter.
Footnote 32:
576 P.2d at 103.
Footnote 33:
Rule 68(a) states:
At any time more than 10 days before the trial
begins, either . . . party . . . may serve upon the adverse party
an offer to allow judgment to be entered in complete satisfaction
of the claim . . . . The offer may not be revoked in the 10 day
period following service of the offer. If within 10 days after
service of the offer the adverse party serves written notice that
the offer is accepted, either party may then file the offer and
notice of acceptance together with proof of service, and the clerk
shall enter judgment. An offer not accepted within 10 days is
considered withdrawn.
Footnote 34:
See LaPerriere v. Shrum, 721 P.2d 630, 634-35 (Alaska 1986);
Rules v. Sturn, 661 P.2d 615, 618-19 (Alaska 1983). These
decisions only stand for the proposition that the offeror cannot by
oral or written communication rescind or revoke its offer for 10
days after it is issued.
Footnote 35:
See Wersch v. Radnor/Landgrant, 961 P.2d 1047, 1049-50 (Ariz.
App. 1997) (holding that, where defendant moved for summary
judgment and then made offer of judgment, and lower court
subsequently found in favor of defendant, plaintiff could not then
accept the offer of judgment because offer terminated when summary
judgment was issued); Braham v. Carncross, 514 So. 2d 71, 72-73
(Fla. App. 1987) (holding that, where defendant made an offer of
judgment prior to a trial and verdict favoring defendant, plaintiff
could not accept offer of judgment after verdict); Tucker v.
Benevolent & Protective Order of Elks Lodge #417, 6 P.3d 1082,
1084-87 (Okla. App. 2000) (holding that, where defendant made an
offer of judgment prior to a trial and verdict favoring defendant,
plaintiff could not then accept offer of judgment after verdict).
Footnote 36:
We do not decide whether, under circumstances where a trial
date is accelerated by the court, a party in MAPCO's position could
accept the offer of judgment after the commencement of trial but
before the verdict is rendered.
Footnote 37:
See Sullivan v. Subramanian, 2 P.3d 66, 69 (Alaska 2000).
Footnote 38:
Fairbanks Builders, Inc. v. Morton DeLima, Inc., 483 P.2d 194,
196-97 (Alaska 1971) (holding that there were inadequate factual
findings to support a damages award, but refusing to remand because
the defendant did not challenge the amount or award of damages; the
sole challenge was to the adequacy of the findings); Beaulieu v.
Elliott, 434 P.2d 665, 670 (Alaska 1967) (in personal injury case,
remanding for adequate findings on causation); Patrick v. Sedwick,
413 P.2d 169, 175-76 (Alaska 1966) (remanding for findings to
explain inconsistency between past and future damages).
Footnote 39:
See trial transcript at 200.
Footnote 40:
See trial transcript at 228.
Footnote 41:
In Boh Brothers Construction v. M/V Tag-Along, 569 F.2d 217
(5th Cir. 1978), a construction company plaintiff was seeking
recovery from a negligent towing vehicle that damaged a bridge the
plaintiff was building. Id. at 218. The damage was repaired by
the plaintiff. Id. at 219. The court remanded the lower court's
damages calculation partly because the lower court failed to use
the normal market rates for the plaintiff's equipment. Id.
In Arrow Concrete Co. v. Sheppard, 645 N.E.2d 1310 (Ohio
App. 1994), the plaintiff brought suit against a defendant for
negligently causing damage to a building that the plaintiff was
building. Id. at 1310-11. The plaintiff did the repairs himself,
and the court rejected the argument that a reasonable market rate
(applied to the plaintiff's own time) could not be used to
calculate the cost of repair. Id. at 1311-12. The court held that
"regardless of whether [plaintiff] hired a third party to do the
work or performed the work himself, he is entitled to the same
recovery: the reasonable cost of repair." Id. at 1312.
Footnote 42:
As the Fifth Circuit stated in Boh Brothers Construction:
Much of the repair work was performed by Boh
Bros.'s regular work force, using plaintiff's own tools and
equipment. . . . However, it is not clear whether the Judge
included reasonable profits for the plaintiff's use of its own
equipment and personnel in calculating the award. Had the plaintiff
paid another business to do the repair work, the charge would
certainly reflect an element of profit. The fact that plaintiff did
the work itself does not make the element of profit any less
recoverable, certainly in the sense that the tort victim ought not
to suffer a further "loss" from the use of its own equipment which
might otherwise be engaged in profitable outside employment.
569 F.2d at 219.
Footnote 43:
MAPCO claimed both below and on appeal that many or all of
Faulk's workers were casual workers, and that therefore the sums
paid to these workers (in cash) represented Faulk's total labor
costs. However, the only evidence in the record concerning these
workers is Faulk's testimony and records, which indicate that the
workers were "employees," and show their pay rates; the record does
not clearly indicate that any of these workers were casual workers.
Therefore, MAPCO's argument is not supported by evidence in the
record.
Footnote 44:
MAPCO claims that this testimony is controverted by the
testimony of Faulk's manager, Mark Marlow. However, Marlow's
testimony concerned a completely different invoice that explicitly
referenced the "ANCO" building (8401 Brayton Drive), and not the
Sandlewood building.
Footnote 45:
But Faulk did request punitive damages in his complaint and in
the April 1999 pretrial meeting report.
Footnote 46:
990 P.2d 626 (Alaska 1999).
Footnote 47:
Id. at 636 (final alteration in original) (citations and
quotations omitted).
Footnote 48:
Wal-Mart, Inc., 990 P.2d at 936.
Footnote 49:
See Johnson v. Johnson, 836 P.2d 930, 933-34 (Alaska 1992).
Footnote 50:
See International Broth. of Elec. Workers Local 1547 v. Alaska
Util. Constr., Inc., 976 P.2d 852, 858 (Alaska 1999) (citing Sturm,
Ruger & Co. v. Day, 594 P.2d 38 (Alaska 1979), modified, 615 P.2d
621 (1980), modified, 627 P.2d 204 (1981), cert. denied, 454 U.S.
894 (1981), overruled on other grounds by Dura Corp. v. Harned, 703
P.2d 396, 405 n.5 (Alaska 1985)); Norcon, Inc. v. Kotowski, 971
P.2d 158, 175 (Alaska 1999).
AS 09.17.020(c) also provides a list of factors to
consider; however, this statute is not applicable because all of
the events in this appeal took place before the effective date of
the statute, August 7, 1997. See Norcon, 971 P.2d at 175 n.21.
Footnote 51:
See Norcon, 971 P.2d at 175-76; Sturm, Ruger, 615 P.2d at 624
n.3.
