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Shields v. Cape Fox Corp. (03/08/2002) sp-5547
Shields v. Cape Fox Corp. (03/08/2002) sp-5547
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
PATRICIA SHIELDS, KRISTY )
SHIELDS, and THOMAS MARTINEZ, JR., ) Supreme Court No. S-9134
)
Appellants, )
) Superior Court No.
v. ) 1KE-97-294 CI
)
CAPE FOX CORPORATION, an ) O P I N I O N
Alaskan corporation, and the BOARD )
OF DIRECTORS OF CAPE FOX )
CORPORATION, )
)
Appellees. ) [No. 5547 - March 8,
2002]
)
Appeal from the Superior Court of the State
of Alaska, First Judicial District,
Ketchikan, Michael A. Thompson, Judge.
Appearances: David W. Rosendin, P.C.,
Ketchikan, for Appellants. Frank A.
Pfiffner, Hughes, Thorsness, Powell,
Huddleston & Bauman, LLC, Anchorage, and
James D. Nelson, Betts, Patterson & Mines,
P.S., Seattle, for Appellees.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
MATTHEWS, Justice.
Cape Fox Corporation recovered a judgment against
Kristy Shields, Patricia Shields, and Thomas Martinez, Jr.,
arising out of losses incurred by a store owned by Cape Fox
during 1995 and 1996. The main question presented in this appeal
is whether the trial court committed plain error in failing to
instruct the jury to determine Cape Foxs comparative fault in
causing the losses. Because there was evidence of comparative
fault, comparative fault was pled and argued, each of Cape Foxs
claims was at least partly negligence-based, and the applicable
statute clearly requires a comparative fault instruction, we
conclude that the trial court committed plain error.
I. FACTS AND PROCEEDINGS
Cape Fox Corporation is the village corporation for
Saxman. It owns a number of businesses, including The Village
Store, a gift shop that primarily sells items to tourists. The
Village Store incurred losses in 1995 and 1996, although it was
profitable in other years of operation. Patricia Shields managed
the store from 1993 through 1996; in 1995 and 1996 her management
became more autonomous. Kristy Shields, Patricias teenaged
daughter, worked at The Village Store during 1995-1996. Thomas
Martinez, Patricias brother-in-law, was a director of Cape Fox
until he was removed as a result of this case. He was also
chairman of the board until the summer of 1996.
Cape Fox sued the defendants for the stores losses.1
It presented claims of negligence and conversion against each of
the three and a claim of breach of fiduciary duty against
Martinez. It sought punitive damages against Patricia and
Martinez. Cape Fox also sought the removal of Martinez from the
board and a decree barring him for life from serving on the
board. They based this request upon allegations of Martinezs
fraudulent or dishonest acts and gross misconduct.
During discovery, the defendants failed to appear for
scheduled depositions. The trial court thus entered discovery
sanctions precluding them from testifying. At trial, however,
the court permitted Patricia to call Martinez as a witness.
Otherwise, the sanctions were enforced.
After a four-day trial the jury returned a special
verdict in favor of Cape Fox on all counts. The jury awarded the
following amounts against each defendant on the claims presented:
Kristy Shields
Conversion $10,000.00
Negligence $10,000.00
Patricia Shields
Conversion $201,727.08
Negligence $352,440.08
Punitive Damages $125,000.00
Thomas Martinez
Conversion $206,427.08
Negligence $321,427.08
Breach of
Fiduciary Duty $206,427.08
Punitive Damages $175,000.00
The jury also determined that Martinez should be removed from the
board of directors and barred for fifteen years from serving as a
director.
Following receipt of the verdict, the court entered an
award of attorneys fees and costs against the defendants. The
court also limited the compensatory damages awarded against
Patricia for her negligence and conversion to the jurys
determination of damages owing to her negligence alone,
$352,440.08. Similarly with respect to Martinez, the court
limited damages against him for conversion and breach of
fiduciary duty to the jurys determination of damages owing to his
negligence, $321,427.08. Finally, treating the jurys special
verdict on the removal and bar of Martinez as advisory, the court
entered an order removing Martinez from the board and barring him
from service on the board for fifteen years.
The defendants now raise a variety of challenges to the
trial courts judgment.
II. DISCUSSION
A. Did the Court Err in Failing to Appoint a Guardian ad
Litem for Kristy?
Patricia, without counsel, filed an answer on Kristys
behalf as her next friend. Defendants contend that the judgment
against Kristy is void because she was a minor when she was sued
and the absence of a court-approved guardian ad litem makes any
judgment against a minor void. Further, they contend that the
fact that Kristy had reached the age of majority by the time of
the trial does not mean that the judgment is valid, because she
was a minor at critical pretrial stages.
Alaska Civil Rule 17(c) governs this issue.2 The
second sentence of this rule makes clear that while a next friend
may sue on behalf of a minor, she may not defend a suit against a
minor. Further, a next friend cannot generally represent a
minor, even as a plaintiff, without counsel.3
As noted, Patricia, acting pro se, filed an answer for
Kristy as Kristys next friend. Thus Kristy was not properly
represented and the trial court should have appointed a guardian
ad litem or entered some other appropriate protective order on
Kristys behalf pursuant to Civil Rule 17(c).
However, this error does not require reversal in this
case because Kristy turned eighteen almost a year before trial.
She became an adult after the case was filed but before any
events had occurred in pretrial practice that might prejudice her
interests. Once she became an adult she was, in the eyes of the
law, competent to represent herself and was no longer entitled to
protection under the rule.4 Absent a showing of prejudice
resulting from her lack of representation or protection before
she turned eighteen, the error was harmless.5
B. Did the Court Err When it Failed to Instruct on the
Comparative Fault of Cape Fox?
The defendants argue that a comparative fault
instruction should have been given. But they did not propose a
comparative fault instruction or object to the courts failure to
give one. Civil Rule 51(a)6 therefore applies, and this argument
must be reviewed under the stringent plain error standard.7
Plain error exists where there is an obvious mistake
that creates a high likelihood that the jury will follow an
erroneous theory resulting in a miscarriage of justice.8 This
standard imposes a heavy burden on appellants to show that an
error was both obvious and very likely consequential.9 We
believe that there was plain error in this case.
Alaska Statute 09.17.080(a) requires trial courts to
instruct on comparative fault in all cases involving the fault of
more than one person unless the parties agree that there should
be no such instruction. This requirement is expressed in clear
and mandatory terms: In all actions involving fault of more than
one person, including third-party defendants and persons who have
settled or otherwise been released, the court, unless otherwise
agreed by all parties, shall instruct the jury to answer special
interrogatories . . . . (Emphasis added.)
Here, Patricia and Kristy pled comparative fault as an
affirmative defense. Martinez, answering pro per, did not plead
comparative fault as an affirmative defense, but he did interpose
it as a counterclaim for damages. Further, Martinez, who was
subsequently represented by counsel, made Cape Foxs comparative
fault the centerpiece of his trial brief. There was no express
agreement by the Shields or Martinez not to instruct on the
subject of comparative fault. Thus the failure to instruct on
comparative fault was error sufficiently obvious to meet the
obvious mistake component of the plain error doctrine.
The defendants at the trial stressed the responsibility
of Cape Fox Corporation for the losses during 1995 and 1996 at
The Village Store. They argued that Patricia did not receive
adequate administrative support, training, or equipment
maintenance. They contended that Cape Fox administrative
personnel were aware of the problems she was having and of the
practices that she had permitted. Defendants argued that Cape
Fox personnel negligently failed to act in response to this
knowledge. Furthermore, Martinez argued that the Cape Fox board
concurred with his acts which allegedly facilitated Patricias
mismanagement and wrongful conduct. The defendants developed
evidence on these points and emphasized them in their final
arguments.
In our view, if the jury had been properly instructed
on the subject of comparative fault, Cape Fox would probably have
been made to bear some significant responsibility for the 1995
and 1996 losses. Therefore, we conclude that the likelihood of
harm component of the plain error standard has also been met. We
thus find that the court committed plain error when it failed to
give a comparative fault instruction.
This conclusion applies to the negligence claims
against all defendants. The defendants argue that it must apply
also to the conversion claims. They correctly point out that the
pre-1997 version of AS 09.17.900, which governs this case,
included within the concept of fault all tortious acts except
those where the defendant acted with the intent to cause the
resultant harm.10 Defendants also note that the jury instruction
on conversion did not require an intent on their part to deprive
Cape Fox of the benefits of ownership of the items allegedly
converted.11 Instead, the court required an intentional exercise
of dominion or control over property or money which so seriously
interferes with the right of another to control it that the actor
may justly be required to pay the other the full value of the
property or money. According to that instruction, a store
manager such as Patricia, who intentionally exercises control
over store property, might be liable for losses resulting from
negligent acts in connection with such control. Thus, the fault
giving rise to liability for conversion could be mere negligence.
Accordingly, fault as defined by the courts conversion
instruction falls within the ambit of AS 09.17.900, and the court
should have instructed the jury on comparative negligence with
regard to these claims.12
What remains is the question whether a comparative
fault instruction should have encompassed the claim against
Martinez for breach of his fiduciary duties. The courts
instruction on this theory of liability maintained that a
director such as Martinez has the duty to honestly and diligently
direct the business of the corporation.13 Cape Fox argues that
actions against corporate directors for breach of fiduciary duty
are contract actions and that comparative fault principles should
not apply to them. In support of this proposition Cape Fox cites
Bibo v. Jeffreys Restaurant.14 There the question was which of
two possible statutes of limitations applied to a claim against
corporate directors for breach of their fiduciary obligations.
The choices were the six-year period applicable to implied
contracts or the two-year period applicable to torts. We
recognized that there was authority supporting both choices and
decided that such actions should be governed by the implied
contract statute of limitations because of the preference given
to the longer period of limitations when two periods reasonably
may apply.15
This aspect of Bibo was discussed in Lee Houston &
Associates, Ltd. v. Racine.16 There we compared Bibo involving
claims that directors had breached their fiduciary duties to Van
Horn Lodge, Inc. v. White,17 a case involving a claim of
professional malpractice against an attorney. In Van Horn Lodge
we held that the malpractice claim fell within the two-year
period of limitations established by the tort statute. In Lee
Houston we found the two cases difficult to reconcile. In each
case the duty that was allegedly breached was imposed by law
rather than by an explicit promise. We observed that in these
circumstances the claims may be reasonably be said to arise
either in tort or in contract.18 We referred to such actions as
hybrid actions and held that they would be governed by the longer
implied contract statute of limitations, while leaving open the
possibility that they might be considered tort actions for
purposes of determining the availability of punitive damages.19
Subsequently, in Breck v. Moore20 we were presented with
a professional malpractice action against an attorney and a title
company involving an alleged breach of a duty of due care which
was implied by law as a result of a contractual undertaking.21
Referring to the hybrid nature of such actions, we held that the
implied contract statute of limitations should be applied, but
that a tort rather than a contract measure of damages should be
used.22
Cape Foxs breach of fiduciary duty claim against
Martinez is a hybrid claim. Like the claims involved in the
foregoing cases, the fiduciary duty claim is based on a duty
implied by law as a result of a contractual undertaking. Insofar
as the duty requires due diligence it is merely a particular
application of a negligence standard. To say that this claim
should not be subject to a comparative fault instruction would be
to elevate form over substance. As we said in Lee Houston,
[t]his court should avoid applications of the law which lead to
different substantive results based upon distinctions having
their source solely in the niceties of pleading and not in the
underlying realities.23
Cape Fox advances another reason why it was not plain
error not to give a comparative fault instruction. Cape Fox
contends that fault should not be allocated in situations
involving solely economic loss. It bases this argument on the
definition of fault set out in AS 09.17.900: In this chapter,
fault includes acts or omissions that are in any measure
negligent, reckless, or intentional toward the person or property
of the actor or others . . . . Cape Fox notes that this
language was taken from the Uniform Comparative Fault Act of 1977
and that the comment to the act indicates that fault is not
intended to be allocated in situations involving economic loss.
The commissioners comment to section 1 of the Uniform Comparative
Fault Act states:
The specific application of that principle,
as provided for in this Act, is confined to
physical harm to person or property. But it
necessarily includes consequential damages
deriving from the physical harm, such as
doctors bills, loss of wages or costs of
repair or replacement of property. It does
not include matters like economic loss
resulting from a tort such as negligent
misrepresentation, or interference with
contractual relations or injurious falsehood,
or harm to reputation resulting from
defamation. But failure to include these
harms specifically in the act is not intended
to preclude application of the general
principle to them if a court determines that
the common law of the state would make the
application.
A number of jurisdictions have been presented with the
question of whether cases involving only economic loss should be
subject to comparative negligence principles.24 The prevailing
view is that comparative negligence does apply in such cases.25
But we need not resolve this controversy in the present case for
this not a case involving only economic loss. Cape Foxs claim
for conversion was necessarily a claim for tangible property
loss. Where substantial claims for tangible property loss are
combined with claims for economic loss, it would be confusing and
unduly complex to apply a rule of comparative fault to the
former, but not to the latter. Cape Fox does not advocate that
such a course should be followed, and we are aware of no
authority that so holds.
In summary, we conclude that it was plain error not to
give a comparative fault instruction and that such an instruction
should have been given encompassing all of Cape Foxs claims for
compensatory damages against each defendant.
C. Did the Court Err When it Instructed the Jury that
Patricia Shields and Kristy Shields Could Be Liable for
Failing to Exercise Ordinary Care in the Work They Were
Hired to Perform for Cape Fox?
The court instructed the jury that Patricia and Kristy
had a duty to exercise reasonable skill and ordinary care and
diligence in the work they were hired to perform.26 The
defendants claim that this instruction was erroneous, arguing
that there is no tort of negligent job performance. They contend
that in case of poor job performance, [t]he employers remedy is
to fire the employee for ineptness or lack of diligence.
Since defendants failed to raise this issue below and
did not object to Instruction No. 12, we review this issue only
for plain error. The focus of their argument is on the case of
Brown v. United Cerebral Palsy/Atlantic & Cape May, Inc.27 In
that case the court indicated that ordinary negligence would
apply to nondiscretionary acts of employees such as those
resulting in shortages in a cash drawer, but not to acts of bad
management causing a loss of profits.28
Cape Fox responds that Brown represents a distinct
minority view and that the Restatement (Second) of Agency 379(1)
(1958), expresses the more general rule that [u]nless otherwise
agreed, a paid agent is subject to a duty to the principal to act
with standard care and with the skill which is standard in the
locality for the kind of work which he is employed to perform
. . . .
We agree with Cape Fox that the general rule is that
expressed by 379(1) of the Restatement (Second) of Agency,29 and
that it was not plain error to give Instruction No. 12.
D. Did the Court Err When it Failed to Instruct that
Martinezs Liability Was Limited by the Business
Judgment Rule?
Defendants contend that Jury Instruction Nos. 14 and 15
concerning Martinezs liability as a director of the corporation
were plain error30 because they did not reflect the business
judgment rule. The business judgment rule is set out in AS
10.06.450(b).31 It requires a director to use the care . . . that
an ordinarily prudent person in a like position would use under
similar circumstances. As such, liability under the business
judgment rule does not differ appreciably from negligence
liability the standard used in Instructions Nos. 14 and 15.32
Thus it was not plain error to fail to instruct on the business
judgment rule.
E. Were the Courts Findings Removing Martinez and Barring
Him from Serving as an Officer and Director Adequate?
Defendants contend that the entire case was equitable
rather than legal in nature, that certain equitable defenses
therefore should have been allowed, that findings of fact and
conclusions of law on all issues were required, and that no
punitive damages could be awarded. This global contention is
without merit. All of Cape Foxs damage claims were legal rather
than equitable in nature.33 Cape Fox did, however, seek equitable
relief insofar as it sought the removal of Martinez from the
board of directors and a ban on his future service. The court
treated the special verdict on this subject as advisory only and
subsequently entered the following statement as a part of the
final judgment:
It is further ORDERED, ADJUDGED AND
DECREED that Defendant Thomas Martinez, Jr.
engaged in fraudulent or dishonest acts,
gross neglect of duty and gross abuse of
authority or discretion with regard to
Plaintiff Cape Fox Corporation and, pursuant
to AS 10.06.463, is hereby removed from
office as a director of Plaintiff Cape Fox
Corporation. It is further
ORDERED, ADJUDGED AND DECREED that for
the reasons noted in the preceding paragraph,
Defendant Thomas Martinez, Jr. is barred from
office as a director of Plaintiff Cape Fox
Corporation for a period of fifteen (15)
years commencing from January 13, 1999.
Martinez contends that the above statement is merely conclusory
and does not satisfy the findings requirement of Civil Rule
52(a).34 We agree. The statement does not explain in what
respects Martinez committed the wrongs he is found to have
committed. Without detailing the particulars of his misconduct,
the trial courts judgment does not satisfy Rule 52(a)s findings
requirement.35 We therefore remand for further findings.
III. CONCLUSION
Because the court committed plain error in failing to
instruct the jury on comparative fault, a new trial as to the
comparative fault of the parties and compensatory damages is
required. Because comparative fault is relevant to punitive
damages, a new trial as to Cape Foxs entitlement to punitive
damages and the amount of punitive damages is also required.
Because the court did not make adequate findings
concerning the removal and ban from service of Martinez as an
officer and director of Cape Fox, this aspect of the trial courts
judgment is vacated. On remand, the court should make and enter
findings specifying the particular conduct of Martinez upon which
the relief granted is based.36 The award of costs and fees to
Cape Fox must also be vacated since the judgment on which it is
based has been reversed.
VACATED, REVERSED, and REMANDED.
_______________________________
1 Cape Fox also presented a claim that Martinez had
charged unauthorized travel expenses of some $3500 to the
corporation.
2 Civil Rule 17(c) provides:
Whenever an infant or incompetent person
has a representative, such as a general
guardian, committee, conservator, or other
like fiduciary, the representative may sue or
defend on behalf of the infant or incompetent
person. An infant or incompetent person who
does not have a duly appointed representative
may sue by a next friend or by a guardian ad
litem. The court shall appoint a guardian ad
litem for an infant or incompetent person not
otherwise represented in an action or shall
make such other order as it deems proper for
the protection of the infant or incompetent
person.
3 The Ninth Circuit Court of Appeals addressed this issue
in Johns v. County of San Diego. The court stated:
While we have not addressed the question
of whether a guardian ad litem can represent
a child without retaining a lawyer, all other
circuit courts addressing the issue have held
that the guardian or parent cannot bring a
lawsuit on behalf of a minor in federal court
without retaining a lawyer. See, e.g., Osei-
Afriyie v. Medical College, 937 F.2d 876, 882-
83 (3d Cir.1991); Cheung v. Youth Orchestra
Found. of Buffalo, Inc., 906 F.2d 59, 61-62
(2d Cir.1990); Meeker v. Kercher, 782 F.2d
153, 154 (10th Cir.1986) (per curiam). The
Third Circuit explained the rationale:
A litigant in federal court has a
right to act as his or her own
counsel. See 28 U.S.C. 1654
(1982).... However, we agree with
Meeker v. Kercher, 782 F.2d 153,
154 (10th Cir.1986) (per curiam),
that a non-attorney parent must be
represented by counsel in bringing
an action on behalf of his or her
child. The choice to appear pro se
is not a true choice for minors who
under state law, see Fed. R. Civ.
P. 1(b), cannot determine their own
legal actions. There is thus no
individual choice to proceed pro se
for courts to respect, and the sole
policy at stake concerns the
exclusion of non-licensed persons
to appear as attorneys on behalf of
others.
It goes without saying that it is not in the
interest of minors or incompetents that they
be represented by non-attorneys. Where they
have claims that require adjudication, they
are entitled to trained legal assistance so
their rights may be fully protected. Osei-
Afriyie, 937 F.2d at 882-83 (quoting Cheung,
906 F.2d at 61).
We agree with this reasoning. In
addition, we are bound by our general holding
in C.E. Pope that a non-lawyer "has no
authority to appear as an attorney for others
than himself." C.E. Pope, 818 F.2d at 697.
The issue of whether a parent can bring a pro
se lawsuit on behalf of a minor "falls
squarely within the ambit of the principles
that militate against allowing non-lawyers to
represent others in court." Brown v. Ortho
Diagnostic Sys., Inc., 868 F. Supp. 168, 172
(E.D. Va.1994). Accordingly, we hold that a
parent or guardian cannot bring an action on
behalf of a minor child without retaining a
lawyer.
114 F.3d 874, 876-77 (9th Cir. 1997).
4 See Wagnon v. Gaines, 526 P.2d 500, 501 (Okla. App.
1974).
5 Civil Rule 61 provides in relevant part:
No error . . . in anything done or
omitted by the court or by any of the parties
is ground for granting a new trial . . .
unless refusal to take such action appears to
the court inconsistent with substantial
justice. The court at every stage of the
proceeding must disregard any error or defect
in the proceeding which does not affect the
substantial rights of the parties.
6 Civil Rule 51(a) provides:
At the close of the evidence or at such
earlier time as the court reasonably directs,
any party may file written requests that the
court give the jury specific instructions.
The court shall inform counsel of the final
form of jury instructions prior to their
arguments to the jury. Following the close
of the evidence, before or after the
arguments of counsel, the court shall
instruct the jury. Additionally, the court
may give the jury such instructions as it
deems necessary at any stage of the trial.
No party may assign as error the giving or
the failure to give an instruction unless the
party objects thereto before the jury retires
to consider its verdict, stating distinctly
the matter to which the party objects and the
grounds of the objection. Opportunity must
be given to make the objection out of the
hearing of the jury, by excusing the jury or
hearing objections in chambers.
7 See Manes v. Coats, 941 P.2d 120, 125 (Alaska 1997).
8 Alaska Marine Pilots v. Hendsch, 950 P.2d 98, 110
(Alaska 1997); see also Merrill v. Faltin, 430 P.2d 913, 917
(Alaska 1967) (We have held that we shall not pass upon an
assertion that the giving of an instruction was error where the
matter had not been properly brought to the attention of the
trial court. But we have also held that we shall consider plain
errors, even though not objected to below, which are so
substantial as to result in injustice.).
9 See Alaska Marine Pilots, 950 P.2d at 110.
10 See Borg-Warner Corp. v. Avco Corp. (Lycoming Div.),
850 P.2d 628 (Alaska 1993).
11 The conversion instruction given by the court provided
as follows:
INSTRUCTION NO. 13
Plaintiff Cape Fox Corporation claims
that each of the defendants converted
property or money from the corporation and
wants compensation for the fair value of the
losses resulting from the conversion.
Conversion is an intentional exercise of
dominion or control over property or money
which so seriously interferes with the right
of another to control it that the actor may
justly be required to pay the other the full
value of the property or money.
In order to find that plaintiff Cape Fox
Corporation is entitled to recover on this
claim, you must decide that it is more likely
true than not true that:
1. Defendants Patricia Shields, Thomas
Martinez, Jr., and/or Kristy Shields
converted property or money from plaintiff
Cape Fox Corporation; and
2. The fair value of the losses
resulting from the conversion.
12 By contrast, the Alaska Pattern Civil Jury Instructions
(1990 revisions) concerning conversion require an intentional act
on the part of the defendant damaging or interfering with the
plaintiffs right to possess property. Pattern Instruction 18.02.
Instruction 18.03 defines intentional act as encompassing either
an intent to interfere with the property or knowledge on the part
of the defendant to a substantial certainty that the act or
omission would result in such interference. Even as so defined,
conversion sometimes may be negligent in character, for the
second sentence of Pattern Instruction 18.03 indicates that a
mistaken belief on the part of a defendant that he or she had a
right to interfere with the property does not negate
intentionality.
13 The fiduciary duty instruction provided as follows:
INSTRUCTION NO. 14
Plaintiff Cape Fox Corporation claims
that as a director of Cape Fox Corporation
defendant Thomas Martinez, Jr. breached
fiduciary duties that he owed to the
corporation and wants compensation from
defendant Thomas Martinez, Jr. for the harm
resulting from the breach of fiduciary
duties.
A director is a fiduciary to the
corporation. Directors are entrusted with
the management of the corporations business
and property for the benefit of all the
shareholders. As such, directors occupy the
position of trustees for the collective body
of shareholders. This fiduciary duty
constitutes an agreement to honestly and
diligently direct the business of the
corporation.
In order to find that plaintiff Cape Fox
Corporation is entitled to recover on this
claim, you must decide that it is more likely
true than not true that:
1. Defendant Thomas Martinez, Jr.
breached fiduciary duties that he owed to
plaintiff Cape Fox Corporation;
2. The breach of fiduciary duties by
defendant Thomas Martinez, Jr. was a legal
cause of harm to plaintiff Cape Fox
Corporation; and
3. Plaintiff Cape Fox corporation was
actually harmed.
14 770 P.2d 290, 295 (Alaska 1989).
15 Id. at 296.
16 806 P.2d 848, 853-54 (Alaska 1991).
17 627 P.2d 641 (Alaska 1981).
18 Lee Houston, 806 P.2d at 853-54.
19 Id. at 854-55.
20 910 P.2d 599 (Alaska 1996).
21 Id. at 603.
22 Id. at 604.
23 Lee Houston, 806 P.2d at 853 (quoting Higa v.
Mirikitani, 517 P.2d 1, 4-5 (Haw. 1973)).
24 See Sonja Larsen, J.D., Annotation, Applicability of
Comparative Negligence Doctrine to Actions Based on Negligent
Misrepresentation, 22 A.L.R. 5th 464 (1994).
25 Id. at 2. There are also contrary authorities. Id.
at 4.
26 Instruction No. 12 provides:
Plaintiff Cape Fox Corporation claims
that it was harmed because of the failure of
defendants Patricia Shields and Kristy
Shields to exercise reasonable skill and
ordinary care and diligence in the work they
were hired to perform for plaintiff Cape Fox
Corporation and wants compensation from
defendants Patricia Shields and Kristy
Shields for the harm.
Employees have the duty to exercise
reasonable skill and ordinary care and
diligence in the work they were hired to
perform.
In order to find that plaintiff Cape Fox
Corporation is entitled to recover on this
claim, you must decide that it is more likely
true than not true that:
1. Defendants Patricia Shields and/or
Kristy Shields failed to exercise reasonable
skill and ordinary care and diligence in the
work they were hired to perform for plaintiff
Cape Fox Corporation;
2. The failure to exercise reasonable
skill and ordinary care and diligence was a
legal cause of harm to plaintiff Cape Fox
Corporation; and
3. Plaintiff Cape Fox Corporation was
actually harmed.
27 650 A.2d 848 (N.J. Super. Law. Div. 1994).
28 Id. at 852. Brown, if followed, therefore would have
no effect on Kristys liability for she was not a manager, but it
could affect Patricias liability.
29 Still, the matter is not free from doubt. For example,
the commentary to 379(1) of the Restatement (Second) of Agency
(1958) does not necessarily encompass lost profits liability. It
states:
The negligence for which an agent is
subject to liability to the principal may
consist of misconduct in negotiations with
third persons, of conduct causing harm to the
principals tangible things in his custody, or
of conduct causing the principal to be
subject to liability for a tort, crime, or
breach of contract.
30 These instructions were also not objected to at trial.
31 AS 10.06.450(b) provides:
A director shall perform the duties of a
director, including duties as a member of a
committee of the board on which the director
may serve, in good faith, in a manner the
director reasonably believes to be in the
best interests of the corporation, and with
the care, including reasonable inquiry, that
an ordinarily prudent person in a like
position would use under similar
circumstances. Except as provided in (c) of
this section, a director is entitled to rely
on information, opinions, reports or
statements, including financial statements
and other financial data, in each case
prepared or presented by
(1) one or more officers or employees of
the corporation whom the director reasonably
believes to be reliable and competent in the
matters presented;
(2) counsel, public accountants, or
other persons as to matters that the director
reasonably believes to be within the person's
professional or expert competence; or
(3) a committee of the board upon which
the director does not serve, designated in
accordance with a provision of the articles
or the bylaws, as to matters within the
authority of the committee if the director
reasonably believes the committee to merit
confidence.
32 AS 10.06.210(1)(N) provides that the articles of
incorporation can restrict the liability of a director generally
to acts that are not in good faith or involve intentional
misconduct. Martinez did not contend that the articles of
incorporation of Cape Fox contain such a provision.
33 See Vinson v. Hamilton, 854 P.2d 733, 737 (Alaska 1993)
(money damage claims are legal in nature).
34 The first sentence of Civil Rule 52(a) provides:
In all actions tried upon the facts
without a jury or with an advisory jury, the
court shall find the facts specially and
state separately its conclusions of law
thereon and judgment shall be entered
pursuant to Rule 58; and in granting or
refusing interlocutory injunctions the court
shall similarly set forth the findings of
fact and conclusions of law which constitute
the grounds of its action.
35 See Borchgrevink v. Borchgrevink, 941 P.2d 132, 139
(Alaska 1997).
36 The appellants have made a number of additional claims
of error. They have been considered and found to be either
without merit or moot in view of our decision in this case.
