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Lexington Insurance Co. v. Lindahl Construction & Engineering, Inc. (5/24/2002) sp-5574
Lexington Insurance Co. v. Lindahl Construction & Engineering, Inc. (5/24/2002) sp-5574
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
LEXINGTON INSURANCE )
COMPANY, a Delaware corporation, ) Supreme Court No. S-9701
WESTCHESTER FIRE INSURANCE )
COMPANY, a New York corporation, ) Superior Court No. 4FA-98-
659 CI
AGRICULTURAL INSURANCE )
COMPANY, a Delaware corporation, ) O P I N I O N
THE TRAVELERS INDEMNITY )
COMPANY OF ILLINOIS, an Illinois ) [No. 5574 - May 24, 2002]
corporation, and FIREMANS FUND )
INSURANCE COMPANY, a )
California corporation, )
)
Appellants, )
)
v. )
)
LINDAHL CONSTRUCTION AND )
ENGINEERING, INC., an Alaska )
corporation, STEVEN M. LINDAHL, )
an individual, and the STATE OF )
ALASKA, )
)
Appellees. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Richard D. Savell, Judge.
Appearances: William Grant Callow, Law
Offices of William Grant Callow, P.C.,
Anchorage, and Paul V. Esposito, Clausen
Miller, P.C., Chicago, Illinois, for
Appellants. Steven M. Lindahl, pro se,
Holmes Beach, Florida. Randy M. Olsen,
Assistant Attorney General, Fairbanks, and
Bruce M. Botelho, Attorney General, Juneau,
for Appellee State of Alaska.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
Fire damaged the Denali Princess Lodge in 1996. Five
insurance companies paid the lodge owner under policies covering
property and business interruption loss. The insurance companies
then sued the State of Alaska, claiming that it negligently
approved building plans which did not satisfy the 1979 Uniform
Building Code (UBC) and negligently failed to require a one-hour
fire-resistive enclosure around a lodge furnace. They also sued
the contractor that built the lodge, claiming that it negligently
failed to follow the building code. The superior court granted
summary judgment to the defendants, holding that the 1985 UBC
applied and that it did not require a one-hour fire wall around
the furnace. We affirm, because there are no genuine issues of
material fact and the defendants were entitled to judgment as a
matter of law.
II. FACTS AND PROCEEDINGS
In 1986 Princess Tours hired Lindahl Construction and
Engineering, Inc., as the general contractor for its new hotel
complex near Denali National Park. Jerry Moberg, Princesss
project engineer, began discussing the project and code
requirements with a state deputy fire marshal, Charles Lee Davis,
in May 1986. At the time of those early conversations the 1979
Uniform Building Code was still in effect in Alaska. It was not
until August 2, 1986 that the 1985 UBC became effective in
Alaska.1 On July 31, 1986 Princess submitted its application for
plan review to the states Department of Public Safety, Fire
Marshals Office, and paid the fees for the review. It did not
submit the project plans with the application. On the same day
Lindahl and Moberg met with another state deputy fire marshal,
Ernest Misewicz, to discuss the project. Lindahl wrote a letter
to Misewicz confirming the discussion: To confirm the topics
discussed in your office on 7/31/86, I have enclosed a list of
items that were discussed for your records . . . . The letter
listed several items of discussion, including 13. The entire
project will be reviewed under the 1979 U.B.C. codes. Lindahl
testified in his deposition that he believed this statement was a
request by Princess to have the project reviewed under the 1979
UBC, and that it did not reflect an affirmative answer by the
state to apply the 1979 UBC.
On August 12, 1986 Deputy Fire Marshal Davis spoke with
Moberg by telephone. Davis asked Moberg what version of the UBC
Princess was using to formulate its plans. Davis told Moberg
that if Princess wanted the state to apply the 1979 UBC to the
project, Princess needed to submit a letter requesting
application of the 1979 UBC. Although the state received on
August 15, 1986 Lindahls letter recounting the July 31 meeting
between Lindahl, Moberg, and Misewicz, the supervisor of the
State Fire Marshals Office later stated in an affidavit that the
state did not receive any other writing representing Princesss
desire to have the building plans reviewed under the 1979 UBC.
The building plans divided the hotel into four
buildings: Building 1 contained hotel rooms, a lobby, a gift
shop, and offices; Building 2 contained hotel rooms; Building 3
contained the restaurant; and Building 4 housed employees.
Building 4 was separate from the others and was the only building
to survive the fire.
By letter of September 11, 1986 Deputy Fire Marshal
Misewicz authorized Lindahl to begin foundation work for
Buildings 1 and 2, but forbade further work until complete plans
for the project were received and approved. The letter warned
that the distance between Building 1 and Building 3 was
insufficient to meet the standards set out in the 1985 UBC.
Princess did not communicate any objection to this application of
the 1985 UBC to the lodge project. Misewicz reviewed the plans
for Buildings 1 and 2 on September 23 under the 1985 UBC and
classified Buildings 1 and 2 as Occupancy: R-1. He issued a
certificate of plan review on September 29. On October 22, 1986
Lindahl wrote Misewicz regarding the classification of the lobby
and reception area in Building 1. By letter of October 23, 1986
Misewicz replied, stating that the lobby/reception area/foyer of
Building 1 was considered one area and that [t]he 1985 Uniform
Building Code classifies this area as an Assembly 3 (A3)
[o]ccupancy. Princess did not object to this classification.
In March 1996 fire destroyed three of the Denali
Princess Lodge buildings. As a result of the fire Lexington
Insurance Company and four other insurance companies
(collectively Lexington) paid Princess Tours more than
$18,000,000. The state fire inspector concluded that the fire
started at the furnace in the crawlspace of Building 1.
In March 1998 Lexington filed a superior court
complaint that alleged, among other things, that Lindahl
Construction and Engineering, Inc., breached its general
construction contract with Princess Tours by failing to comply
with the owner-approved plans and specifications, and by failing
to comply with all applicable building and fire codes, including
the requirement of a one-hour fire wall around the furnace where
the fire allegedly started. The complaint also alleged that
Lindahl Construction and Steven Lindahl individually failed to
exercise due care in constructing the four buildings, causing the
fire to spread from the crawlspace under Building 1 to Buildings
2 and 3. Finally, the complaint alleged that the State of Alaska
failed to exercise due care in reviewing the plans submitted by
Lindahl Construction for Building 1 because the plans contained
no provision for a one-hour fire wall around the furnace where
the fire allegedly started.
In September 1999 the state moved for summary judgment;
it argued that the 1985 UBC was the applicable building code and
that the 1985 UBC did not require fire walls around the furnaces
in the Princess Lodge because the furnaces were located in an
assembly area (A-3) or a business area (B-2). In September 1999
Lindahl, representing both his construction company and himself
pro se, moved for summary judgment. He also argued that fire
walls were not required under the 1985 UBC for the lobby area of
Building 1. He then adopted the states similar motion, and the
state adopted Lindahls motion.
Lexington argued in its opposition to the summary
judgment motions that the 1979 UBC applied to the Denali Princess
Lodge project because the application for plan review was
submitted to the Fire Marshals Office on July 31, 1986, two days
before the 1985 UBC took effect, and because Deputy Fire Marshal
Misewicz had agreed to apply the 1979 UBC. Lexington also argued
that the furnace was located in an R-1 area and that the 1979 and
1985 UBC both required one-hour fire walls around furnaces in
that area. The state argued in response that Misewicz did not
err in reviewing the Building 1 plans under the 1985 UBC and that
[t]he 1985 UBC was the proper code to govern the construction of
Building 1.
The superior court granted summary judgment in April
2000 to the state, Lindahl Construction, and Steven Lindahl
individually. It concluded that as a matter of law the 1985 UBC
applied to the Denali Princess Lodge project. It also held that
the states A-3 classification of the lobby area was not legally
infirm or an abuse of discretion, and that the state was not
negligent in failing to require a one-hour fire wall because the
1985 UBC did not require a fire wall for furnaces built in A-3
areas.
The state moved for attorneys fees. Lexington opposed,
claiming that the states attorneys had devoted twice as much time
to the case as Lexingtons attorneys. The state replied that
Lexingtons comparison of its hours spent on the case with the
states was faulty because much of Lexingtons legal work would
have been done before Lexington filed suit. The state also filed
a motion to require Lexington to disclose the total time spent on
the case from the time of the fire. Without deciding this last
motion, the superior court entered final judgment for all
defendants and awarded the state $54,471.12 for attorneys fees
and paralegal fees.
Lexington appeals the grant of summary judgment to the
defendants and the award of attorneys fees.
III. DISCUSSION
A. Standard of Review
We review the dismissal of Lexingtons claims on summary
judgment de novo.2 A summary judgment movant must establish that
there are no genuine issues of material fact and that it is
entitled to judgment as a matter of law.3 We will draw all
reasonable factual inferences in favor of Lexington, the
nonmoving party.4 Summary judgment is inappropriate if the
parties genuinely dispute any facts material to a viable legal
theory.5 We apply our independent judgment to questions of law,
adopting the rule of law most persuasive in light of reason,
precedent, and policy.6
We review an award of Alaska Civil Rule 82 attorneys
fees for an abuse of discretion.7
B. The Superior Court Did Not Err in Concluding that the
1985 UBC Applied to Building 1.
1. No factual dispute about whether the state was
required to review the Denali Princess Lodge building
plans under the 1979 UBC is material.
Lexington argues that there is a genuine issue of
material fact whether Lexington and the state agreed that the
1979 UBC would govern the Denali Princess Lodge project. In
making this argument Lexington relies in part on the July 31,
1986 letter to Deputy Fire Marshal Misewicz in which Lindahl
writes: The entire project will be reviewed under the 1979 U.B.C.
codes. The state argues that the letter was only a recitation of
discussion topics and not an agreement to apply the 1979 UBC to
the project. The state also claims that once Princess received
oral advice that the 1985 UBC was already in effect and would
control, Princess offered no objections to the application of the
later code. The supervisor of the State Fire Marshals Office
provided an affidavit stating that after Moberg and Davis spoke
on August 12, 1986, Princess made no written requests that the
plans be reviewed under the 1979 UBC.
The grant of summary judgment to the state must be
overturned if we determine that any genuine factual disputes are
material.8 Viewed in a light most favorable to Lexington, there
may be a factual dispute about the significance of Lindahls July
31, 1986 letter to the state. But Lexingtons complaint alleged a
negligence cause of action against the state based on the states
review and approval of the building plans and the states
subsequent fire safety inspections. Lexington reiterated its
negligence claim in its opposition to the states motion for
summary judgment; Lexington stated that [o]ne of the reasons
[Lexington] claim[s] [the state] was negligent in this case is
because Mr. Misewicz reviewed this project under the wrong
edition of the Uniform Building Code at the time he did his
building plans review. Lindahls letter may indicate that it was
contemplated or even expected during initial discussions between
Lindahl, Moberg, and Misewicz that the 1979 UBC would apply. But
as a matter of law it was the 1985 UBC that was in effect when
Misewicz actually reviewed the plans in late September 1986.
Lexingtons cause of action necessarily assumes that the
state breached the applicable standard of care by failing to
apply the 1979 UBC and by classifying the commercial area as A-3
rather than R-1.9 At the time of his plans review in September,
however, Deputy Fire Marshal Misewicz had no legal obligation or
authority to apply the 1979 UBC because the 1985 UBC was already
in effect. It was the 1985 UBC, along with the classification of
the commercial area, that governed Lexingtons negligence claim.10
Perhaps if Lexington had asserted a negligent misrepresentation
claim or a contract claim, the states earlier alleged agreement
to apply the 1979 UBC, and its initial characterization of the
commercial area as R-1, would have raised a genuine, material
factual dispute. But because Lexington actually asserted only a
negligence claim, its claim turns on whether the state breached a
duty at the time it approved the plans; pre-approval events are
of no consequence. Since Deputy Fire Marshal Misewiczs
application of the 1985 UBC after it became effective did not
breach the negligence standard of care, we do not need to decide
whether he arguably could have been required to apply the 1979
UBC by agreement with Princess or otherwise.
Although we need not examine whether there is a genuine
issue of material fact about whether the parties agreed to apply
the 1979 UBC, we note that basic contract principles cast serious
doubt on Lexingtons claim that the state entered into a legally
binding agreement to apply the earlier UBC. Lexington cites
Bloomstrand v. State11 for the proposition that silence may be
deemed an admission when a silent person could be reasonably
expected to speak. That case involved constitutional and
criminal law issues related to a defendants right to remain
silent in a homicide investigation;12 it is of no relevance here.
Instead, it is instructive to consider Lexingtons claim
of an alleged agreement with the state in a contractual
environment. We have previously held in the context of summary
judgment that to demonstrate the existence of a contract or
legally binding agreement, a party must point to evidence showing
that the opposing party unequivocally accepted an offer by words
and actions that objectively manifested an intent to be bound.13
Without this showing we will not disturb the summary judgment.14
We have also held that silence operates as acceptance of an
agreement only in cases where a party has reason to understand
that assent may be manifested by silence . . . , and the [party]
in remaining silent . . . intends to accept the offer. 15 The
states silence upon receiving Lindahls July 31, 1986 letter does
not demonstrate the type of clear knowledge of an agreement
required to bind the state. Also, Lexington does not make a
sufficient showing through the states actions or written or
spoken words that the state assented to an agreement that would
potentially subject it to the type of liability Lexington now
alleges.
Lexington further argues that Deputy Fire Marshal
Misewiczs August 20, 1986 letter to Lindahl seeking clarification
of work relating to Building 4 evinced the states intent to enter
into an agreement to apply the 1979 UBC to the entire project.
The state claims that [t]he employee housing building [Building
4] . . . had already been started [and] was being constructed
according to the 1979 UBC. Accordingly, it would not be
surprising that the August 20 letter referred to the 1979 UBC.
In any event, the states letter was addressed to Lindahl and did
not create any contractual obligation with Princess.
For the reasons discussed above, any dispute regarding
the alleged agreement to use the 1979 UBC is not material to
Lexingtons negligence claim. We consequently hold that the
superior court did not err by granting summary judgment to the
state.
2. The vested rights approach to determining which
building code applied to Building 1 does not apply
here.
Lexington asks us to adopt the vested rights approach
for determining whether the 1979 UBC or the 1985 UBC was the
appropriate building code for the states review of the Denali
Princess Lodge project. It asserts that under the vested rights
approach, a property owner has a right to application of the
building code that is in effect when the owner applies for plan
review.16 Lexington argues that we should adopt this rule in
Alaska because it produces a bright line test that is easy to
administer. Although it would be a matter of first impression
for this court, we do not need to decide here whether to adopt
this approach for Alaska. The vested rights approach is the
minority rule in other jurisdictions. It requires not merely an
application by the owner, but a substantial change in position in
reliance on the old law.17 Lexington does not argue that Princess
changed its behavior in reliance on any expectation that the
state would apply the 1979 UBC. Princess remained free to build
the lodge to standards exceeding the requirements of the 1985
UBC, and the state did not prevent Princess from building a fire
wall around the furnace. Because Lexington would not prevail
even if we applied the vested rights approach, there is no reason
for us to decide whether to adopt it for Alaska.
C. The Superior Court Did Not Err in Holding that the Fire
Marshal Correctly Classified the Lobby as an Assembly-3
Area.
Lexington argues that even if the 1985 UBC applied, a
one-hour fire wall was still required. The 1979 UBC and the 1985
UBC both state that [e]very room containing a boiler, central
heating plant or hot-water supply boiler in Division 1
Occupancies [which include areas characterized as R-1] shall be
separated from the rest of the building by not less than a one-
hour fire-resistive occupancy separation.18 Lexington therefore
reasons that because Deputy Fire Marshal Misewicz classified the
lobby area of Building 1 as R-1 in his September 1986 plan
review, the one-hour fire wall was necessary since both versions
of the UBC required it.
The state argues that Deputy Fire Marshal Misewiczs
October 23, 1986 letter to Lindahl stating that [t]he 1985
Uniform Building Code classifies this area as an Assembly 3 (A3)
occupancy was sufficient to classify the area as A-3 and not R-1.
It argues that Misewiczs classification of the area as A-3 was
bolstered by the opinions of other professional engineers and
architects. Also, the state notes that fire inspections of the
premises in subsequent years classified the area as A-3 or B-2,
confirming that Misewiczs classification of the area as A-3 was
not in error.
To prevail on its negligence claim against the state,
Lexington must demonstrate that the state breached some duty owed
to Lexington that it misinterpreted or misapplied the law.19 The
superior court correctly noted that it is a question of law
whether the occupancy classification assigned to the lobby was
correct. Section 501 of the UBC gave the fire marshal the
authority to classify Building 1.20 Misewicz classified the lobby
as A-3 in his October 23, 1986 letter. Although Lexington
continues to maintain that there is a genuine issue of material
fact about the lobbys proper classification, Lexington has
offered no evidence that the lobby should have been classified as
R-1 or that it was incorrectly classified in the October 23, 1986
letter or during state inspections in subsequent years.
Lexington argues that the state, by first assigning the
R-1 classification to Building 1 during the initial review, was
not permitted to adjust its classification in light of additional
information about the building. Lexingtons interpretation defies
the clear words of both editions of the UBC, which state that any
question [regarding occupancy] shall be classified by the
building official.21 Lexington does not argue that Misewiczs
classification of the lobby as A-3 was itself incorrect, and
neither code prohibits such a classification.22 Lexington only
argues that Misewiczs first review classified the lobby as R-1
and that his later classification of the lobby as A-3 was
impermissible. Further, if Lexingtons argument were the law, it
would impose an undue burden on the review of building plans and
inspection of buildings by state officials. Because section 501
of the 1985 UBC clearly gave the fire marshal the authority to
classify the lobby in Building 1, we hold that the states
original classification of the lobby as R-1 does not create a
genuine issue of material fact, especially in light of Misewiczs
October 23, 1986 classification of the area as A-3.
D. The Superior Court Did Not Abuse Its Discretion in
Awarding Attorneys Fees to the State.
Applying the twenty percent standard for cases resolved
without trial,23 the superior court awarded the state Civil Rule
82 fees of $54,471.12. The award was twenty percent of
$272,355.58, the value the state attributed to the services of
Department of Law attorneys and paralegals.
Lexington argues that this award was excessive. It
reasons that the hours the state claims it spent 1,446.4 hours
by its attorneys and 767.6 hours by its paralegals greatly
exceeded the 694 hours Lexingtons attorneys spent during the same
period. Lexington does not separately attempt to show that it
was error to award paralegal fees. The state argues that the
time its attorneys spent was not excessive, and that a fair
comparison would require Lexingtons attorneys to document the
total time they spent on the litigation, including time they
spent before they filed the complaint.
Lexington does not challenge any specific part of the
1,446.4 hours of attorney time reported by the state, but argues
only that the total was excessive. An award of attorneys fees
under Civil Rule 82 will be reversed only upon a showing of abuse
of discretion or a showing that the award [was] manifestly
unreasonable.24 Because Lexington has not demonstrated that the
amount awarded was excessive, that the twenty percent standard
was the incorrect standard, or that the states attorneys hours
were excessive, we hold that the superior court did not abuse its
discretion in awarding attorneys fees to the state.
Finally, Lindahl seeks an award of attorneys fees from
Lexington. Because he is a pro se litigant, Lindahl is not
entitled to attorneys fees.25
IV. CONCLUSION
We AFFIRM the superior courts grant of summary judgment
in all respects and AFFIRM its award of attorneys fees.
_______________________________
1 13 Alaska Administrative Code (AAC) 50.020 (1986).
2 Reeves v. Alyeska Pipeline Serv. Co., 926 P.2d 1130,
1134 (Alaska 1996).
3 Id. (citing Zeman v. Lufthansa German Airlines, 699
P.2d 1274, 1280 (Alaska 1985)).
4 Id. (citations omitted).
5 McGlothlin v. Municipality of Anchorage, 991 P.2d 1273,
1277 (Alaska 1999) (citations omitted).
6 Bockness v. Brown Jug, Inc., 980 P.2d 462, 465 (Alaska
1999).
7 Caudle v. Mendel, 994 P.2d 372, 374 (Alaska 1999).
8 McGlothlin, 991 P.2d at 1277.
9 The premise of Lexingtons claim is that the state owes
owners a duty, enforceable in tort, to advise them of their
noncompliance with applicable building code provisions. In view
of our decision in this case we have no occasion to endorse or
reject this premise.
10 See infra Part III.B.2 for a discussion of the
classification of Building 1.
11 656 P.2d 584, 588 (Alaska App. 1982).
12 Id. at 587-89.
13 Brady v. State, 965 P.2d 1, 8 (Alaska 1998) (citations
omitted).
14 Id.
15 Id. at 9 (quoting RESTATEMENT (SECOND) OF CONTRACTS 69
(1979)). See also 1 JOSEPH M. PERILLO, CORBIN ON CONTRACTS
3.18, at 402-07, 3.21, at 414 (1993) (silence as acceptance
usually limited to cases where conduct of party denying contract
or agreement would lead other to reasonably believe that silence
would be sufficient, such as where party is so certain that the
[other] will accept that the [others] silence will be taken as
acceptance).
16 Lexington cites State ex rel. Ogden v. City of
Bellevue, 275 P.2d 899, 901-02 (Wash. 1954), in support. Ogden
involved a zoning ordinance and not a building code. We do not
consider how the vested rights approach might apply in the
context of building codes because Lexingtons argument fails even
if there is no difference in the legal applicability of the rule
in the two separate contexts.
17 Relay Improvement Assn v. Sycamore Realty Co., 661 A.2d
182, 188-89 (Md. App. 1995).
18 UBC 1201, 1212 (1979, 1985).
19 Wickwire v. Arctic Circle Air Servs., 722 P.2d 930, 932
(Alaska 1986) (To make out a prima facie case of negligence,
Wickwire needed to present evidence on each of the following
elements: duty, breach of that duty, proximate cause and
damages.); contra Mesiar v. Heckman, 964 P.2d 445, 452 (Alaska
1998) (Heckman cites no cases, and we are aware of none, holding
that mere negligence by an agency charged with a general public
duty of resource management supports a claim for damages by an
affected resource user.).
20 Section 501 of both the 1979 UBC and the 1985 UBC
states that [a]ny occupancy . . . about which there is any
question shall be classified by the building official. UBC 501
(1979, 1985).
21 UBC 501 (1979, 1985).
22 Id.
23 Alaska R. Civ. P. 82(b)(2) (providing that the court
shall award the prevailing party in a case resolved without trial
20 percent of its actual attorneys fees which were necessarily
incurred).
24 Feichtinger v. Conant, 893 P.2d 1266, 1268 (Alaska
1995) (citations omitted).
25 Alaska Fed. Sav. & Loan Assn of Juneau v. Bernhardt,
794 P.2d 579, 581-82 (Alaska 1990).
