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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kay v. Danbar, Inc. (03/31/2006) sp-5999
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
| STEVEN D. KAY, | ) |
| ) Supreme Court Nos. S- 11008/11017 | |
| Appellant/Cross-Appellee, | ) |
| ) Superior Court No. 3PA-01-0159 CI | |
| v. | ) |
| ) O P I N I O N | |
| DANBAR, INC., an Alaska | ) |
| corporation, d/b/a RE/MAX of | ) No. 5999 - March 31, 2006 |
| Wasilla, | ) |
| ) | |
| Appellee/Cross-Appellant. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Palmer,
Beverly W. Cutler, Judge.
Appearances: Benjamin I. Whipple, Palmer, for
Appellant/Cross-Appellee. Rod R. Sisson and
Craig Wm. Black, Sisson & Knutson, P.C.,
Anchorage, for Appellee/Cross-Appellant.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
BRYNER, Chief Justice.
EASTAUGH, Justice, dissenting.
I. INTRODUCTION
Steven Kay sued RE/MAX of Wasilla for personal injuries
suffered from a fall in a duplex that he rented through RE/MAX.
Kay initially limited his claim to damages of less than $100,000,
thereby securing the advantage of limited discovery under Civil
Rule 26(g). But he later attempted to claim additional damages
and unsuccessfully moved to withdraw his election to proceed
under Rule 26(g). The jury returned a verdict for Kay exceeding
$400,000, but the court reduced the judgment to conform to Rule
26(g)s $100,000 damages cap. Kay appeals, challenging the courts
refusal to lift the damages cap. RE/MAX cross-appeals, asserting
that the case should have been dismissed on summary judgment or
by directed verdict because it owed no duty to protect Kay from
physical injury. We reverse the superior courts order declining
to lift the damages cap, finding no just reason to preclude Kay
from increasing his claim to include new damages. But we affirm
its orders denying RE/MAXs motions for summary judgment and
directed verdict. We thus remand for a new trial on Kays full
damages claim.
II. FACTS
In 1999, when Steven Kay first began looking for a
place to rent, he contacted his mother, Jean Kay, a real estate
agent at RE/MAX of Wasilla (RE/MAX). She was involved in sales,
not rentals, so she referred her son to Kristan Cole (f/k/a
Tanner), an agent in RE/MAXs property management division.
Kristan Coles stepsons, Aaron and Jesse Tanner (the Tanner
brothers), owned a Wasilla duplex, which Kristan Cole, for a
time, may have helped manage. Kays mother showed Kay the duplex,
which he agreed to lease from the Tanner brothers. The lease
agreement designated RE/MAX as the agent for the Tanner Brothers.
It instructed tenants, in the event of emergency, to immediately
notify management; it also listed Kristan Tanner at RE/MAX of
Wasilla as the only emergency contact.
Within a month after moving into the duplex, Kay
slipped and fell on a loose carpet remnant on the landing of the
stairs leading to the garage, badly fracturing his ankle. He
sued the Tanner brothers and RE/MAX in February 2001, twenty-two
months after he was injured. Kays complaint alleged that the
defendants were negligent for failing to fasten or remove the
carpet remnant and that the height of the stairs, the threshold,
and the swing of the door to the garage did not satisfy code
requirements. The defendants answered through their attorneys.
In May 2001 the superior court set the trial to begin on April
29, 2002, and ordered discovery to close forty-five days before
trial, March 15, 2002.
About one week after the superior court calendared the
trial, Kay responded to multiple interrogatories and requests for
production from RE/MAX and the Tanner brothers. Kay objected to
these requests on the ground that discovery should be limited as
specified under Alaska Civil Rule 26(g) because the case involved
less than $100,000 in damages.
The parties cross-moved for summary judgment in January
2002. RE/MAXs motion asserted that the rental agreement did not
give rise to a duty by RE/MAX to ensure the premises safe
condition. Kay sought partial summary judgment against both
defendants on all issues except the nature and extent of damages.
The superior court denied these motions, finding that genuine
issues of material fact remained.
On March 5, 2002, fifty-five days before trial was
scheduled to begin, Kay returned to his treating physician, Dr.
Bret Mason. Later that same day, Kay filed a pleading
withdrawing his opposition to the Tanner brothers pending motion
to compel discovery, and stated that he also withdraws his
election to invoke the $100,000 Rule 26(g) damages cap.
According to Kay, he took these steps because Dr. Mason had told
him that he needed further medical care, including possible
surgery, for his ankle to heal properly. Kay asserted that he
hoped to know by the end of March whether surgery would be
necessary. He also stated that he was not opposed to a
continuance and that he would respond to the outstanding
interrogatories and production requests on or before March 22,
seven days after discovery was to close.
Although Kays Rule 26(g) withdrawal was not phrased as
a motion and did not seek any expedited consideration, the
defendants treated it as a motion and promptly opposed it. Kay
then filed a reply, indicating that he had produced the discovery
information previously requested by the defendants and was in the
process of responding to their interrogatories, but that he would
nonetheless be willing[] to postpone trial if necessary so the
parties could obtain the relevant discovery desired and not be
disadvantaged.
On April 22, seven days before the day set for trial,
the superior court issued an order denying Kays request to drop
the Rule 26(g) cap. The order noted the tardiness of Kays motion
in light of other dates set by the pretrial order. The following
day, Kay filed expedited motions asking the court to continue the
trial and reconsider its order denying his attempt to withdraw
the damages cap. The superior court denied both motions, and the
case proceeded to trial.
Before submitting the case to the jury, the superior
court denied RE/MAXs motions for a directed verdict. The jury
found $425,000 in total damages; determined that RE/MAX, the
Tanner brothers, and Kay had all acted negligently; and assigned
seventy-five percent of the fault to RE/MAX, fifteen percent to
Kay, and five percent to each of the Tanner brothers who had
settled with Kay on the eve of trial.
Kay then renewed his motion for reconsideration of the
courts refusal to allow him to drop the Rule 26(g) cap. The
superior court denied this motion and ultimately entered a
judgment limiting Kays award to $75,000, exclusive of attorneys
fees, costs, and interest. Kay later moved to amend the
judgment under Rule 60(b)(1) and (6), again arguing that the Rule
26(g) cap should not have applied. The court issued a notice of
intent to deny Kays motion. While the court later did enter an
amended judgment, the only changes consisted of awarding
attorneys fees and costs and altering the amount of prejudgment
interest; the $75,000 principal did not change.
Kay appeals, challenging the trial courts rulings on
the Rule 26(g) cap and its denial of his motion for a
continuance.1 RE/MAX cross-appeals, challenging the superior
courts denial of its motions for summary judgment and a directed
verdict.
III. DISCUSSION
A. Kays Motion To Withdraw the Rule 26(g) Cap on Damages
Alaska Civil Rule 26(g) provides for limited discovery
and expedited calendaring in cases advancing claims for damages
totaling less than $100,000:
In a civil action for personal injury or
property damage involving less than $100,000
in claims, the parties shall limit discovery
to that allowed under District Court Civil
Rule 1(a)(1) and shall avail themselves of
the expedited calendaring procedures allowed
under District Court Civil Rule 4.[2]
Kay first invoked Rule 26(g) in May 2001, one week
after the superior court set his trial date, when his attorney
objected to the Tanner brothers extensive initial discovery
requests; Kays attorney asserted that discovery should be limited
because the damages Kay claimed were less than $100,000. In
response, the Tanner brothers and RE/MAX demanded that Kay either
sign a stipulation regarding the $100,000 cap or provide the
requested discovery within ten days. Kay did not sign the
proposed stipulation, but served initial disclosures suggesting
that his damages totaled less than $100,000.
Six months later, at Kays November 2001 deposition,
Kays counsel confirmed that Kay had elected to invoke Rule 26(g).
He confirmed this election twice more: in a November 2001 letter
to the Tanner brothers counsel that explained Kays continued
refusal to provide requested discovery and in his December 2001
opposition to the defendants motion to compel discovery.
Kay acknowledges on appeal that it was probably unwise
to invoke Rule 26(g), since his case was not set for an expedited
trial and did not fit the rule procedurally. He also concedes
that he was slow to recognize [that] the rule did not fit the
case factually; because his expected damages crowded so close to
the $100,000 cap, he should have realized that he was cramming
the case to fit the rule.3
RE/MAX characterizes Kays invocation of Rule 26(g) as
more deliberate. It argues that Kay was attempting to manipulate
the civil rules in an effort to delay and/or avoid discovery a
kind of procedural gamesmanship. Yet, Kay nonetheless argues
that the superior court erred in denying his request to drop the
Rule 26(g) cap; he points out that he informed the court that his
expected damages would exceed the cap immediately upon learning
that his ankle would require additional care, and that he agreed
to take all steps necessary to avoid prejudice to the defendants.
We find Kays arguments to be more persuasive. It is
undisputed that Kay filed notice of his intent to withdraw his
election to rely on the cap on the same day his doctor informed
him that his ankle required further care. At the time almost two
months remained before trial. Rule 26(g) does not establish any
procedure for withdrawing a Rule 26(g) election, and there is no
prior Alaska case law addressing the issue.
As a practical matter, Kays attempt to withdraw his
election cap seems analogous to a claimants motion for leave to
amend a complaint under Alaska Civil Rule 15. Civil Rule 15(a)
provides in part that leave shall be freely given when justice so
requires. We have construed that provision to favor amendments
absent a showing that the amendment would have resulted in
injustice.4 In so doing, we have endorsed rulings of the United
States Supreme Court emphasizing that, under the parallel Federal
Rule, amendments should freely be granted
[i]n the absence of any apparent or declared
reason such as undue delay, bad faith or
dilatory motive on the part of the movant,
repeated failure to cure deficiencies by
amendments previously allowed, undue
prejudice to the opposing party by virtue of
allowance of the amendment, futility of
amendment, etc.[5]
In our judgment, the same basic principles should apply
when a party moves to withdraw a prior election to rely on the
damages cap specified in Rule 26(g). Although Rule 26(g) does
not incorporate language expressly requiring amendments to be
freely given, the policies underlying Rule 26(g) favor the same
lenient approach counseled by Rule 15(a).
As already mentioned, a motion to withdraw an election
to proceed under Rule 26(g) is functionally similar to a motion
to amend a pleading: the plaintiff essentially seeks leave to
amend its previously asserted damages claim. Thus, both the
denial of a Rule 15 motion to amend and the denial of a motion to
drop the Rule 26(g) damages cap operate to deprive the plaintiff
of an opportunity to test his claim on the merits.6
Moreover, Rule 26(g) strives to encourage if not
require plaintiffs to file and prosecute personal injury actions
as minor claims when it appears realistically likely that the
damages will actually fall within the district courts limited
jurisdiction. A rigid approach to enforcing Rule 26(g) elections
would frustrate the rules purpose by forcing cautious plaintiffs
to file their original claims based not on a realistic prediction
of likely recovery, but rather on the highest imaginable
recovery. All but the smallest claims would then be filed as
claims for damages of more than $100,000.
Considering the totality of the circumstances here in
light of the same lenient test that applies under Rule 15,7 we
find nothing to indicate that denial of Kays motion to revise the
damages cap was warranted by the need to avoid injustice no
showing that Kays motion reflected dilatory conduct or purposeful
delay; that Kay made his request in bad faith; or that raising
the cap would have unduly prejudiced RE/MAX.
When Kay first informed the superior court of his
intent to withdraw his election, the trial date was still almost
two months away, the case was relatively young, and there was no
history of prior delay. Moreover, in setting the original trial
date, the superior court had emphasized that its schedule was
meant to be flexible: Im sure [that Kays attorney is] aware,
just from practicing here locally, if a party makes a motion to
extend or to file something late for good cause shown, I almost
always grant it. Our supreme court almost always says lets
litigate on the merits[.] In discussing the parties expert
disclosures, the court added that [i]f we were setting this
trial six months from now, it would be different [than] if were
setting it a year from now. But were really setting it
effectively a year from now. . . . I mean, if were setting it six
months out, then the deadlines make more sense.
The promise of flexibility communicated by these
remarks seems mirrored by the parties informal approach toward
Kays initial election invoking Rule 26(g)s damages cap. After
Kays attorney responded to requests for full discovery by
indicating Kays intent to invoke the cap, RE/MAXs attorney sought
confirmation of Kays election at his November 2001 deposition.
Kays attorney acknowledged that he was invoking the rule for
purposes of the overall litigation, but he observed that the cap
would have no effect on the deposition. At the same time, Kays
attorney said that if the current prediction of damages changed,
he might have to withdraw this election to rely on the cap.
RE/MAXs attorney specifically asked if Kay actually was claiming
damages totaling less than $100,000. The following exchange
occurred:
MR. WHIPPLE [Kays attorney]: Thats our
understanding of the damages at this point.
If theres something that comes out that would
change that, we would notify you immediately,
and we would stipulate to an extension of
discovery for that purpose. . . . Thats our
understanding at this point. But if theres a
withdrawal of that, Ill let you know and we
can stipulate to allowing more discovery.
MR. SISSON [RE/MAXs attorney]: Okay.
In opposing Kays argument, RE/MAX now portrays Kays
attempt to relax the Rule 26(g) cap as a last-minute tactical
procedural choice[], emphasizing that Kay enjoyed thirteen months
of being able to avoid nearly all of the defendants discovery
attempts. But as the quoted conversation demonstrates, Kay
informed RE/MAX of the possibility that he might need to claim
additional damages. And he later kept his word to notify
[RE/MAX] immediately of any changes. Kay sought to withdraw his
election on the same day he learned that his ankle would need
additional care; and he offered to stipulate to an extension of
the discovery period as well as a continuance, if RE/MAX deemed
these steps necessary to protect its procedural rights. These
circumstances do not reveal manipulative conduct, bad faith, or
dilatory practice.
Nor did the superior court find any manipulation,
misconduct, or danger of actual prejudice. To the contrary, the
court expressly declined to fault Kay for the last-minute nature
of his request. In denying Kays motion to continue the trial,
the court observed that it doesnt appear that this is counsels
fault or plaintiffs fault, its just the way things happen.
Because RE/MAX fails to show that this finding is clearly
erroneous, the finding defeats RE/MAXs attempt to depict Kays
motion as a mere tactical ploy.
The only reasons identified by the superior court for
denying Kays motion were the lateness of the motion and the need
to enforce the original schedule in the general interest of
avoiding delay. Yet in analogous circumstances we have
previously emphasized that [d]elay alone is an insufficient basis
upon which to deny a motion to amend.8
Similarly, we hold that delay alone could not justify
denying Kays request to change his election here. Absent a case-
specific showing of dilatory conduct, bad faith, or unavoidable
prejudice that might cause actual injustice, we conclude that it
was an abuse of discretion to deny Kays motions to drop the
damages cap.
This conclusion requires us to consider how the error
can be cured. Kay suggests that we should simply disregard the
cap and order judgment entered in his favor based on the damages
actually awarded by the jury. But this approach is untenable
because it would result in obvious injustice to RE/MAX. Had Kays
motions to withdraw his election and for a continuance of the
trial been properly granted, RE/MAX would have had the
opportunity to conduct the full discovery that it sought from the
outset. More importantly, with the damages claim uncapped from
the outset of trial, RE/MAX might have chosen to conduct its
defense much differently on disputed issues of liability and
damages.
Because the error in denying Kays motions had an
obvious yet incalculable impact on RE/MAXs efforts to prepare and
defend its case, we conclude that it is necessary to vacate the
jurys verdict and remand for a new trial after affording both
parties the opportunity to conduct full discovery.9
B. RE/MAXs Motions for Summary Judgment and a Directed
Verdict
RE/MAX contends on cross-appeal that Kays claims
against it should never have reached the jury.10 RE/MAX moved for
summary judgment before trial and for directed verdicts at the
close of Kays evidence and at the end of the case. RE/MAX argues
that Kays claims against it should have been dismissed at each of
these junctures because there was no evidence that RE/MAX owed or
breached any legal duty to ensure Kays safety or protect him from
dangerous conditions at the duplex. RE/MAX first contends that
it undertook no contractual duty toward Kay. It then argues that
even if it owed Kay certain contractual duties as a manager of
the property, these duties did not extend to protecting him from
personal injury caused by dangerous conditions on the premises.
Kay responds that (1) the lease agreement imposed a duty of care
on RE/MAX, and (2) RE/MAX assumed a duty as a result of Kristan
Cole and RE/MAXs undertaking of management responsibilities.
1. Standard of review
In reviewing a denial of a summary judgment motion, we
apply de novo review and draw reasonable inferences of fact in
favor of the non-moving party to determine whether any genuine
issues of material fact exist and whether the moving party was
entitled to judgment as a matter of law.11 Summary judgment is
appropriate if the only reasonable inference from the undisputed
facts is that one party owed another no duty or owed a duty
clearly and vastly narrower in scope than that asserted by the
non-moving party.12 Questions about the scope of a duty are
generally not susceptible to summary judgment if the scope of the
duty poses a fact-specific question involving policy and
circumstantial judgments better reserved for the jury.13
When reviewing the denial of a motion for a directed
verdict, we must determine whether the evidence, when viewed in
the light most favorable to the non-moving party, is sufficient
to allow reasonable jurors to differ in their judgment as to the
facts. 14 If there is room for diversity of opinion among
reasonable people, the question is one for the jury.15
2. Evidence that RE/MAX undertook a contractual duty
toward Kay
When interpreting a contract, we give effect to the
parties intentions by looking to the words of the contract and
any extrinsic evidence regarding intentions when they entered
into the contract, including evidence of the parties subsequent
conduct.16 But the words of the contract remain the most
important evidence of intention17 and, unless otherwise defined,
are given their ordinary, contemporary, common meaning.18
Although contract interpretation is usually a question of law, it
becomes a question for the trier of fact when the parties present
extrinsic evidence to clarify a contracts meaning, when this
evidence points towards conflicting interpretations . . . and
when the contract itself is reasonably susceptible of either
meaning.19
RE/MAX contends that it was not a party to the lease
agreement drafted by the Tanner brothers; it insists that
affidavits filed by the Tanner brothers and Kristan Cole in
support of its summary judgment motion establish that the leases
references to RE/MAX resulted from the Tanner brothers
inadvertent failure to edit them out of a form agreement given to
them by Cole. Coles affidavit states that she had a Re/Max
agency relationship with Danbar, Inc., an Alaska Corporation,
d/b/a/ Re/Max of Wasilla, and that she supplied her stepsons with
a RE/MAX rental agreement form on a floppy disk, instructing them
to delete the references to RE/MAX. Cole testified to the same
effect at trial.
But it is undisputed that the lease agreement was
executed with references to RE/MAX remaining intact. And RE/MAX
presented no evidence that the Tanner brothers ever informed Kay
of their subjective intent to exclude RE/MAX from the lease.20
Moreover, many of the leases references to RE/MAX could
reasonably be read as deliberate. The most significant items
include:
the heading of the rental agreement
which states in large font, RE/MAX of
Wasilla;
the first page which identifies RE/MAX
of Wasilla (hereinafter called agent for
Aaron & Jesse Tanner the
Owner/Landlord);
the provision which states rent will be
payable to Owner/Landlords agent[]s
address: RE/MAX of Wasilla 1590 E.
Financial Dr. Suite 200, Wasilla,
Alaska;
the reference to Kristan [Cole] at
RE/MAX as the emergency contact for
tenants; and
the signatory page which shows Kristan
Coles initials above the byline, RE/MAX
of Wasilla and Agent/Broker for
Landlord.21
The lease agreement itself thus raised triable issues of fact as
to the parties reasonable expectations upon executing the lease.
Furthermore, Kay presented additional evidence
regarding the circumstances of contract formation. Kay testified
that a RE/MAX agent (his mother) showed him the property; the
duplex was listed as property managed by RE/MAX; and Kay applied
and was accepted as a tenant through RE/MAX.
As we explained in Sea Lion Corp. v. Air Logistics of
Alaska, Inc., when written or spoken words or any other conduct
of the principal, if reasonably interpreted, cause third persons
to believe the principal consents to having the act done on his
behalf by the person purported to act for him, we recognize
apparent authority sufficient to bind a principal.22
Drawing all permissible inferences in favor of Kay, the
superior court correctly determined that genuine issues of
material fact existed as to Kays contractual relationship with
RE/MAX. Similarly, there was sufficient evidence at trial to
allow a reasonable juror to conclude that the Tanner brothers had
chosen to retain the lease agreements references to RE/MAX
because RE/MAX, through Kristan Cole, actually undertook to be
the property manager of the duplex and intended to bind itself as
a party to the contract.
The superior court did not err in denying RE/MAXs
motion for summary judgment or its motions for a directed verdict
on this issue.
3. Scope of RE/MAXs duty toward Kay
RE/MAX further argues that even if it became a party to
the rental agreement by contractually undertaking to manage the
rental, there was no basis for the jury to find that it owed and
breached a duty to protect Kay from personal injuries caused by
dangerous conditions on the rental property.
We have long recognized that duties may be voluntarily
assumed.23 For example, we held in Adams v. State that when the
state undertakes a fire inspection, it has the further duty to
exercise reasonable care in conducting the inspection.24 In
LaMoureaux v. Totem Ocean Trailer Express, Inc. the question was
whether a union owed a duty of care to a victim of a truck
collision to ensure that union members dispatched to drive were
qualified drivers.25 The agreement between a trucking company and
the union provided only that the union would dispatch regular and
experienced longshoremen.26 Based on testimony that the union had
actually undertaken the responsibility to supply competent and
licensed drivers, we concluded that a genuine issue of fact
existed about whether the union had voluntarily assumed a duty of
care to ensure that members dispatched as drivers could lawfully
drive even though the contract did not explicitly require the
union to check its members driving qualifications.27
Here, the rental agreement seemingly designated RE/MAX
as the property manager and assigned several specific
responsibilities to the management.
First, the section entitled Rules specified that the
rules for the premises are set by management. Second, the
subsection entitled Cleanliness and Trash required the tenant to
assist management in keeping outside areas and common areas
clean. Third, a subsection entitled Maintenance, Repairs, and
Alterations required the tenant to assist management in keeping
walkways clear and salted in winter months a duty usually
belonging to the owner or occupier of the land.28 This subsection
also prohibited any alterations without the written consent of
management, and required the tenant to inform the management, not
the owners, in writing of any items needing repair including
electrical and plumbing fixtures and smoke detectors. In the
event of an emergency, the lease demanded immediate notice and
insisted that all service requests be made only to the property
manager. The lease further identified Kristan Tanner at RE/MAX
as the emergency contact.
Additional evidence at trial suggested that RE/MAX had
undertaken an even broader range of duties than the management
responsibilities explicitly mentioned in the rental agreement.
Kay testified at his deposition that RE/MAXs responsibilities
included listing the duplex in RE/MAXs property management
division, providing one of its agents the keys for showing the
duplex to Kay, providing a standard RE/MAX residential agreement
form to Kristan Cole for her use, processing Kays rental
application in RE/MAXs office, giving Kay his set of keys, and
accepting Kays rent at RE/MAXs office. Kay also testified that
he notified RE/MAX of a sewer system problem and that Kristan
relayed this information to the Tanner brothers. Moreover, the
rental agreement identified RE/MAX as agent for Aaron & Jesse
Tanner the Owner/ Landlord.
Finally, Daniel Crozier, the owner of RE/MAXs Wasilla
branch, testified that RE/MAX acted as landlord on this property
and that it would be correct to say that as far as Mr. Kay [was]
concerned . . . Re/Max stood in the shoes of the Tanners the
property owners. In closing arguments RE/MAX acknowledged that
it is not a huge leap to come to a conclusion about whether an
owner of a premises has a duty to take care of the premises, to
inspect it and so forth. (Emphasis added.)
In sending the case to the jury, the superior court
submitted numerous jury instructions on the issue of duty,
including the following instruction based on Restatement (Second)
of Torts 324A (1965), which allowed RE/MAX to be held liable if
the jury found that it undertook and breached a duty to protect
Kay from physical harm:
One who undertakes, gratuitously or for
consideration, to render services to another
which he should recognize as necessary for
the protection of the others person or
things, is subject to liability to the other
for physical harm resulting from his failure
to exercise reasonable care to perform his
undertaking, if
(a) his failure to exercise reasonable care
increases the risk of such harm, or
(b) the harm is suffered because of the
others reliance upon the undertaking.
RE/MAX does not challenge this instruction as such; it
argues only that the evidence was insufficient to justify
submitting it to the jury. But we think that a reasonable juror
viewing the totality of evidence in the light most favorable to
Kay could logically find, under this instruction, that RE/MAX had
assumed significant property management responsibilities on
behalf of the Tanner brothers.
We note that other jurisdictions applying Restatement
324A in analogous cases have found that property managers assume
at least a limited duty to protect tenants, even if the managers
have not taken over the entire charge of the land or the
building. For example, in Kirschbaum v. WRGSB Associates, a
property management agreement obliged the property manager to
maintain the building in good condition and to make repairs.29
Applying Pennsylvania laws similar to the Restatement, the court
affirmed a judgment holding that the property manager was
responsible for injuries stemming from its failure to repair a
defective handrail, but had no duty to fix structural defects in
the staircase.30
In the present case, we think that a reasonable juror
could similarly conclude that the management responsibilities
RE/MAX assumed encompassed a duty of due care to inform itself of
the condition of the premises and to take reasonable steps to
protect the tenants against non-obvious dangers, either by
arranging for repairs of non-structural problems or by giving the
tenants adequate warnings.
We recognize that section 387 of the Restatement
(Second) of Torts limits the circumstances under which a property
managers duties would be as broad as a landlords:
An independent contractor or servant to whom
the owner or possessor of land turns over the
entire charge of the land is subject to the
same liability for harm caused to others,
upon or outside of the land, by his failure
to exercise reasonable care to maintain the
land in safe repair as though he were the
possessor of the land.[31]
Comment a to this section goes on to say that
the contractor must have taken over the
entire charge of the land or building. It is
not enough to create liability. . . that he
has undertaken to make specific repairs, or
even to inspect the land or building and from
time to time to make such repairs as he
should discover to be necessary.[32]
Here, we doubt that the evidence could reasonably
support a finding that RE/MAX undertook complete control and
responsibility for the Tanner brothers duplex, so as to make it
responsible for curing major structural defects. But we need not
resolve that issue. For present purposes, it suffices to observe
that the evidence in this case would have allowed the jury to
find that RE/MAX undertook and breached the considerably more
modest duty to exercise due care by using its expertise as a
property manager to take reasonable steps in inspecting the
premises and warning Kay about dangers that might not be obvious
to an ordinary tenant.
As noted above, comment a to the Restatement 387
states that liability to remedy structural defects should not be
imposed against a property manager unless the manager takes over
the entire charge of the property, even if it has undertaken to
. . . inspect the land or building.33 The comment thus implicitly
recognizes that a property manager who undertakes broad duties
without taking over the entire charge might be held liable for
assuming, and then breaching, more modest duties to inspect, make
minor repairs, and warn tenants of non-obvious dangers.
Because the evidence at trial was at least minimally
sufficient to allow a jury to find that RE/MAX undertook limited
responsibilities to protect Kay from personal injury and thus
owed and violated a duty to take reasonable steps to protect Kay
from unobvious dangers on the premises, we conclude that the
superior court did not err in submitting the case to the jury.
IV. CONCLUSION
For these reasons, we AFFIRM the superior courts
rulings on RE/MAXs motions for summary judgment and directed
verdicts. But we REVERSE its ruling on Kays motion to withdraw
his Rule 26(g) election; we thus VACATE the judgment, and REMAND
for a new trial unrestricted by Rule 26(g)s damages cap.
EASTAUGH, Justice, dissenting.
I. Introduction
I respectfully dissent from that part of the opinion
that reverses on the Alaska Civil Rule 26(g) issue. A trial
court faced with these sorts of procedural problems on the eve of
trial is entitled to exercise its discretion in resolving the
problems and is entitled to deference upon appellate review.1
Kay consistently invoked Rule 26(g) to prevent the defendants
from engaging in rigorous discovery, and in exchange, chose to
subject himself to the rules $100,000 damages cap. Only ten days
before discovery was to close, and having successfully and
repeatedly limited the defendants discovery efforts, he
unilaterally (without asking the courts permission) tried to give
notice that he was withdrawing his reliance on the rule. This
attempt, only fifty-five days before trial, would have freed him
from the rules $100,000 damages cap. Although it also would have
exposed him to additional discovery efforts, they would have been
last-minute, eve-of-trial, efforts. They were unlikely to have
been as productive as defendants timely discovery efforts would
have been had Kay not avoided them by electing to invoke the
rule. Only a week before trial was to begin did Kay first
request a continuance. Two days before trial began, the trial
court rejected Kays efforts to disavow the rule and lift the cap.
That was a permissible judicial decision, well within the
discretion a trial court must have. By reversing, we interfere
with a valid exercise of discretion and fail to give deference to
the trial court.
II. There Was No Abuse of Discretion.
The legislature included Rule 26(g) in its 1997 tort
reform legislation.2 The legislature intended the act to
encourage the efficiency of the civil justice system by
discouraging frivolous litigation and by decreasing the amount,
cost, and complexity of litigation without diminishing the
protection of innocent Alaskans rights to reasonable, but not
excessive, compensation for tortious injuries caused by others.3
The rule patently assumes that a moderate damages cap is a fair
quid pro quo for a significant limit on discovery. As with other
fair bargains, unilateral disavowal of the bargain after one side
has performed is potentially unfair. Given Kays early election
and his repeated invocations of the rule to limit discovery, his
late filing of the unilateral withdrawal notice would have been
inherently unfair had withdrawal been allowed. The trial court
must have concluded that Kays attempted withdrawal would be
unfair. Likewise, the court must have concluded that granting
Kays last-minute continuance motion would be unfair.
We review discovery orders and denials of motions for
reconsideration, continuance, and relief from judgment under the
abuse of discretion standard.4 This is, or is supposed to be, a
deferential standard of review. We will find an abuse of
discretion only when we are left with a definite and firm
conviction after reviewing the record that the trial court
erred.5 Given the circumstances facing the trial court, I do not
have a definite and firm conviction that the trial court erred.6
A. A motion to amend a complaint is not analogous to an attempt
to withdraw from a Rule 26(g) election.
The courts opinion states that an attempt to withdraw
an election of the Rule 26(g) damages cap is analogous to a
claimants motion for leave to amend a complaint under Alaska
Civil Rule 15.7 It also contends that a motion to withdraw the
Rule 26(g) cap is functionally similar to a motion to amend a
pleading because the plaintiff essentially seeks leave to amend
its previously asserted damages claim.8
I think the court is mistaken in both regards: no such
attempt to amend was made here, and Rule 15 provides no analogy.
Kay did not seek judicial permission to amend his complaint or
his previously asserted damages claim. He simply filed a notice
with the court that he was withdrawing from Rule 26(g). Only
later, after another three weeks had passed, did he implicitly
seek court approval of his withdrawal from his election. The
court suggests that prohibiting Kay from withdrawing from the
rule would deprive him of the opportunity to test his claim on
the merits.9 I agree that a plaintiff should be able to test his
claims on the merits.10 But a damages cap does not affect a
plaintiffs ability to test his claim on the merits. Kay was
still able to bring all applicable legal claims to trial; only
his recoverable damages were limited by the affirmative choice he
made early in the litigation in exchange for the benefit of
limited discovery.
Nor was the procedure Kay followed at all analogous to
a motion to amend a complaint. A Rule 15 motion to add a new
claim or amend the damages prayer is not typically inconsistent
with the plaintiffs affirmative representations and the parties
mutual understandings. An attempt to withdraw from a Rule 26(g)
election fundamentally differs from a motion to amend because the
election consists of an affirmative representation that damages
will not exceed $100,000, and results in significant limitations
on discovery. The election, per the rule, results in a mutual
understanding by the parties. The resulting expectations are
reasonable and enforceable. Moreover, in this case, Kay
repeatedly invoked the cap to limit defense discovery efforts.
As an example of a valid analogy, consider instead a plaintiffs
affirmative statement that he is forgoing a particular claim in
exchange for some bargain with the defendant. In that situation,
a trial court ruling on whether to rescind the agreement would be
entitled to the same deference we should be giving the trial
court here. Our usual expressions of the liberal policy favoring
amendment of pleadings would be irrelevant to a valid analogy.
B. Withdrawal of the Rule 26(g) cap would have prejudiced
RE/MAX.
A. Kay first invoked Rule 26(g) in May 2001, three months after
filing his complaint, when he responded to the Tanners initial
discovery requests.11 Kay continued to invoke Rule 26(g) in
response to further defense discovery requests until shortly
before he filed his notice of withdrawal in March 2002. Despite
the text of Rule 26(g),12 Kay knowingly took affirmative steps to
invoke the rule throughout the pre-trial period. Kay used Rule
26(g) to shield himself from defendants discovery efforts for
nearly ten of the fifteen months between the filing of the
complaint and the scheduled trial date and for nearly all of the
time when discovery was open.
Kay argues that he gained no advantage from trying to
withdraw from Rule 26(g), but his unilateral efforts to avoid
discovery forced his opponents to file a motion to compel,
requiring them to spend additional resources to obtain discovery.
His efforts also limited and delayed the allowable discovery.
Defendants prepared their defense believing that, per the rule,
their damages exposure could not exceed $100,000. Defendants who
are sued for personal injury guide their litigation efforts by
the risks the lawsuit poses. It is often the damages exposure,
more than the liability exposure, that drives how a lawsuit is
litigated. A defendant may choose not to litigate as vigorously
in a case that can be defended through trial at relatively modest
cost if the damage exposure is limited. In contrast, if damages
might be much greater and uncapped, a defendant will usually
litigate more aggressively to discover all facts relevant to
liability (including allocation of fault and causation) and
damages, may engage in motion practice to limit its exposure, may
prepare for trial far more thoroughly, and may finally chose to
avoid trial with a favorable settlement after appropriate
discovery and investigation.
It is impossible to imagine how RE/MAX would have
defended the case had Kay not invoked the Rule 26(g) cap. If Kay
had given timely indication he would claim much greater losses,
RE/MAX would have had time to reassess its defensive efforts.
Indeed, it is precisely because the late effort to withdraw was
prejudicial to RE/MAX that this court has fashioned its remedy
and its remand instructions so carefully.13
A short continuance would not have remedied the
prejudice, given the lost discovery opportunity. And a long
continuance would not have avoided prejudice because defendants
would have needed to prepare for trial a second time, at
additional cost, and witness memories would have faded.
It is hard to be very sympathetic to Kay. His lack of
diligence caused the problem. Had he been reasonably diligent
about his medical treatment, his doctor would have informed him
of the likelihood of further surgery early enough that withdrawal
of the election would not have prejudiced RE/MAX. Had he been
reasonably diligent about his trial preparation, he would have
included a knowledgeable estimate of future medical expenses in
his damage estimate. Kay also could have moved for a continuance
immediately after visiting his doctor for the first time since
filing suit, on March 5, 2002, rather than allowing nearly fifty
more days to pass before moving for a continuance. The lateness
of Kays visit to his doctor, coupled with his delay in requesting
a continuance, reflects either a lack of diligence or a tactical
choice. In any event, Kay asked for an open-ended continuance
pending the resolution of his medical condition. His request as
made was patently without merit. An indefinite delay of trial is
undue and is not a proper use of a trial continuance.14
C. The record supports the trial courts decision.
The court suggests that the trial court promised at the
May 2001 trial setting conference to be flexible in its
scheduling decisions,15 and implicitly concludes that it was not
flexible after Kay belatedly tried to change the ground rules for
the lawsuit.16 I do not read the trial courts statements as
amounting to an enforceable promise of flexibility.17 Although
the trial court stated that it would usually grant motions to
extend or file late for good cause shown, it also repeatedly
emphasized that it did not want pre-trial deadlines crowding too
close to the trial date and potentially delaying the trial. The
trial courts decision not to allow Kay to withdraw from Rule
26(g) is consistent with its previous statements expressing
concern about late filings and delay of trial. The courts trial
setting comments could not have misled Kay, and reliance on them
to justify the late withdrawal and eve-of-trial continuance
efforts would have been unreasonable. Kay had to understand that
such efforts are addressed to the trial courts discretion.
III. Conclusion
The trial court was in the best position to assess how
Kays invocation of Rule 26(g) affected the course of the lawsuit.
It exercised its discretion in dealing with the potential
prejudice created by Kays last minute attempts to withdraw from
the damages cap and continue the trial. Because I do not have a
definite and firm conviction that the trial court erred, I cannot
conclude that it abused its discretion here.
_______________________________
1 Kay also appeals the denial of his motion for partial
summary judgment. Because Kays brief merely incorporates his
superior court arguments on the summary judgment issues, we deem
these issues to be inadequately briefed, and we decline to
consider them. Anchorage Nissan, Inc. v. State, 941 P.2d 1229,
1240 (Alaska 1997) (citing Tenala, Ltd. v. Fowler, 921 P.2d 1114,
1124 (Alaska 1996)); Bidwell v. Scheele, 355 P.2d 584, 587-88
(Alaska 1960).
2 Under Alaska District Court Civil Rule 1(a)(1),
discovery is limited to disclosures required under Civil Rule
26(a), party depositions, and one additional deposition of a non-
party. District Court Civil Rule 4(b) sets out procedures for
expediting cases for trial, providing in relevant part:
In a civil action for personal injury or
property damage, unless otherwise permitted
by order of the court in exceptional cases
and for good cause shown, all parties shall
file a memorandum to set the case for trial
. . . no later than 180 days after service of
the complaint on all parties to the
case. . . . After the court satisfies itself
that the information described in Civil Rule
26(a) has been disclosed, the court shall set
the case for trial as soon as practicable,
but no sooner than 30 days after the court
makes the determination regarding disclosure.
3 Kays initial demand letter, sent to the defendants
before Kay filed suit, demanded $104,657.33, while his initial
discovery disclosures in May 2001 alleged damages of
approximately $98,937.33.
4 Ruckle v. Anchorage Sch. Dist., 85 P.3d 1030, 1039
(Alaska 2004).
5 Betz v. Chena Hot Springs Group, 742 P.2d 1346, 1348
(Alaska 1987) (quoting Foman v. Davis, 371 U.S. 178, 182-83
(1962)); see also Miller v. Safeway, 102 P.3d 282, 294 (Alaska
2004).
6 Foman, 371 U.S. at 182 (quoted with approval in Betz,
742 P.2d at 1350).
7 We review lower courts rulings on Rule 15 motions for
abuse of discretion. See, e.g., Betz, 742 P.2d at 1348.
8 Miller, 102 P.3d at 294 (quoting Betz, 742 P.2d at
1348).
9 Because RE/MAX proceeded to trial on the understanding
that it faced a potential liability of $100,000, we also hold
that Kay may alternatively elect remittitur in the amount of
$100,000 and forgo the option of a new trial.
10 We must address this issue despite our decision to
vacate the original verdict, and remand the case for a retrial,
because outright dismissal of Kays claim would be warranted if
RE/MAX prevailed on its cross-appeal.
11 Botelho v. Griffin, 25 P.3d 689, 692 (Alaska 2001).
12 Guerrero v. Alaska Hous. Fin. Corp., 6 P.3d 250, 257
(Alaska 2000).
13 Lynden Inc. v. Walker, 30 P.3d 609, 613 (Alaska 2001).
In Estate of Breitenfeld v. Air-Tek, Inc., we explained:
Whether a party voluntarily assumed to
perform a particular act is a question of
fact. By its assumption to act, the party
may become subject to a duty to act
carefully. Although the precise nature and
extent of that duty is a question of law, it
depends on the nature and extent of the act
undertaken, a question of fact.
755 P.2d 1099, 1102 (Alaska 1988) (citations omitted).
14 K & K Recycling, Inc. v. Alaska Gold Co., 80 P.3d 702,
722 (Alaska 2003) (quoting Ben Lomond, Inc. v. Schwartz, 915 P.2d
632, 635 (Alaska 1996)).
15 Sherbahn v. Kerkove, 987 P.2d 195, 198 (Alaska 1999)
(quoting Petersen v. Mutual Life Ins. Co., 803 P.2d 406, 410
(Alaska 1990)).
16 Sourdough Dev. Servs. v. Riley, 85 P.3d 463, 468
(Alaska 2004); Municipality of Anchorage v. Gentile, 922 P.2d
248, 256 (Alaska 1996).
17 K & K Recycling, Inc., 80 P.3d at 712.
18 Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1001
n.3 (Alaska 2004).
19 Id. at 1004 (quoting Little Susitna Constr. Co. v. Soil
Processing, Inc., 944 P.2d 20, 23 (Alaska 1997)).
20 Cf. id. at 1003 (Testimony of a party as to his
subjective intentions concerning the meaning of a particular
clause in a contract is not probative unless the party in some
way expressed or manifested his understanding at the time of
contract formation.); Peterson v. Wirum, 625 P.2d 866, 870
(Alaska 1981).
21 The last page of the agreement also states, Tenant is
aware the property manager is related to the owners.
22 Sea Lion Corp. v. Air Logistics of Alaska, Inc., 787
P.2d 109, 117 n.3 (Alaska 1990) (citing City of Delta Junction v.
Mack Trucks, Inc., 670 P.2d 1128, 1130 (Alaska 1983)).
23 LaMoureaux v. Totem Ocean Trailer Exp., Inc., 651 P.2d
839, 841 n.4 (Alaska 1982); Adams v. State, 555 P.2d 235, 240
(Alaska 1976) (It is ancient learning that one who assumes to
act, even though gratuitously, may thereby become subject to the
duty of acting carefully . . . .) (quoting Glanzer v. Shepard,
135 N.E. 275, 276 (N.Y. 1922)).
24 Adams, 555 P.2d at 240.
25 LaMoureaux, 651 P.2d at 840.
26 Id. at 841.
27 Id. at 840-41.
28 Coburn v. Burton, 790 P.2d 1355, 1357 (Alaska 1990)
(Under [the Uniform Residential Landlord and Tenant Act] as under
the common law, the primary obligation to remove snow and ice in
common areas falls upon the landlord[.]).
29 243 F.3d 145, 153 (3d Cir. 2001).
30 Id. at 154.
31 Restatement (Second) of Torts 387 (1965) (emphasis
added).
32 Restatement (Second) of Torts 387, cmt. a (1965).
33 Restatement (Second) of Torts 387, cmt. a (1965)
(emphasis added).
1 See Willoya v. State, Dept of Corr., 53 P.3d 1115, 1119
(Alaska 2002); Dougan v. Aurora Elec. Inc., 50 P.3d 789, 793
(Alaska 2002).
2 Ch. 26, 1, 48, SLA 1997.
3 Id. at 1(1).
4 Manelick v. Manelick, 59 P.3d 259, 262 (Alaska 2002)
(reviewing denial of motion for reconsideration); Fleegel v.
Estate of Boyles, 61 P.3d 1267, 1278 n.51 (Alaska 2002) (applying
abuse of discretion standard to review of relief from judgment);
Tesoro Petroleum Corp. v. State, 42 P.3d 531, 535 (Alaska 2002)
(reviewing generally rulings on discovery for abuse of
discretion).
5 Rockstad v. Erikson, 113 P.3d 1215, 1220 (Alaska 2005).
6 Finding, as the court does, that the appellants
arguments are more persuasive than the appellees seems at odds
with the deferential standard of review that applies here. See
Slip Op. at 7.
7 Id.
8 Id. at 8.
9 Id.
10 See Alaska R. Civ. P. 15(a); Miller v. Safeway, Inc.,
102 P.3d 282, 295 (Alaska 2004).
11 The court states that Kay served initial disclosures
suggesting that his damages totaled less than $100,000. Slip Op.
at 6. That characterization minimizes the specificity of Kays
disclosure. His disclosure stated:
G. Categories of damage.
Past medicals: $ 21,937.33
Future medical: $5-10,000
approx.
Past wages: $ 17,000,
minus taxes
Reduced abilities: $ 15,000
approx.
Pain & suffering: $ 35,000
approx.
The disclosed total was less than $99,000. To read approx. as an
indication Kay either was uncertain or wanted defendants to think
he was uncertain about his damages is inconsistent with his
explicit invocations of the discovery limitation in first
responding to discovery and then repeatedly fending off
defendants discovery attempts. The disclosed total closely
approached $100,000. We must assume Kays counsel was acting in
good faith and understood the rules unambiguous effect on
damages. [A]pprox. must therefore be read to imply that the
actual damages were less than the disclosed total. Any other
reading would be inconsistent with candor and good faith.
12 The text of Rule 26(g) suggests that the damages cap is
self-executing: In a civil action for personal injury or
property damage involving less than $100,000 in claims, the
parties shall limit discovery. (Emphasis added.) The courts
opinion does not address the difficulties created by this text.
Regardless of whether he needed to invoke Rule 26(g)s limited
discovery shield (or whether it was appropriate to do so in this
context), Kay did so repeatedly and as such chose to bring his
case within the rules ambit.
13 See Slip Op. at 11-12. Thus, this court approves the
alternative remedy of remittitur because it acknowledges that
RE/MAX proceeded to trial on the understanding that it faced a
potential liability of $100,000. Slip Op. at 12 n.9.
14 In the complaint amendment context, we have repeatedly
stated that undue delay is a sufficient basis to deny a motion to
amend. See Miller, 102 P.3d at 294; Betz v. Chena Hot Springs
Group, 742 P.2d 1346, 1348-49 (Alaska 1987).
15 Slip Op. at 9.
16 See id. at 10-11.
17 See id. at 9.
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