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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Albrecht v. Alaska Trustee, LLC (10/19/2012) sp-6718
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, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
DIANA P. ALBRECHT, )
) Supreme Court No. S-14317
Appellant, )
) Superior Court No. 3AN-10-07430 CI
v. )
) O P I N I O N
ALASKA TRUSTEE, LLC, )
) No. 6718 - October 19, 2012
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Andrew Guidi, Judge.
Appearances: James J. Davis, Jr., Goriune Dudukgian, and
Ryan Fortson, Northern Justice Project, Anchorage, for
Appellant. Jennifer Stuart Henderson, Farley & Graves, P.C.,
Anchorage, for Appellee.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Stowers, Justices.
FABE, Justice.
I. INTRODUCTION
Diana Albrecht brought a class-action lawsuit against Alaska Trustee, LLC,
on behalf of a group of Alaska homeowners who had faced foreclosure on their homes.
Alaska Trustee, acting as foreclosure trustee, had provided Albrecht and the other
homeowners reinstatement quotes that included the costs of foreclosure. Albrecht
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maintained that the inclusion of foreclosure costs in her reinstatement quote violated her
right to cure under a former version of AS 34.20.070(b), the non-judicial foreclosure
statute, which provided that a homeowner's "default may be cured by payment of the
sum in default other than the principal that would not then be due if no default had
occurred, plus attorney fees or court costs actually incurred by the trustee due to the
default." According to Albrecht, Alaska Trustee's inclusion of foreclosure costs in
addition to "attorney's fees or court costs" constituted a violation of not only the non-
judicial foreclosure statute but also Alaska's Unfair Trade Practices Act (UTPA).
The superior court concluded that Albrecht lacked standing to sue and
denied her motion for class certification. The superior court further ruled that Alaska
Trustee's practice of including various fees and charges as foreclosure costs was
permitted under the statute. The superior court awarded attorney's fees to Alaska
Trustee as the prevailing party, enhancing those fees under AS 45.50.537(b) on the
ground that Albrecht's claims were frivolous. Because the inclusion of foreclosure costs
in a reinstatement quote does not violate AS 34.20.070, we affirm the superior court in
most respects. But because Albrecht's claims were not frivolous and attorney's fees may
not be awarded under Rule 82 for time spent litigating the structure of a class action, we
remand for recalculation of fees awarded.
II. FACTS AND PROCEEDINGS
A. Facts
Diana Albrecht executed a deed of trust to secure the balance due on the
promissory note to her home. Albrecht subsequently defaulted on her promissory note
and deed of trust, and on February 6, 2010, Alaska Trustee was authorized to foreclose.
Albrecht requested a reinstatement quote on March 31, 2010, and Alaska Trustee
provided it two days later. Because Albrecht had missed 11 monthly payments, she
owed a total of $23,734.59 of back payments on her mortgage. Alaska Trustee included
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additional charges in her reinstatement quote, including: (1) late charges of $1,050.27;
(2) a property inspection charge of $10.50; (3) expenses for a broker's price opinion for
$190; (4) title costs of $256.78; and (5) Alaska Trustee's fees and costs for enforcing the
lender's rights. These foreclosure costs totaled $2,385.16, raising Albrecht's total to cure
to $25,705.38.1
B. Proceedings
On May 13, 2010, Albrecht filed a class-action complaint for declaratory
and injunctive relief and damages. Her complaint alleged that Alaska Trustee was
systematically violating AS 34.20.070(b) by including in its reinstatement quotes costs
in addition to the sum in default, attorney's fees, and court costs. Albrecht further
alleged that the inclusion of these additional fees violated the UTPA. Alaska Trustee
responded with a denial that its inclusion of foreclosure fees violated AS 34.20.070(b).
Albrecht moved for a temporary restraining order to stop the sale of her
home. Alaska Trustee agreed to cancel Albrecht's foreclosure sale until further order
from the trial court. Albrecht then moved for certification of a class consisting of
homeowners who had received reinstatement quotes that included foreclosure costs
incurred by Alaska Trustee.
Alaska Trustee served Albrecht with a revised reinstatement quote that
omitted all of the disputed foreclosure costs. Albrecht moved for summary judgment
arguing that Alaska Trustee's inclusion of foreclosure fees in her initial reinstatement
quote violated her right to cure under AS 34.20.070(b). Alaska Trustee filed a motion
for summary judgment, maintaining that it was in compliance with AS 34.20.070(b)
because the charged foreclosure costs were payable under Albrecht's deed of trust.
1 Albrecht continues to live in her home. Alaska Trustee agreed to postpone
Albrecht's foreclosure sale and on February 22, 2011, canceled the foreclosure
proceedings.
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Albrecht's deed of trust outlines four conditions necessary for Albrecht to
cure her default, including the conditions that the borrower:
(a) pays Lender all sums which then would be due under
this Security Instrument and the Note as if no acceleration
had occurred; [and]
. . . .
(c) pays all expenses incurred in enforcing this Security
Instrument, including, but not limited to, reasonable
attorneys' fees, property inspection and valuation fees, and
other fees incurred for the purpose of protecting Lender's
interest in the Property and rights under this Security
Instrument[.][2]
2 The Deed of Trust states in relevant part:
Borrower's Right to Reinstate After Acceleration. If
Borrower meets certain conditions, Borrower shall have the
right to have enforcement of the Security Instrument
discontinued at any time prior to the earliest of : (a) five days
before sale of the Property pursuant to any power of sale
contained in this Security Instrument; (b) such other period
as Applicable Law might specify for the termination of
Borrower's right to reinstate; or (c) entry of a judgment
enforcing this Security Instrument. Those conditions are that
Borrower: (a) pays Lender all sums which then would be due
under this Security Instrument and the Note as if no
acceleration had occurred; (b) cures any default of any other
covenants or agreements; (c) pays all expenses incurred in
enforcing this Security Instrument, including, but not limited
to, reasonable attorneys' fees, property inspection and
valuation fees, and other fees incurred for the purpose of
protecting Lender's interest in the Property and rights under
this Security Instrument; and (d) takes such action as Lender
may reasonably require to assure that Lender's interest in the
Property and rights under this Security Instrument, and
(continued...)
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Alaska Trustee also argued that because it had removed the challenged foreclosure costs
from Albrecht's reinstatement quote, and because Albrecht had failed to pay the revised
reinstatement quote, Albrecht lacked standing.
Albrecht filed a motion for leave to amend her complaint to add a new class
representative, Sharon Mason, who also had received a reinstatement quote that included
foreclosure fees, and who had paid these reinstatement fees in full. The superior court
granted Alaska Trustee's motion for summary judgment ruling that Albrecht lacked
standing to sue, denying Albrecht's motion to amend for class certification, and deciding
that Alaska Trustee had not violated AS 34.20.070 or the UTPA.
Alaska Trustee sought an award of enhanced attorney's fees, which
Albrecht opposed. The superior court awarded Alaska Trustee enhanced fees of $10,000
on the basis that Albrecht's claims were frivolous.3
Albrecht appeals both the grant of summary judgment and the award of
attorney's fees.
2(...continued)
Borrower's obligation to pay the sums secured by this
Security Instrument, shall continue unchanged. Lender may
require that Borrower pay such reinstatement sums and
expenses in one or more of the following forms, as selected
by Lender: (a) cash; (b) money order; (c) certified check,
bank check, treasurer's check or cashier's check, provided
any such check is drawn upon an institution whose deposits
are insured by a federal agency, instrumentality or entity; or
(d) Electronic Funds Transfer. Upon reinstatement by
Borrower, this Security Instrument and obligations secured
hereby shall remain fully effective as if no acceleration had
occurred. However, this right to reinstate shall not apply in
the case of acceleration under Section 18.
3 Under Alaska Civil Rule 82 Alaska Trustee would have been entitled to
$8,377.25. The superior court awarded an additional $1,622.75.
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III. STANDARD OF REVIEW
We review the superior court's summary judgment decision on a de novo
basis.4 We apply our independent judgment to the interpretation of a statute and will
"adopt the rule of law that is most persuasive in light of precedent, reason, and policy."5
6
A denial of a motion to amend a complaint is reviewed for abuse of discretion, and will
only be reversed when we are "left with a definite and firm conviction, after reviewing
the whole record, that the trial court erred."7 A denial of class certification is reviewed
for an abuse of discretion.8 If the denial of class certification is based upon a legal error,
the decision is reviewed de novo.9 The award of attorney's fees is reviewed for abuse
of discretion,10 but the correctness of the trial court's legal analysis in support of the
award is reviewed de novo.11
4 Schug v. Moore, 233 P.3d 1114, 1116 (Alaska 2010).
5 Municipality of Anchorage v. Suzuki , 41 P.3d 147, 150 (Alaska 2002)
(citations omitted).
6 Betz v. Chena Hot Springs Grp. , 742 P.2d 1346, 1348 (Alaska 1987).
7 Id.
8 Bartek v. State, Dep't of Natural Res. , 31 P.3d 100, 101 (Alaska 2001).
9 Shook v. Alyeska Pipeline Serv. Co., 51 P.3d 935, 937 (Alaska 2002).
10 Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610, 613 (Alaska 2010).
11 Id.
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IV. DISCUSSION
A. The Inclusion Of Foreclosure Fees In A Reinstatement Quote Does Not
Violate AS 34.20.070(b).
In Kuretich v. Alaska Trustee, LLC ,12 we recently held that foreclosure fees
may be included in reinstatement quotes under the former version of AS 34.20.070(b).13
In that case, Kuretich claimed, as Albrecht does, that AS 34.20.070(b) bars foreclosure
fees because those fees are not contemplated by AS 34.20.070(b). But as we previously
held in Hagberg v. Alaska National Bank ,14 the purpose of AS 34.20.070 is to "codify
a form of relief from forfeiture which courts have often exercised" at equity.15 In
Kuretich , we clarified that relief from forfeiture by reinstatement places the lender and
borrower in the "position . . . they were before default."16 We observed that only
through the inclusion of foreclosure fees in the reinstatement amount would the parties
be in "their status quo prior to default."17 Thus, we concluded that reinstatement quotes
properly include foreclosure fees under AS 34.20.070(b).
12 ____ P.3d ____, Op. No. 6707, 2012 WL 4039803 (Alaska, Sept. 14,
2012).
13 In April 2010, AS 34.20.070(b) was amended to include foreclosure costs.
It now reads: "the default may be cured . . . by payment of the sum then in default . . .
and attorney and other foreclosure fees and costs."
14 585 P.2d 559 (Alaska 1978).
15 Id. at 562.
16 Kuretich , ___ P.3d ___, Op. No. 6707 at 5, 2012 WL 4039803, at *2.
17 Id. (quoting the superior court).
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We further observed that the deed of trust governs the lender's and
borrower's rights upon foreclosure.18 In Kuretich , the deed of trust "specifically
delineate[d] the reinstatement amount as including costs of foreclosure not limited to
attorney fees."19 Thus, "costs incident to foreclosure were properly included within the
sum in default" by the "express terms of the deed."20 Here, under the section entitled
"Borrower's Right to Reinstate After Acceleration" Albrecht's deed defines the
reinstatement amount. Under the express terms of Albrecht's deed, she may reinstate
only if she "pays all expenses incurred in enforcing th[e] Security Instrument, including,
but not limited to, reasonable attorneys' fees, property inspection and valuation fees, and
other fees incurred for the purpose of protecting Lender's interest in the Property and
rights under this Security Instrument."
Because AS 34.20.070(b) provides for foreclosure costs in the reinstatement
amount, and because Albrecht's deed expressly includes foreclosure costs, Alaska
Trustee did not violate AS 34.20.070(b) or the UTPA. We therefore affirm the superior
court's decision granting summary judgment in favor of Alaska Trustee and denying
Albrecht's motions to amend her complaint and for class certification.
B. It Was An Abuse Of Discretion To Award Additional Fees Under
AS 45.50.537(b).
As the prevailing party, Alaska Trustee sought attorney's fees under Civil
Rule 82(b)(2),21 requesting 20% of its total fees of $41,030.20, or $8,206, plus $171 in
18 Id.
19 Id. (quoting the superior court).
20 Id.
21 Civil Rule 82(b)(2) states in part:
(continued...)
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fees and costs under Rule 79. In addition, Alaska Trustee argued that under the UTPA
it was entitled to enhanced attorney's fees because Albrecht's claims were frivolous.
Under the UTPA, "[u]nless the action is found to be frivolous, in an action brought by
a private person . . . a prevailing defendant shall be awarded attorney fees and costs as
provided by court rule. If the action is found to be frivolous, the attorney fees to be
awarded to the defendant shall be full reasonable attorney fees at the prevailing
reasonable rate."22 A frivolous action is one that is "(1) not reasonably based on
evidence or on existing law or a reasonable extension, modification, or reversal of
existing law; or (2) brought to harass the defendant or to cause unnecessary delay or
needless expense."23
The superior court granted Alaska Trustee's request for enhanced attorney's
fees and found that Albrecht's action under the UTPA was "frivolous, in that the facts
admitted by [Albrecht] supported no legal claim under the Act and ultimately provided
[Albrecht] no standing for legal action." The superior court also concluded that Alaska
Trustee was "forced to participate in extensive litigation over legal questions that did not
ultimately impact [Albrecht]." The court awarded $10,000 in attorney's fees, rather than
the $8,377.25 presumptive amount under Rules 79 and 82(b).
Albrecht challenges this award on three grounds. She argues that Alaska
Trustee is not in fact the prevailing party and that all attorney's fees should be stricken,
21(...continued)
In cases in which the prevailing party recovers no money
judgment, the court shall award the prevailing party . . . in a
case resolved without trial 20 percent of its actual attorney's
fees which were necessarily incurred.
22 AS 45.50.537(b).
23 AS 45.50.537(e).
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that her claims were not frivolous, and that attorney's fees may not be awarded for time
spent litigating the structure of a class action.
Albrecht contends that Alaska Trustee is not the prevailing party because,
despite Alaska Trustee's success on the merits, the main issue in this case was the
preservation of Albrecht's right to her house, and she "remains in her home today."
Albrecht relies on Currington v. Johnson,24 in which we held that "right to the
conveyance of the property in dispute was the 'main issue' of the litigation."25 But the
superior court did not err in concluding the main issue litigated in this class action was
whether Alaska Trustee's inclusion of foreclosure fees in Albrecht's reinstatement quote
was valid under AS 34.20.070, and whether this in turn violated the UTPA. Albrecht did
not prevail on these claims, and it was therefore not an abuse of discretion to designate
Alaska Trustee as the prevailing party and award it attorney's fees.
Albrecht also argues that the superior court abused its discretion in finding
that her claims were frivolous. We agree. At the time of Albrecht's case, two superior
court judges had concluded that foreclosure fees were not included in AS 34.20.070.26
Thus, Albrecht's claims were "reasonably based on evidence or on existing law or a
reasonable extension, modification, or reversal of existing law."27 Alaska Trustee failed
24 685 P.2d 73 (Alaska 1984).
25 Id. at 83.
26 See Bachmeier v. Alaska Trustee, No. 3AN-09-08695 CI (Alaska Super.,
June 14, 2010) (Order on Cross-Motions for Summary Judgment) (holding fees and costs
incurred in the processing of the foreclosure are not included under AS 34.20.070(b));
Collins v. Cash Alaska II, LLC, No. 3AN-09-12552 CI (Alaska Super., July 12, 2010)
(Order On Motion for Summary Judgment) (holding AS 34.20.070(b) cannot be
expanded to include foreclosure fees).
27 AS 45.50.537(e).
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to demonstrate that Albrecht's claims were brought for the purpose of harassment or
resulted in unnecessary delay or needless expense.28 Because Albrecht's claims were not
frivolous, enhanced attorney's fees were not warranted.
Finally, Albrecht argues that attorney's fees may not be awarded for time
Alaska Trustee spent litigating class certification, Albrecht's standing to sue as a class
representative, or the addition of Mason as a named party. In Monzingo v. Alaska Air
Group, we held that although class representatives are not exempt from paying attorney's
fees under Rule 82, "a named plaintiff should not ordinarily be held liable for attorney's
fees that fall beyond the scope of litigating the merits of his claim."29 Efforts by the
prevailing party to fight class certification or otherwise litigate the structure of a class
action are motivated by a desire to discourage claims by others, and warrant a downward
variance in attorney's fees under Rule 82(b)(3)(J).30 Alaska Trustee estimates that
$9,243 worth of its hours were spent fighting class certification.31 Whatever the actual
number, the value of these hours should be removed from the value of "actual attorney's
fees" before calculating the proper award under Rule 82(b)(2).
Alaska Trustee argues that Albrecht must prove that she was not being paid
to litigate on behalf of the class before a downward variance in the Rule 82 award is
appropriate. But, as we held in Monzingo , this is a determination to be made by the
28 Id.
29 112 P.3d 655, 668 (Alaska 2005).
30 Id.
31 This estimate does not seem to include the value of time spent by Routh
Crabtree Olsen litigating class-action matters before Farley & Graves was substituted as
counsel for Alaska Trustee.
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superior court on remand.32 We therefore remand the case to the superior court to
determine the value of time Alaska Trustee spent solely litigating the structure of the
class action and whether Albrecht had any financial incentive to act as a class
representative, and to enter an award under Rule 82(b) accordingly.
V. CONCLUSION
We AFFIRM the superior court's grant of Alaska Trustee's motion for
summary judgment and denial of Albrecht's motions. We REVERSE the superior
court's decision that Albrecht's claims were frivolous and REMAND for modification
of the attorney's fee award consistent with this opinion and Civil Rules 79 and 82(b).
32 Monzingo , 112 P.3d at 668 n.80.
-12- 6718
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