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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. McAnally v. Thompson (6/23/2017) sp-7183

McAnally v. Thompson (6/23/2017) sp-7183, 397 P3d 322

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

           Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  


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                      THE SUPREME COURT OF THE STATE OF ALASKA                                      

CHARLEY  McANALLY,                                              )  

                                                                )          Supreme  Court  No.  S-15906  

                     Appellant,                                 )  


                                                                )          Superior Court No. 3PA-11-01916 CI  

           v.                                                   )  


                                                                )         O P I N I O N  


VIRGIE THOMPSON, JIM                                            )  


JOHANSEN, CAROLYN                                                                                            

                                                                )         No. 7183 - June 23, 2017  


GRABOWSKI, and CITY OF                                          )  

HOUSTON,                                                        )  


                     Appellees.                                 )  


_______________________________ )  


                     Appeal from the Superior Court of the State of Alaska, Third  


                     Judicial District, Palmer, Kari Kristiansen, Judge.  


                     Appearances:                 Kenneth          P.    Jacobus,         Anchorage,            for  


                     Appellant.  Danielle M. Ryman and Sarah J. Shine, Perkins  


                     Coie LLP, Anchorage, for Appellees.  


                     Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  


                     and Carney, Justices.  


                     STOWERS, Chief Justice.  



                     The City of Houston fired its police captain shortly before disbanding its  


police department. The captain claims that he was terminated in bad faith in order to stop  


ongoing investigations into city leaders.  He challenges the superior court's refusal to  


allow his  claim under  the  Alaska  Whistleblower  Act, a jury  instruction  stating that  

----------------------- Page 2-----------------------

termination for personality conflicts does not constitute bad faith, and an award of                                                                                                                                                                

attorney's fees and costs.                                                We conclude that the court's refusal to allow his claim under                                                                                                   

the Whistleblower Act, its decision to give the personality conflict instruction, and its                                                                                                                                                           

award of attorney's fees and costs were not erroneous and therefore affirmin all respects.                                                                                                                                        

II.                FACTS AND PROCEEDINGS                       

                   A.                  Facts  

                                       The City of Houston hired Charley McAnally to serve as a police officer   

in 2009.                     In October 2010 the City                                                          promoted him to the at-will position of police                                                                           

                       1  in the absence of a police chief, the police captain served as the head of the  


police force in Houston.  McAnally received generally positive employment reviews in  


April, October, and December 2010.  


                                       McAnally claims that he told Mayor Virgie Thompson soon  after  she  


became mayor that he saw several mistakes in the City's budget and believed that  


Treasurer  and  Personnel  Officer  Carolyn  Grabowski  was  manipulating  numbers.2  


McAnally also claims that Thompson agreed with his belief and that she also suspected  


Grabowski of manipulating the budget.  


                                       According  to  McAnally,  in  either  December  2010  or  January  2011  


Thompson and Deputy Mayor Jim Johansen "determined that they were going to get rid  


of Captain McAnally."  On January 9, 2011, McAnally told Thompson that Grabowski  


was under investigation for embezzlement.  He claimed that Thompson told Grabowski  


                    1                  An at-will employee may be terminated without good cause.                                                                                                                       See Luedtke   

v.  Nabors Alaska Drilling, Inc.                                                         , 768 P.2d 1123, 1131 (Alaska 1989) ("Employees hired                                                                                              

on an at-will basis can be fired for any reason that does not violate the implied covenant                                                                                                                                       

of good faith and fair dealing.").                              

                   2                   McAnally supports many of his factual assertions only by citing to the  


complaint he filed in this case and not to the record.  


                                                                                                                          -2-                                                                                                                7183

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about the investigation so Grabowski could "cover whatever tracks and information                                                                                      

[that]   might   have   been   discovered   through   a   complete   investigation";   he   claimed  

Grabowski then contacted McAnally to complain about the investigation.                                                                 

                              McAnally asserted he then began investigating the mayor for hindering a                                                                                           

prosecution.  He stated that Thompson threatened to investigate the police department                                                                                    

in retaliation for his investigations.  McAnally apparently contacted the FBI regarding                                                                            

the investigations and met with two FBI agents in the parking lot behind the Dairy Queen                                                                                            

in Wasilla.3  He also referred his embezzlement and hindering-prosecution allegations  

to the Palmer District Attorney's Office, which asked him to have the FBI or the Alaska  


Bureau of Investigation investigate "due to the ongoing political situation in Houston."  


                              On December 31, 2010, around the time of McAnally's investigations, he  


was involved in an altercation with a private citizen.  Tom Hood, Houston's fire chief;  


Christian Hartley, a lieutenant at the Houston Fire Department; and Houston firefighter  


Jason Starrett all claimed that McAnally challenged a private citizen to a fight.   On  


January 10, 2011, the incident appeared in a local newspaper, and McAnally suspected  


Hartley of leaking the incident.  McAnally was quoted in the article, but he testified that  


he only confirmed details of the incident because the paper already knew about it.  On  


January 11 Thompson suspended McAnally for speaking to the press about the incident,  


a  violation  of  City  policy.                                     McAnally  claimed  that  Thompson  suspended  him  as  


retaliation for his investigation.  


                              In  February  McAnally   had  a  counseling  session  with  Thompson.  


Councilman Lance Wilson was present for that session and later prepared a statement  


that appears in the record.  According to Wilson's statement Thompson claimed that  




                              At trial McAnally did not present any evidence suggesting that an FBI  


investigation was ongoing.  

                                                                                              -3-                                                                                              7183  

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McAnally failed to respond to a call despite being on duty and that, when she finally did                                                                                                                                          

contact him, he responded in an evasive and insubordinate manner. McAnally disagreed                                                                                                                             

and said that he had informed the mayor that he was in Wasilla on city business and had                                                                                                                                          

not been insubordinate.                                           Thompson disagreed, but McAnally then revealed that he had                                                                                                     

recorded their previous conversation. That                                                                         caused Thompson to retract her disagreement  

about McAnally's whereabouts, but she inquired into the nature of his business in                                                                                                                                                    

Wasilla.   McAnally responded that it was part of a confidential investigation.  Wilson,                          

after listening to McAnally's recording, agreed that McAnally had told Thompson of his                                                                                                                                             

whereabouts and that McAnally did not sound insubordinate. Four days later McAnally                                                                                                                             

filed a grievance, but the City did not act on it.                                                                             4  

                                    OnMarch 7 ThompsonwroteupMcAnally forsubmitting apoliceschedule  


to the 911 dispatcher two days late.  He claims that he filed a grievance challenging that  


write-up and that the City did not act on that grievance, but that grievance does not  


appear  in  the  record.                                          On  March  16  Thompson  gave  McAnally  a  mostly  negative  


performancereview. Shortlyafter thenegativeperformancereview,McAnally informed  


the City Council that he and the FBI were investigating Thompson and Grabowski.  


                                    On March 20 a local newspaper published an article detailing the FBI  


investigation of the City of Houston.   The article reported that Deputy Mayor Jim  


Johansen contacted the paper to offer his doubt that the FBI was actually investigating;  


he stated, "It's not real.  It's lies.  They're trying to set up the mayor to take a fall."  


                                    On March 23 the City Council held a special session to determine whether  


it would accept Thompson's March 16 performance review of McAnally; the mayor  


recused herself fromthat session. The City Council rejected the performance review and  


requested that Johansen prepare a new review with the assistance of Councilmembers  


                  4                 The  grievance  does  not  appear  in  the  record.   

                                                                                                                  -4-                                                                                                                   7183  

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Wilson and Ruth Blanchard.   Johansen's review does not appear in the record, and  


McAnally  claims  that  it  never  got  past  the  drafting  stage.                              While  Johansen  was  


performing this review he was charged with fourth-degree assault by McAnally based  


on a citizen complaint.  McAnally was a witness in that case.  


                    On April 26 the City Council voted to terminate McAnally's employment.  


About two weeks later the City disbanded the police department due to pre-existing  


budget constraints.  

          B.        Proceedings  


                    In July 2011 McAnally sued the City of Houston, Thompson, Grabowski,  


and Johansen (collectively "the City"), alleging a breach of the implied covenant of good  


faith and fair dealing, a constitutional due process violation, and retaliatory discharge.  


His claims were premised on his contention that the City wrongfully terminated him in  


retaliation  for  his  involvement  in  criminal  investigations  regarding  Thompson  and  



                    In  September  2012  the  City  moved  for  summary  judgment  on  all  of  


McAnally's claims.  The City also moved for summary judgment to limit damages and  


argued that McAnally's lost wages could not extend beyond the date the City eliminated  


the police department and that McAnally could not recover damages he could have  


avoided with reasonable efforts by accepting comparable employment following his  


termination.          The  superior  court  granted  the  City's  motion  only  with  respect  to  


McAnally's due process claim.  


                    The superior court initially scheduled trial to begin in December 2012.  


Trial  was  continued  repeatedly,  and  it  eventually  began  in  November  2014  on  


McAnally's  claims  for  breach  of  the  covenant  of  good  faith  and  fair  dealing  and  


retaliatory discharge. On October 16, 2013, before one of those continuances, McAnally  


filed his trial brief, which asserted that he intended to pursue a claim under the Alaska  

                                                               -5-                                                        7183

----------------------- Page 6-----------------------

  Whistleblower Act.                                                    He did not file a motion to amend his complaint to add the new                                                                                                                                                     

  claim. The deadline for McAnally to amend his complaint was November 11, 2011. The                                                                                                                                                                                                          

  superior court dismissed that claim explaining that every claim must be pleaded, that the                                                                                                                                                                                                      

  City would be subjected to substantial prejudice if it were forced to defend a claim                                                                                                                                                                                                 

  introduced that late, and that the facts giving rise to the claim were known to McAnally                                                                                                                                                                              

  at the time he filed his complaint.                                           

                                               At mid-trial, the superior court granted the City's motion for a partial                                                                                                                                                            

  directed verdict and dismissed Grabowski as a defendant.                                                                                                                                                      The trial proceeded to its                                                        

  conclusion, and the jury returned a unanimous verdict in favor of the remaining City                                                                                                                                                                                                     

  defendants.   The City moved for an attorney's fee award of $106,803.45 pursuant to the                                                                                                                                                                                                        

                                                                                                                                                                                                                           5   the  City  had  offered  

  City's earlier offer of judgment under Alaska Civil Rule 68;                                                                                                                                                                                

  McAnally $5,000 in March 2013 to satisfy his claims and McAnally did not accept the  


  offer.  Despite McAnally's claim that the offer of judgment was invalid, the superior  


  court granted the City's Rule 68 attorney's fees motion. The court also awarded the City  


  $14,564.31 in costs.  


                                               McAnally appeals.  


  III.                   STANDARD OF REVIEW  


                                               We review "the interpretation of a statute de novo, adopting the rule of law  


  most persuasive in light of precedent, reason, and policy."6   "We review a trial court's  


  factual  findings  under  a  clearly  erroneous  standard.                                                                                                                                           A  factual  finding  is  clearly  


                         5                     As we discuss in more detail later in this opinion, Rule 68 sets out the                                                                                                                                                                        

  circumstances under which a party may recover attorney's fees after making an offer of                                                                                                                                                                                                            

 judgment to an adverse party that was rejected.                                                                                      

                         6                     L.D.G., Inc. v. Brown, 211 P.3d 1110, 1118 (Alaska 2009) (citing Alaskans  


for Efficient Gov't, Inc. v. Knowles , 91 P.3d 273, 275 (Alaska 2004)).  


                                                                                                                                                  -6-                                                                                                                                     7183

----------------------- Page 7-----------------------

erroneous when we are 'left with a definite and firm conviction on the entire record that                                                                


a mistake has been made.' "                             

                         We review a trial court's denial of leave to amend a complaint for abuse of  


                    8    "We  will  find  an  abuse  of  discretion  when  the  decision  on  review  is  


manifestly unreasonable."9                          We apply our independent judgment to determine whether  


a challenged jury instruction correctly states the law.10                                                    " 'We review an award of  


attorney's fees for abuse of discretion,' so a fee award 'will not be disturbed on appeal  


unless it is "arbitrary, capricious, or manifestly unreasonable." ' "11  "But we consider  

de  novo  '[w]hether  the  superior  court  applied  the  appropriate  legal  standard  in  its  


consideration  of  a  fee  petition,'  including  'whether  [the]  superior  court  correctly  


determined a settlement offer's compliance with Rule 68.' "12  


IV.         DISCUSSION  

                         McAnally makes three arguments in his appeal:   (1) the superior court  


abused its discretion when it prohibited him from bringing a claim under the Alaska  


Whistleblower Act; (2) the superior court erred by allowing Jury Instruction Number 14  


            7            Fernandes v. Portwine                      , 56 P.3d 1, 4 (Alaska 2002) (quoting                                   Jenkins v.   

Handel, 10 P.3d 586, 589 (Alaska 2000)).                                         

            8            Valdez Fisheries Dev. Ass'n v. Alyeska Pipeline Servs., 45 P.3d 657, 671  


(Alaska 2002).  


            9            Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc., 355 P.3d 503, 508  


(Alaska 2015) (citing Tufco, Inc. v. Pac. Envtl. Corp., 113 P.3d 668, 671 (Alaska 2005)).  


             10          Henrichs v. Chugach Alaska Corp., 250 P.3d 531, 535 (Alaska 2011).  


             11         Marshall v. Peter, 377 P.3d 952, 956 (Alaska 2016) (quoting Limeres v.  


Limeres, 367 P.3d 683, 686 (Alaska 2016)).  


             12          Id. (alterations in original) (first quoting Limeres, 367 P.3d at 686-87; then  


quoting Tagaban v. City of Pelican, 358 P.3d 571, 575 (Alaska 2015)).  


                                                                             -7-                                                                      7183

----------------------- Page 8-----------------------

to incorrectly state the law; and (3) the superior court abused its discretion when it                                                                                                         

awarded the City 50% of its reasonable attorney's fees under Rule 68.                                                                                  

               A.	            The Superior Court Did Not Abuse Its Discretion When It Dismissed                                                                            

                              McAnally's Claim Under The Alaska Whistleblower Act.                                                                            

                              On October 16, 2013, McAnally noted in his trial brief that he planned to                                                                                       


pursue a claim against the City for a violation of the Alaska Whistleblower Act.                                                                                                       This  


was  the  first  time  McAnally  had  raised  that  claim.                                                                         Trial  was  set  to  begin  on  


November 4, 2013, and the superior court had previously set a November 11, 2011  


deadline to amend pleadings.  McAnally argued that he would "be able to show that his  


discharge was in retaliation for requesting an investigation of the Mayor and City Clerk  


by the United States Federal Bureau of Investigation.  This is in violation of the Alaska  


Whistleblower Act."  He continued, "Whether or not these protections are actionable as  


a violation of due process of law, they are relevant to good faith and fair dealing."  


McAnally did not file a motion to amend his complaint to add this claim.  


                              The superior court dismissed the claim for several reasons. First, the court  


agreed with the City that every claim must be pleaded.  And the court agreed that the  


City would be subjected to substantial prejudice if it were forced to defend a claim that  


had been added three weeks before trial without the opportunity to pursue discovery or  


file a dispositive motion on the claim.  The court further noted that the facts giving rise  


to the whistleblower claim were known to McAnally at the time he filed his complaint,  


so the claim was not newly discovered.  


                              McAnallyargues that theWhistleblowerActboth provides aseparatecause  


of action and also provides evidentiary support for his claim that the City violated the  


covenant of good faith and fair dealing.  He argues that the court abused its discretion  



                              AS 39.90.100-.150.  

                                                                                              -8-	                                                                                             7183  

----------------------- Page 9-----------------------

in dismissing a standalone claim under the Whistleblower Act and also prohibiting him                                                                                                                                                                                                   

from presenting evidence regarding the Whistleblower Act to bolster his claim that the                                                                                                                                                                                                    

City breached the covenant of good faith and fair dealing.                                                                                                               

                                             First,with respect toMcAnally'sstandaloneclaimundertheWhistleblower                                                                                                                                     

Act, it is not clear whether McAnally intended to seek leave from the superior court to                                                                                                                                                                                                       

amend his claim or whether he was simply asserting that he intended to pursue the claim                                                                                                                                                                                            

without pleading it.                                                McAnally was clearly prohibited from pursuing the claim without                                                                                                                                        

pleading it:                            Alaska law requires that all claims be pleaded so as to give the defendant                                                                                                                                                 

"fair notice of the nature of the claim."                                                                                           14  

                                             Assuming that McAnally intended to amend his pleading, Alaska Civil  


Rule 15(a) provides that a party may amend a pleading only by leave of court or by  


written consent of the adverse party where leave is sought after a responsive pleading  


was filed.  Rule 15(a) states that "leave shall be freely given when justice so requires."  


                                             McAnally argues that the City would not have been prejudiced if he had  


been allowed to add the claim because the City was aware of the facts underlying the  


claim even before McAnally filed suit.  Thus McAnally claims that the superior court  


abused its discretion when it dismissed his whistleblower claim.  But McAnally points  


to no law providing that the standard for amending a complaint is simply that the facts  


were known to the other party before litigation began. Being generally aware of the facts  


of a possible claim does not mean that the City would not be prejudiced by its inability  


to seek discovery or file a dispositive motion before the start of trial.  And in dismissing  


                       14                    Sykes v. Melba Creek Mining, Inc.                                                                                , 952 P.2d                        1164, 1168 n.4 (Alaska 1998);                                                  

see   also   Alaska   R.  Civ.   P.   10(d)   ("A   party   filing   a   complaint,   counterclaim,   or  

cross-claim seeking relief under any specific statute is required to cite the statute relied                                                                                                                                                                                     

upon in parentheses following the title of the pleading or in the heading for the section                                                                                                                                                                                    

asserting the statutory claim.").                                           

                                                                                                                                              -9-                                                                                                                                   7183

----------------------- Page 10-----------------------

McAnally's claim the court pointed to                                    Valdez Fisheries Development Association, Inc.                                     

v.  Alyeska Pipeline Service Co.                            , a case in which Valdez Fisheries moved to add new                                            

                                                            15   In Valdez Fisheries the superior court found that the  

claims seven weeks before trial.                                                                                                                             

facts giving rise to the new claims "were 'largely coexistent' with the facts giving rise  


to Valdez Fisheries' prior claims[] and that there was 'no adequate reason' why Valdez  


Fisheries had not previously asserted  the proposed new claims."16                                                                   We agreed and  


concluded that the superior court did not abuse its discretion in denying leave to amend.17  


The  same  reasoning  applies  here.                                  McAnally  waited  over  two  years  to  assert  his  


whistleblower claim, and he did so not by seeking leave to amend but rather by casually  


mentioning the claim in his trial brief three weeks before trial.   There is nothing to  


suggest that justice requires granting McAnally leave to amend his complaint three  


weeks before trial when he did not even request leave to amend from the court.  


                         Second, McAnally argues that the superior court erred by not allowing him  


to present evidence of the Whistleblower Act violation as part of his breach of good faith  


and fair dealing claim.  He argues that there is no requirement that evidence be pleaded,  


and he adds that the Whistleblower Act "sets a standard for what constitutes good faith  


and fair dealing, which is something that the jury is entitled to know."  But as the City  


correctly observes, "the trial court's order did not bar McAnally from presenting a  


whistleblower theory or whistleblower-related evidence in support of his two other  


claims."            The  court  simply  dismissed  McAnally's  claim  as  a  standalone  claim.18  


             15          45 P.3d 657, 671 (Alaska 2002).

             16          Id .

             17          Id .


             18          At oral argument counsel for McAnally suggested that the superior court   


                                                                             -10-                                                                        7183

----------------------- Page 11-----------------------

                                         The court did not abuse its discretion in denying McAnally's attempt to                                                                                                                                                 

assert a Whistleblower Act claim three weeks before trial, and it did not bar McAnally                                                                                                                                                   

from presenting whistleblower-related evidence in support of his other claims.                                                                                                                                                                            We  

therefore affirm the court's decision.                                               

                    B.                   Jury Instruction Number 14 Was A Correct Statement Of The Law.                                                                                                                                               

                                         McAnally challenges Jury Instruction Number 14 as an incorrect statement                                                                                                                          

of the law.                       The instruction stated:                            

                                         An employer may transfer, demote or terminate an employee                                                                                                

                                         because of a personality conflict with another employee or                                                                                                                     

                                         supervisor.       Transferring,    demoting    or    terminating    an  

                                         employee   because   of   such   conflict   does   not   violate   the  

                                         covenant of good faith and fair dealing.                                                        

McAnally argues that "this instruction allow[ed] Captain McAnally to be terminated in                                                                                                                                                                             

bad faith simply because there [was] a personality conflict."                                                                                                                             

                                         The instruction, however, was an accurate statement of relevant law from                                                                                                                                        

                                                                                                                                         19  In that case Seekins sued Era Aviation  

our decision in  Era Aviation, Inc. v. Seekins.  

                     18                  (...continued)  


denied a proposed jury instruction that would have used the Whistleblower Act in this  


manner and that this was error. The only proposed jury instruction on the Whistleblower  


Act that appears in the record did not clarify the way the jury was to use the Act and was  


proposed before the court dismissed McAnally's Whistleblower Act  claim.  Nothing in  


the record suggests that McAnally objected to the absence of a jury instruction about the  


Whistleblower Act "set[ing] a standard for what constitutes good faith and fair dealing."  


McAnally's counsel conceded  at oral argument that McAnally  was able to  present  


evidence of retaliatory discharge to the jury. And the court instructed the jury to find for  


McAnally if the jury found that there was a retaliatory discharge.  

                     19                  973 P.2d 1137, 1141 (Alaska 1999) ("Given the at-will nature of Era's  


employment contract with Seekins, we cannot say that the company's alleged desire to  


avoid a personality conflict between two of its employees would, if proved, amount to  


an impermissible motive for firing Seekins.").  


                                                                                                                              -11-                                                                                                                       7183

----------------------- Page 12-----------------------

for breach of the covenant of good faith and fair dealing, alleging that she could only be                                                                

terminated for good cause despite an "at-will" termination clause in her employment                                                    



contract.           The superior court denied Era Aviation's motion for summary judgment, but  



we reversed.                We concluded that even if Seekins proved that the real reason she was  

terminated was due to a personality clash, "these facts would be legally insufficient to  


warrant  a  finding  that  Era  breached  the  implied  covenant  of  good  faith  and  fair  



dealing."             Era Aviation makes it clear that an employer does not violate the implied  


covenant  of  good  faith  and  fair  dealing  by  terminating  an  at-will  employee  for  a  


personality conflict with another employee.   Case law from other jurisdictions is in  



                        McAnally seeks to distinguish Era Aviation.  He argues that Era Aviation  


was "a single-issue, summary judgment case."  He continues, "The only issue involved  


was whether or not, in an at-will employment case, firing someone because she could not  


get along with a supervisor was or was not a violation of the covenant of good faith and  


fair dealing." McAnally argues that his case involves many other issues, such as whether  

            20          Id .  at   1138.   

            21          Id .  at   1138,   1142.  

            22          Id .  at   1141.  

            23          See  Velantzas  v.  Colgate-Palmolive  Co.,  536  A.2d  237,  239  n.2  (N.J.  1988)  

("An   employer  is,   of   course,   free  to discharge   an   employee  if   a  genuine   'personality  

conflict'  exists."  (quoting   Wheeler  v.  Snyder  Buick,  Inc.,  794  F.2d  1228,   1233  (7th  Cir.  

 1986))); Sabetay   v.  Sterling  Drug,  Inc.,   497  N.Y.S.2d   655,   656-57   (N.Y.   App.   Div.  

 1986)   (noting   that   termination   statement  in  a   personnel   manual   did   not   limit   an  

employer's   right   to   terminate   an   at-will   employee   for various   reasons   including   for  

personality   conflicts);  Cty.   of   Giles   v.   Wines,   546   S.E.2d   721,   722,   725   (Va.   2001)  

(concluding  that  an  at-will  employee  had  no  property  right in employment  and  could  

therefore  be  terminated  for  personality  conflicts).  

                                                                           -12-                                                                     7183

----------------------- Page 13-----------------------

the employer has acted in violation of public policy.  But that is not the question here;  


McAnally argues that Jury Instruction Number 14 is an inaccurate statement of the law,  


but it is not.   Era Aviation  clearly stands for the proposition that an employer may  


terminate an at-will employee for a personality conflict and not breach the covenant of  


good faith and fair dealing. The City proposed the jury instruction based on the fact that  


there was a personality conflict between McAnally and the named defendants, and the  


court  correctly  instructed  the  jury  that  employment  decisions  based  on  personality  


conflicts are not breaches of good faith and fair dealing. Instruction Number 14 does not  


indicate that an  employer  may  terminate an  employee in  bad  faith or  otherwise in  


violation of the law. Indeed, the court defined for the jury the covenant of good faith and  


fair dealing and instructed the jury to find bad faith if "the discharge was done either for  


the  purpose  of  depriving  the  employee  of  a  benefit  reasonably  expected  from  the  


employment agreement, or the employer did not act in a way which a reasonable person  


would regard as fair."  We therefore conclude that Jury Instruction Number 14 was an  


accurate statement of the law and the superior court did not err in giving this instruction  


to the jury.  


          C.	       The Superior Court Did Not Err In Awarding The City Attorney's  


                    Fees and Costs.  


                    McAnally challenges the superior court's attorney's fees award to the City  


of $106,803.45 under Alaska Civil Rule 68.  Under Rule 68, a party defending a claim  


"may serve upon the adverse party an offer to allow judgment to be entered in complete  


satisfaction of the claim for the money . . . or to the effect specified in the offer."  


According to the rule, where there are multiple defendants and judgment eventually  


rendered by the court is at least 10% less than the offer, the offeree shall pay reasonable  


                                                               -13-	                                                        7183

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