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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Bachner Company, Inc. v. State of Alaska, Department of Administration, Division of General Services, State of Alaska, Department of Administration v Bachner Company, Inc. (7/10/2020) sp-7466
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,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
BACHNER COMPANY, INC., )
) Supreme Court Nos. S-17150/17179
Appellant and Cross-Appellee, )
) Superior Court No. 3AN-16-06598 CI
v. )
)
O P I N I O N
STATE OF ALASKA, )
DEPARTMENT OF ) No. 7466 - July 10, 2020
ADMINISTRATION, DIVISION OF )
GENERAL SERVICES, )
)
Appellee and Cross-Appellant. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Pamela Scott Washington,
Judge pro tem.
Appearances: Michael C. Kramer and Robert John, Kramer
and Associates,Fairbanks,forAppellantandCross-Appellee.
Rebecca E. Hattan and Rachel L. Witty, Assistant Attorneys
General, Anchorage, and Kevin G. Clarkson, Attorney
General, Juneau, for Appellee and Cross-Appellant.
Before: Bolger, Chief Justice, Winfree, Stowers, Maassen,
and Carney, Justices.
MAASSEN, Justice.
I. INTRODUCTION
A company leased office space to the State. The lease stipulated that the
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State would occupy 15,730 square feet of space but would not have to pay rent on 1,400
square feet of that space during the lease's initial ten-year term. The lease further
specified that if it was extended beyond the initial term the parties would negotiate a rate
for the free space and the State would pay for it.
Toward the end of the initial termthe State exercised its first renewal option
and opened negotiations with the company over the free space's value. The parties
retained an expert to value the space, but the State questioned his methods and
conclusions. The State also resisted the company's claim that the State should begin
paying rent for additional space, not identified in the lease, that the company contended
the State had been occupying. The parties failed to reach agreement, and the State did
not pay rent for any of the extra square footage. Eventually the State executed a
unilateral amendment to the lease based on the expert's valuation and, ten months after
the end of the lease's initial term, paid all past-due rent for the formerly free space
identified in the lease.
The company filed a claim with the Department of Administration,
contending that the State had materially breached the lease, the lease was terminated, and
the State owed additional rent. A contracting officer rejected the claim, and on appeal
an administrative law judge found there was no material breach, the lease had been
properly extended, and thecompanyhad waived any claimregarding spacenot identified
in the lease. The Commissioner of the Department of Administration adopted the
administrative law judge's findings and conclusions. The superior court affirmed the
Commissioner's decision except with regard to the space not identified in the lease; it
directed the company to pursue any such claim in a separate action. Both parties
appealed to this court.
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Because the administrative law judge's findings - adopted by the
Commissioner - are supported by substantial evidence, and because the lease did not
terminate under our interpretation of it, we affirm the Commissioner's decision except
with regard to the company's claim to rent for space not identified in the lease. We do
not consider the merits of this claim, but we conclude that, to the extent it seeks rent after
the end of the initial term, it was not waived by the document on which the
administrative law judge relied to find waiver. We remand only that issue to the
Commissioner for further consideration.
II. FACTS AND PROCEEDINGS
A. Background Facts
In 2003 Bachner Company, Inc. - the successful bidder in response to a
request for proposals - leased the State "approximately 15,730 square feet of office
space" for a ten-year term, fromSeptember 2003 to September 2013. The lease provided
that "[t]he monthly lease payment indicated herein is applicable only to 14,330 square
feet of the lease." The lease acknowledged, however, that Bachner was providing the
State an additional 1,400 square feet "for the State's exclusive use, at no cost to the State
during the firm term," i.e., the initial ten-year term. 1 At the firm term's conclusion the
State had the option to renew the lease for ten one-year periods. If the State chose to
renew, it was required to "either vacate and discontinue use of [the formerly free] 1,400
square feet of space or negotiate with [Bachner] to pay the then-prevailing market lease
rates" for that space. If the parties could not agree on a rate for that space, "a mutually
acceptable third party [would] be contracted to determine the market lease rates."
1 The lease uses the phrase "firm term" without defining it, but the parties
agree that it refers to the initial term identified in the lease as running fromSeptember 26,
2003, to September 30, 2013.
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According to an affidavit later filed by Bachner's president, the company
realized before the lease was signed that, because of negotiated changes to the floor plan,
the State would actually be enjoying the use of even more square footage than the 14,330
square feet it paid for and the 1,400 square feet identified in the lease as initially free.
But the State refused to agree to changes in either the lease's stated square footage or the
amount of rent, and the lease was executed without modification.
In June 2013, about three months before the end of the firm term and in
anticipation of exercising its first renewal option, the State contacted Bachner to begin
negotiating a rate for the 1,400 square feet that had been provided rent-free. In response
Bachner brought up the additional space it claimed the State had been occupying, which,
according to Bachner, amounted to an additional 1,434 square feet.
The State and Bachner were unable to agree on the appropriate rate for the
formerly free 1,400 square feet, though they did agree that any adjustment would be
retroactive to October 2013. As required by the lease terms, the parties sought an
opinion from a local realtor. In a December 2013 opinion letter, the realtor estimated the
value of the 1,400 square feet at $2.35 per square foot. The State asked for clarification,
which the realtor provided, but the State's continued rental payments failed to include
any amount for the formerly free space.
On April 8, 2014, six months after the first payment came due for the
renewal term, Bachner notified the State that it was in default. The notice read in its
entirety: "Lessee (State of Alaska) is in default in their payment of rent on Lease #2532
and Lease #2530. Please consider this your official notification." The State responded
on May 27 with a proposed amendment to the lease, accepting the realtor's evaluation
of $2.35 per square foot for the 1,400 square feet that had been rent-free. But Bachner
refused to sign the amendment, in part because it did not address the additional 1,434
square feet Bachner had identified as included in the space the State was occupying. In
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June, more than 60 days after the notice of default, Bachner sent a letter advising the
State that it had failed to cure its breach of the duty to pay rent and that the State must
therefore either vacate the premises or negotiate a new lease. In response, on August 5,
the State unilaterally executed an amendment adopting the realtor's estimated value for
the 1,400 square feet, and on August 11 the State directly deposited rent for that space,
retroactive to October 2013, in Bachner's bank account.
B. Administrative Proceedings
In September 2014 Bachner filed an action in the superior court seeking to
evict the State, but the court dismissed the complaint for failure to exhaust administrative
2
remedies. Bachner appealed, and we issued an opinion in 2016 affirming the dismissal.
In the meantime Bachner had filed a claim with the Department of Administration
3 The contracting officer construed Bachner's
pursuant to the State Procurement Code.
claim as consisting of two issues: (1) whether Bachner had terminated the lease, and
(2) whether the State was required to pay for the additional 1,434 square feet not
mentioned in the lease. The contracting officer found that the lease was not terminated
because the State had not materially breached it, and that even if there was a material
breach Bachner had not taken the steps necessary to effect a termination. The
contracting officer found that the claim involving the uncompensated 1,434 square feet
was not timely filed because AS 36.30.620(a) requires a contractor to file claims within
90 days, and "[Bachner] was aware of the square footage issue in 2003" when the floor
plans were finalized. The contracting officer determined in the alternative that the claim
should be denied on its merits; he found no support in the lease or the parties' course of
dealing for Bachner's claim that the State was obligated to pay for the 1,434 square feet.
2 Bachner Co. v. State, Dep't of Admin. , 387 P.3d 16, 25 (Alaska 2016).
3 AS 36.30.550-.699.
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Bachner appealed the contracting officer's decision to the Commissioner
of Administration. An administrative law judge (ALJ) issued a lengthy and detailed
decision. Noting the parties' agreement that the claim "could be decided based on
written briefs and the documentary record," the ALJ granted the State's motion for
summary adjudication. He noted the "long, complex history between the parties
regarding the lease at issue" but observed that the question presented was "fairly
narrow": Did the State "commit a material breach of the lease by virtue of its late
payment of rent in 2014 for 1,400 square feet of space that had formerly been 'free
space' during the first ten years of the lease term, thus causing the lease to be
terminated?" The ALJ did not address arguments relating to the 1,434 additional square
feet, finding in footnotes that Bachner had "explicitly waived any such claim."
Like the contracting officer, the ALJ concluded that the State had not
materially breached the lease. He relied on tests set out in the Restatement (Second) of
4 5 to conclude that the untimely rent
and the Restatement (Second) of Contracts
Property
payment for the 1,400 square feet of formerly free space was not a material breach; and
further, that even if it was a material breach, the lease did not automatically terminate
when the State failed to cure within 60 days of Bachner's notice letter because Bachner
failed to take the affirmative action necessary to terminate the lease. The Commissioner
adopted the ALJ's findings and conclusions as his final decision.
C. Superior Court Decision
Bachner appealed the Commissioner's decision to the superior court. The
court affirmed the ALJ's findings that there had been no material breach and the lease
4 RESTATEMENT (SECOND) OF PROPERTY: L AND. & T EN. § 13.1 (A M. L AW.
INST . 1977).
5 RESTATEMENT (SECOND) OF CONTRACTS § 241 (A M. L AW. I NST . 1981).
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----------------------- Page 7-----------------------
had not terminated. But the court came to a different conclusion on the question of
payment for the additional 1,434 square feet of space not mentioned in the lease that the
ALJ considered waived. Rather than relying on waiver, the court held that "Bachner
improperly attempted to bring the claim for the space in this contract action." The court
held that under "simple contract law," that claim was "a completely different claim,
separate of the contract in question." The court declined to consider the issue on its
merits because neither party had sufficiently addressed it. Both parties filed appeals to
this court.
III. STANDARD OF REVIEW
When the superior court acts as an intermediate court of appeal, we
6
independently review the agency decision.
We have defined four standards of review
for administrative cases:
(1) the substantial evidence standard applies to questions of
fact; (2) the reasonable basis standard applies to questions of
law involving agency expertise; (3) the substitution of
judgment standard applies to questions of law where no
expertise is involved; and (4) the reasonable and not arbitrary
[ ]
7
standard applies to review of administrative regulations.
Contract interpretation generally involves questions of law, which we review de novo.8
6 Premera BlueCross v. State, Dep't of Commerce, Cmty. &Econ. Dev., Div.
of Ins. , 171 P.3d 1110, 1115 (Alaska 2007).
7 Alaskan Crude Corp. v. State, Dep't of Nat. Res., Div. of Oil & Gas , 261
P.3d 412, 419 (Alaska 2011) (quoting Pasternak v. State, Commercial Fisheries Entry
Comm'n, 166 P.3d 904, 907 (Alaska 2007)).
8 State, Dep't of Nat. Res. v. Alaskan Crude Corp., 441 P.3d 393, 398
(Alaska 2018) (Alaskan Crude II); Exxon Corp. v. State, 40 P.3d 786, 792 (Alaska 2001)
("Interpretation of a contract is a question of law that is not within [a] department's
special expertise or skill.").
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----------------------- Page 8-----------------------
We will "adopt the rule of law that is most persuasive in light of precedent, reason, and
9
policy."
Whether a contract breach is material, however, must "ordinarily . . . be left to
the factfinder," though "in some cases the breached provision is so obviously central to
10
the purpose of the contract that materiality can be determined as a matter of law."
IV. DISCUSSION
A. The Commissioner's Decision That The State Did Not Materially
Breach The Lease Is Supported By Substantial Evidence.
Bachner argues that it had the right to terminate the lease because of the
State's material breach. The ALJ decided the material breach issue on the "written briefs
and the documentary record," the parties having "stipulated that no evidentiary hearing
was necessary." The ALJ analyzed the facts in the context of two different tests for
determining materiality - one from the Restatement (Second) of Property and one from
the Restatement (Second) of Contracts - concluding that "[u]nder either standard, [the
State's] failure to timely pay the rent for the 1,400 square feet of free space did not rise
to the level of a material breach of the lease agreement." We conclude that the ALJ's
findings on this issue, adopted by the Commissioner as his final decision, are supported
by substantial evidence.11
1. Substantial evidence supports the ALJ's findings under the
Restatement (Second) of Property test.
The test for material breach found in the Restatement (Second) of Property,
characterized by the ALJ as a "broad standard," provides that a landlord may terminate
a lease if the tenant fails to perform a promise and the landlord is thereby "deprived of
9 McMullen v. Bell, 128 P.3d 186, 190 (Alaska 2006).
10 Alaskan Crude II, 441 P.3d at 401.
11 Because the evidence supports the Commissioner's decision under both
tests, we need not decide today whether one is more appropriate than the other.
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----------------------- Page 9-----------------------
a significant inducement to the making of the lease [and] the tenant does not perform his
12
promise within a reasonable period of time after being requested to do so."
The ALJ
explained why the evidence failed to satisfy this test. First, he found that Bachner's
agreement to offer the 1,400 square feet rent-free during the lease's firm term showed
that the State's "delay in timely payment of rent for that space ten years later" could not
have "deprived [Bachner] of a 'significant inducement to the making of the lease.' "
The Restatement (Second) of Property test is framed in the
conjunctive - meaning that the absence of the first element was enough to find the
13 - but the ALJ went on to consider the second element as well:
breach immaterial
whether the tenant did "not perform [its] promise within a reasonable period of time after
being requested to do so."14 The ALJ construed "reasonable period of time" in the
context of Bachner's own efforts to reach agreement: "[T]here can be no dispute that it
was [Bachner] that interjected the issue of additional square footage into the parties'
negotiations," "overshadow[ing] and unduly complicat[ing]" the negotiations by its
"consistent posturing regarding the additional square feet that it believed should be paid
for (more than doubling the amount of square footage under negotiation)." (Emphasis
in original.) The ALJ concluded: "Under these facts, [Bachner] cannot establish that it
12 RESTATEMENT (SECOND) OF PROPERTY: L AND. & T EN. § 13.1 (A M. L AW.
INST . 1977).
13 See, e.g. , City & Borough of Juneau v. Thibodeau , 595 P.2d 626, 634
(Alaska 1979) ("Courts which have interpreted ordinances phrased in the conjunctive
form have consistently required the applicant for a variance to satisfy both . . . elements
of the variance test."), disavowed on other grounds, State v. Alex, 646 P.2d 204, 208-09
n.4 (Alaska 1982); In re Stern, 403 B.R. 58, 68-69 (Bankr. C.D. Cal. 2009) (observing
that because elements of statutory test for setting aside asset transfer "are stated in the
conjunctive, [this] means that both elements must be proven") (emphasis in original)).
14 RESTATEMENT (SECOND) OF PROPERTY: LAND. & T EN. § 13.1.
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----------------------- Page 10-----------------------
made a clear request for [the State] to make timely payment for the 1,400 square feet, or
that [the State] failed to pay within a reasonable period after such a request was made."
The ALJ's finding that the breach was immaterial under this test is
supported by substantial evidence. Regarding the "significant inducement" element, the
evidence is undisputed that in 2003 Bachner freely entered into the lease designating the
1,400 square feet as free for the duration of the firm term. Bachner knew it would not
get paid for that space for at least 120 months, possibly longer if the State decided to
vacate the space at the end of the firm term and left Bachner to find a new tenant. The
length of delay is a small fraction of the parties' over-ten-year relationship, and the
unpaid rent is a small fraction of the amount the State paid to Bachner during that time.
As for thereasonablenessoftheState's delay in performing, theALJ placed
it in the context of the negotiations that stalled primarily because of Bachner's tactical
decisions. The State contacted Bachner to begin negotiating a rate for the 1,400 square
feet three months before it planned to exercise its first renewal option. The parties
followed their contractual process by hiring a realtor to determine a fair market rate for
that space, but Bachner added a demand for rent for the additional 1,434 square feet not
mentioned in the lease. When the State acceded to the realtor's estimate for the 1,400
square feet and proposed a lease amendment accepting it, Bachner refused to sign the
amendment because it did not account for the additional 1,434 square feet. The State
pressed Bachner to resolve the separate and contract-based 1,400-square-foot issue,
citing the "internal process" that had to be satisfied before the State could "commit
additional funds to a lease agreement." But when Bachner was eventually paid,
retroactive to October 2013, it was only because the State unilaterally executed an
amendment to the lease, adopting the realtor's rate for the 1,400 square feet addressed
by the lease, and deposited the past-due amounts in Bachner's account.
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TheevidencesupportingtheALJ's findingsis substantial. Relying on these
findings, the Commissioner's decision that the State's breach of the lease was immaterial
under the Restatement (Second) of Property test was therefore not erroneous.
2. Substantial evidence supports the ALJ's findings under the
Restatement (Second) of Contracts test.
Analyzing the same facts under the different test for material breach set out
in the Restatement (Second) of Contracts, the ALJ began by setting out the test's five
elements:
(a) the extent to which the injured party will be
deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be
adequately compensated [in damages] for the part of that
benefit of which he will be deprived;
(c) the extent to which the party failing to perform . . .
will suffer forfeiture;
(d) the likelihood that the party failing to perform . . .
will cure his failure, taking account of all the circumstances
including any reasonable assurances; [and]
(e) the extent to which the party failing to perform . . .
[15]
comports with standards of good faith and fair dealing.
The ALJ found that Bachner satisfied the first element, "in that it could
reasonably expect to be paid for the 1,400 square feet [following lease renewal], and the
breach did deprive [Bachner] of that benefit for a period of time." But the ALJ found
that none of the other elements favored Bachner. "[A]s to the second element, [Bachner]
clearly could be adequately compensated by damages," and in fact had already been
made whole by the State's late payment of all past-due rent. The third element also
weighed in the State's favor because a finding of material breach "resulting in
15 RESTATEMENT (SECOND) OF CONTRACTS § 241 (A M. L AW. I NST . 1981).
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----------------------- Page 12-----------------------
termination of the lease would cause an extreme forfeiture of [the State's] interest in the
leasehold." The fourth element weighed in the State's favor as well because the State
had already made its "curative payment." The undisputed evidence supports the ALJ's
findings on these issues, and the Commissioner did not err by adopting them.
As for the fifth element - whether the State's behavior "comport[ed] with
16 - the ALJ found that Bachner "failed to
standards of good faith and fair dealing"
adduce any evidence that [the State] did not act in good faith in negotiating the market
rate for the 1,400 square feet." The ALJ rejected Bachner's argument that the State's
"very low initial market rate offer" of 60 cents per square foot was evidence of bad faith,
finding that it showed "nothing more than" an early negotiating step. The ALJ
concluded, in fact, that it was Bachner whose conduct fell short of that required to
complete a good-faith negotiation:
If anything, the evidence would suggestthat [Bachner]
was engaged in manipulation of the negotiations to attempt to
effect a termination of the lease and then execute a better deal
with [the State]. [Bachner's] intentions in this context are
evidenced by the fact that [Bachner] did nothing to help
resolve any perceived problems with [the State's] proposed
bilateral amendment as it related to the 1,400 undisputed
square feet. For example, [Bachner] could have suggested
carving that issue out and reaching agreement on it, knowing
from its long dealings with the State that until a lease
amendment was executed no payment could be made for the
1,400 square feet. Instead, [Bachner] sent a letter from
counsel continuing to argue about the issue of total square
footage, and then shortly thereafter issued another letter from
counsel declaring that [the State] had failed to cure its breach
"for failure to pay rent," again without specifying that the
breach related to rent as to the 1,400 square feet. [Emphasis
in original.]
16 Id.
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Bachner challenges the ALJ's good-faith finding, asserting that the State materially
17
breached the lease not just by withholding rent but by doing so fraudulently,
with the
purpose of coercing Bachner into a deal that unfairly favored the State. Bachner
characterizes the State's offered lease amendment - agreeing to the realtor's
recommended rate of $2.35 per square foot for the 1,400 square feet of formerly free
space - as "bad-faith bargaining and extortion," intended to force Bachner to choose
between receiving the amounts it was indisputably owed for that 1,400 square feet and
continuing to pursue its claim to payment for the additional 1,434 square feet not
mentioned in the lease.
But the ALJ construed the same evidence differently. It found that the
State's offers were simply steps in the negotiation and it was Bachner that sought to
misuse the process, withholding its approval of an amendment specifically contemplated
by the lease in order to force the lease's termination and coerce the State into paying rent
for the square footage the parties had never agreed to include. As noted above, there is
substantial evidence to support the ALJ's view. Because the ALJ's finding under the
Restatement (Second) of Contracts test for material breach is supported by substantial
evidence, it was not error for the Commissioner to adopt it.
B. The Lease Did Not Terminate, And The State Therefore Properly
Exercised Its Right to Renew.
Bachner argues that the lease terminated on June 19, 2014, after it gave the
State notice of the breach on April 8, 2014, and that the State's August payment of past-
due amounts was merely the settlement of a debt that could not "unilaterally un-
terminat[e] the lease." The ALJ held that the lease did not terminate absent some more
17 Alaska Interstate Constr., LLC v. Pac. Diversified Invs., Inc., 279 P.3d
1156, 1173 (Alaska 2012) ("[F]raud and other forms of intentional wrongdoing
constitute material breaches of contract as a matter of law.").
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----------------------- Page 14-----------------------
affirmative action on Bachner's part to terminate it. Reviewing the issue de novo as a
matter of contract interpretation, we agree with the Commissioner that the ALJ correctly
decided the issue.
The lease describes Bachner's options upon default in permissive terms.
If the State is in "default in the payment of rent . . . and . . . shall fail to remedy such
default within sixty (60) days after written notice thereof . . . it shall be lawful for
[Bachner] to enter upon [the] premises and again have, repossess, and enjoy the same as
if the lease had not been made." And "[i]n case of any such default and entry by
[Bachner], [Bachner] may relet [the] premises for the remainder of said term." These
provisions are consistent with the common law as described in the Restatement (Second)
of Property, which explains that if a tenant fails to perform a promise in the lease and
"does not perform his promise within a reasonable period of time after being requested
to do so, the landlord may: (1) terminate the lease and recover damages; or (2) continue
18 According to the
the lease and obtain appropriate equitable and legal relief."
Restatement, a "lease is not automatically terminated by the tenant's failure to
perform."19 Rather, the landlord's right to terminate "is an option to terminate," the
exercise of which requires both notice and the tenant's subsequent failure to remedy.20
The ALJ found that Bachner failed to complete its threatened termination;
after sending the notice of default and letter advising the State of its failure to cure,
Bachner "just continued negotiating." Bachner also continued accepting rent for the
18 RESTATEMENT (SECOND) OF PROPERTY: LAND. & T EN. § 13.1 (emphasis
added).
19 Id. at cmt. k.
20 Id.
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square footage that was not in dispute. We agree with the ALJ that this course of action
21
was not "consistent with an intent to terminate the lease."
As the lease was not terminated, the State properly exercised its right to
renew in 2014. The State was then current on its rent obligations and not in default; it
had retroactively paid all the rent for the 1,400 square feet contemplated by the lease.
We therefore agree with the ALJ's conclusion, adopted by the Commissioner, that the
State was "entitled to renew the lease, and its September 2, 2014 renewal was valid."
C. Bachner's Claim To Rent For The Additional 1,434 Square Feet After
October 2013 Must Be Remanded For Further Proceedings.
Bachner also argues that it is entitled to rent at the fair market rate for the
1,434 square feet it claims the State occupies because of floor-plan changes but which
the parties did not address in the lease. As noted above, the contracting officer rejected
the claim both on timeliness grounds and because the parties' agreement never
contemplated that the State would pay rent for that square footage: charging rent for it
"would represent a material change to the lease 10 years after it was executed," effected
"unilaterally" by Bachner "to the financial detriment of the State."
The State argues that Bachner subsequently waived this claim on its
administrative appeal when it advised the ALJ: "Although timely, [Bachner] voluntarily
waives any rent claim for the extra 1,434 square feet up until the first renewal on
October 1, 2013." The ALJ relied on this waiver when it declined to address "any
21 The contracting officer also relied on AS 09.45.105, prescribing the
necessary content of a notice to quit, and found that Bachner's notice was deficient under
the statute. The ALJ questioned whether the notice-to-quit statute was consistent with
Bachner's other obligations under the procurement code and declined to reach the issue,
finding that "[w]hether or not the statutory requirement had to be met, . . . [Bachner] at
least was required to take clear steps to terminate the lease - steps that are consistent
with an intent to terminate," and Bachner "did anything but that." Like the ALJ, we find
it unnecessary to analyze Bachner's clam under the notice to quit statute.
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----------------------- Page 16-----------------------
questions regarding [Bachner's]claimthat [the State] occupied greaterthan1,400 square
feet of free space." The superior court disagreed that the issue was waived, but it
concluded that it could not be addressed in this case because it involved "a completely
different claim" and "because neither party has had anopportunity to sufficiently address
the issue."
Bachner now argues that it is entitled to rent for the 1,434 square feet
retroactive to 2003 under various theories, citing "[l]aw, [e]quity, [a]nd [t]he Fifth
Amendment [a]nd [t]he Alaska Constitution." But Bachner clearly waived any claim to
rent for that space during the lease's firm term with its unequivocal statement to the ALJ.
The ALJ erred, however, by construing the waiver to include a claim for rent after
October 2013, which the waiver does not purport to address.
We express no opinion about the timeliness or merit of this claim. We note
only that Bachner did not expressly waive it in the pleading on which the ALJ relied for
the finding of waiver. We therefore remand to the Commissioner for further proceedings
22
on this issue only.
V. CONCLUSION
We AFFIRM the Commissioner's decision in all respects except for the
issue of whether Bachner waived its claim to rent for the additional 1,434 square feet
after October 2013. We REMAND to the Commissioner for further consideration of
only that claim.
22 See White v. State, Dep't of Nat. Res. , 984 P.2d 1122, 1128 (Alaska 1999)
(remanding administrative appeal to Commissioner for decision of factual dispute
material to lease interpretation).
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