Opinion
Supreme Court No. S-12733.
August 27, 2008.
Appeal from the Superior Court of the State of Alaska, Fourth Judicial District, Fairbanks, Douglas L. Blankenship, Judge, Superior Court No. 4FA-02-1.
Thomas R. Wickwire, Law Office of Thomas Wickwire, Fairbanks, for Appellant. Cory R. Borgeson, Borgeson Burns, P.C., Fairbanks, for Appellees.
Before: Fabe, Chief Justice, Matthews, Eastaugh, and Carpeneti, Justices. [Winfree, Justice, not participating.]
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
Darrel Martin appeals a ruling in a civil suit against James Dieringer, the personal representative of the estate of Martin's father. Martin seeks to recover attorney's costs and fees from his earlier probate case against Dieringer and asks us to find that the superior court erred in refusing to admit evidence about his lost investment opportunities, dismissing his conversion claim against Dieringer, allowing evidence of what his father told Dieringer that was allegedly contrary to his father's will, and not awarding him enhanced attorney's fees. Because there is no reversible error, we affirm.
II. FACTS AND PROCEEDINGS
This case is a civil suit that has its origins in a probate case. The probate case "involve[d] an estate that remained open for more than seventeen years. William Martin died in 1985 . . . [and] [h]is will left everything . . . in equal shares to the children [Donna and Darrel], in trust." James Dieringer was the personal representative of the trust and Nancy Dieringer was co-trustee.
The probate case has been before us twice. See Martin v. Dieringer, 108 P.3d 234 (Alaska 2005); Dieringer v. Martin, 187 P.3d 468 (Alaska 2008).
Martin, 108 P.3d at 235.
Id. This appeal arises from a civil action brought against both James and Nancy Dieringer. When necessary, the parties will be distinguished, but for most purposes both James and Nancy will be collectively referred to as "Dieringer."
We set out the underlying facts of this case in our earlier decision in an appeal from Martin's probate case:
The assets of [William Martin's] estate included a house in Fairbanks, a lot on Summit Lake, a motor home, some snowmachines, an escrow, and some life insurance. The net value of the estate was less than $250,000.
. . . .
By 1997 the only remaining assets of the estate were the Summit Lake lot, which was subject to a mortgage, and a loan Dieringer had made to a company that he owned a half interest in. The children agreed that Darrel would receive the Summit Lake property and Donna would receive more cash from the estate. Darrel contacted Dieringer a number of times concerning the Summit Lake property and closing the estate. Dieringer informed Darrel that he wanted to buy the Summit Lake property for $15,000. Darrel had received a substantially larger offer for the property and was reluctant to agree to sell to Dieringer at Dieringer's price. When this occurred Dieringer took the position that unless Summit Lake were sold to him he would charge the estate fees for his services. Further, he stated that the proceeds of a $50,000 life insurance policy he and Nancy had received when William died were actually owned by him and Nancy, that they had merely loaned the proceeds to the estate, and that the proceeds would have to be repaid.[]
Id. at 235-36.
Based on these facts, Martin filed a petition in probate court to remove James Dieringer as the estate's representative. While the petition to remove was pending, Darrel Martin filed an independent civil claim against Dieringer, which is the subject of this appeal. The complaint alleged that James Dieringer had failed to close the estate in a timely manner, that he failed to pay a family or homestead allowance to Darrel and Donna, that he made improper sales of estate property, that he loaned himself money from the estate, that he attempted to buy a piece of property owned by the estate (the Summit Lake lot) at a price well below market value, and that he made intentional misrepresentations to Martin. The complaint also claimed that the Dieringers' failure to distribute the trust property within "a reasonable time" after Donna turned twenty-two constituted conversion. A final count alleged that Nancy Dieringer had violated her trust duties.
Id. at 236.
Id.
In the complaint, Martin explained that one of the instructions in William Martin's will "was to place the Estate property in trust and distribute the property in full to Mr. Martin's two children on the youngest, Donna Martin, reaching age 22. This happened in December 1992."
The probate case was initially decided unfavorably to Martin, with the master denying Martin's petition to remove James Dieringer and the superior court approving "[t]he master's findings and conclusions" and granting "Dieringer's final accounting motion and clos[ing] the estate." Martin's civil action was subsequently dismissed "on the grounds of collateral estoppel and res judicata based on [the] findings made in [the] probate proceedings."
Martin, 108 P.3d at 236.
Martin v. Dieringer, Mem. Op. J. No. 5122, 2005 WL 503637, at *1 (Alaska, March 4, 2005).
Martin appealed his probate case and we reversed. We concluded that Dieringer breached his fiduciary duty to Martin, and that Dieringer acted in bad faith in handling the closing of the estate. The award of attorney's fees and personal representative fees to Dieringer was vacated and remanded to superior court. On the same day (March 4, 2005), we also determined that because of the conclusions reached in the appeal of the probate case "much of the judgment of dismissal entered in [the civil] case must be vacated." We distinguished the "claims concerning failure to give notice to creditors, failure to prepare an inventory, failure to provide a homestead or family allowance, sale of a motor home to a friend without appraisal or advertising, and rental of a house at less than fair market value without appraisal or advertising" as ones which were sufficiently "unrelated to [the] probate findings found to be erroneous." We affirmed the superior court's dismissal of these claims.
Martin, 108 P.3d at 237-40.
Id. at 240.
Id. at 241.
Martin, 2005 WL 503637, at *1.
Id.
Id.
The remanded civil case on the remaining claims was tried before a jury on October 30 and 31 and November 1, 6, and 8, 2006. Superior Court Judge Douglas L. Blankenship presided. During pretrial motion practice and discovery, Martin was required to disclose his calculation of damages, and he included the attorney's fees incurred from the probate case as part of his estimate. Dieringer filed a motion in limine to exclude evidence of these fees. Martin opposed the motion, stating that he did not seek "such fees as damages" but sought only to "recover attorney fees spent and incurred in prior litigation." The trial court initially denied Dieringer's motion to exclude the evidence, but then, on reconsideration, granted it.
Martin testified in an offer of proof that if he had received the Summit Lake lot from Dieringer earlier than the year 2000, he would have been able to sell it and purchase a house next door to his home (in California) as an investment. Martin sought $225,000 as damages from the missed opportunity to purchase the house next door. The court deemed Martin's testimony on the damages to be too speculative, and excluded it from evidence.
Martin had not specifically listed this missed investment opportunity as a damage suffered in either his original complaint or his 2005 damage calculations. He later included it in a response to an interrogatory by Dieringer.
James Dieringer testified at trial that before Martin's father died, he had told Dieringer that "his will included very broad powers" for Dieringer. Martin objected. The court admitted the testimony as relevant to showing Dieringer's state of mind. At the close of the trial, the court refused, also over Martin's objection, to instruct the jury on conversion, viewing it as already covered under Martin's breach of fiduciary duty claim.
The jury found that Dieringer breached his duty to Martin to settle and distribute the Martin estate and that he intentionally misrepresented certain information to Martin. Martin was awarded $37,902.08, which included punitive damages.
After the jury verdict in the civil case, Martin moved for enhanced attorney's fees based on the presence of several "aggravating" Civil Rule 82(b)(3) factors. The court denied the motion.
Martin appeals the court's ruling that he could not recover attorney's fees from the probate case and the exclusion of testimony about his investment loss. He also appeals the court's refusal to instruct the jury on conversion and its decision to allow Dieringer's testimony on the wishes of Martin's father. Finally, he appeals the court's award of attorney's fees.
III. DISCUSSION
A. The Superior Court Correctly Ruled that Attorney's Fees Incurred in the Probate Case Were Not Recoverable in Martin's Civil Suit.
In count one of his original complaint, Martin alleged that Dieringer failed to timely close the estate and as a result Martin had to force Dieringer to close the estate, causing Martin to "spen[d] time, money and attorney fees." Dieringer filed a motion to exclude consideration of past attorney's fees as damages and prevailed. The court, in explaining its ruling, said that there was "at least a decent argument that there [are] consequential damages in this case," but that it changed its opinion because it was the court's "view that the Supreme Court would make a determination that these are not consequential damages that are recoverable." The court also felt that the case had been made "that those attorney's fees could be recovered in the . . . probate action." Whether attorney's fees can be considered as damages is a question of law, and we review questions of law on the independent judgment standard; we will adopt the rule most persuasive in light of precedent, reason, and policy.
Crittell v. Bingo, 83 P.3d 532, 535 n. 10 (Alaska 2004).
Martin argues that our case law holds that attorney's fees incurred in a probate case may be recovered, "but it [does] not say that is the only place to request them." Martin is correct in asserting that in Crittell v. Bingo, and later in Wetherhorn v. Alaska Psychiatric Institute, we have recognized that attorney's fees can be recovered in some probate proceedings. As we explained in Wetherhorn, Rule 82 can apply to will contests because these "comprise disputes between private litigants. A litigant in a will contest usually litigates only to increase his own share of a will, regardless of the effect this has on society generally." Given the adversarial nature of will contests, we determined that a trial court may be within its discretion to award attorney's fees in those kinds of proceedings, to be determined on a case-by-case basis.
Id. at 535-36.
167 P.3d 701, 703-04 (Alaska 2007).
Id. at 704.
Id.; see also Crittell, 83 P.3d at 536.
But such analysis is not directly relevant to Martin's claim in his civil case; all that Crittell and Wetherhorn support is that Martin could have sought attorney's fees in his probate case. They do not support his claim that he should be able to recover those fees now.
Martin avers that in remanding the civil case, we "did not say whether Martin's attorney fees incurred in the probate case must or may be brought in the remand of this case or only in the probate case" and that it would be a "strained reading of this Court's decision remanding this case to believe the remand meant to split Martin's damages into parts and send him back to the probate court for costs and attorney fees incurred there." But this "split" is neither as strained nor as unusual as Martin seems to think. Indeed, Martin inaugurated the split when he filed an independent civil suit against Dieringer. Martin should have sought attorney's fees in the case in which he incurred them and not as damages in a subsequent case. Martin supplies us with no reason why he could not have sought attorney's fees in our remand of his probate court appeal other than his desire to put the episode behind him.
A judgment was issued "in favor of" Martin in his probate case on October 4, 2006. In re Estate of William Charles Martin, No. 4FA-85-113 PR (Alaska Super., October 4, 2006).
Martin writes that "Attempting to reopen the Probate case, after Herculean efforts to close it, was not an option for Martin or his sister." Martin seems here to confuse re-opening the estate and re-opening the probate case. The probate case, after remand in 2005, was still "open," and Martin could have moved for attorney's fees after the judgment of the superior court as a "prevailing party." Alaska R. Civ. P. 82(c).
Martin cites several cases that purportedly show that attorney's fees can be recovered as damages in subsequent litigation. But none of his cases are on point, as they all deal with recovering in subsequent litigation attorney's fees incurred against a different party in earlier litigation. Our court has also upheld the general rule that attorney's fees are not to be considered an item of damages.
Martin cites, in order: Transamerica Title Ins. Co. v. Ramsey, 507 P.2d 492, 496-98 (Alaska 1973) (plaintiff recovered attorney's fees from litigation against a third party caused by Transamerica's negligent breach of duty); Alaska Pac. Assurance Co. v. Collins, 794 P.2d 936, 948 (Alaska 1990) (attorney's fees from Collins's previous litigation recoverable because Alpac breached its duty to defend Collins in that litigation). Martin also cites Manson-Osberg Co. v. State, 552 P.2d 654, 660 (Alaska 1976), which is likewise not on point. Id. (award of full attorney's fees under an indemnity clause in the same case).
Ehredt v. DeHavilland Aircraft Co., 705 P.2d 446, 452 n. 8 (Alaska 1985) ("[A]ttorney's fees are not an item of damage."). We have, however, at least one time, allowed attorney's fees incurred in an earlier case to be recovered as damages in a later case involving the same parties. Bridges v. Alaska Housing Authority involved litigation in a number of courts (Territorial District Court and the Ninth Circuit Court of Appeals) before we granted a petition for review. 375 P.2d 696, 700-02 (Alaska 1962). In an appeal from a later iteration of the case, we reversed a trial court's denial of recovery of a "reasonable sum representing attorney's fees for previous litigation." Id. at 700. We wrote that the "extensive history of the previous action . . . indicat[es] the protracted nature of the litigation, the substantial questions that were involved, and the considerable amount of time and effort required. . . ." Id. at 701. The trial court was instructed on remand to "realistically assess fair attorney's fees for each of the proceedings in the previous litigation." Id. (emphasis added); Id. at 703. This case is distinguishable, however, because it is unlikely that Bridges had an opportunity to recover attorney's fees at any point in her previous litigation.
Martin also claims that "[i]n malicious prosecution cases, attorney fees incurred in defending the prior case that was maliciously prosecuted" would be recoverable as damages, and he argues that what Dieringer has done is similar to malicious prosecution. But Martin's claim that he was "den[ied] . . . the right to recover attorney fees" and therefore should be entitled to pursue past attorney's fees under a theory of malicious prosecution is unavailing; he could have recovered them after the superior court's final judgment in his probate case.
Martin's contention that such a request might have been futile given the probate master's attempts to increase Dieringer's fee awards is unpersuasive. The superior court rejected the master's recommendations and reduced the award; it is from this judgment that Martin should have sought attorney's fees as a prevailing party.
Martin also makes several unpersuasive arguments based on Alaska Statutes. Martin cites AS 13.16.485, which only goes to whether a personal representative can be liable at all and whether he can be sued outside of probate court in a separate proceeding; the statute clearly says he can. It does not, however, suggest that attorney's fees stemming from a probate action can be recovered in a separate suit. Martin also cites a number of statutes which allow for full attorney's fees. But this again is not the issue; the issue is whether Martin can recover past attorney's fees as damages.
Martin concludes with a public policy argument that it would be "inefficient" to send him to "two different courts to recover damages from one claim." But this argument ignores the fact that Martin wasalready in "two different courts" and he could have moved for attorney's fees in the probate case, but (for whatever reason) did not do so. There is no inefficiency in asking that Martin move for costs and fees incurred in one case in the proceedings for that case, rather than wait and pursue them as damages in another suit. B. The Superior Court Did Not Err in Excluding Martin's Evidence of Lost Investment Opportunities.
Martin argues that the superior court erroneously excluded evidence that he lost an opportunity to invest in a property near his home because he had not "received the remainder of his inheritance from Dieringer." During trial, Martin made an offer of proof that he was pursuing a degree in business, that he was looking for investment opportunities around 2000, that he had experience in financing housing, that a house next door to his home in California was for sale in April or May of 2000, that he would have needed $25,000 to $35,000 on hand before he could have purchased the house, and that he believed he could sell the Summit Lake property for $30,000. Martin said if Dieringer had transferred the Summit Lake property to him, he would have sold it and purchased the property next to his house. Martin had planned to use the house as a rental property after making repairs to it.
In cross-examination, Martin admitted that he had previously testified that he needed to sell the Summit Lake property to help pay for his wedding. Martin also testified about his less-than-ideal financial and employment situation at the time the property next door was available for purchase. Martin admitted that he had not discussed the purchase with his then-fiancee. Nor did Martin inform Dieringer of his plans.
The court found that Martin's claim for lost money from not being able to rent the property next door was "out there." The court further found that "there's been no testimony about an offer [from Martin for the property and] no exhibit about an offer that was even contemplated, a draft offer, or anything like that." The court believed there were too many contingencies, such as whether Martin's offer would have been accepted and whether he could have secured a loan necessary for purchasing the house, to let Martin's claim of a lost investment opportunity go to the jury.
Our decision in Landers v. Municipality of Anchorage explained the relevant standard of review. Although "the standard of review for a trial court's decision to exclude evidence . . . is abuse of discretion," because "the question on review in this case is whether the trial court applied the correct legal standard in the exercise of its broad discretion" we review the trial court's ruling de novo.
915 P.2d 614 (Alaska 1996).
Id. at 616 n. 1 (citation omitted).
In DeNardo v. GCI Communication Corp. we deemed DeNardo's claim for damages to be "so remote from the alleged breach [by GCI] as to be conjectural" and affirmed the superior court's summary judgment in favor of GCI. DeNardo had asked the court to award him over $1,000,000 because GCI had cut off his phone service and he was unable to participate in GCI's "Thanks a Million" sweepstakes. In the course of our opinion, we referred to a Montana Supreme Court opinion defining "speculative damages": damages are speculative when they are "too remote, obscure, undefinable, problematical, or the like."
983 P.2d 1288, 1290, 1293 (Alaska 1999).
Id. at 1289.
Id. at 1291 (quoting State Highway Comm'n v. Antonioli, 401 P.2d 563, 567 (Mont. 1965)).
The loss of Martin's investment opportunity is so "problematical" as to be properly deemed speculative. There was no offer made by Martin, nor is there much other evidence that Martin was planning to make the purchase. He did not appear to discuss it with anyone. And Martin had previously testified that he had planned to use the money from the sale of the Summit Lake property for other things. As the court stated there were at least two contingencies related to the purchase of the property, "the acceptance of the offer and also getting the loan." The court did not err in determining that the offer of proof made by Martin regarding his damages was "too attenuated from Mr. Dieringer's conduct" because "too many things . . . had to happen" and no "reasonable jury would differ on that."
The court also stated that the specific amount Martin claimed in damages ($225,000) from the lost opportunity was also not sufficiently proven.
Martin cites a case that states that issues of foreseeability and causation are usually left to the jury to decide. But this rule is a general one, and our case law (such as DeNardo) lays out exceptions where the causal links are too attenuated for damage to be reasonably proven. Martin also cites Dressel v. Weeks for the proposition that if damages are difficult to prove because of the defendant's wrongdoing, the burden of removing the uncertainty should not be on the victim. But Martin does not explain how Dieringer's wrongdoing made it more difficult for him to offer sufficient proof of his economic loss. We affirm the superior court's ruling.
Div. of Corr., Dep't of Health Soc. Servs. v. Neakok, 721 P.2d 1121, 1127 n. 7 (Alaska 1986).
779 P.2d 324, 328 (Alaska 1989).
C. The Superior Court's Failure To Instruct on Martin's Conversion Claim Was Harmless Error.
In his original complaint, Martin alleged that the Dieringers had converted the estate by failing to "follow and carry out the instructions in William C. Martin's Will" and not distributing the trust property "within a reasonable time." The court was initially inclined to allow Martin's conversion claim to go to the jury, but then decided not to instruct the jury on the claim. The court apparently believed that Martin had only provided evidence sufficient to support sending his breach of fiduciary duty claims to the jury; it also may have been concerned about Martin receiving a double recovery if he won both the conversion claim and the breach of fiduciary duty claims.
The count is labeled "XIII" but should be "VIII."
The court also had a passing concern that conversion might not apply to the property at issue in this case because it was not personal property. The court did not expand on this concern, however, and neither party discusses it.
Martin's attorney argued that there was "lots of evidence that [Dieringer] treated [Martin's] property as his own, and withheld the benefits of it from the rightful owners." His attorney further stated that he wanted conversion as "an alternative claim with the same remedy to the breach of the duty to distribute the property . . . because I don't know whether the jury is going to find one or the other." He said that if the jury gave Martin two remedies, the court could strike one.
We review a trial court's decision to decline to instruct on a claim de novo.
Sever v. Alaska Pulp Corp., 931 P.2d 354, 361 n. 11 (Alaska 1996).
The tort of conversion is "an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." The initial question is whether there was sufficient evidence presented by Martin to justify instructing the jury on conversion. There was. In addition to the delay in distributing the estate, Martin also points to Dieringer's loan of $8,000 of estate money to a business Dieringer owned an interest in and Dieringer's use of "estate money to pay repairs on his own residence," among other things. These actions are all at least "indications," in the words of Martin's attorney, "that Mr. Dieringer treats this property like he can do whatever he want[s] with it."
RESTATEM ENT (SECOND) OF TORTS § 222A (1965), quoted in Dressel, 779 P.2d at 328.
We discussed the loan and concluded that it was self dealing in Martin v. Dieringer, 108 P.3d 234, 238, 240 (Alaska 2005).
But since the jury found for Martin on his claim that Dieringer had breached his fiduciary duty to distribute the property, the superior court's failure to instruct on Martin's conversion claim was harmless error. The jury awarded Martin $10,100 on this claim. Since, as Martin conceded, the remedy for this claim was the same as the remedy for Martin's conversion claim, the court's error in failing to instruct on the conversion claim was harmless.
D. The Superior Court Did Not Err in Admitting Evidence of What William Martin Allegedly Said to Dieringer.
At trial James Dieringer testified that Martin's father, William Martin, had told him that "his will included very broad powers for me so that there shouldn't be any interference." Martin's attorney objected that Dieringer's testimony was hearsay that was "contrary to what's in the will." Dieringer's attorney responded that there was a "deadman exception to the hearsay rule" which he thought might apply. The court added, on its own initiative, that the testimony showed "Dieringer's state of mind" and was not offered for the truth of the matter asserted. Martin in this appeal again objects to the testimony as hearsay, and adds that it is not covered by any exception to the rule against hearsay. He claims that Dieringer's testimony was harmful to his case because it was "contrary to the terms of his [father's] Will."
We review rulings admitting or excluding evidence for abuse of discretion.
Hutchins v. Schwartz, 724 P.2d 1194, 1197 (Alaska 1986).
Dieringer points to Evidence Rule 803(3) which states in relevant part that a "statement of the declarant's then existing state of mind [is admissible] . . . but . . . a statement of memory or belief to prove the fact remembered or believed [is not admissible] unless it relates to the execution, revocation, identification, or terms of declarant's will." (Emphasis added.) The court correctly allowed the testimony of James Dieringer as it related to the execution and terms of William Martin's will and did therefore not abuse its discretion. E. The Superior Court Did Not Abuse Its Discretion in Not Awarding Martin Enhanced Attorney's Fees.
The superior court stated that the evidence was admissible because it showed Dieringer's state of mind, not William Martin's. This ground is likely also acceptable, but since the ground in the text is sufficient, we do not reach it.
Martin moved for enhanced attorney's fees at the close of the trial. Martin appeals the court's denial of enhanced fees and reiterates his claim that several "aggravating" factors under Civil Rule 82(b)(3) were present: the litigation was complex, the trial was lengthy, the number of attorneys used and the rates charged were reasonable, Martin's attorney minimized fees, his claims and defenses were reasonable, and Dieringer engaged in bad faith and vexatious conduct.
We review attorney's fee awards for abuse of discretion.
City of Valdez v. Valdez Dev. Co., 523 P.2d 177, 184 (Alaska 1974).
We are unable to conclude that the court abused its discretion by not enhancing fees in this case. Although Dieringer's conduct as personal representative was in breach of his fiduciary duty and in bad faith and his defense of his breaches was unreasonable in light of our prior decision, the other damages aspects of his defense were both reasonable and successful. Martin sought well over $200,000 in compensatory damages as w ell as punitive damages, yet compensatory damages were limited to slightly more than $11,000 while punitive damages of $10,000 were awarded. Further, the jury found that Dieringer's breaches of duty regarding the Summit Lake property, the $50,000 life insurance proceeds, and the $8,000 loan did not cause damage to Martin. The length of the trial — six days — was in part due to Martin's presentation of damage claims that were unsuccessful and, in the case of his lost investment opportunity claim, speculative. Under these circumstances we conclude that the court did not err in awarding attorney's fees in accordance with the schedule of Civil Rule 82(b).
The court awarded Martin attorney's fees of $5,266.78 in accordance with the schedule set out in Civil Rule 82(b)(1).
IV. CONCLUSION
The judgment below is AFFIRMED.