Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc.

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

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

RANES & SHINE, LLC, )

) Supreme Court No. S-15222

Appellant, )

) Superior Court No. 3AN-10-10232 CI

v. )

) OPINION

MACDONALD MILLER )

ALASKA, INC., ) No. 7003 – May 1, 2015

)

Appellee. )

_______________________________ )

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

Judicial District, Anchorage, John Suddock, Judge.

Appearances: Brent R. Cole, Law Office of Brent R. Cole,

P.C., Anchorage, for Appellant. Jason J. Ruedy, Law Offices

of Royce & Brain, Anchorage, for Appellee.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and

Bolger, Justices.

STOWERS, Justice.

I. INTRODUCTION

In 2005 Gordon Timmerman, the sole owner of MacDonald Miller Alaska,

Inc., agreed to release a claim MacDonald Miller had against Ranes & Shine, LLC, and

to pay an additional $18,000 in exchange for equipment Ranes & Shine claimed to own

free of any encumbrances. Five years later First National Bank Alaska contacted

Timmerman, asserting a security interest in the equipment and requesting its return. First

National eventually filed this suit against Timmerman in 2010 to obtain possession of the

equipment.1

Timmerman filed a third-party complaint against Ranes & Shine and its

former managing member, Thomas Ranes, asserting breach of warranty of title,

misrepresentation, unfair trade practices, and common law contract claims. In its answer,

Ranes & Shine alleged among its other contentions that the applicable statutes of

limitation barred Timmerman’s suit because First National’s publicly filed Uniform

Commercial Code (UCC) financing statement should have placed Timmerman on inquiry

notice of First National’s security interest in the equipment at the time of the agreement

in 2005. The superior court disagreed and held Ranes & Shine liable for breach of

contract and misrepresentation, while also dismissing the claims asserted against Ranes

individually. Ranes & Shine appeals.

We affirm the superior court’s statute of limitations and attorney’s fees and

costs rulings, as well as various procedural rulings for the reasons discussed below. But

we reverse the court’s decision to dismiss the misrepresentation claim that Timmerman’s

company, MacDonald Miller, had asserted against Ranes in his individual capacity and

remand for further proceedings on that issue.

II. FACTS AND PROCEEDINGS

A. Facts

Thomas Ranes, Ken Embley, and Tom Embley formed Ranes & Shine,

LLC in October 2001. Ranes owned 50% of the company, and the Embleys each owned

25% of the company. Ranes had complete managerial authority, and the Embleys were

essentially silent partners.

1

First National’s claims are not relevant to this appeal, and we do not discuss

them in any detail.

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In 2002 Ranes & Shine applied for a loan from First National Bank Alaska.

In connection with the loan, Ranes and the Embleys signed a promissory note, a business

loan agreement, and a commercial security agreement to secure the loan. The

commercial security agreement gave First National a security interest in various

categories of collateral, including Ranes & Shine’s equipment. On October 30, 2002,

First National filed a UCC financing statement perfecting its security interest in the

equipment. First National filed a continuation of that financing statement on

August 7, 2007.

In 2003 Circle Plumbing & Heating, a company majority-owned by the

Embleys, was hired to build Ranes & Shine’s facility. Circle hired MacDonald Miller

Alaska, Inc., a company wholly owned by Gordon Timmerman, to provide mechanical

services for the new building.

MacDonald Miller worked on the project and billed Circle, but was not

promptly paid. MacDonald Miller eventually filed a lien against Ranes & Shine’s

building for approximately $92,000. But MacDonald Miller released the lien a few hours

later, allegedly because Tom Embley contacted Timmerman asking him to release the

claim so Ranes & Shine could secure additional funding for the building project. Tom

Embley allegedly assured Timmerman he would be paid, and Circle later paid

MacDonald Miller $60,000 in 2004. This left a claimed balance of $32,000 outstanding.

Timmerman continued to pursue the debt without success until he contacted

Ranes & Shine directly and spoke with Ranes. In October 2005 Timmerman and Ranes

came to an agreement: in exchange for certain equipment, Timmerman executed a

release of the remaining $32,000 debt owed to MacDonald Miller and paid an additional

$18,000 to Ranes & Shine.

In the course of reaching this agreement, Ranes incorrectly represented to

Timmerman that Ranes & Shine owned clear title to the equipment. Timmerman did not

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conduct a UCC record search; he later testified it was not his standard practice to do so

and he “didn’t even know what UCC stood for” prior to this lawsuit.

After Timmerman took possession of the equipment, he stored it in a

shipping container. There it remained until the summer of 2010 when First National

contacted him. First National explained it had filed a UCC financing statement

documenting its security interest in the equipment several years before Timmerman’s

agreement with Ranes & Shine. First National also stated that the loan secured by the

equipment had gone into default. First National demanded that Timmerman return the

equipment, but Timmerman refused.

B. Proceedings

First National brought suit against Timmerman in 2010 seeking the return

of the equipment. Timmerman answered the complaint and asserted third-party claims

against Ranes individually and Ranes & Shine based on Ranes’s incorrect representation

that Ranes & Shine owned the equipment without any encumbrances. Timmerman

asserted the following third-party claims: (1) breach of warranty of title under the UCC;

(2) misrepresentation; and (3) deceptive trade practices under Alaska’s Unfair Trade

Practices and Consumer Protection Act (UTPA). First National’s claims against

Timmerman were disposed of on summary judgment, leaving only Timmerman’s

third-party claims.

Ranes & Shine moved for summary judgment on Timmerman’s claims

based on the applicable statutes of limitation. Superior Court Judge John Suddock

granted Ranes & Shine’s motion in part, ruling that Timmerman’s breach of warranty

claim was subject to the UCC’s strict four-year limitations period 2 and that Timmerman

2

See AS 45.02.725(a)-(b) (“An action for breach of a contract for sale must

be commenced within four years after the cause of action has accrued. . . . A cause of

(continued...)

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failed to bring his breach of warranty claim within that period. The superior court denied

Ranes & Shine’s motion with respect to the misrepresentation and UTPA claims,

concluding that there were genuine issues of material fact regarding when Timmerman

was put on inquiry notice. The court did not address a common law contract claim

Timmerman had added through an amended complaint filed while the parties were

briefing the summary judgment motion.3

The superior court held a two-day bench trial in May 2013 to address the

remaining claims. The court ruled that Timmerman’s misrepresentation, UTPA, and

common law breach of contract claims were not barred by the statutes of limitation

because Timmerman was not on inquiry notice until he was contacted by First National

in 2010. The court also concluded that Timmerman had proven his misrepresentation

and breach of contract claims, but not his UTPA claim.

The superior court observed, however, that the lawsuit had been “inaptly

filed as a personal lawsuit by Mr. Timmerman against [Ranes & Shine] when all the

evidence is that he was negotiating and settling and purchasing this equipment as a

corporate officer of MacDonald Miller.” Based on this finding, and further finding that

Ranes & Shine would suffer no prejudice, the court on its own initiative substituted

MacDonald Miller as the plaintiff.

2

(...continued)

action accrues when the breach occurs, regardless of the aggrieved party’s lack of

knowledge of the breach.”); see also Armour v. Alaska Power Auth., 765 P.2d 1372,

1375 (Alaska 1988) (holding that the four-year UCC statute of limitations is not tolled

under the common law discovery rule regardless of a purchaser’s knowledge).

3

Timmerman’s contract claim alleged that Ranes & Shine had not provided

“good and valuable consideration,” apparently due to the seizure of the equipment, and

that Ranes & Shine breached the duty of good faith and fair dealing by selling equipment

that Ranes & Shine “was not authorized to sell.”

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MacDonald Miller prepared a final judgment for the superior court’s

signature. The proposed final judgment stated that the claims against Ranes individually

were dismissed. Ranes & Shine objected, arguing that the superior court’s oral findings

had not dismissed the individual claims against Ranes.

The superior court signed the proposed final judgment without specifically

discussing its decision to dismiss the claims against Ranes individually. The court

awarded MacDonald Miller $50,329.37, plus interest, attorney’s fees, and costs.

Ranes & Shine appeals.

III. STANDARD OF REVIEW

“Determinations of which legal authorities apply in a case and

interpretations of what those legal authorities mean are questions of law subject to

de novo review.”4 “When applying the de novo standard of review, we apply our

independent judgment . . . , adopting the rule of law most persuasive in light of

precedent, reason, and policy.”5

We review a trial court’s findings of fact for clear error.6 Clear error “exists

when ‘our review of the record leaves us with the definite and firm conviction that the

superior court has made a mistake.’ ”7

4

ConocoPhillips Alaska, Inc. v. Williams Alaska Petrol., Inc., 322 P.3d 114,

122 (Alaska 2014) (footnotes omitted).

5

Id. (quoting Russell ex rel. J.N. v. Virg-In, 258 P.3d 795, 802

(Alaska 2011)) (internal quotation marks omitted).

6

Gilbert M. v. State, 139 P.3d 581, 586 (Alaska 2006).

7

Id. (quoting D.M. v. State, Div. of Family & Youth Servs., 995 P.2d 205,

207-08 (Alaska 2000)).

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We review a trial court’s decision to admit evidence, including the

testimony of a witness, for abuse of discretion.8 A decision to permit or deny an

amendment to the pleadings is reviewed for abuse of discretion.9 We will find an abuse

of discretion when the decision on review is manifestly unreasonable.10

IV. DISCUSSION

Ranes & Shine primarily argues that the superior court erred when it ruled

that the statutes of limitation did not bar MacDonald Miller’s claims. Ranes & Shine

also argues that the court erred in dismissing the claims against Ranes individually and

awarding MacDonald Miller attorney’s fees and costs. Finally, Ranes & Shine raises

several procedural issues. We generally affirm the superior court’s rulings, but we

reverse and remand its dismissal of the misrepresentation claim against Ranes

individually.

A. MacDonald Miller’s Common Law Breach Of Contract And

Misrepresentation Claims Were Not Barred By The Statutes Of

Limitation.

MacDonald Miller asserted three claims at trial: (1) misrepresentation;

(2) unfair trade practices; and (3) breach of contract. Only the misrepresentation and

breach of contract claims are at issue in this appeal.11

8

Getchell v. Lodge, 65 P.3d 50, 53, 58 (Alaska 2003).

9

Miller v. Safeway, Inc., 102 P.3d 282, 288 (Alaska 2004).

10

See Tufco, Inc. v. Pacific Envtl. Corp., 113 P.3d 668, 671 (Alaska 2005).

11

The trial court dismissed MacDonald Miller’s UTPA claim, and

MacDonald Miller has not appealed that ruling.

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A party must bring a misrepresentation claim within two years of the

accrual of his cause of action 12 and a breach of contract claim within three years of

accrual.13 Generally, “accrual of a cause of action is established at the time of the

injury.”14 But the common law discovery rule tolls the running of the statutory period

“[w]here an element of a cause of action is not immediately apparent.”15 The discovery

rule “mitigate[s] the harshness that can result from the [accrual] rule’s preclusion of

12

AS 09.10.070(a).

13

AS 09.10.053. But see AS 45.02.725(a) (four-year statute of limitations

applicable to breach of a contract for sale of goods). Ranes & Shine argues that the

contract between Timmerman and Ranes was one for the sale of goods, making it subject

to the four-year statute of limitations in AS 45.02.725 to which the discovery rule does

not apply. Armour v. Alaska Power Auth., 765 P.2d 1372, 1375 (Alaska 1988). But we

conclude that Ranes & Shine did not preserve this argument.

MacDonald Miller first asserted its common law contract claim while the

briefing on Ranes & Shine’s motion for summary judgment was pending. Ranes &

Shine thus argued for the application of AS 45.02.725 for the first time in its summary

judgment reply brief. But the superior court did not issue a ruling on that issue, and

Ranes & Shine never sought reconsideration or filed a new motion seeking to bar the

common law contract claim. Ranes & Shine also did not ask the court to apply the four-

year statute of limitations at trial even after the court specifically asked the parties if it

needed to make any additional rulings. Thus, Ranes & Shine asks that we review an

order that was never properly requested and that was never issued. We decline to do so.

See Gunderson v. Univ. of Alaska, Fairbanks, 902 P.2d 323, 327 n.5 (Alaska 1995)

(“Gunderson did not present this argument to the trial court . . . . Therefore it is

waived.”); Alaska State Emps. Ass’n v. Alaska Public Emps. Ass’n, 813 P.2d 669, 671

n.6 (Alaska 1991) (“As a matter of fairness, the trial court could not consider an

argument raised for the first time in a reply brief.”).

14

Gefre v. Davis Wright Tremaine, LLP, 306 P.3d 1264, 1273 (Alaska 2013)

(quoting Cameron v. State, 822 P.2d 1362, 1365 (Alaska 1991)) (internal quotation

marks omitted).

15

Id. at 1274 (alteration in original) (quoting John’s Heating Serv. v. Lamb,

46 P.3d 1024, 1031 (Alaska 2002)) (internal quotation marks omitted).

-8- 7003

claims where the injury provided insufficient notice of the cause of action to the

plaintiff.”16

In discussing the discovery rule, we have previously explained:

[T]he statute of limitations does not begin to run until the

claimant discovers, or reasonably should have discovered, the

existence of all elements essential to the cause of action.

Thus we have said the relevant inquiry is the date when the

claimant reasonably should have known of the facts

supporting her cause of action. We look to the date when a

reasonable person has enough information to alert that person

that he or she has a potential cause of action or should begin

an inquiry to protect his or her rights.[17]

There are at least two dates from which the statute of limitations can begin to run: (1) the

actual-notice date, and (2) the inquiry-notice date. The actual-notice date is “the date

when [the] plaintiff reasonably should have discovered the existence of all essential

elements of the cause of action.”18 The inquiry-notice date is “the date when the plaintiff

has information which is sufficient to alert a reasonable person to begin an inquiry to

protect his rights.”19 The inquiry-notice date generally controls when a cause of action

accrues.20

16

Id. (second alteration in original) (quoting Cameron, 822 P.2d at 1365)

(internal quotation marks omitted).

17

Id. at 1275 (alteration in original) (quoting Mine Safety Appliances Co. v.

Stiles, 756 P.2d 288, 291 (Alaska 1988)).

18

Id. (alteration in original) (quoting John’s Heating Serv., 46 P.3d at 1031)

(internal quotation marks omitted).

19

Id. (quoting John’s Heating Serv., 46 P.3d at 1031) (internal quotation

marks omitted).

20

Id. We note that there are exceptions to this rule not at issue in this case.

(continued...)

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Ranes & Shine challenges the superior court’s statute of limitations rulings

on two grounds. First, Ranes & Shine asserts that we should hold that MacDonald Miller

was on notice of its claims in 2005 because First National’s publicly filed UCC financing

statement put MacDonald Miller on constructive notice21 of the fact that the equipment

was encumbered, contrary to Ranes’s representation. Whether a UCC financing

statement provides constructive notice of the elements of a claim for statute of limitations

purposes is a question of law that we review de novo.22

Second, Ranes & Shine argues that the facts of this case demonstrate that

MacDonald Miller was on inquiry notice of its claims in 2005 even without imputing the

information contained in the UCC financing statement to it. Determining the accrual

date is a fact-intensive inquiry conducted by the superior court, and we review the

court’s findings for clear error.23

1. UCC financing statements do not provide constructive notice of

the elements of a claim for statute of limitations purposes.

Ranes & Shine argues that First National’s UCC financing statement gave

MacDonald Miller constructive notice of the fact that Ranes had misrepresented

20

(...continued)

For example, if the plaintiff made a reasonable inquiry but failed to discover the essential

elements of his cause of action, the actual-notice date may control. Cameron, 822 P.2d

at 1367.

21

“Constructive notice is information or knowledge of a fact imputed by law

to a person, although he or she may not actually have it . . . .” 58 A M . JUR . 2 D

Notice § 6 (2015).

22

Matanuska Elec. Ass’n v. Chugach Elec. Ass’n, 152 P.3d 460, 465

(Alaska 2007) (reviewing questions of law de novo).

23

Gefre, 306 P.3d at 1271 (citing Sengupta v. Wickwire, 124 P.3d 748, 752

(Alaska 2005)); Pedersen v. Zielski, 822 P.2d 903, 907 (Alaska 1991) (“Application of

the discovery rule . . . is dependent on facts that are often unclear.”).

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Ranes & Shine’s ability to pass clear title to the equipment. Ranes & Shine reasons that

the superior court should have charged MacDonald Miller with notice of First National’s

security interest in the equipment at the time of the 2005 agreement. This would place

the accrual date sometime in October 2005, and the statutes of limitation would bar

MacDonald Miller’s claims.24 But we decline to adopt Ranes & Shine’s constructive

notice argument because it is inconsistent with our statute of limitations jurisprudence

and would be bad public policy.

a. We have implicitly rejected the constructive notice

position Ranes & Shine asks us to adopt.

Neither party has cited any statute of limitations cases where we charged

a plaintiff with constructive notice of publicly recorded facts absent a finding that the

24

We note that the parties have briefed this case as though MacDonald

Miller’s misrepresentation and common law contract claims must have accrued at the

same time. We have treated their arguments in the same manner because it does not

affect the result in this case.

But our holding in Jarvill v. Porky’s Equipment, Inc. suggests that their

assumption may not be correct. 189 P.3d 335, 339 (Alaska 2008). In Jarvill the plaintiff

purchased a boat that was allegedly constructed negligently. Id. at 336. Two and a half

years after the plaintiff took delivery of the boat, the boat sank, and the plaintiff sued the

builder. Id. at 337. We held that even though the boat was defective when it was sold,

the plaintiff did not suffer an injury that would support his negligence and product defect

claims until the boat sank, and, therefore, those causes of action did not accrue until the

boat sank. Id. at 339-41.

Similarly, it could be argued that MacDonald Miller’s misrepresentation

action did not accrue until First National demanded the equipment be returned because

MacDonald Miller had not suffered damages necessary to support its claim until that

point. If that were the case, MacDonald Miller’s misrepresentation claim — but not

necessarily its contract claim — would be timely even without the operation of the

discovery rule. But we decline to apply Jarvill here because it was not raised before us

or the superior court, and its application would not change our ultimate conclusions

regarding the timeliness of MacDonald Miller’s claims.

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plaintiff was already on inquiry notice.25 Our review has identified only one Alaska

case — Bauman v. Day — where it was argued that a party should have been charged

with knowledge of facts in a publicly recorded document for statute of limitations

purposes without already being on inquiry notice.26

In Bauman the Baumans purchased a property in 1984 from the Days after

allegedly asking the Days about the presence of permafrost on the property and being

25

While we have held that a person may be charged with knowledge of

information in publicly available documents in a variety of contexts, none of these cases

specifically considers that issue with respect to the statute of limitations where the

plaintiff was not already on inquiry notice. See, e.g., Kenai Chrysler Ctr., Inc. v.

Denison, 167 P.3d 1240, 1248 (Alaska 2007) (holding that a dealership was on

constructive notice of guardianship because of existence of guardianship order); Watega

v. Watega, 143 P.3d 658, 665 (Alaska 2006) (holding that purchasers of divorcing

couple’s home had constructive notice of wife’s claim to the property because wife had

filed an opposition to the sale with the superior court and purchasers knew about the

divorce and the husband’s need to obtain court permission prior to sale); Methonen v.

Stone, 941 P.2d 1248, 1252 (Alaska 1997) (charging a purchaser of real property with

notice of information in public records where other facts known to the purchaser placed

him on inquiry notice of a potential encumbrance); State v. Alaska Land Title Ass’n,

667 P.2d 714, 725 (Alaska 1983) (holding that title insurer’s policy was triggered

because insurer was held to be on constructive notice of a public land order published

in the Federal Register). Nothing in this opinion today affects these earlier holdings.

26

892 P.2d 817 (Alaska 1995). The theory of constructive notice has

appeared elsewhere in our statute of limitations cases, but never in the way Ranes &

Shine proposes here. See, e.g., Phillips v. Gieringer, 108 P.3d 889, 893 (Alaska 2005)

(discussing constructive notice and the relation back doctrine); Breck v. Moore, 910 P.2d

599, 604-05 (Alaska 1996) (holding that plaintiffs were on constructive notice of

information known or that should have been known to the plaintiffs’ attorney). But cf.

Moore v. Allstate Ins. Co., 995 P.2d 231, 239 (Alaska 2000) (holding in the discovery

rule context that a homeowner would not be charged with constructive notice of her

claim that her insurer had allegedly misrepresented the coverage available to her under

the National Flood Insurance Program despite the fact that she could have researched the

policy in the Federal Register).

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told that there was none.27 But the recorded subdivision plat “showed the presence of

permafrost-laden soils on the land.”28

The Baumans built a house on the property, and in 1986 began

experiencing permafrost-related problems.29 The early problems were not significant,

and the Baumans dismissed them as normal settlement of a new home.30 By 1988,

however, the problems were so significant that the Baumans stopped paying their

property taxes until the property was reevaluated to take the apparent permafrost into

account.31

The Baumans did not bring a suit against the Days until 1992, alleging

breach of contract among other claims.32 At the time, a breach of contract action was

subject to a six-year statute of limitations.33 On a motion for summary judgment, the

superior court found that the contract action had accrued at the time of the sale in 1984

and ruled that the Baumans’ contract claims were barred.34 The Baumans appealed and

27

Bauman, 892 P.2d at 820.

28

Id. at 822.

29

Id. at 820.

30

Id.

31

Id.

32

Id.

33

See id. at 827 & n.16. As noted above, a common law breach of contract

claim is now subject to a three-year statute of limitations. See AS 09.10.053.

34

Bauman, 892 P.2d at 822.

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we reversed in part, holding that the statute of limitations on their contract claim did not

begin to run until they began experiencing permafrost-related problems.35

Chief Justice Moore, writing in partial dissent, concluded that the language

regarding the presence of permafrost in the subdivision plat meant that the Baumans

could have discovered the existence of permafrost on the land in 1984.36 He would have

held that the Baumans had constructive notice of the permafrost at the time they bought

the house because (1) “[i]t is not unreasonable to expect the Baumans to have examined

the subdivision plat, given that the deed of trust’s description specifically referenced that

plat,” and (2) the Baumans were allegedly concerned before purchasing the property that

it might contain permafrost.37

This court, however, implicitly dismissed this constructive notice

argument.38 Instead, we reviewed the facts in the light most favorable to the Baumans

and concluded that the Baumans did not discover the permafrost “until they built on the

property and problems began to arise.”39 Noting that the Baumans allegedly became

aware of the permafrost in 1988, we held that the breach of contract action was filed

within the six-year statute of limitations period in effect at the time.40

Ranes & Shine’s reasoning is similar to Chief Justice Moore’s dissenting

opinion and is not supported by our holding in Bauman. If we had construed the

35

Id. at 828.

36

Id. at 831 (Moore, C.J., dissenting).

37

Id.

38

Id. at 828.

39

Id.

40

Id.

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information in the subdivision plat as being sufficient to put the Baumans on inquiry

notice, we would have needed to determine whether the Baumans undertook an inquiry

and whether the inquiry was reasonable.41 Our not doing so in the face of Chief Justice

Moore’s dissent on this particular point demonstrates our implicit rejection of the

argument Ranes & Shine advances here.

b. Public policy weighs against holding that a

misrepresentation victim is on constructive notice of the

information in publicly recorded financing statements for

the purposes of the statute of limitations analysis.

A UCC financing statement is intended to provide notice to the world of a

secured party’s interest in specific collateral.42 The notice protects the party who obtains

the security interest, it also protects those who consider dealing with the debtor by

helping a potential creditor understand where it would stand in the order of priority

among other creditors and by helping it take appropriate action to protect its interests.43

But a financing statement is not intended to shield a tortfeasor from the

consequences of his misrepresentations. “The recording laws establish a priority as

between innocent claimants to the same property or right; they are not intended to give

security to the perpetrators of fraud as against their victims.”44 Any other rule would

41

See Cameron v. State, 822 P.2d 1362, 1367 (Alaska 1991) (discussing the

third part of the discovery rule analysis as stated in Pedersen v. Zielski, 822 P.2d 903,

908 (Alaska 1991)).

42

68A A M . JUR . 2D Secured Transactions § 216 (2015).

43

Id.

44

Larabee v. Eichler, 271 S.W.3d 542, 547 (Mo. 2008) (en banc) (emphasis

added) (quoting Dreckshage v. Cmty. Fed. Sav. & Loan Ass’n, 555 S.W.2d 314, 319-20

(Mo. 1977) (en banc)). Although Larabee involved a real estate transaction, we

conclude the same rationale is true for UCC financing statements. See id. at 544-45.

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reward the party that convincingly misrepresents the status of his title by relieving him

of liability once the statute of limitations has run without any indication to his victim that

there is a need to undertake additional investigation. We see no convincing reason to

adopt such a rule.

The potential collateral consequences of extending the notice a financing

statement gives beyond the realm of secured transactions also give us pause. For

example, our case law establishes that a plaintiff must prove that he justifiably relied on

a defendant’s incorrect statements to prove misrepresentation.45 If we adopted Ranes &

Shine’s broad constructive-notice argument, it is unlikely that any misrepresentation

regarding ownership could be justifiably relied upon when a contradictory recorded

document exists: the misrepresentations would always be belied by the publicly

recorded documents of which the plaintiff would be deemed to have constructive notice.

Nothing in our case law suggests such a result, and we decline to endorse it here.

2. The superior court did not commit clear error when it set the

inquiry-notice date.

The parties do not dispute that Timmerman and Ranes agreed to settle

MacDonald Miller’s outstanding debt in October 2005. Nor is there any dispute that

First National initially contacted Timmerman in the summer of 2010. MacDonald Miller

brought its third-party complaint in September 2010. The superior court found that

MacDonald Miller’s causes of action did not accrue at the time of the 2005 agreement

based primarily on Ranes’s and Timmerman’s lack of commercial financing

sophistication and Ranes’s affirmative representation to Timmerman that Ranes & Shine

owned clear title to the equipment. Instead, the court found that the statutes of limitation

began to run when First National contacted Timmerman.

45

Reeves v. Alyeska Pipeline Serv. Co., 56 P.3d 660, 670 (Alaska 2002).

-16- 7003

Ranes & Shine argues that the superior court erred in finding that the

statutes of limitation began to run upon First National’s 2010 contact with Timmerman.

Ranes & Shine asserts that the information known to MacDonald Miller at the time of

the 2005 transaction put it on inquiry notice in October 2005, making its lawsuit

untimely.46

We have reviewed the record in this appeal with Ranes & Shine’s

arguments in mind and find no clear error. Timmerman and Ranes both testified that

they believed Ranes & Shine owned clear title to the equipment. Timmerman and Ranes

also both testified that they did not know about UCC financing statements until this case.

The superior court specifically found Timmerman credible on this point, while noting

that both Timmerman and Ranes lacked commercial sophistication.

While Timmerman appears to have known that a bank may have been

involved in financing Ranes & Shine’s building, Timmerman also claimed he believed

that the Embleys had put a substantial amount of their own money into the project. The

superior court apparently credited this testimony because it later explicitly referred to the

Embleys’ investment in Ranes & Shine as one explanation for why Timmerman

reasonably relied on Ranes’s representation that Ranes & Shine owned clear title to the

equipment.

We conclude that the superior court did not commit clear error in finding

Timmerman was not on inquiry notice at the time of the sale. These facts and findings

46

Ranes & Shine argues this point in two different contexts: (1) the denial

of its motion for summary judgment; and (2) the superior court’s findings after trial. We

address only the latter here. The superior court denied Ranes & Shine’s motion, at least

as to the misrepresentation claim, because it found there were genuine issues of material

fact. It then held a trial. We will not review an order denying summary judgment after

there has been a subsequent trial on the merits of the facts at issue in the summary

judgment proceedings. Larson v. Benediktsson, 152 P.3d 1159, 1170 (Alaska 2007).

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provide sufficient support for the court’s decision even in the face of contrary evidence.

Thus, we affirm the court’s finding that Timmerman was not on inquiry or actual notice

until contacted by First National. Because MacDonald Miller filed its claims against

Ranes & Shine within two years of that contact, its claims were timely.

B. The Misrepresentation Claim Against Ranes In His Individual

Capacity Should Not Have Been Dismissed.

MacDonald Miller asserted its misrepresentation claim against both

Ranes & Shine and Ranes in his individual capacity. While the superior court orally

ruled in MacDonald Miller’s favor and specifically discussed Ranes & Shine’s liability,

it did not address Ranes’s individual liability. That issue first arose after trial when

MacDonald Miller submitted a proposed final judgment including language dismissing

the claim against Ranes individually. Ranes & Shine objected to this part of the

proposed final judgment. Despite Ranes & Shine’s specific objection to this language,

the superior court adopted the proposed final judgment as its order without any

discussion of why it dismissed the claims against Ranes.

Ranes & Shine argues that the superior court erred in dismissing the

misrepresentation claim against Ranes. Ranes & Shine argues that an agent may be held

liable to a third-party for the agent’s negligence, and asserts that it was Ranes’s

misrepresentations that gave rise to MacDonald Miller’s claims. MacDonald Miller

argues that Ranes was not individually liable because Ranes was Ranes & Shine’s agent

acting on the company’s behalf. These arguments present questions of law which we

review de novo.47

47

Matanuska Elec. Ass’n v. Chugach Elec. Ass’n, 152 P.3d 460, 465 (Alaska

2007) (reviewing questions of law de novo).

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Our case law indicates that an agent’s liability depends on the type of claim

asserted.48 “The law is well established that in the event of negligence by a disclosed

agent acting within the scope of his authority the agent may be held individually liable

to a third party.”49 But for breach of contract claims “officers of a corporation will not

ordinarily be held personally liable for contracts they make as agents of the corporation”

if they disclose their agency and the existence of the corporation.50 Thus, an agent may

be held individually liable for negligence the agent commits, but not, in the majority of

circumstances, for breach of contract.

The only claim MacDonald Miller asserted against Ranes on which

MacDonald Miller prevailed was its misrepresentation claim. It is undisputed that Ranes

was the person who misrepresented the status of title to the equipment, and it is through

Ranes’s misrepresentation that Ranes & Shine also became liable for misrepresentation.

The case law discussed above compels the conclusion that Ranes would be individually

liable for tortious acts he individually committed while acting as an agent for Ranes &

Shine — he thus can be held individually liable for the misrepresentation he made. An

agent, even a corporate officer or director, is not cloaked with tort immunity because he

was acting in the course and scope of his employment when he committed the tort.

48

We note that the briefing in this case assumes that Ranes was acting as

Ranes & Shine’s agent during his negotiations with Timmerman.

49

Austin v. Fulton Ins. Co., 498 P.2d 702, 704 (Alaska 1972); see

11 FLETCHER CYCLOPEDIA OF THE LAW OF CORPORATIONS § 1135 (2014) (“It is the

general rule that an individual is personally liable for all torts the individual committed,

notwithstanding the person may have acted as an agent or under directions of another.”);

see also 18B A M . JUR . 2D Corporations § 1629 (2015) (“If . . . a director or officer

commits or participates in the commission of a tort, whether or not it is also by or for the

corporation, he or she is liable to injured third persons . . . .”).

50

Jensen v. Alaska Valuation Serv., Inc., 688 P.2d 161, 162-63 (Alaska 1984).

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Therefore, we hold it was error to dismiss the misrepresentation claim asserted against

Ranes in his individual capacity.

C. The Superior Court Did Not Abuse Its Discretion When It Amended

The Pleadings Sua Sponte.

While issuing its oral decision, the superior court commented that it

believed Timmerman was the wrong plaintiff and that the real party in interest was

MacDonald Miller. Finding that “the case was tried on the basis [of] what happened to

MacDonald Miller and . . . the appropriate treatment of that,” the court amended the

pleadings sua sponte to substitute MacDonald Miller as the plaintiff. The court further

found that there was no prejudice to Ranes & Shine as a result of the amendment.

Ranes & Shine argues that this decision constituted an abuse of discretion.

We disagree. A trial court has broad power to conform the pleadings to the

evidence actually presented.51 Alaska Rule of Civil Procedure 15(b) provides that

“[w]hen issues not raised by the pleadings are tried by express or implied consent of the

parties, they shall be treated in all respects as if they had been raised in the pleadings.”52

Nothing in Civil Rule 15(b) prohibits the superior court from amending the pleadings

sua sponte. “Application of [Civil Rule 15(b)] is appropriate . . . when evidence

supporting the amendment was offered at trial . . . with the opposing party’s express or

implied consent . . . .”53 “In determining implied consent, prejudice to the party opposing

amendment is relevant.”54

51

See Alaska R. Civ. P. 15(b).

52

Id.

53

Alderman v. Iditarod Props., Inc., 32 P.3d 373, 396 (Alaska 2001).

54

Id. (citing 6A CHARLES A LLAN W RIGHT , A RTHUR R. M ILLER & M ARY K AY

K ANE , FEDERAL PRACTICE AND PROCEDURE § 1493 (2d ed. 1990)).

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Reviewing the circumstances here, we find no abuse of discretion.55

Timmerman testified that he was MacDonald Miller’s sole owner. He also testified that

when he entered into the contract with Ranes he was representing himself and his

company. Part of the agreement he entered into with Ranes involved MacDonald Miller

forgiving the remaining balance owed for work MacDonald Miller had done on Ranes &

Shine’s building. Although Timmerman paid the additional $18,000 with a personal

check and not a corporate check, he testified this was only a matter of convenience. We

also note that Ranes & Shine occasionally referred to MacDonald Miller as if

MacDonald Miller were the party asserting claims against it and that Ranes & Shine’s

defense does not appear to have been predicated on Timmerman being an improper

plaintiff.

Based on the evidence presented, the way the parties tried their case, and

the lack of prejudice to Ranes & Shine, we hold that the superior court did not abuse its

discretion when it sua sponte amended the pleadings to substitute MacDonald Miller as

the third-party plaintiff.

D. The Superior Court Did Not Abuse Its Discretion When It Permitted

Ranes To Testify Telephonically.

Leading up to the trial there was significant confusion regarding whether

and how Ranes would testify because he was in federal custody outside of Alaska.

MacDonald Miller had indicated it intended to depose Ranes telephonically, but later

asked for a 60-day continuance to determine whether Ranes would testify at trial. The

superior court suggested deposing Ranes but also offered to help facilitate Ranes’s

appearance at trial.

A month before trial was to start, MacDonald Miller filed a witness list

indicating it intended to have Ranes testify telephonically. Ranes & Shine filed an

55

Cf. id. at 380 (reviewing amendm ent of pleadings for abuse of discretion).

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objection to Ranes appearing telephonically based on MacDonald Miller’s failure to

comply with the civil rules. On the first day of trial, the superior court ruled it would

allow Ranes to testify telephonically and stated that, while counsel for Ranes & Shine

“object[ed] that the I’s aren’t dotted and the T’s aren’t crossed[,] . . . in substance rather

than form [Timmerman’s motion was] compliant.”

Ranes & Shine appeals that decision, asserting that (1) it was prejudiced by

the superior court’s decision to permit Ranes to testify telephonically because it was

unable to confront him with exhibits; (2) Timmerman filed the notice too close to trial;

and (3) it was “led . . . to believe that the purpose of the sixty[-]day continuance in

January 2013 was to facilitate the deposition of Ranes.” We review the superior court’s

decision to grant a motion to permit telephonic testimony for abuse of discretion.56 And

we have previously noted that procedural rules, such as those providing for telephonic

testimony, “should be interpreted liberally in order to avoid determinations based on

technicalities.”57

We hold the superior court did not abuse its discretion in permitting Ranes

to testify telephonically. Alaska Rule of Civil Procedure 99(a) provides that the court

may allow a witness “to participate telephonically in any hearing or deposition for good

cause and in the absence of substantial prejudice to opposing parties.” And in a case

presenting similar issues, we determined that it was not an abuse of discretion for the

superior court to undertake a good-cause analysis that considered the cost, time, and

inconvenience of transporting a prisoner for in-person testimony.58 We affirmed the

superior court’s finding that it would not prejudice the inmate — who was a party — to

56

Silvers v. Silvers, 999 P.2d 786, 789 (Alaska 2000).

57

Rollins v. Leibold, 512 P.2d 937, 941 n.8 (Alaska 1973).

58

Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105, 1113 (Alaska 2002).

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participate telephonically at trial, as opposed to being physically present in court.59

Here, the superior court made a brief good-cause finding that Ranes was

incarcerated out of state. The court also noted that it would work with the parties to

address any problems arising out of Ranes’s telephonic participation. Our review of

Ranes’s testimony reveals that Ranes & Shine never requested such help or complained

of being unable to show Ranes an exhibit. If Ranes & Shine had asked for assistance,

we believe the court would have tried to resolve any issues as it had previously offered

to do. Given that there was good cause to permit Ranes to testify telephonically and

Ranes & Shine has not demonstrated any prejudice, we hold that the court did not abuse

its discretion in allowing Ranes to testify telephonically.

E. The Superior Court Did Not Err When It Awarded Attorney’s Fees

And Costs To MacDonald Miller.

Ranes & Shine also argues that the superior court abused its discretion in

awarding MacDonald Miller attorney’s fees and costs because Timmerman — not

MacDonald Miller — actually incurred the charges in this case. But any attorney’s fees

or costs Timmerman incurred were incurred for MacDonald Miller’s benefit, and the

evident unity of interests between Timmerman and MacDonald Miller that rendered

MacDonald Miller’s substitution proper similarly supports the award of attorney’s fees

and costs to MacDonald Miller.60 Therefore, the superior court did not err when it

awarded MacDonald Miller’s attorney’s fees and costs.61

59

Id.

60

See BP Pipelines (Alaska) Inc. v. State, Dep’t of Revenue, 327 P.3d 185,

192 (Alaska 2014) (“[O]ur case law has long made it clear that, regardless of how parties

are formally arranged, fees and costs may be awarded based on actual adversity of

interests.”).

61

Ranes & Shine also appears to challenge the superior court’s decision to

(continued...)

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V. CONCLUSION

We AFFIRM the superior court in all respects except its decision to dismiss

MacDonald Miller’s misrepresentation claim against Ranes in his individual capacity.

We REVERSE the dismissal as to Ranes and REMAND for further proceedings

consistent with this opinion.

61

(...continued)

enhance the fee award. But we do not address that argument here because it was first

raised in Ranes & Shine’s reply brief. Sumner v. Eagle Nest Hotel, 894 P.2d 628, 632

(Alaska 1995).

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