State v. First National Bank of Anchorage

RABINOWITZ, Chief Justice,

dissenting in part.

My only disagreement with the court’s disposition of the various issues in this appeal concerns its holding that determination of Brown’s liability to pre-September 21, 1977 purchasers on the basis of common law fraud must be remanded for a second trial. The court reaches its remand conclusion on the following rationale: “The state did not allege that Brown should be held liable on the basis of common law fraud.” Agreeing that Brown’s right to a fair trial was jeopardized by the trial court’s adoption of a new theory of the case, and refusing to countenance the trial court’s re-engineering of the case to hold Brown liable for common law fraud, the majority has concluded that the matter should be remanded for trial of the common law fraud question.

I do not believe that a remand to address the issue of common law fraud is appropri *427 ate. The case against Brown was tried solely on the theory that Brown was liable under the ULSPA, not on the basis of common law fraud. Further, it cannot be shown that the issue of common law fraud was tried with the express or implied consent of the parties. In short, I think it unfair to require Brown to go through a second trial in circumstances where the state never asserted a claim of common law fraud in the original proceedings.

Even if I was persuaded that the issue of common law fraud had been raised and tried, in my view the appropriate disposition of the case would be to reverse a significant portion of the superior court’s judgment ordering restitution to purchasers. As to these fifty-odd pre-September 21, 1977 purchasers, there is no evidence in the record concerning what misrepresentations, if any, were made to them or whether a particular purchaser relied on any such misrepresentation. 1 In short, I fail to comprehend the justification for the court’s ordering a remand which will afford the state a second opportunity to attempt to present sufficient evidence to show that a particular purchaser is entitled to rescind his or her transaction with Brown. 2

In my view, the court’s disposition of the common law fraud issue also raises basic *428 considerations of fairness. Brown’s engineer, Neil Hausam, moved for summary judgment on the ground that the ULSPA could not be applied to reach his activities. The superior court granted summary judgment on that, ground. In response to Brown’s inquiry at the outset of the trial, the superior court indicated that “implicit in what the court has already ruled with regard to Mr. Hausam is that any claim based upon anyone who relied — whose actions were motivated by acts that took place prior to the effective date of the amendment must fail.” The record indicates that Brown obviously was proceeding under the assumption that, if Hausam was out of the case because the act could not be applied retroactively, so was he unless the state could prove some post-ULSPA misbehavior affecting a pre-ULSPA purchaser. In my view, inconsistent application of the law in this case has resulted in a basically unfair decision against Brown.

. Although the superior court’s order permits numerous purchasers to rescind their purchases and obtain a refund of their money on the ground that they were defrauded by Brown, there is no evidence in the record concerning most of these persons’ dealings with Brown. A total of fifteen purchasers testified (several on Brown’s behalf), and their testimony establishes that Brown or his agents told different things to different persons and that purchasers had varying amounts of knowledge about the condition of the property that they were purchasing. In other words, it is impossible to infer from the testimony of record that Brown defrauded dozens of purchasers, and thus the superior court’s judgment lacks evidentiary support.

For example, on the issue of Brown’s alleged failure to inform purchasers that their riverside parcels might flood, several of the state’s witnesses testified that they knew the area was prone to flooding. Another two witnesses explained that they were told by Brown’s representative of the subdivision’s history of flooding. Many purchasers told stories much like that told by Thomas Doggett, who explained that he had bought his lot “more or less on impulse” within two hours of first seeing it and that he “didn’t think about it, didn’t research it, didn’t ask any of the neighbors nothing.” In other words, even if the testimony of some purchasers established that those persons were entitled to rescind their transactions, that testimony also establishes that it is impossible to infer that Brown is liable to other purchasers; the testimony of record does not establish that all purchasers were in the same position or that they all were told the same thing.

. First, this is not a case in which the state is the victim of poor lawyering or inartful pleading. The state was permitted to amend its complaint four times over the course of almost a year. The state had ample opportunity, both before and after conducting extensive investigations, to tailor its pleadings and theories to fit its view of the facts.

Second, this is not a case in which defrauded consumers would be left without a remedy should the state be denied the remand opportunity to litigate the common law fraud issue on their behalf. Each and every landowner is free to maintain an individual suit should he or she wish to rescind the transaction or to recover damages.

Third, this is not a case in which significant judicial resources would be saved by litigating all purchasers’ claims in a single class action type lawsuit. The state must prove its allegation of fraud as to each purchaser. On remand, the proceedings could become a confusing series of up to 53 mini-trials.

Fourth, this is not a case in which the state’s objectives would be frustrated should individual purchasers be required to bring separate suits to vindicate their rights, if any. The state has repeatedly represented that its objective is not to redress individual purchasers’ grievances but rather to vindicate its separate interest in “public law enforcement” by enjoining Brown from violating state law. Indeed, the state has already obtained precisely the relief that it claims to have been seeking, an injunction.

Fifth, this is a case in which Brown will suffer significant prejudice should the case be remanded for a second trial. There is the obvious prejudice of forcing Brown to incur the expense of a second trial which would not have been necessary had the state raised the theory that it now wishes to rely upon, and the prejudice of possible liability to purchasers who would not have been entitled to recover under the state’s statutory theory of liability. Further, there is no assurance that Brown will not be faced with separate suits brought by individual purchasers after the state’s suit comes to an end. The state’s suit has no res judicata effect as to individual landowners, and landowners are not required to elect to participate in any judgment obtained by the state until *428 after the lawsuit has drawn to a close. Thus, if the state loses, individual purchasers are free to ignore the state’s suit and to file their own lawsuits; even if the state wins, no landowner is bound by the judgment, although it is plausible to assume that most landowners will elect to participate in the judgment rather than to bring separate suits.