STATE OF ALASKA, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, Appellant,
ALECIA RAE MULLINS, SHAYNA LYNN MULLINS, JACK DOMINICK, ANGELA MICHELLE McCOY aka ANGELA MICHELLE MULLINS aka ANGELA MICHELLE FULTON, and BARBARA DOMINICK (DECEASED), Appellees
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Kenai, Carl Bauman, Judge. Superior Court No. 3KN-10-00532 CI.
Ruth Botstein, Assistant Attorney General, Anchorage, Janell M. Hafner, Assistant Attorney General, and Michael C. Geraghty, Attorney General, Juneau, for Appellant.
Michael C. Kramer, Kramer and Associates, Fairbanks, for Appellees Alecia and Shayna Mullins.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.
Two sisters reported tat they were abused by their grandparents while they were entrusted to the legal custody of the Office of Children's Services (OCS). The sisters sued OCS, and a jury awarded them substantial damages, concluding that OCS was responsible for 95% of their damages and that their grandparents were not responsible for any of their damages. On appeal, OCS argues that this verdict should be set aside. Because the evidence supporting the jury's allocation of fault was so insubstantial as to make the verdict plainly unreasonable, we conclude that OCS is entitled to a new trial.
II. FACTS AND PROCEEDINGS
Alecia Mullins was born in 1990, and Shayna Mullins was born in 1992. Throughout their childhood, their mother, Angela McCoy, abused drugs and alcohol and was involved in a violent and abusive relationship with her then-husband, Chris McCoy.
In September 1998, after receiving a report that Alecia and Shayna were at risk of immediate physical harm from Chris McCoy, OCS  took emergency custody of the children. They were then placed with their grandparents, Jack and Barbara Dominick. Jack and Barbara were licensed as the Mullinses' foster parents from September 1998, until January 2001, when they became Alecia and Shayna's legal guardians.
While Alecia and Shayna were living with their grandparents, they were seeing a counselor to help them cope with the abuse they had experienced when they were younger. The counselor, Linda Jacobsen, noted that Alecia was experiencing night terrors, and that night terrors could be a sign of sexual abuse. But Jacobsen testified at trial that she never suspected that anyone was abusing Alecia or Shayna while she was counseling them. She wrote a letter reporting her observations to Alecia and Shayna's guardian ad litem and an OCS employee.
In March 2001, Alecia and Shayna revealed that their grandfather had been sexually abusing them for some time. Alecia testified that the abuse lasted between three and a half and four years.
Jack left the home immediately after the abuse was disclosed. He pleaded no contest to three counts of sexual abuse of a minor shortly thereafter. Although Jack never returned to his home, there was testimony that Barbara met with him in a parking lot while Alecia and Shayna were present and frequently spoke with him on the phone in the evenings.
After Jack's abusive behavior was disclosed, Barbara became angry and violent. Alecia testified that Barbara slapped her in the face after Alecia told her something that Barbara " didn't like." Barbara also hit Alecia and Shayna with wooden spoons. OCS investigated these incidents but found that they did not constitute physical abuse. Some witnesses testified that Barbara's behavior reflected the fact that she was struggling to believe and accept that Jack had abused her grandchildren.
In June 2002, at her request, Barbara's guardianship was terminated and Alecia and Shayna were returned to their mother. However, this placement was short-lived; the family's home life quickly deteriorated, and the children were removed from their mother again in September 2003 when Angela was arrested for assaulting Chris.
Alecia and Shayna were then placed in foster care. There was testimony that the foster parents were abusive as well.
In January 2004, Alecia was placed with a friend's family. And in the same year, Shayna was placed with a different foster family. In 2006, Shayna was placed with her biological father in Minnesota, and Alecia was permanently placed with two relatives in Washington. Both children were released from OCS custody following these placements.
Alecia and Shayna filed a complaint against OCS and Jack Dominick in the Kenai Superior Court. They alleged that OCS had a duty to protect them from harm and that OCS negligently breached that duty. As to Jack, they alleged that he committed assault and battery against them and negligently harmed them. OCS filed an answer and a third-party complaint against Angela McCoy and Barbara Dominick.
During trial, the Mullinses developed several theories under which the jury could hold OCS liable. They argued, among other things, that OCS negligently failed to investigate Linda Jacobsen's 1999 report that Alecia was suffering from night terrors; that OCS failed to provide Alecia and Shayna with adequate mental health services while they were in OCS custody; that OCS negligently investigated reports that Barbara was physically abusing ...