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Laybourn v. City of Wasilla

Supreme Court of Alaska

December 11, 2015

BRADLEY K. LAYBOURN, ALAN D. LAYBOURN, DOUGLAS K. LAYBOURN and DIAMOND D. LAYBOURN, Appellants and Cross-Appellees,
v.
CITY OF WASILLA, Appellee and Cross-Appellant

Page 448

[Copyrighted Material Omitted]

Page 449

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Palmer, Kari Kristiansen, Judge. Superior Court No. 3PA-11-02919 CI.

Brad D. DeNoble, Eagle River, for Appellants.

Thomas F. Klinkner, Birch Horton Bittner & Cherot, Anchorage, for Appellee.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

OPINION

Page 450

MAASSEN, Justice.

I. INTRODUCTION

Property owners granted a utility easement to the City of Wasilla in exchange for the City's promise to build an access road across their property, subject to obtaining permits and funding. The access road was not built, and the property owners sued the City, claiming that it fraudulently induced them to sign the easement agreement, breached the agreement, and breached the covenant of good faith and fair dealing.

After trial the superior court made findings of fact and conclusions of law about the parties' negotiations, their reasonable expectations, the key provisions in the easement agreement, and the City's efforts to satisfy the agreement's conditions, and it ruled against the property owners on all their claims. The property owners appeal. The City cross-appeals, contending that the property owners' claims should have been dismissed on statute of limitations grounds. We agree with the superior court's interpretation of the parties' agreement and find no clear error in its findings of fact. We therefore affirm its judgment in favor of the City and do not reach the issue raised in the City's cross-appeal.

II. FACTS AND PROCEEDINGS

A. Facts

Bradley, Alan, Douglas, and Diamond Laybourn own a piece of property south of the Parks Highway, between a subdivision on the east and the City of Wasilla's new multi-use sports complex on the west. The site of the sports complex had no preexisting infrastructure for water or sewer, so before construction the City approached the Laybourns in the fall of 2002 seeking a utility easement over the northern 60 feet of their property.

Archie Giddings, the City Engineer at the time, represented the City in negotiations with Bradley Laybourn, who represented the property owners. Giddings told Bradley that the City had limited options and that a utility easement through the Laybourns' property would be the most cost-effective one. In accordance with the City's usual practice, Giddings offered the Laybourns a waiver of the sewer payment-in-lieu-of-assessment (PILA) fees or construction of a maintenance trail in exchange for the easement; the Laybourns rejected this initial offer. Countering, the Laybourns said they would allow the utility easement in exchange for both the PILA waiver and the City's construction of an access road that would run across the northern edge of their property, from South Mack Drive on the west (where the sports complex was being built) to their property's northeast corner. It was Giddings's view, however, that a road dead-ending in the Laybourns' property would serve no public purpose; he envisioned instead that the access road would continue east from the Laybourns' property to connect with Lake Lucille Drive (or Upper Road, a stub extending west from West Lake Lucille Drive), thus creating an alternate thoroughfare to the Parks Highway from the subdivisions near Lake Lucille.

Giddings and the Laybourns continued their negotiations in several meetings over the course of six months. Giddings then drafted the terms of a public utility easement

Page 451

agreement, which the Laybourns signed on May 29, 2003. The agreement granted a public water and sewer easement to the City on the northern 60 feet of the Laybourns' property in exchange for the following consideration:

1) The City will not charge a sewer connection fee or sewer PILA (payment in-lieu of assessment) for future development on the grantor's property.
2) In 2003, the City will apply for a public use easement across parcel D2[1] in conjunction with a public use easement across parcel C2,[2] to provide access from Upper Road to South Mack Drive; and
3) In 2004, the City will apply for a wetlands permit to construct the access road that will include the dredging of fill material and a delineation of wetlands on parcel C2; and
4) Upon approval of the public use easement and wetlands permit, the City will construct the access road in 2005, subject to funding.

The City installed the water and sewer lines in the granted easement in the summer of 2003. Around the same time, as required by the agreement's second provision, the City applied for the public use easement necessary for construction of the Upper Road extension and received conditional approval of it from the Matanuska-Susitna Borough Platting Division.[3]

Completing the conditions for final approval of the easement would have cost the City approximately $5,000, funds Giddings believed it imprudent to spend in the absence of a wetlands permit. The entire estimated cost of the Upper Road extension was approximately $500,000. The City's local sources of funding for all its capital improvements City-wide -- for water and sewer systems, roads, the airport, and buildings -- averaged approximately $1.2 million in 2003 and subsequent years. Construction of the sports complex was a $20 million project which the City financed in part with bonding of $14.7 million. To pay the debt service on the bonds, the Wasilla City Council raised the City sales tax by ordinance from 2.0% to 2.5%; proceeds from the tax increase were dedicated to that purpose.[4] The City therefore depended upon state and federal funding for many aspects of the sports complex project, including ballfields, paving, kitchen facilities, and water and sewer lines. Giddings testified that the City initially planned to pay $50,000 toward the Upper Road extension and look to the State for the remaining $450,000 of its estimated cost. The City included the Upper Road extension in its funding requests to the legislature in 2005 and again in 2006, but the legislature rejected the request both times.

The City did not apply for a wetlands permit in 2004, as required by the easement agreement's third provision. When Giddings began the application process toward the end of that year, he realized he would need someone with engineering expertise to delineate the wetlands as required for the application's completion. This would require funding; in May 2006, therefore, Giddings asked the City Council to authorize a contract at an estimated cost of ...


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