RONALD M. BURTON, Appellant,
v.
FOUNTAINHEAD DEVELOPMENT, INC., Appellee.
Appeal
from the Superior Court of the State of Alaska, Fourth
Judicial District, Fairbanks, No. 4FA-12-01642 CI Jane F.
Kauvar, Judge.
James
M. Hackett, Law Office of James M. Hackett, Fairbanks, for
Appellant.
David
H. Bundy, David H. Bundy, P.C., Anchorage, for Appellee.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
MAASSEN, Justice.
I.
INTRODUCTION
A tour
company hired an employee to work the tourist season as one
of its representatives at a Fairbanks hotel where he had
worked seasonally in the past. During training, hotel
management recalled that the employee had been difficult to
work with. They told the tour company they did not want him
working at their hotel and, in explaining their decision,
made several unfounded statements about him. When the tour
company was unable to place the employee at a different hotel
because of his limited transportation, it terminated his
employment.
The
employee sued the hotel for defamation and for tortious
interference with his prospective business relationship with
his employer. Following a bench trial the superior court
rejected the tortious interference claim based on lack of
causation but found that several of the hotel's
statements were defamatory per se, justifying an award of
general damages but not special or punitive damages. The
court also denied the employee's motion to amend his
complaint to add a new defamation claim based on events that
arose mid-trial. The employee appeals.
We
conclude that: (1) the superior court did not abuse its
discretion in denying the employee's post-trial motion to
amend his complaint; (2) the court did not clearly err in its
application of a conditional business privilege or in its
finding that the defamation did not cause the employee's
damages; and (3) the court did not clearly err in its award
of damages. We therefore affirm the judgment of the superior
court.
II.
FACTS AND PROCEEDINGS
A.
Facts
Princess
Tours hired Ronald Burton to work the 2011 tourist season as
a "guest service host." Guest service hosts are
stationed at hotels where Princess houses its tour groups;
they help hotel employees greet and serve the large numbers
of Princess guests as they arrive and require various
services. Burton was hired to work primarily at Bear Lodge,
owned by Fountainhead Development, Inc., because it was
within walking distance of his home and he lacked alternative
transportation; however, he also agreed to work as needed at
other Princess-affiliated hotels in Fairbanks. Burton had
worked seasonally for Princess Tours before, from 1999 to
2004, and at Bear Lodge from 2000 to 2003.
Burton
completed several weeks of training in the spring of 2011,
including a visit to Bear Lodge. There, in the presence of
his Princess supervisor, Jonathan Bradish, and a Fountainhead
manager, Stuart Campbell, Burton criticized the traffic flow
in the hotel's parking lot. Campbell relayed the
criticism to Fountainhead's general manager, Shane
Arnold, who passed it on to the personnel and operations
manager, Kathleen Lanning. The criticism reminded the
management team of other complaints Burton had made while
working on Fountainhead's property years before. Lanning
and Timothy Cerny, Fountainhead's president, decided they
did not want Burton as a guest service host at Bear Lodge,
and they asked Arnold to speak to Princess about their
decision.
Arnold
told Bradish of Fountainhead's decision on May 13. The
two men later recalled the conversation differently, but the
superior court found that Arnold told Bradish that Burton was
"not allowed" on Fountainhead's property. When
Bradish asked why, Arnold said that Burton had once been
involved in an altercation with a guest and that he had
"defaced" Fountainhead property.[1]
Burton
was scheduled to begin work at a different hotel on May 16.
Bradish pulled Burton from the schedule and told him about
Fountainhead's allegations. Burton denied them, and
Bradish granted him a "grace period" to sort things
out with Fountainhead. Over the next several days Burton
exchanged emails and phone calls with Lanning, and on May 24
she sent him a letter "to recap [a] phone conversation
of last week." According to the letter, Burton was not
"banned" from Fountainhead's property; he was
welcome there "anytime as a guest, " but he would
not be welcome as an employee. Fountainhead's decision
was based on its impression that Burton was "never happy
with [the hotel's] policies and procedures" when
working there in the past. Lanning also mentioned a different
incident when Burton "had not been supportive of a
management decision while in the presence of guests, "
though she had heard the story second-hand and lacked any
other details. Lanning's letter concluded that employing
Burton at Bear Lodge would not be "in the best interest
of [Fountainhead] or that of Princess's guests."
On May
28 Burton emailed Bradish, reminding him that he could not
easily "work at any other location than Bear Lodge
except on rare occasions" because of his transportation
issues. Anticipating that this meant the end of his Princess
employment, he asked "that any action for [his]
separation from employment be in writing and address the
cause." Bradish emailed back, confirming that Princess
had hired Burton "hoping to place [him] at Bear
Lodge" and that it could "no longer have [him] on
[its] team [due] to schedule parameters." Princess
documented Burton's termination internally with a note
that said he "[w]as banned from Fountainhead Properties
by their management, which meant he couldn't work where
we wanted him to." Princess also marked Burton as
ineligible for rehire.
B.
Proceedings
In May
2012 Burton filed a complaint against Fountainhead alleging
two causes of action: (1) tortious interference with a
prospective business relationship, for causing Princess to
terminate his employment; and (2) defamation based on
Arnold's statements to Bradish about "Burton's
past performance as a [Fountainhead] employee."
Fountainhead raised defenses of truth and privilege, among
others. The superior court held a bench trial over three days
in December 2014, then scheduled closing arguments for
February 2015.
Before
closing arguments, Burton moved pursuant to Alaska Civil Rule
15(b) to amend his complaint to add an additional defamation
claim based on conduct that "occurred... during the
course of the court trial." The court had suggested
mid-trial that Fountainhead talk to Princess and attempt to
correct any misimpression Princess might have about why
Burton was barred from working at Bear Lodge. That evening
Fountainhead wrote a letter to Princess asking the company to
correct the "termination paperwork" in Burton's
personnel file to reflect that he "was never
'banned' from [Fountainhead's] properties."
To help explain why it had not wanted Burton to work at Bear
Lodge, it attached a copy of Lanning's 2011 letter to
Burton. Burton's amended complaint alleged that this
mid-trial correspondence was a separate publication and libel
that caused him additional harm and entitled him to
additional damages. Fountainhead did not oppose Burton's
motion to amend, and it filed an answer to the amended
complaint.
In
February 2015, while hearing the parties' closing
arguments, the superior court noted that Burton's motion
to amend was not yet ripe for decision. But the court said it
would take Fountainhead's mid-trial letter into
consideration in crafting any damages award.
A few
weeks later the court issued its written decision on the
merits. It found against Burton on his claim for tortious
interference with a prospective business relationship on the
ground that his employment ended because of his "refusal
to work at Princess locations besides Bear Lodge, " not
because of what Fountainhead said about him to Princess. The
court concluded that Fountainhead had a "conditional
privilege to publish defamatory statements" because of
its shared business relationship with Princess, but that it
abused this privilege with two statements to Princess that
were defamatory per se: "that [Burton] had an
altercation with a guest, and that [Burton] defaced
[Fountainhead's] property." The court awarded Burton
$15, 000 in general damages on the defamation claim but
denied special and punitive damages. In a separate written
order the court denied Burton's motion to amend his
complaint, though it reiterated in its decision that it had
taken Fountainhead's mid-trial letter into account
"in fashioning [Burton's] award in this case."
Burton
requested a new trial or additur, both of which were denied.
The court awarded attorney's fees to Fountainhead as the
prevailing party because Burton had failed to accept an
Alaska Civil Rule 68 offer of judgment in an amount greater
than the award of damages.[2]
Burton
appeals. He argues that the superior court abused its
discretion when it denied his post-trial motion to amend his
complaint; that it erred in determining that Fountainhead was
privileged to interfere with his employment relationship;
that it misstated the legal standard for causation and erred
in finding that he failed to prove this element of his
tortious interference claims; that it erred in failing to
include lost wages and benefits in its award of general
damages; and that it erred in failing to award punitive
damages.[3]
III.
STANDARDS OF REVIEW
We
review a trial court's "decision to permit or deny
an amendment to the pleadings ... for abuse of
discretion."[4] Abuse of discretion exists "when the
decision on review is manifestly
unreasonable."[5]
"In
a bench trial, the judge is the trier of fact. . .
."[6] We review the trial court's factual
findings for clear error, as "[i]t is the function of
the trial court, not of this court, to judge witnesses'
credibility and to weigh conflicting
evidence."[7] Clear error exists "when 'after a
thorough review of the record, we come to a definite and firm
conviction that a mistake has been made.'
"[8] "[W]hether the superior court applied
the correct legal standard is a question of law to which we
apply our independent judgment."[9]
We note
some inconsistency in how we have formulated our standard of
review of a damage award made by a judge sitting as the
finder of fact. In Breck v. Moore we said that we
"review[] an award of damages for an abuse of discretion
and independently review[] the law applied by the trial
court, "[10] and some later cases relied on
Breck for this abuse-of-discretion
standard.[11] But Breck cited only
Johnson v. Alaska State Department of Fish &
Game, [12] which states, consistent with earlier
cases, that the applicable standard is clear error except
with regard to questions of law:
"[A] determination of damages by the trial court is a
finding of fact which will not be disturbed on appeal unless
clearly erroneous." State v. Guinn, 555 P.2d
530, 544-45 (Alaska 1976). We have reviewed the record in
this case and[] we do not find clear error in any of the
superior court's factual findings. However, we do not
limit our review of the superior court's damages decision
to simply an evidentiary review. "[T]his court will also
intervene when the trial court's calculations are in
disregard of a rule of law pertaining to damage
measures." Id. at 545.[13]
Notwithstanding
Breck, we again applied the clear error standard a
year later. In Pluid v. B.K. we held that
"[t]he determination by a trial court sitting as a
finder of fact as to the proper amount to be awarded as
compensatory damages is not to be disturbed on appeal unless
it is clearly erroneous";[14] we went on to say that as long
as the trial court "follows the correct rules of law,
and [its] estimation appears reasonable and is grounded upon
the evidence, [its] finding will remain
undisturbed."[15] We applied the same standard in other
cases.[16]
Even
while applying the clear error standard of review, however,
we have recognized that the fact-finder necessarily has some
latitude in determining the amount of damages to award.
"Certainly in many cases . . . some items of damage
cannot be fixed with mathematical precision, " and
"[i]n those instances the trial judge is necessarily
forced to estimate."[17] Reviewing an award of general
damages in another defamation case, we observed that
"the trier of fact [is permitted] a great deal of
latitude in determining the magnitude of... damage awards,
" and "[s]ince proof of damages is not required if
words are deemed actionable per se, they clearly cannot be
computed with mathematical certainty."[18] We quoted a
California case for the proposition that fixing "damages
[for harm suffered to intangible interests such as
reputation] has long been vested in the sound discretion of
the trier of fact. . . subject only to the passion and
prejudice standard."[19] In short, a damages award, and
particularly a general damages award, will often require the
fact-finder to exercise some discretion along an acceptable
continuum - unlike, for example, a finding about whether the
traffic signal was red or green.
At
bottom, however, deciding the amount of compensatory damages
is the job of the finder of fact, whether a jury or the judge
in a bench trial; as such it is subject to the clear error
standard of review. We do not review jury awards for an abuse
of discretion, and we see no reason to review judges'
awards differently when judges are performing the same
fact-finder role. We take this opportunity to reaffirm that
"[a] trial court's determination of damages is a
finding of fact which we affirm unless it is clearly
erroneous[, b]ut we apply our independent judgment in
deciding whether the trial court's award of damages is
based on an erroneous application of law."[20]
IV.
DISCUSSION
A.
The Superior Court Did Not Abuse Its Discretion By Denying
Burton's Post-Trial Motion To Amend His
Complaint.
Burton
contends that Fountainhead's decision to republish
Lanning's 2011 letter in its mid-trial correspondence
with Princess was anew instance of defamation that the
parties then litigated by consent. He argues that the
superior court therefore abused its discretion when it denied
his post-trial motion to amend his complaint to include a new
defamation claim. But the record does not support the
contention that the republication, though raised as an issue
toward the end of trial, was then litigated as a separate
claim.
Under
Civil Rule 15(b), "[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." But "[i]mplied
consent... is ... difficult to establish and seems to depend
on whether the parties recognized that an issue not presented
by the pleadings entered the case at trial. If they do not,
there is no consent and the amendment cannot be
allowed."[21] We have recognized trial by consent when
the new issue was identified at the beginning of trial and
litigated by both sides, [22] but not when the parties
failed to actively litigate the claim[23] or when one
party did not have the opportunity to contest
it.[24]
Here,
though Fountainhead appears to concede on appeal that
"the issues raised by the amendment" were tried by
consent, [25] the record does not show that the issues
were litigated as a new and separate claim. The
issue of re-publication arose mid-trial when the superior
court asked Fountainhead's president whether his company
had ever informed Princess that Burton was not in fact
"banned" from Fountainhead property, giving
Princess the opportunity to correct its internal records
about the reason for Burton's termination. The court
"invite[d] the parties, while we have a break tonight,
to look and see if they might not see how they could address
this problem with what Princess heard in 2011 and maybe what
Princess should have heard."
The
next day Fountainhead recalled Lanning, its manager of
operations and personnel, to the stand as its last witness.
Lanning testified that she had sent a letter to Princess the
night before "[b]ecause the [c]ourt asked us to."
The letter informed Princess that Burton had never in fact
been "banned" from Fountainhead properties, and it
included as an attachment the letter Lanning had sent Burton
in May 2011 outlining the company's concerns about his
attitude. The 2011 letter also mentioned "an incident
where [Burton was not] supportive of a management decision
while in the presence of guests, " while acknowledging
that Fountainhead lacked any other details about that
incident.
The
court interjected that it had intended something else:
"[I]t wasn't that I said you should send any
particular letter, the idea was to have you use the time to
talk among yourselves to see if, perhaps, there is a way that
you could help overcome this stigma on [Burton's]
record." The court further observed, "I ...