PETER HAINES, as the personal representative of the Probate Estate of Verna Haines (Deceased), Appellant,
v.
COMFORT KEEPERS, INC. and LUWANA WITZLEBEN, Appellees.
Appeal
from the Superior Court of the State of Alaska, Superior
Court No. 3AN-11-12882 CI Third Judicial District, Anchorage,
Paul E. Olson, Judge.
Yale
H. Metzger, Law Offices of Yale H. Metzger, Anchorage, for
Appellant.
John
J. Tiemessen, Clapp Peterson Tiemessen Thorsness &
Johnson, LLC, Fairbanks, for Appellee Comfort Keepers, Inc.
No
appearance by Appellee Luwana Witzleben.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
MAASSEN, Justice.
I.
INTRODUCTION
An
elderly woman hired an in-home care company to assist her
with day-today living. The company provided an in-home
assistant who was later discovered to have stolen the
woman's j ewelry and prescription medication. The woman
sued both the company and the assistant for conversion and
assault, among other causes of action, and accepted an offer
of judgment from the company. The assistant did not appear in
the superior court.
Eventually
the woman applied for entry of default against the assistant
"on the condition that once default is entered[, ]...
damages are to be determined by a jury." The superior
court granted a default but ruled that trial on damages would
take place without a jury. After a bench trial, the court
found that the assistant's actions had caused the woman
no additional suffering and therefore awarded her no damages.
The
woman appeals. We affirm the superior court's decisions
on the measure of damages for conversion and discovery
sanctions. But we conclude it was an abuse of discretion to
grant the woman's application for default while denying
the condition on which it was based - retaining her right to
a jury trial. We also conclude that it was error to award no
damages or attorney's fees after entry of default when
the allegations of the complaint and the evidence at trial
put causation and harm at issue, and that the allegations of
the complaint could have supported an award of punitive
damages. We therefore vacate the superior court's
judgment and remand for further proceedings.
II.
FACTS AND PROCEEDINGS
Because
of her advanced age and declining health, Verna Haines hired
Comfort Keepers, Inc. to provide in-home care. Comfort
Keepers assigned its employee Luwana Witzleben to work as
Verna's personal assistant. Witzleben stole Verna's
jewelry and prescription pain medication and, to conceal her
theft of the medication, substituted pills that looked
similar but had not been prescribed.
In
December 2011 Verna filed a complaint against Comfort Keepers
and Witzleben in superior court, alleging claims for
negligent hiring, conversion, assault and battery, breach of
contract, and unjust enrichment. Along with her complaint
Verna filed a timely demand for a jury trial.
Verna
served discovery requests on Witzleben, and after receiving
no response filed a motion to compel. She also asked the
court to hold that Witzleben's failure to timely respond
to the discovery requests waived any objection to them. The
court granted Verna's motion to compel but declined to
impose sanctions, citing Witzleben's self-represented
status and some doubt as to whether she "fully
understood her [discovery] obligation."
Another
year passed without any response from Witzleben. Verna died
in the meantime, and Peter Haines (Haines), the personal
representative of her estate, was substituted as plaintiff.
In April 2014 the superior court invited Haines to apply for
entry of default against Witzleben under Alaska Civil Rule
55(c). In another order issued the same day, the court
granted Comfort Keepers' motion to strike Haines's
unjust enrichment claim, which was based on the theory that
the damages for conversion of Verna's medication should
be calculated by reference to its "street value."
Rejecting this theory, the court stated that "[t]here is
no basis for permitting a party to recover the value realized
by a defendant through illegal activity" and held that
any damages for the medication's conversion were limited
to "the fair market value or value to [Verna] at the
time it was taken."
In
August 2014 Haines accepted an offer of judgment from Comfort
Keepers, notified the superior court, and filed a proposed
final judgment against Comfort Keepers. The court responded
that "pursuant to Alaska Civil Rule 54(b), a final
judgment will not be entered against one defendant until all
the claims in the case are resolved as to all the defendants,
" and it asked Haines for "an update . . .
regarding whether he intends to pursue default judgment
against Ms. Witzleben." Haines accordingly applied for
entry of default against Witzleben "on the condition
that once default is entered... damages are to be determined
by a jury." The superior court signed the entry of
default against Witzleben in November 2014, set a default
judgment hearing for a few weeks later, and expressly stated
that "[a] jury trial will not occur."
(Emphasis in original.)
The
default judgment hearing took place in December 2014, and the
only issue was damages. The court heard testimony from
several witnesses, including Verna's children, on the
extent of her non-economic harm, but Haines did not attempt
to prove economic damages. The court's subsequent written
decision awarded Haines no damages at all, finding that
Witzleben's tortious conduct, though "callous,
" caused Verna no pain or suffering beyond what she was
already undergoing. The court later entered final judgment
against Witzleben as well as a satisfaction of judgment
against Comfort Keepers-though no final judgment against
Comfort Keepers had been entered on the accepted Alaska Civil
Rule 68 offer of judgment.
Haines
appeals. He argues that the superior court erred when it (1)
struck Haines's claim for unjust enrichment; (2) denied
oral argument on the motion to strike; (3) "improperly
denied [his] request for an order [stating] that any
objections to discovery requests . . . were waived"; (4)
denied Haines a jury trial on damages; (5) entered its
damages award without considering the legal effect of the
default against Witzleben; (6) failed to award punitive
damages; (7) failed to award Haines attorney's fees; and
(8) entered a satisfaction of judgment against Comfort
Keepers "without having ever entered final
judgment."
Comfort
Keepers does not address most of the issues raised on
Haines's appeal because they involve only Witzleben. It
does address the court's grant of its motion to strike
Haines's unjust enrichment claim, Haines's request
for oral argument on the motion, and the satisfaction of
judgment. Witzleben does not appear in this appeal.
III.
STANDARDS OF REVIEW
"We
decide constitutional issues of law" such as a
party's right to a jury trial "by applying our
independent judgment."[1] In doing so we will adopt "a
reasonable and practical interpretation in accordance with
common sense based upon 'the plain meaning and purpose of
the provision and the intent of the framers.'
"[2] "A trial court's determination of
damages is a finding of fact which we affirm unless it is
clearly erroneous. But we apply our independent judgment in
deciding whether the trial court's award of damages is
based on an erroneous application of law."[3]
We
review denials of oral argument on non-dispositive motions,
sanctions for discovery violations, and awards of
attorney's fees for abuse of discretion.[4] "The trial
court has broad discretion" in awarding attorney's
fees, [5] and we "will not find an abuse of
that discretion absent a showing that the award was
arbitrary, capricious, manifestly unreasonable, or stemmed
from an improper motive."[6] We also review for abuse of
discretion the superior court's decision to grant or deny
an application for default.[7]
IV.
DISCUSSION
In the
discussion that follows we conclude that the superior court
did not err in striking Haines's claim for unjust
enrichment, nor did it abuse its discretion in declining to
award him sanctions and attorney's fees during the course
of discovery. But we conclude it was an abuse of discretion
to enter a default while denying Haines a jury trial on
damages when Haines had expressly conditioned his application
for default on retaining the jury trial right. We also
conclude that the superior court erred in its findings on
damages and attorney's fees in the proceedings that
followed. Although these last issues might not arise again on
remand given the procedural options, they are significant,
and we address them now for the sake of efficiency.
A.
The Superior Court Did Not Err In Striking
Haines's Claim For Unjust Enrichment.
On
Comfort Keepers' pretrial motion the superior court
struck Haines's claim for "unjust enrichment, "
which sought to measure damages by the "street
value" of the medication Witzleben converted rather than
fair market value or some other traditional measure of
Verna's actual loss. The court concluded that
"[t]here is no basis" in Alaska law "for
permitting a party to recover the value realized by a
defendant through illegal activity." This was not error.
"Unjust
enrichment" is not a cause of action but a prerequisite
to recovery under the doctrine of restitution.[8] Restitution, an
equitable remedy based on the concept of quasi-contract, is
available only when there is no adequate remedy at
law.[9]
For conversion claims, such remedies generally exist. We have
noted that courts use "three different standards"
to "measur[e] damages for loss of personal
property": (1) fair market value; (2) value to the owner
"based upon actual monetary loss resulting from the
owner being deprived of the property"; and (3)
"where the property has its primary value in sentiment,
" "value to the owner including sentimental and
emotional value."[10] Under these standards Haines could
have sought damages based on the converted medication's
fair market value, what Verna actually spent for it, or what
she would have had to spend to replace it.
But
Haines did not attempt to prove economic damages at trial
under these or any other measures. Instead he focused
entirely on noneconomic damages, and the superior court,
finding no proof of noneconomic harm, therefore awarded no
damages at all. But the lack of a damage award does not mean
that Haines lacked an adequate remedy at law. He could have
presented evidence of economic damages but chose not to once
the court had ruled against him on his favored measure of
damages. And as for noneconomic harm, he was awarded no
damages because the court found that the evidence was
insufficient, not because damages were not legally available
if proven. Because Haines had an adequate remedy at law,
restitution was not available as an equitable alternative.
Haines
also argues that Comfort Keepers' motion to strike the
damages remedy was, in effect if not in form, an Alaska Civil
Rule 12(b)(6) motion to dismiss on which the court was
obliged to accept as true all well-pleaded allegations of his
complaint, including his allegation that Witzleben was
unjustly enriched by her wrongful conduct.[11] But the
motion was directed at a measure of damages, not a cause of
action; it was not a Rule 12(b)(6) motion to
dismiss.[12] And even on a motion to dismiss, a court
is not obliged to accept as true "unwarranted factual
inferences and conclusions of law."[13] Thus, even if
the court was bound to accept the factual allegation that
Witzleben unjustly enriched herself by converting Verna's
jewelry and medication, it did not have to accept
Haines's preferred legal conclusion: that Haines was
therefore entitled to restitution as a remedy.
Finally,
Haines argues that public policy supports his theory that
damages in this context should be measured by the amount of
the defendant's gain rather than the amount of the
plaintiff s loss-the usual measure in tort
cases.[14] He argues that limiting the plaintiffs
recovery to what the plaintiff lost rewards the thief who
steals something for which the victim paid very little and
sells it on the black market for a great deal more. But
"[t]he primary purpose of tort law is to provide just
compensation to the tort victim, " and
"[compensatory damage awards are designed to achieve
this purpose."[15] Punishing the wrongdoer, when
appropriate in the civil law, is accomplished through
punitive or other exemplary damages.[16] And the consequences for
wrongdoing may extend beyond civil damages. Criminal statutes
require thieves to pay fines and restitution.[17] In this case,
Witzleben did not escape the public consequences of her
crimes; she was convicted of misconduct involving a
controlled substance and theft. We are not convinced that
either public policy or the facts of this case require the
dramatic change in the measure of compensatory damages that
Haines advocates. The superior court did not err in striking
Haines's unjust enrichment claim.
B.
The Superior Court Did Not Abuse Its Discretion In Its
Discovery Rulings.
Haines
contends that the superior court abused its discretion in two
discovery rulings, but we find no abuse of discretion in
either. In the first, the court declined to hold that
Witzleben waived any objections to written discovery by her
failure to timely respond. Haines argues that this was error
because Witzleben never showed the "good cause"
required to excuse her nonresponse.[18]
But the
superior court enjoys broad discretion in deciding whether to
impose discovery-related sanctions.[19] Here, in determining that
the requested sanction was "inappropriate at this time,
" the court expressly noted the governing standard that
"[a]ny grounds not stated in a timely objection [to an
interrogatory] are waived unless a party's failure to
object is excused by the court for good cause
shown."[20] The court concluded that Witzleben, who
was not represented by an attorney, may not have "fully
understood her obligation" and accordingly allowed her
another 20 days to respond. A superior court's ruling is
not an abuse of discretion unless it is "arbitrary,
capricious, manifestly unreasonable, or . . . stems from an
improper motive."[21] The court clearly considered the
good-cause standard when it decided to give Witzleben more
time to respond before considering sanctions; this was not an
abuse of discretion.
Second,
Haines asserts that he was wrongly denied an award of
attorney's fees after the court granted his motion to
compel discovery from Witzleben. Alaska Civil Rule
37(a)(4)(A) directs the court to award "reasonable
expenses .... including attorney's fees" to the
successful proponent of a such a motion. But the rule also
allows a court to decline to award fees if it "finds ...
the opposing party's nondisclosure . . . substantially
justified, or [if] other circumstances make an award of
expenses unjust."[22] The court noted these aspects of the
rule in its order and determined not to award attorney's
fees because "Witzleben [was] a self-represented
litigant" and "it [was] unclear whether she ever
received" Haines's discovery requests or understood
the procedures for response. It was not an abuse of
discretion for the court to take these matters into account
and decide that under the circumstances it would be unjust to
award fees.
C.
It Was An Abuse Of Discretion To Enter Default But Deny
Haines A Jury Trial On Damages When His Request For Default
Was Conditioned On Retaining His Right To A Jury
Trial.
The
next issue we address involves Haines's right to a jury
trial on damages following entry of default against
Witzleben. When Haines applied for entry of default, his
application was made expressly "on the condition that
once default is entered . . . damages are to be determined by
a jury." The superior court granted the application for
default but ruled that a damages hearing would occur without
a jury. Haines argues that article I, section 16 of the
Alaska Constitution granted him a right to a jury trial which
he did not waive by seeking the entry of default. We disagree
that he had a right to a jury trial following default. But
because his application for default was expressly conditioned
on keeping a jury trial, we agree it was an abuse of
discretion to grant the default while rejecting the
condition.
The
Alaska Constitution guarantees the right to trial by jury
"[i]n civil cases where the amount in controversy
exceeds two hundred fifty dollars... to the same extent as it
existed at common law."[23] "That this right is to be
jealously guarded by the courts of this state is made clear
by Alaska Civil Rule 38(a), which charges the courts with
insuring that the right to trial by jury in civil cases
'shall be preserved to the parties inviolate.'
"[24] Rule 38(b) provides that "[a]ny
party may demand a trial by jury of any issue triable of
right by a jury by serving upon the other parties a demand
therefor." And under Alaska Civil Rule 39(a),
[w]hen a trial by jury has been demanded and not waived as
provided in Rule 38, the trial of all issues so demanded
shall be by jury, unless (1) the parties or their attorneys
of record ... consent to trial by the court siting without a
jury or (2) the court upon motion by a party or upon its own
motion finds that a right of trial by jury of some or all of
those issues does not exist under the state constitution or
statutes of the state.
Accordingly,
because the parties in this case did not consent to proceed
without a jury, the first issue we address is whether Haines
had a right to a jury trial on damages following default
"under the state constitution or statutes of the state,
"[25] with the constitutional inquiry focusing
on whether such a right "existed at common
law."[26]
1.
A jury trial on damages following default is not
required by Alaska statutes or the Alaska
Constitution.
We
first observe that there are no "statutes of the
state" that grant a right to a jury trial in these
circumstances. The legislature, by statute, has provided for
juries in various types of special proceedings,
[27]
but it has not found it necessary to supplement by statute
the constitution's reservation of the right to a jury
trial for the general run of civil cases like the one at
issue here.[28]
In
defining the reach of the constitutional right, we must
determine whether the right to a jury following default
"existed at common law." We have noted that
"[a]t common law, the existence of a right to trial by
jury depended upon whether the claim asserted was legal or
equitable in nature."[29] But we have also ...