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Keenan v. Meyer

Supreme Court of Alaska

July 20, 2018

MICHAEL J. KEENAN and DOLORES A. KEENAN, Appellants,
v.
JACKSON MEYER and KANDICE MEYER, Appellees.

          Appeal from the Superior Court No. 3AN-12-08714 CI of the State of Alaska, Third Judicial District, Anchorage, Andrew Guidi, Judge.

          Katherine Demarest, Dorsey & Whitney LLP, Anchorage, and Jeffrey M. Feldman, Summit Law Group, Seattle, Washington, for Appellants.

          Thomas P. Amodio, Debra J. Fitzgerald, and Robert W. Corbisier, Reeves Amodio, LLC, Anchorage, for Appellees.

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

          OPINION

          MAASSEN, JUSTICE.

         I. INTRODUCTION

         Landowners sued their neighbors over use of a well and an access easement, and the neighbors counterclaimed for damages caused by interference with their water rights and loss of access to their cabin. The superior court ruled in favor of the neighbors following trial and awarded them compensatory loss-of-use damages, as well as full attorney's fees based in part on a finding that the landowners had engaged in vexatious and bad faith conduct. The landowners appeal. We conclude that the superior court did not clearly err in the findings underlying its damages award and that it did not abuse its discretion in its award of full attorney's fees to the neighbors. We therefore affirm the judgment.

         II. FACTS AND PROCEEDINGS

         A. Keenan And Wade Subdivide Their MacDonald Spit Property.

         Michael Keenan and Hugh Wade co-owned about five acres of property near Seldovia at the base of MacDonald Spit.[1] The property is unique in the Spit community because its access routes do not cross any beaches and can be used by highway-legal vehicles. Motorized access to other properties on the Spit is primarily limited to all-terrain vehicles (ATVs).

         In 1993 Keenan and Wade subdivided the property into three lots, Lots 1, 2, and 3, and sold Lots 1 and 2, retaining joint ownership of Lot 3. The subdivision plat called for a public access easement along the southern border of all three lots. As part of the sale of Lot 1, Keenan and Wade executed a written memorandum agreement with the new owners, committing to build a year-round ATV and pedestrian trail within the public access easement and to allow a water well to be drilled near the easement; the subdivided lots would "share equally in the right to the water." Keenan testified that he intentionally failed to have the memorandum agreement notarized, believing that it could not then be recorded and he would not be bound by it. The Lot 1 owners recorded it anyway.

         A trail known as the Beach Access Trail was constructed along the public access easement, deviating from the easement at one point in Lot 3 to get around an impassable rocky bluff. Subdivision residents and other property owners and lessees in the area customarily used the Beach Access Trail, usually by ATV or foot, despite its deviation from the public easement.

         During this time Keenan and Wade reached Lot 3 by taking the western portion of the Beach Access Trail to where it forked into another trail - the Southern Original Trail-that cut across the southeastern corner of Lot 2. After the Lot 2 owners constructed a gravel pad in the corner of their lot, Keenan and Wade crossed the gravel pad before entering Lot 3 via the remnant of the Southern Original Trail, which became known as Jerry's Trail. The Lot 2 owners also used Jerry's Trail to reach their house.

         B. Keenan And Wade Subdivide Lot 3.

         In 1995 Michael Keenan and his wife Dolores built a second house on the southern portion of Lot 3, accessible by highway-legal vehicles via the Beach Access Trail. By 1999 Keenan and Wade had entered into a de facto partition of Lot 3, [2] which Keenan sought to formalize in 2004.[3] Wade was named the owner of the northern part, Lot 3A-1, and Keenan was named the owner of the southern part, Lot 3A-2.[4] A 2006 court order recognized that Keenan and Wade had agreed to reciprocal easements and directed the parties to file "any necessary documents to preserve said easements, and access to water." In 2008, presumably in order to comply with the court order, Wade granted Keenan a view easement, and Keenan granted Wade water rights and an access easement. The water rights agreement purported to grant Wade rights to water from the well on the Keenans' land. The access easement established a ten-foot-wide easement along the western boundary of Lot 3A-2 (the Keenans' half) that would "run[] with the land." The written grant of the access easement was executed and recorded. But at the time the easement was granted, only the northern part of it, coinciding with Jerry's Trail, was in use; the southern part, bordering the Keenans' land, was mostly undeveloped. Wade continued to use Jerry's Trail and never further developed the rest of the easement along the Keenans' land.

         C. The Meyers Take Ownership Of Lot 3A-1.

         In 2010 Wade sold Lot 3 A-1 to Jackson and Kandice Meyer. The Meyers believed that the 1994 memorandum agreement (among Keenan, Wade, and the Lot 1 owners) granted water rights to the well on Lot 3A-2 to all subdivision properties, including theirs. They confirmed that a series of easements granted them motorized access from Jakolof Bay Road, and they understood that the Lot 1 and 2 owners and the Keenans drove to their properties using highway-legal vehicles; the Meyers also understood that Wade had driven to Lot 3A-1 via Jerry's Trail.

         The Meyers promptly began renovating the cabin on Lot 3A-1. In the course of the renovations, in late 2010 or early 2011, the Meyers disconnected the Keenans' sewage pipe; this caused a backup in the Keenans' house, and, as the superior court later found, "did not contribute to good feelings between the neighbors."

         The Meyers' renovations required the regular transportation of equipment and materials to their property. They primarily used Jerry's Trail for this until, in July 2011, the Lot 2 owner informed them "that he was closing their access across Lot 2 based on pressure from others in the MacDonald Spit community." Turning instead to the unused access easement along the western edge of the Keenans' lot, the Meyers discovered that it would not be passable without significant improvement.

         In the fall of 2011 the Meyers cleared the access easement and made improvements to the Lot 3 well, rotating the well house to reduce its encroachment on the easement. But in spring 2012 the Keenans rotated the well house to again encroach on the easement. The Keenans also placed a burn barrel in the easement, blocked the northern end with large rocks, and posted signs at each end declaring it could only be used for pedestrian traffic. The Meyers dropped their attempts to develop it.

         D. The Keenans Initiate Legal Action Regarding The Meyers' Use Of The Access Easement And Water Rights.

         In April 2012 the Keenans sent the Meyers a letter threatening legal action if the Meyers further developed the access easement. The Keenans asserted that use of the easement was limited to pedestrian traffic, and then only when tidal conditions prevented use of the Beach Access Trail in conjunction with another trail, to the northeast of the Meyers' lot, known as the Crossover Trail. The Meyers stopped using the access easement altogether, but they also consulted a lawyer and by letter asserted their right to continue making reasonable improvements to it.

         In July 2012 the Keenans filed a complaint seeking a permanent injunction that would prohibit the Meyers from modifying the access easement, as well as compensatory damages for the "destruction of the trees, brush and foliage" in the easement. They also sought a declaration that the Meyers had no rights to water from the Lot 3 well. The Meyers counterclaimed for an injunction protecting their right to use the access easement for motorized traffic, for a declaration of their water rights, and for compensatory damages. The superior court dismissed the water rights claims in June 2013 for lack of subject matter jurisdiction; by that time, the Meyers had a water rights application pending with the Department of Natural Resources (DNR).

         In late October 2013 the Keenans cut off the Meyers' water supply. The Meyers filed suit to have the water restored; the case was dismissed with instructions that the Meyers could amend their answer and counterclaims to include the claim in the Keenans' 2012 lawsuit. In December 2013 the DNR issued a permit to the Meyers granting them water rights to the Lot 3 well as long as they could obtain "legal access" to the well. But the Keenans did not restore the Meyers' water supply until late February 2014. That spring, Keenan also constructed a new, larger well house, intruding much farther into the access easement. The superior court would later conclude that the increased intrusion "was no accident."

         E. The Superior Court Rules In Favor Of The Meyers.

         The superior court held a four-day bench trial in January and March 2015, issued a decision in August, and issued a more expansive set of supporting factual findings and conclusions of law in December. The court concluded that the Meyers had a right to use the access easement for "pedestrian, ATV, and car/light truck travel," and that they had access to the Lot 3 well by implied easement, easement by estoppel, and easement by necessity.

         The court also awarded the Meyers compensatory damages: $42, 000 for the loss of use of their house for the four-month period they were without water ($350 per day for four months) and $33, 150 for the loss of use of the access easement during the pendency of the litigation ($25 per day from the time of the first letter threatening legal action to the date of final judgment). The court declined to award punitive damages because they had not been pleaded or placed at issue in the pretrial proceedings; it observed, however, that punitive damages would have been merited if they had been pleaded, because the Keenans' actions "were outrageous, were done with bad motives, and showed reckless indifference to the Meyers' rights."

         The Meyers moved for attorneys' fees, and the superior court granted them full reasonable fees in the amount of $157, 418. The court enhanced the baseline fee award set out in Alaska Civil Rule 82(b)(1) to 75% of full fees by applying several factors of Rule 82(b)(3); it then concluded that the remaining 25% of full fees should also be awarded because of the Keenans' vexatious or bad faith conduct during the litigation.

         The Keenans appeal the compensatory damages award and the award of full attorney's fees.

         III. STANDARDS OF REVIEW

         "[D]eciding the amount of compensatory damages is the job of the finder of fact" and is therefore reviewed for clear error.[5] "So long as the trial judge 'follows the correct rules of law, and [the judge's] estimation appears reasonable and is grounded upon the evidence, [the judge's] finding will remain undisturbed.' "[6]

         "We review an award of attorney's fees under Alaska Civil Rule 82 for abuse of discretion."[7] We will only find an abuse of discretion if an award is "arbitrary, capricious, manifestly unreasonable, or the result of an improper motive."[8] "[B]ecause an enhanced fee award under Rule 82(b)(3)(G) 'calls into question [a party's] litigation conduct and the potential merits of [the party's arguments and defenses], we assess de novo the legal and factual viability of [the party's claims] and review relevant findings of fact for clear error.' "[9]

         IV. DISCUSSION

         The Keenans challenge the superior court's award of compensatory damages, arguing that the award was unsupported by the evidence and that part of it constituted an impermissible double recovery. They also challenge the superior court's award of full attorney's fees to the Meyers. We conclude that the superior court's findings of fact are not clearly erroneous and that they support its ...


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