LEE E. BAKER JR., Appellant,
KENNETH M. DUFFUS, Appellee.
from the Superior Court of the State of Alaska No.
3AN-07-08461 CI, Third Judicial District, Anchorage, William
F. Morse, Judge.
Jones, Jones Law Group, LLC, Anchorage, for Appellant.
W. Cook, Birch Horton Bittner & Cherot, Anchorage, for
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
limited liability company and its individual members failed
to make payments on a real estate loan, the lender sued. One
member, Kenneth Duffus, cross-claimed against a second
member, Lee Baker, Jr., alleging breach of contract and tort
claims related to the management of the business. Baker
counterclaimed against Duffus, also alleging breach of
contract and tort claims. After several years of litigation,
only the claims by and between Duffus and Baker remained; the
superior court granted partial summary judgment to Duffus,
finding that the statutes of limitation barred Baker's
counterclaims. A trial jury found against Baker on
Duffus's breach of contract and tort claims, and awarded
damages to Duffus. Baker appeals the grant of summary
judgment and a number of procedural issues from the trial.
Because it was error to conclude that Baker's claims were
not compulsory counterclaims, thus changing the statutes of
limitation analysis, we reverse the superior court's
grant of summary judgment, vacate the judgment, and remand
for a new trial on both Duffus's cross-claims and
FACTS AND PROCEEDINGS
Baker, Jr., Lynn Lythgoe, and Kenneth Duffus are former
business associates. They met in 2004, discussed developing
residential property in Anchorage, and established Harvest
Properties, LLC to purchase and develop a property. The LLC
members were experienced in fields related to real estate
development: Baker owned a construction company and was in
charge of financing; and Duffus either had incorporated or
was president of two engineering firms and was in charge of
members intended to purchase property referred to as
Prominence Pointe, subdivide it into smaller residential
lots, and sell the lots. Harvest obtained a $4.5 million loan
from First National Bank Alaska (FNBA) to purchase the
property, and the LLC members personally guaranteed the loan.
But the Prominence Pointe project was never completed and
Harvest was unable to make its required payments to FNBA.
10, 2007, FNBA sued Harvest and the three LLC members in
superior court after Harvest failed to make payments. Duffus
answered FNBA's complaint on September 28; Baker answered
on October 8. Later that month Duffus filed an amended answer
and cross-complaint against Baker and Lythgoe. In his cross-
complaint Duffus alleged that Baker and Lythgoe had failed to
make required capital contributions to Harvest and that FNBA
should therefore obtain recovery only from Harvest, Lythgoe,
and Baker. Duffus also sought judgment against Baker and
Lythgoe individually, seeking equitable contributions from
them in the event that he paid more than his pro rata share
of the FNBA debt.
answered the cross-complaint a year later, in November 2008.
He asserted that Duffus's cross-complaint failed to state
a claim for relief and that individual members of Harvest
could not sue to enforce capital contribution obligations.
Baker amended his answer two months later to add claims
2010 FNBA entered into settlements with Baker and Duffus,
with the parties stipulating to dismissals of claims and
FNBA's withdrawal from the litigation. Lythgoe was
dismissed from the proceedings following his Chapter 11
bankruptcy. Harvest was later dismissed as a party during the
trial between Duffus and Baker.
April 2012 the parties stipulated to stay the case pending
the resolution of unrelated criminal charges against Baker.
At a status hearing in April 2013, the superior court
scheduled trial for April 2014.
October 2013 Duffus moved to amend his cross-complaint,
adding additional cross-claims for breach of contract, breach
of the duty of good faith, breach of the fiduciary duty of
care, breach of the duty of loyalty, conversion, and unfair
trade practices. Baker opposed the motion, arguing the new
cross-claims made "an entirely new lawsuit based on
entirely different theories than the original
cross-claims." In December the superior court granted
Duffus's motion. Baker answered the amended
cross-complaint and added new counterclaims in February 2015,
over a year after Duffus filed his amended cross-complaint.
Baker alleged breach of fiduciary duty, breach of the duty of
good faith, fraudulent misrepresentation, and unfair trade
practices against Duffus.
March 2015 Duffus moved to dismiss Baker's counterclaims
pursuant to Alaska Civil Rule 12(b)(6), arguing that all of
Baker's claims were barred by the relevant statutes of
limitation. The court denied the motion in January 2016.
February 2016 Duffus moved for summary judgment based upon
the statutes of limitation. Baker opposed summary judgment,
arguing that his counterclaims related back to the filing of
FNBA's original complaint in 2007 or "at the
minimum" to Duffus's 2007 cross-complaint. The
superior court granted Duffus's motion in May, ruling
that the counterclaims did not relate back to either the
original FNBA complaint or Duffus's 2007 cross-complaint
because they did not satisfy the compulsory counterclaims
test and that the statutes of limitation on all four of
Baker's counterclaims had run.
conclusion of a six-day trial, the jury returned a special
verdict finding Baker liable for breach of contract, breach
of the covenant of good faith and fair dealing, breach of the
fiduciary duty of care, conversion, and unfair or deceptive
acts or practices. The jury awarded damages of $170, 917 for
Baker's breach of contract; $174, 466.67 for breach of
the covenant of good faith; and $300, 000 for breach of the
fiduciary duty of care. The superior court entered a final
judgment for $1, 228, 170.64, which included the jury's
award, treble damages under the Unfair Trade Practices and
Consumer Protection Act (UTPA),  prejudgment interest,
attorney's fees, and costs.
appeals the grant of summary judgment and the court's
decisions on ...