Appeal
from the Superior Court of the State of Alaska, No.
3HO-13-00213 CI Third Judicial District, Homer, Anna Moran,
Judge.
Thomas
Taffe and Devony Lehner, pro se, Homer, Appellants.
Bruce
A. Moore and Andrew B. Erickson, Landye Bennett Blumstein
LLP, Anchorage, for Appellee.
Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and
Carney, Justices.
OPINION
WINFREE, JUSTICE.
I.
INTRODUCTION
Borrowers
brought suit alleging that their lending bank had engaged in
fraudulent real estate lending practices. The bank responded
that statutes of limitations barred the borrowers' fraud
claims. Following an evidentiary hearing to establish
relevant dates for the statutes of limitations inquiry, the
superior court entered judgment and awarded attorney's
fees in the bank's favor. The borrowers appeal, arguing
that the superior court erred in its factual and legal
determinations and otherwise violated their due process
rights. Seeing no error or due process violation in the
superior court's rulings, we affirm its decisions.
II.
FACTS AND PROCEEDINGS
Thomas
Taffe and Devony Lehner borrowed money from First National
Bank of Alaska to develop a Homer planned community
subdivision, with some tracts reserved for conservation and
outdoor activities.[1] This 2006 loan was secured by a deed of
trust covering the entire property. Taffe and Lehner first
subdivided the land into a group of lots with a single
remainder tract. Once they recorded the subdivision plat,
First National recorded a new deed of trust covering only the
subdivided lots, releasing its security interest in the
remainder tract.
In 2008
Taffe and Lehner obtained a second loan from First National,
using it to retire the first loan and develop additional
lots. They recorded a second plat subdividing the remainder
tract into additional lots and several new tracts. First
National recorded a deed of trust - signed by Taffe and
Lehner - covering the entirety of the subdivision except lots
already sold.
By
early 2009 Taffe and Lehner became concerned, expecting First
National to have released its security interest in the
unsubdivided tracts as it had done in the first transaction.
Late in 2009 Taffe and Lehner wanted to sell one tract to
raise money for loan payments and other expenses. Taffe and
Lehner had to negotiate the tract's release from First
National's deed of trust security interest; First
National's release terms included restrictions on Taffe
and Lehner's use of the sale proceeds.
Taffe
and Lehner struggled to meet the loan's repayment terms
and requested an extension, ultimately executing a change in
terms agreement with First National in February 2010; despite
Taffe and Lehner's continued objection that First
National's deed of trust was not intended to cover the
unsubdivided tracts, the collateral expressly remained the
same. Following an additional extension, in November 2012
First National sent a default notice stating its intent to
foreclose on unsold subdivided lots and two unsubdivided
tracts. An amended foreclosure notice in January 2013 stated
that First National also intended to foreclose on the
additional unsubdivided tracts still covered by the 2008 deed
of trust. When Taffe and Lehner ultimately were unable to pay
the loan, First National foreclosed and acquired the unsold
land by offset bid at auction in April 2013.
Taffe
and Lehner - self-represented - subsequently contested the
foreclosure proceeding in superior court. They filed a
complaint for declaratory relief in November 2013, primarily
seeking to set aside the foreclosure sale and subsequent
title transfers. In March 2014 they amended their complaint
to add fraud claims, including that First National
fraudulently induced them to take the second loan. Taffe and
Lehner alleged that First National had promised to execute a
new deed of trust secured by only the unsold subdivision lots
after they recorded the second plat and to release the
unsubdivided tracts as it had done when they recorded their
first plat. Taffe and Lehner alleged that the second
loan's terms violated their reasonable expectations and
that the deed of trust was an ambiguous adhesion contract
that should be interpreted in their favor. Taffe and Lehner
again amended their complaint in December 2014, seeking
additional declaratory relief and stating a variety of fraud
claims.
Following
motion practice and discovery, Taffe and Lehner suggested
their fraud claim against First National was fraud in the
execution, [2] rather than the fraud in the inducement
alleged in their complaint. In July 2015, after Taffe and
Lehner apparently abandoned their claim to set aside the
foreclosure, the superior court dismissed Taffe and
Lehner's requests for declaratory relief regarding the
foreclosure and ruled that their remedies were limited to
damages. In July 2016 the court granted First National
summary judgment on most of Taffe and Lehner's remaining
claims. The court denied summary judgment on the contractual
ambiguity claim, ruling that there was a genuine dispute
whether the deed of trust was fully integrated, and on the
fraud claim that First National misrepresented the terms of
the 2008 deed of trust.
First
National subsequently sought to extinguish the remaining
claims as barred by statutes of limitations. "[T]he
ordinary operation of the statute of limitations looks to
'the date on which the plaintiff incurs injury.'
"[3] But under Alaska's discovery rule, the
statute of limitations does not begin to run until "a
reasonable person has enough information to alert that
person" to a potential cause of action or to "begin
an inquiry to protect his or her rights."[4]
Applying
the discovery rule to the two-year statute of limitations for
tort claims, [5] First National argued that Taffe and
Lehner should have been prompted to inquire whether it
intended to fulfill its alleged promise as early as August
2008, when First National did not execute a new deed of trust
after the second plat was recorded; probably no later than
February 2010, when they executed a change in terms agreement
that did not alter the collateral; and certainly by October
2011, when they sent First National a memorandum apparently
contending that it should release its liens to allow them to
sell unsubdivided tracts. Because more than two years elapsed
between these occurrences and Taffe and Lehner's November
2013 complaint, First National contended that the statute of
limitations barred the fraud in the inducement claim.
Applying
the discovery rule to the three-year statute of limitations
for contract claims, [6] First National argued that Taffe and
Lehner should have been prompted to inquire about the terms
of the 2008 deed of trust by late 2009, when they disputed
the need for a release from First National to sell a tract,
and no later than February 2010, when they executed a change
in terms agreement that did not alter the collateral. Because
more than three years elapsed between either occurrence and
Taffe and Lehner's November 2013 complaint, First
National contended that the statute of limitations barred
their fraud in the factum claim.
Taffe
and Lehner opposed, arguing that no injury occurred until
November 2012, when First National sent its foreclosure
notice, and that they therefore brought their claims within
the statutes of limitations. Taffe and Lehner disputed
several of First National's assertions, but they
presented no supporting evidence.
Following
an evidentiary hearing, the superior court ruled in First
National's favor on its statutes of limitations defenses.
The court found that Taffe and Lehner knew enough to pursue a
claim in 2009, when they questioned the need for a release
from First National, and no later than February 2010, when
they executed the first change in terms agreement with First
National with no change in collateral. The court specifically
found that by early 2009, Taffe and Lehner should have
realized that First National "had a different view"
of the agreement; they had questioned First National why a
new deed of trust had not been issued. The court discounted
as unreasonable Taffe and Lehner's arguments that they
had no reason to believe First National did not intend to
reduce its collateral. The court found that Taffe and Lehner
"had all the information they needed to move forward
with the [fraud] claim . . . [by] February [] 2010, "
and concluded that their fraud claim was barred by both the
two-year statute of limitation on torts and the three-year
statute of limitations on contracts.
The
superior court entered final judgment in First National's
favor and awarded it attorney's fees and costs of roughly
$54, 000 under Alaska Civil Rules 82 and 79.[7]
Taffe
and Lehner appeal, arguing that the superior court erred in
both its substantive decisions and its attorney's fees
award in First National's favor.
III.
DISCUSSION
A.
The Superior Court Did Not Err Or. Violate Due Process Rights
By Conducting A Pretrial Evidentiary
Hearing.[8]
Taffe
and Lehner argue that the superior court legally erred by
resolving at a pretrial evidentiary hearing the disputed
facts about when the statute of limitations for their claims
began to run. But we have stated on numerous occasions that
superior courts should hold pretrial evidentiary hearings to
resolve whether a statute of limitations has
run.[9]
...