Ass'n of Vill. Council Presidents Reg'l Hous. Auth. v. Mael, Supreme Court Nos. S-17802/17821

CourtSupreme Court of Alaska (US)
Writing for the CourtMAASSEN, Justice.
Parties ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS REGIONAL HOUSING AUTHORITY, Appellant and Cross-Appellee, v. Dietrich MAEL, on his own behalf and on behalf of his minor children D.K. and E.M.; Thomas Mael; and Rose Mael, Appellees and Cross-Appellants, and State of Alaska, Intervenor/Cross-Appellee.
Docket NumberSupreme Court Nos. S-17802/17821
Decision Date15 April 2022

507 P.3d 963

Dietrich MAEL, on his own behalf and on behalf of his minor children D.K. and E.M.; Thomas Mael; and Rose Mael, Appellees and Cross-Appellants,
State of Alaska, Intervenor/Cross-Appellee.

Supreme Court Nos. S-17802/17821

Supreme Court of Alaska.

April 15, 2022

Aaron D. Sperbeck and Shane C. Coffey, Birch Horton Bittner & Cherot, Anchorage, and Thomas Weathers, The Law Offices of Thomas Eagle Weathers, P.C., San Rafael, California, for Appellant and Cross-Appellee.

Susan Orlansky, Reeves Amodio, LLC, Anchorage, Russell L. Winner, Winner & Associates, PC, Anchorage, and Myron Angstman, Angstman Law Office, Bethel, for Appellees and Cross-Appellants.

Anna Jay, Assistant Attorney General, Anchorage, and Treg R. Taylor, Attorney General, Juneau, for Intervenor/Cross-Appellee.

Before: Bolger, Chief Justice, Winfree, Maassen, and Carney, Justices, and Eastaugh, Senior Justice.* [Borghesan, Justice, not participating.]


MAASSEN, Justice.

507 P.3d 968


A boiler exploded in a home owned by a nonprofit regional housing authority, severely injuring a man who lived there. He sued the housing authority in both contract and tort, claiming that his lease-purchase contract with the authority included a promise that it would inspect the boiler, which it had failed to do with reasonable care. After the man dismissed his contract claim, the housing authority asked the court to decide as a matter of law that a breach of a contractual promise cannot give rise to a tort claim. But the superior court allowed the man to proceed to trial on his tort claim, and the jury awarded over $3 million in damages, including over $1.5 million in noneconomic damages and separate awards to several of his family members for negligent infliction of emotional distress. The court reduced the man's noneconomic damages award to $1 million because of a statutory damages cap, but it excluded the family members’ awards from the amount subject to the cap.

The housing authority appeals. It argues that the superior court erred by concluding that the contract created a continuing legal duty to inspect the boiler with reasonable care. It maintains that it should have been granted a judgment notwithstanding the verdict for that reason. It also argues that it should have been granted a new trial because it had established that the boiler explosion was caused by a product defect rather than negligent inspection. Finally, it argues that the family members’ damages for negligent infliction of emotional distress should have been included in the amount subject to the statutory damages cap. The man cross-appeals, arguing that the damages cap violates due process because it fails to account for inflation or the severe nature of his physical injuries.

We uphold the jury verdict because the superior court properly concluded that the housing authority had an independent tort duty to inspect the boiler with reasonable care and because the jury had sufficient evidence to find that the explosion was caused by the housing authority's negligence rather than a product defect. We also conclude that the superior court properly reduced the damages award; the noneconomic damages were properly capped at $1 million and the other family members’ emotional distress damages were properly excluded from the amount subject to the cap. We thus affirm the superior court's judgment on all issues.


A. Facts

The Association of Village Council Presidents Regional Housing Authority is a nonprofit corporation that provides housing and housing assistance to persons living in the Yukon-Kuskokwim Delta region. The housing authority administers a federal home ownership program established by the Indian Housing Act, which authorizes the Department of Housing and Urban Development (HUD) to enter into contracts to provide financial assistance to Indian housing authorities.1 The program stipulates that in order to receive government funds, a housing authority must enter into a mutual help and occupancy agreement (the Agreement) with each family selected to occupy one of the provided homes.2 The Agreement must contain terms such as the family's required initial contribution to the housing authority and its subsequent

507 P.3d 969

monthly payments.3 The Agreement must also stipulate that the family is "responsible for the maintenance and monthly utility expenses of the dwelling," while the housing authority is responsible for having in effect procedures "sufficient for ensuring the timely periodic maintenance of the dwelling by the family."4 Further, the Agreement must allow the family the opportunity to buy the dwelling under a lease-purchase arrangement.5

Thomas and Rose Mael moved into a home in Chefornak under this program in 1984. They did not sign the required Agreement until 1989, but the parties appear to agree that the effective date of their Agreement was the date the Maels moved in. The Agreement contains the mandated terms noted above, establishing the respective responsibilities of the housing authority and the "homebuyer" — the occupant who had not yet become the owner. The Agreement states that the homebuyer is responsible for the home's maintenance. But it also provides that if "the condition of the property creates a hazard to the life, health or safety of the occupants, the [housing authority] shall have the work done" to remedy the problem.

The Agreement does not have an express expiration date. It stipulates that the "lease under this Agreement" commences upon occupancy and expires when the purchase price has been fully amortized pursuant to a schedule that provides for "a 25-year period." The Agreement explains that it can be terminated in two ways: by a breach of the homebuyer's obligations or by the homebuyer's notice of termination. The Agreement also identifies the two ways the house can be conveyed to the homebuyer: The homebuyer may request to purchase it, or the housing authority may require the homebuyer to purchase it once certain financial thresholds are met. After the housing authority has given notice that the homebuyer is required to purchase the home, all the homebuyer's rights under the agreement are unchanged until the purchase is completed.

The price of the Maels’ home became fully amortized, and the home was thus "eligible for conveyance," in 2009. But the home was never formally conveyed to the Maels; the housing authority never notified the Maels that they now had to purchase the home, and neither party ever gave the other notice that the Agreement should be otherwise terminated. The housing authority continued to charge the Maels administrative fees, and it conducted annual inspections of the home nearly every year between 1986 and 2011. The March 2011 inspection, which was labeled as an "Annual" as opposed to a "Final" inspection, did not indicate any problems with the boiler, and Rose Mael confirmed at trial that the Maels were not aware of any problems at the time. No more inspections occurred after 2011.

In January 2016 Rose heard a whistling noise coming from the boiler. She asked Dietrich, her adult son, to take a look at it. As he went to do so the boiler exploded, injuring him severely. He was thrown against a wall, sprayed with scalding water and glycol, and knocked unconscious. He spent about a week in a hospital followed by extensive physical therapy. He testified at trial that he continued to suffer from debilitating back pain which prevented him from working, playing with his children, or engaging in subsistence activities.

B. Pre-Trial Proceedings

In 2018 Dietrich sued the housing authority on behalf of himself and two of his minor children. He asserted a negligence claim, alleging that the housing authority assumed a duty to properly inspect the boiler and negligently violated that duty, causing his injuries. He also asserted a breach of contract claim, alleging that the Agreement contained "an express and implied contractual duty to properly inspect" the boiler and that the housing authority violated that duty as well. On behalf of his children, Dietrich alleged that they had heard the explosion, witnessed their father's injuries, and suffered emotional distress as a result of the housing authority's breach of its duty to properly inspect. In its answer the housing authority joined as third-party

507 P.3d 970

defendants Burnham LLC, the manufacturer of the boiler, and Dietrich's parents, Thomas and Rose, "for allocation of fault and apportionment of damages." The housing authority alleged that Thomas and Rose's negligent repair and service of the boiler and Burnham's negligent design caused the explosion. Burnham settled with Dietrich and his two children and was dismissed from the case before trial.

C. Trial Evidence

Trial began in September 2019 and lasted nine days. The jury heard testimony from the Maels about the boiler explosion, along with extensive testimony from medical experts about the scope of Dietrich's injuries and his...

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