Haines v. Comfort Keepers, Inc.

• Citation: 393 P.3d 422
• Decision Date: 24 March 2017
• Docket Number: Supreme Court No. S-16034
• Parties: Peter HAINES, as the personal representative of the Probate Estate of Verna Haines (Deceased), Appellant, v. COMFORT KEEPERS, INC. and Luwana Witzleben, Appellees.
• Court: Supreme Court of Alaska (US)

393 P.3d 422

Peter HAINES, as the personal representative of the Probate Estate of Verna Haines (Deceased), Appellant,

v.COMFORT KEEPERS, INC. and Luwana Witzleben, Appellees.

Supreme Court No. S-16034

Supreme Court of Alaska.

March 24, 2017

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 jewelry 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...